Jewel Consumer Care Pvt.Ltd., Baroda V. The ACIT.,Circle-1(2), Baroda

ITA 1093/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6319 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-06-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 27-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Income from undisclosed sources; Opportunity of being heard
• Section: 43B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1093/AHD/2008 A. Y.: 1998-99 JEWEL CONSUMER CARE PVT. LTD., (FOR AND ON BEHALF OF JEWEL BRUSHES PVT. LTD.). SUBHAAG, B-15/16 RAMIN PARIK, OLD PADRA ROAD, BARODA 390 020 VS THE A. C. I. T., CIRCLE -1(2), AAYAKAR BHAVAN, BARODA PA NO. 31-118-CN-8457 (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. SOPARKAR, AR RESPONDENT BY SHRI B. L. YADAV, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)- V I, BARODA DATED 05 TH DECEMBER, 2007, FOR ASSESSMENT YEAR 1998-99. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. ON GROUND NO.1 OF THE APPEAL, THE ASSESSEE CHALL ENGED THE ADDITION OF RS.37,11,381/- ON ACCOUNT OF ALLEGED UN ACCOUNTED SALES. THE FACTS OF THE CASE ARE THAT ON THE BASIS OF ENQU IRY CONDUCTED FROM IEL & HLL FOR ASSESSMENT YEAR 1997-98 AND 1998-99 I T WAS REVEALED THAT BOTH OF THEM HAD CLAIMED THAT THEY DID NOT MAI NTAIN PARTY WISE ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 2 LEDGER ACCOUNT AND THAT THEY HAD NOT TAKEN/GIVEN AN Y LOAN/ADVANCE TO JEWEL BRUSHES PVT. LTD. EXCEPT ADVANCES AGAINST PU RCHASE ORDERS. FURTHER, THEY HAVE NOT TAKEN ANY SECURITY DEPOSITS FROM JEWEL BRUSHED PVT. LTD. IT WAS INDICATED BY THE AO THAT T HE ASSESSEE COMPANY HAS SOLD TOOTH BRUSHES WORTH RS.10,23,29,90 5/- INCLUDING SALES TAX DURING THE YEAR UNDER CONSIDERATION TO IE L AND HLL. FURTHERMORE, THE ADVANCES RECEIVED FROM IEL AND HLL WERE SHOWN AT RS.37,11,381/- IN THE BALANCE SHEET AS ON 31-3-1 998. IN VIEW OF THE APPARENT CONTRADICTION BETWEEN THE SUBMISSION B Y IEL AND HLL AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY I T WAS ASKED TO RECONCILE THE FACTS. IT WAS INFORMED BY THE ASSESSE E TO THE AO VIDE LETTER DATED 22-03-2001 THAT THE COMPANY HAD RECEIV ED ADVANCES FROM M/S. INDEXPORT LTD. FOR VARIOUS DEVELOPMENTAL WORK TO BE UNDERTAKEN ON BEHALF OF M/S. HINDUSTAN LEVER LTD. A ND M/S. INDEXPORT LTD. AND THAT THE OUTSTANDING AS ON 31-03-1998 WAS RS.37,11,381/-. FURTHER, IN THE NEXT FINANCIAL YEAR THE DEVELOPMENT AL WORK WAS COMPLETED AND RS.6,50,000/- WAS REFUNDED AND IN RES PECT OF DEVELOPMENTAL WORK OF RS.30,61,375/-. DEBIT NOTE WA S ISSUED. AFTER CONSIDERING THE ASSESSEES REPLY AND ON THE BASIS O F ENQUIRIES CONDUCTED FROM M/S. INDEXPORT LTD. AND M/S. HINDUST AN LEVER LTD. IT WAS CONCLUDED BY THE AO THAT THE CONTENTIONS OF THE ASSESSEE WAS NOT ACCEPTABLE AND THE ADVANCE OF RS.37,11,381/- WA S HELD TO BE UNACCOUNTED SALES OF THE ASSESSEE AND ADDED BACK TO THE TOTAL INCOME. IN APPEAL BEFORE THE LEARNED CIT(A), IT WA S VEHEMENTLY ARGUED THAT THE AO HAD MADE THE ADDITIONS SIMPLY ON THE BASIS OF HIS FINDINGS IN ASSESSMENT PROCEEDINGS FOR ASSESSMENT Y EAR 1997-98. IT WAS ARGUED THAT IN ASSESSMENT YEAR 1997-98, THE AO HAD CONCLUDED ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 3 THAT ALL RECEIPTS FROM M/S. INDEXPORT LTD. DURING T HE YEAR REPRESENTED SALES OF THE COMPANY AND HAD ACCORDINGLY TAXED THE DIFFERENCE BETWEEN THE PAYMENTS MADE BY M/S. INDEXPORT LTD. AN D THE SALES ACCOUNTED FOR BY THE COMPANY AS SUPPRESSED SALES. I T WAS EMPHASIZED THAT THE AO CHOSE TO IGNORE THE ACCOUNTI NG SYSTEM FOLLOWED BY THE COMPANY. A PERUSAL OF PAGE 10 AND 1 1 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1997-98 REVEAL ED THAT THE AO HAD TREATED THE DIFFERENCE BETWEEN THE RECEIPTS FRO M M/S. INDEXPORT LTD. (INCLUDING RECEIPTS TREATED AS ADVANCES BY THE COMPANY) I.E. RS.13,84,55,519/- AND THE GROSS SALES AND DEVELOPME NT INCOME ACCOUNTED I.E. RS.10,87,30,936/- AS SUPPRESSED SALE S. HOWEVER, IN THE YEAR UNDER CONSIDERATION, THE AO BASED ON THE S AME FACTS HAS NOT TAXED THE DIFFERENCE BETWEEN THE RECEIPTS AND T HE GROSS SALES. THE AO HAD SIMPLY ADDED THE CLOSING BALANCE IN THE SAID ADVANCE ACCOUNT I.E. RS.37,11,381/-. THE ASSESSEE FURTHER SUBMITTED THAT TOTAL RECEIPTS FROM M/S. INDEXPORT LTD. WAS RS.8,02 ,68,954/- AND THAT FROM M/S. HINDUSTAN LEVER LTD. WAS RS.99,82,173/- I .E. GROSS RECEIPTS ARE RS.9,02,51,127/- WHEREAS THE GROSS SALES ACCOU NTED BY THE ASSESSEE COMPANY WAS RS.9,00,34,340/- (RS.8,61,26,3 38/- + RS.39,08,011/-) AND RATE DIFFERENCE INCOME CONSIDER ED BY THE COMPANY WAS RS.1,23,23,278/- I.E. TOTAL RS.10,23,57 ,618/-. IT WAS THUS ARGUED THAT IN THE CURRENT YEAR IT IS APPARENT THAT INCOME ACCOUNTED FOR WAS MORE THAN THE RECEIPTS BY RS.1,21 ,05,491/-. THE REASON BEING THAT THE CLOSING BALANCE IN THE ADVANC E ACCOUNT WAS FROM THE OPENING BALANCES EXCEPT FOR A RECEIPT OF R S.6,50,000/- DURING THE YEAR. THE SAID RECEIPT WAS IN ANY CASE R EFUNDED IN THE ASSESSMENT YEAR 1999-2000. IT WAS, THEREFORE, PRAYE D THAT IN APPEAL ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 4 BEFORE THE LEARNED CIT(A) THAT THERE WAS A DOUBLE T AXATION OF THE SAME RECEIPTS IN TWO YEARS. THE LEARNED CIT(A), HOW EVER, CONFIRMED THE ADDITION AND HELD AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE RIVAL ARGUMENT S. THERE IS APPARENT CONTRADICTION IN THE STAND OF APP ELLANT VIS--VIS THE DETAILS SUBMITTED BY M/S. INDEXPORT L TD. AND M/S. HINDUSTAN LEVER LTD. TO THE ASSESSING OFFICER. THE FORMER CLAIMED THE AMOUNT RECEIVED AS ADVANCES WHIC H WERE GRADUALLY SET OFF AGAINST THE SALES AS WELL AS DEVELOPMENTAL EXPENSES. ON THE OTHER HAND THE INDEXPORT LTD. AND HINDUSTAN LEVER LTD. HAD CATEGOR ICALLY MENTIONED THAT NO ADVANCES WERE PROVIDED TO THE APPELLANT COMPANY. DESPITE SUFFICIENT PERIOD OF TIM E AND NUMBER OF OPPORTUNITIES IN ASSESSMENT AS WELL AS IN APPELLATE PROCEEDINGS THE APPELLANT COULD NOT PRODU CE ANY DOCUMENTARY PROOF TO JUSTIFY ITS STAND AS REGAR DS TRANSACTIONS WITH INDEXPORT LTD. AND HINDUSTAN LEVE R LTD. THE DEPARTMENTS VIEW IS THAT WHATEVER AMOUNT HAS B EEN RECEIVED FROM INDEXPORT LTD. AND HINDUSTAN LEVER LT D. AND THEY BEING THE SOLE BUYERS OF APPELLANTS GOODS REFLECT THE SALE PROCEEDS WHICH OUGHT TO HAVE BEEN ACCOUNTED FOR WITHOUT ANY OUTSTANDING AT THE YEAR E ND. IN VIEW OF THE FACT THAT THE APPELLANT HAS NOT BEEN AB LE TO REBUT THE ASSERTION MADE BY INDEXPORT LTD. AND HIND USTAN LEVER LTD. THE ASSESSING OFFICER WAS JUSTIFIED IN T REATING THE SAID ADVANCE OF RS.37,11,381 AS UNACCOUNTED INCOME OF THIS YEAR. THE ADDITION THEREFORE STANDS CONFIRMED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND REFE RRED TO PB-2 WHICH IS REPLY DATED 23-03-2001 REFERRED BEFORE THE AO. PB-8 IS DEBIT NOTE DATED 31-01-1999 OF RS.30,61,375/-, PB-9 IS TH E LETTER DATED 19-11-1998. HE HAS SUBMITTED THAT THE ISSUE REVOLVE S AROUND THE PROCEEDINGS FOR ASSESSMENT YEAR 1997-98 IN WHICH FI NDING WAS GIVEN ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 5 AGAINST THE ASSESSEE. HOWEVER, AT THE APPELLATE STA GE, THE LEARNED CIT(A) CALLED FOR REMAND REPORT FROM THE AO WHICH W AS FILED ON 21-03-2003 COPY OF WHICH IS FILED AT PB-86 OF THE P APER BOOK. HE HAS SUBMITTED THAT IN ASSESSMENT YEAR 1997-98 THE LEARN ED CIT(A) VIDE ORDER DATED 21-12-2009 CONSIDERING THE REMAND REPOR T IN WHICH THE AO ACCEPTED THE FACTUAL DISCREPANCY DELETED THE ADD ITION OF RS.2,97,24,583/-. COPY OF THE ORDER DATED 21-12-200 9 IS FILED AT PB- 107 OF THE PAPER BOOK. HE HAS, THEREFORE, SUBMITTED THAT FACTUAL MISTAKE WAS ADMITTED BY THE AO IN THE REMAND REPORT IN THE PRECEDING ASSESSMENT YEAR WHICH IS THE SOLE BASIS F OR MAKING THE ADDITION; THEREFORE, MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR RECONSIDERATION OF THE ISSUE. HE HAS FURTHER SUBMIT TED THAT THE DEPARTMENT DID NOT CHALLENGE THE ORDER OF THE LEARN ED CIT(A) DATED 21-12-2009 FOR ASSESSMENT YEAR 1997-98 BEFORE THE T RIBUNAL, THEREFORE, FRESH FACTUAL VERIFICATION IS REQUIRED A T THE LEVEL OF THE AO. 5. THE LEARNED DR ALSO SUBMITTED THAT SINCE IN ASSE SSMENT YEAR 1997-98 THE LEARNED CIT(A) GRANTED RELIEF TO THE A SSESSEE ON THE BASIS OF THE REMAND REPORT FILED BY THE AO, THEREFO RE, THE MATTER COULD BE REMANDED TO THE FILE OF THE AO FOR RECONSIDERATI ON. 6. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIEW THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. THE DISCREP ANCY WAS NOTED IN THE ACCOUNTS OF THE SAME PARTIES ON THE BASIS OF IN QUIRIES CONDUCTED IN ASSESSMENT YEAR 1997-98 AS WELL AS IN ASSESSMENT YEAR 1998-99. THE ADDITION WAS MADE IN THIS ASSESSMENT YEAR ALSO ON THE BASIS OF ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 6 THE FINDINGS GIVEN IN ASSESSMENT YEAR 1997-98. IN T HE ASSESSMENT YEAR 1997-98 AT THE APPELLATE STAGE, THE LEARNED CI T(A) CALLED FOR THE REMAND REPORT FROM THE AO WHICH WAS FILED ON DATED 21-03-2003 (PB- 86) IN WHICH THE AO NOTICED THAT THERE WAS FACTUAL DISCREPANCY IN THE ASSESSMENT ORDER ITSELF AND ON RECONCILIATION THE L EARNED CIT(A) DELETED THE ENTIRE ADDITION. IT IS A CLAIM OF THE L EARNED COUNSEL FOR THE ASSESSEE THAT THE ORDER OF THE LEARNED CIT(A) DATED 21-12-2009 FOR ASSESSMENT YEAR 1997-98 IS ACCEPTED BY THE DEPARTME NT. THEREFORE, IN OUR VIEW IT WOULD BE REASONABLE AND PROPER TO RE STORE THIS ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION IN THE LIGHT OF THE FINDINGS GIVEN IN ASSESSMENT YEAR 1997-98. WE ACCORDINGLY, SET ASI DE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR RECONSIDERATION OF THE SAME. THE AO SHALL GIVE REAS ONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND SHAL L TAKE INTO CONSIDERATION THE FACTUAL DISCREPANCY NOTED IN THE ASSESSMENT YEAR 1997-98 FOR DELETING THE SUBSTANTIAL ADDITION. IN T HE RESULT, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES. 7. ON GROUND NO.2 OF THE APPEAL, THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT NO SEPARATE ADDITION IS MAD E ON THIS GROUND BUT IT WAS DEPENDENT UPON THE FINDING GIVEN IN ASSE SSMENT YEAR 1997-98 IN WHICH RELIEF IS ALREADY GRANTED TO THE A SSESSEE. THEREFORE, HE WOULD NOT BE PRESSING GROUND NO.2 OF THE APPEAL OF THE ASSESSEE. IN VIEW OF THE SUBMISSION OF THE LEARNED COUNSEL FO R THE ASSESSEE, GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS DISMIS SED NOT BEING PRESSED. ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 7 8. ON GROUND NO.3 OF THE APPEAL, THE ASSESSEE CHALL ENGED THE DISALLOWANCE OF LABOUR WELFARE EXPENSES OF RS.10,00 0/-. THE AO DISALLOWED RS.15,261/- BEING ONE TENTH OUT OF LABOU R WELFARE EXPENSES, ON THE GROUND THAT THESE EXPENSES WERE IN CURRED ON REFRESHMENT TO STAFF MEMBERS, DIRECTORS AND THEIR G UESTS WHICH WERE INCURRED IN C ASH. IT WAS SUBMITTED BEFORE THE LEAR NED CIT(A) THAT ENTIRE EXPENSES WERE INCURRED FOR MAINTAINING COORD INAL RELATION WITH THE EMPLOYEES, TO MOTIVATE THE EMPLOYEES TO WORK BE YOND THE NORMAL WORKING HOURS AND THAT RESTRICTION IMPOSED BY SECTI ON 37(2) OF THE IT ACT ON ENTERTAINMENT EXPENSES HAVE BEEN REMOVED WIT H EFFECT FROM ASSESSMENT YEAR 1998-99, THEREFORE, AD HOC ADDITION MAY BE DELETED. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF T HE ASSESSEE AND THAT C ASH AMOUNT IS INCURRED ON THESE EXPENSES IN ORDER TO COVER UP NON-BUSINESS USE OF SUCH EXPENSES RESTRICTED THE DI SALLOWANCE TO RS.10,000/-. 9. ON CONSIDERATION OF THE SUBMISSION OF THE PARTIE S, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN EVEN PART ADDITIO N. THE SUBMISSION OF THE ASSESSEE THAT THESE WERE NOT ENTERTAINMENT EXPE NSES, HAS NOT BEEN DISPUTED BY THE LEARNED CIT(A), THEREFORE, ON MERE ASSUMPTION THAT EXPENSES WERE INCURRED ON CASH TO COVER UP NON -BUSINESS USE, THE ADDITION ON AD HOC BASIS CANNOT BE SUSTAINED. W E ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND D ELETE THE ADDITION. AS A RESULT, GROUND NO.3 OF THE APPEAL OF THE ASSES SEE IS ALLOWED. 10. ON GROUND NO.4 OF THE APPEAL, THE ASSESSEE CHAL LENGED THE DISALLOWANCE OF RS.25,400/- ON TELEPHONE EXPENSES O N THE GROUND OF ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 8 PERSONAL USER. THE AO DISALLOWED ONE TENTH OF THE E XPENSES FOR PERSONAL USER OF THE TELEPHONE BY THE DIRECTOR AND THEIR FAMILY MEMBERS. IT WAS NOTED THAT RESIDENTIAL TELEPHONE LI NES HAVE BEEN INSTALLED AT THE RESIDENCE AND MOBILE PHONES ARE AL SO USED. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT TELEPHONES HAVE BEEN KEPT FOR BUSINESS PURPOSES AND THE COMPANY IS ARTIFICIAL JUDICIAL PERSON, THEREFORE, THERE CANNOT BE ANY PERSONAL USER OF THE SE FACILITIES. THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE GU JARAT HIGH COURT ION THE CASE OF SAYAJI IRON & ENGINEERING CO. LTD. VS CIT, 172 CTR 339. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESS EE ON THIS GROUND. 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. THE ASSESSEE IS A COMPANY AND IS ARTIFICIAL JUDICIAL PERSON AND CANNOT HAVE ANY PERS ONAL USER OF TELEPHONE AND MOBILE FACILITIES. THE AO HOWEVER, NO TED THAT THESE ITEMS HAVE BEEN USED BY THE DIRECTORS AND THEIR FAM ILY MEMBERS FOR THEIR PERSONAL PURPOSES. IF THERE WAS ANY UNAUTHORI ZED USE OF TELEPHONE AND MOBILE PHONES BY THE DIRECTORS AND TH EIR FAMILY MEMBERS, ADDITION COULD BE MADE IN THEIR CASES ON A CCOUNT OF PERQUISITE VALUE OF SUCH BENEFITS. MOREOVER, THERE IS NO EVIDENCE TO SUPPORT SUCH FINDINGS OF THE AO IN THIS REGARD. IT APPEARS TO BE AD HOC ADDITION ON ACCOUNT OF ASSUMPTION OF CERTAIN FACTS WHICH ARE NOT PART OF RECORD. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. IN THE RESULT, GROUN D NO.4 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 9 12. ON GROUND NO.5 OF THE APPEAL, THE ASSESSEE CHAL LENGED THE DISALLOWANCE OF VEHICLE EXPENSES AND DEPRECIATION O N VEHICLES IN A SUM OF RS.68,854/- ON THE GROUND OF PERSONAL USER. THIS GROUND IS SAME AS IS CONSIDERED ON GROUND NO.4 OF THE APPEAL; THEREFORE, FOLLOWING THE FINDING GIVEN ON GROUND NO.4, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. IN T HE RESULT, GROUND NO.5 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 13. ON GROUND NO.6 OF THE APPEAL, THE ASSESSEE CHAL LENGED THE ADDITION OF RS.25,000/- ON ACCOUNT OF DISALLOWANCE OF MISC. EXPENSES. THE AO NOTED THAT THE ASSESSEE HAS DEBITE D RS.6,45,703/- UNDER MISC. EXPENSES. THE DETAILS REV EAL THAT THE EXPENSES WERE INCURRED ON ACCOUNT OF GIFT ARTICLES, MEMBERSHIP FEES, MISC. EXPENSES, OFFICE EXPENSES ETC. AND THE ASSESS EE COULD NOT FURNISH ANY BILLS FOR VERIFICATION. THE AO, THEREFO RE, DISALLOWED ONE TENTH OUT OF THE TOTAL EXPENSES. IT WAS SUBMITTED B EFORE THE LEARNED CIT(A) THAT THE AO DID NOT CALL FOR VERIFICATION OF THE DETAILS AND VOUCHERS AND FILED BEFORE THE LEARNED CIT(A) COMPLE TE BREAK UP TO SHOW THAT THE EXPENSES WERE INCURRED FOR THE PURPOS E OF BUSINESS. THE LEARNED CIT(A) CONSIDERING THE NATURE OF THE EX PENSES NOTED THAT SOME OF THE PAYMENTS WERE MADE IN CASH THROUGH VOUC HERS, THEREFORE, RESTRICTED THE DISALLOWANCE TO RS.25,000 /-. 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. THE ASSESSEE FILED COMPLETE DETAILS AND BREAK-UP OF THE EXPENSES BEFORE THE LEA RNED CIT(A) AND EXPLAINED THAT THE MISC. EXPENSES HAVE BEEN INCURRE D FOR THE ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 10 PURPOSE OF BUSINESS. THE LEARNED CIT(A) DID NOT DIS PUTE THE SUBMISSION OF THE ASSESSEE. HOWEVER, HE HAS NOTED T HAT SOME OF THE PAYMENTS WERE VOUCHER PAYMENT MADE IN CASH, THEREFO RE, PART ADDITION WAS SUSTAINED IN A SUM OF RS.25,000/- WITH OUT POINTING OUT AS TO WHETHER THIS EXPENSES WERE INCURRED FOR NON-B USINESS PURPOSE. IN THE ABSENCE OF ANY ADVERSE FINDINGS AGAINST THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE ENTIRE ADDITION. IN THE RESULT, GROUND NO.6 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 15. ON GROUND NO.7 OF THE APPEAL, THE ASSESSEE CHAL LENGED DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES OF RS.5 ,02,364/-.THE AO NOTED THAT THE ASSESSEE HAD DEBITED RS.7,53,546/- O N ACCOUNT OF FOREIGN TRAVEL EXPENSES OF THE MANAGING DIRECTOR, S HRI AMIT GORADIA FOR HIS VISITS TO LONDON, ZURICH, HANOVER, MILA, PA RIS, AMSTERDAM ETC. IT WAS NOTICED THAT THE TRAVELING EXPENSES WERE INC URRED THRICE DURING THE YEAR. THE ASSESSEE SUBMITTED THAT FOREIGN TRAVE L WAS UNDERTAKEN IN CONNECTION WITH PURCHASE OF CAPITAL GOODS SUCH A S INJECTION MOULDING MACHINES, MOULD MAKING PLANT, TOOTH BRUSH HANDLE MOULDS AND ALSO FOR MARKET BOOSTING AND EXPORT PROMOTION O F ITS PRODUCTS TO THESE PLACES. HOWEVER, THE AO WAS OF THE VIEW THAT MOST OF THE MANUFACTURING JOB OF THE ASSESSEE COMPANY WAS UNDER TAKEN ON JOB WORK BASIS THROUGH ITS ASSOCIATE CONCERN AND SELF M ANUFACTURING IS VERY NOMINAL. THE MACHINES AND MOULDS PURCHASED FRO M THE FOREIGN SOURCES WERE MOSTLY SET UP IN ITS GROUP CONCERNS; T HEREFORE, EXPENSES WERE NOT INCURRED FOR BUSINESS PURPOSES. I T WAS FURTHER ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 11 OBSERVED BY THE AO THAT AS PER THE AGREEMENT ENTERE D INTO BY THE ASSESSEE COMPANY WITH IND-EXPORT LTD. AND HINDUSTAN LEVER LTD., THE ENTIRE GOODS PRODUCED BY THE ASSESSEE COMPANY ARE T O BE ONLY SOLD TO THEM AND THE ASSESSEE IS DEBARRED FROM SELLING I TS GOODS DIRECTLY TO THE PARTIES. THE AO ACCORDINGLY ALLOWED THE CLAI M OF THE ASSESSEE FOR ONE THIRD AND DISALLOWED TWO THIRD OF THE EXPEN DITURE. SAME SUBMISSIONS WERE REITERATED BEFORE THE LEARNED CIT( A) AND IT WAS SUBMITTED THAT THE FOREIGN TOUR WAS UNDERTAKEN BY T HE MANAGING DIRECTOR FOR THE PURPOSE OF PRODUCT IMPROVEMENT, IN CREASING THE OPERATIONAL EFFICIENCY, DEVELOPMENT OF NEW PRODUCTS AND UNDERSTANDING THE QUALITY AND TYPE OF BRUSHES THE E UROPEAN COMMUNITY USED AND ALL THE FOREIGN TRIPS WERE WHOLL Y FOR BUSINESS PURPOSES. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEP T THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASS ESSEE. 16. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ASSESSMENT YEAR 1997-98 SIMILAR ISSUE WAS TAKEN UP BY THE AO FOR DISALLOWING FOREIGN EXPENSES WHEN THE SAME MANAGING DIRECTOR, SHRI AMIT GORADIA VISITED FOREIGN COUNTRIES TO PROCURE T HE CAPITAL EQUIPMENT FOR MANUFACTURE OF BRUSHES. THE AO MADE P ART OF THE DISALLOWANCE. HOWEVER, THE LEARNED CIT(A) VIDE ORDE R DATED 21-12-2009 DELETED THE ADDITION. THE DEPARTMENT DID NOT PREFER APPEAL BEFORE THE TRIBUNAL. HE HAS FURTHER SUBMITTE D THAT ITAT AHMEDABAD BENCH IN THE CASE OF THE SAME ASSESSEE I N ASSESSMENT YEAR 2004-05 DELETED SIMILAR ADDITION IN ITA NO.158 /AHD/2008 DATED 29-10-2010. COPY OF THE ORDER IS FILED ON RECORD. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 12 17. ON CONSIDERATION OF THE RIVAL SUBMISSIONS OF TH E PARTIES, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN PART ADDITION ON THIS ISSUE. IN ASSESSMENT YEAR 1997-98 THE SAME MANAGING DIRECTOR VISITED FOREIGN COUNTRIES TO PROCURE CAPITAL EQUIPMENT FOR MANUFACT URE OF BRUSHES. THE CLAIM OF THE ASSESSEE WAS DISALLOWED BY THE AO. BUT THE LEARNED CIT(A) DELETED THE ADDITION. SIMILARLY, IN ASSESSME NT YEAR 2004-05 THE TRIBUNAL DELETED THE ADDITION VIDE ORDER DATED 29-10-2010 (SUPRA). IT WAS FOUND BY THE TRIBUNAL THAT THE ASSE SSEE IS IN THE BUSINESS OF MANUFACTURE OF TOOTH BRUSH AND ACCORDIN G TO THE ASSESSEE THE MACHINES AND MOULDS ARE HIGHLY TECHNIC AL AND PRECISION ITEMS AND REQUIRE FREQUENT CHANGES AND RE PAIRS OF SPARES AND REQUIRED TO BE IMPORTED FROM FOREIGN COUNTRY. O N THE BASIS OF THE EVIDENCE ON RECORD IT WAS FOUND THAT EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS. ADDITION WAS ACCORDINGLY DELET ED. CONSIDERING THE ABOVE FACTS AND IN THE LIGHT OF THE BACKGROUND OF THE CASE NOTED ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ADDITION. IN THE RESULT, GROUND NO.7 OF THE APP EAL OF THE ASSESSEE IS ALLOWED. 18. ON GROUND NO.8 OF THE APPEAL, THE ASSESSEE CHAL LENGED THE DISALLOWANCE OF PF PAYMENT OF RS.1,05,775/-. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD NOT MADE THE PAYMENTS FOR THE MONTH OF SEPTEMBER, 1997 AND OCTOBER, 1997 BEFORE THE DUE DA TE AND MADE THE PAYMENT ON 22-10-1997 AND 21-11-1997 RESPECTIVE LY. THE AO, THEREFORE, DISALLOWED THE SAME AMOUNTING TO RS.1,05 ,775/- IN TERMS OF SECTION 36(1) (VA) READ WITH SECTION 2 (24) (X) OF THE IT ACT AS WELL ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 13 AS SECTION 43B OF THE IT ACT. THE LEARNED CIT(A) CO NFIRMED THE ADDITION. 19. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF TH E RETURN, THEREFORE, AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION LTD., 319 ITR 306 ADDITION BE DELETED. TH E LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 20. IN VIEW OF THE ABOVE FACTS AND SPECIALLY WHEN I T HAS NOT BEEN DISPUTED BEFORE US THAT PAYMENT TOWARDS PF CONTRIBU TION HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN U/ S 139(1) OF THE IT ACT, IN THE LIGHT OF THE VIEW TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF P. M. ELECTRONICS, 313 ITR 161 AND THE DECI SION OF THE HONBLE APEX COURT IN THE CASE OF VINAY CEMENT LTD. , 213 CTR 268, WE ARE OF THE VIEW THAT EMPLOYEES CONTRIBUTION TOWA RDS PF HAVE BEEN MADE BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETURN, THEREFORE, THERE IS NO GROUND OF DISALLOWING THE SA ME. FURTHER, CLAIM IS ALLOWABLE IN VIEW OF DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF ALOM EXTRUSION LTD. (SUPRA). ADDITION IS, T HEREFORE, DELETED. IN THE RESULT, GROUND NO.8 OF THE APPEAL OF THE ASSESS EE IS ALLOWED. 21. NO OTHER GROUND IS ARGUED OR PRESSED. ITA NO.1093/AHD/2008 JEWEL CONSUMER CARE PVT. LTD. VS ACIT, CIR-1(2), BA RODA 14 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24-06-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 24-06-2011 LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD