The ITO, Ward-5(2), Ahmedabad V. Parle Sales & Services Ltd., Ahmedabad

ITA 1097/AHD/2006

• Counselvise Citation: 109720514 RSA 2006
• Duration Of Justice: 9 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 04-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: J P SHAH
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

ITA NOS.1097/AHD/2006 ASSESSMENT YEAR 2002-03 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] ITA NO.1097/AHD/2006 ASSESSMENT YEAR: 2002-03 INCOME TAX OFFICER, WARD 5(2), AHMEDABAD. ............ .APPELLANT VS. PARLE SALES & SERVICES LIMITED, ................ ........RESPONDENT 101, GIDC VATVA, AHMEDABAD. [PAN: AAACP 9019 R] APPEARANCES BY: P.L. KUREEL , FOR THE APPELLANT J.P. SHAH, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 24, 2015 DATE OF PRONOUNCING THE ORDER : JULY 23, 2015 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL IS FILED BY THE ASSESSING OFFICER DI RECTED AGAINST THE ORDER DATED 27 TH FEBRUARY 2006 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT, 1961, FOR THE ASSESSMENT YEAR 2002-03. 2. GRIEVANCES RAISED BY THE ASSESSING OFFICER, IN T HIS APPEAL, ARE AS FOLLOWS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELEING THE DISALLOWAN CE OF RS.54,69,073/- MADE BY THE ASSESSING OFFICER OUT OF ADVERTISEMENT EXPENSES. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING T HE DISALLOWANCE OF RS.47,94,555 OUT OF REBATE AND DISCOUNT EXPENSES MA DE BY THE ASSESSING OFFICER. ITA NOS.1097/AHD/2006 ASSESSMENT YEAR 2002-03 PAGE 2 OF 3 3. THE LEARNED COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE IN DE LETING THE DISALLOWANCE OF RS.43,33,500 OUT OF COMMISSION EXPENSES MADE BY THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABAD HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE IN DE LETING THE DISALLOWANCE OF RS.2,09,001 OUT OF STAFF WELFARE EXPENSES MADE BY T HE ASSESSING OFFICER. 3. WE WILL TAKE UP ALL THESE GRIEVANCES TOGETHER. 4. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURIN G THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT WHILE THE TURNOVER OF THE ASSESSE COMPANY HAS GONE UP BY JUST ABOUT 14.04 %, SEVERAL EXPENSES OF THE ASSESSE COMPANY HAVE INCREASED SUBSTANTIALLY AND QU ITE DISPROPORTIONATE TO THE INCREASE IN TURNOVER. WHILE HE DID NOTE THAT THE AS SESSE HAS FURNISHED DETAILS OF EXPENSES, THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSE HAS NOT BEEN ABLE TO REASONABLY EXPLAIN DISPROPORTIONATE INCREASE IN THE EXPENSES. IT WAS IN THIS BACKDROP THAT HE ALLOWED THE EXPENSES RS.54,69,073 OUT OF ADVERTISEMENT EXPENSES, RS 47,94,555 OUT OF REBATES AND DISCOUNT S, RS 43,33,500 OUT OF COMMISSION EXPENSES AND RS 2,09,001 OUT OF STAFF WE LFARE EXPENSES. AGGRIEVED BY THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICE R, ASSESSE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLO WANCE BY DISAPPROVING THE APPROACH SO ADOPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AN D IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 6. WE ARE UNABLE TO SEE ANY LEGALLY SUSTAINABLE MER ITS IN THE DISALLOWANCES MADE BY THE ASSESSING OFFICER. THE RELATIONSHIP IN TURNOVER OF THE BUSINESS AND QUANTUM OF RELATED BUSINESS EXPENSES CAN NEVER BE S O STATIC AND LINEAR AS TO ITA NOS.1097/AHD/2006 ASSESSMENT YEAR 2002-03 PAGE 3 OF 3 MAINTAIN THE SAME RATIO FOR ALL TIMES. IT IS NOT IN DISPUTE, AS NOTED BY THE CIT(A), THAT THE EXPENSES ARE GENUINE AND IT IS NOT EVEN TH E CASE OF THE ASSESSING OFFICER THAT THE EXPENSES ARE BOGUS. IN THESE CIRCUMSTANCES AND IN THE ABSENCE OF ANY MATERIAL EVEN SUGGESTING LACK OF BONAFIDES OF THESE EXPENSES, THE INCREASE IN EXPENSES AT A RATE HIGHER THAN THE INCREASE IN TURN OVER, IN OUR CONSIDERED VIEW, CAN NEVER BE REASON ENOUGH TO MAKE A DISALLOWANCE O F EXPENSES. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS PARTLY ALLOWED THE E XPENSE TO THE EXTENT THESE EXPENSES WERE PROPORTIONATE TO THE INCREASE IN THE TURNOVER, AND, THEREFORE, EVEN BY THE APPROACH ADOPTED BY THE ASSESSING OFFIC ER, THE EXPENSES CANNOT BE SAID TO BE BOGUS OR NON-EXISTENT. THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WERE FOR FRIVOLOUS REASONS AND DEVOID OF AN Y LEGALLY SUSTAINABLE MERITS. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MI ND ENTIRETY OF THE CASE, WE SEE NO NEED TO INTERFERE IN THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND WE, THEREFORE, DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON 23 RD DAY OF JULY, 2015. SD/- SD/- S. S. GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 23 RD DAY OF JULY, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPON DENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE ( 6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD