Lakshmigraha Enterprises, Coimbatore V. ACIT, Coimbatore

ITA 1133/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57926 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Assessee Lawyers: K RAGHU

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1133/MDS/2011 (ASSESSMENT YEAR : 2007-08) M/S LAKSHMIGRAHA ENTERPRISES, NO.29, RACE COURSE, OPP. MASONIC HOSPITAL, COIMBATORE 641 018. (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, COIMBATORE. (RESPONDENT) APPELLANT BY : SHRI K. RAGHU, CA RESPONDENT BY : SHRI K.E.B. R ENGARAJAN, JUNIOR STANDING COUNSEL DATE OF HEARING : 30.01.2012 DATE OF PRONOUNCEMENT : 30.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, ITS GRIEVAN CE IS THAT THE CIT(APPEALS) UPHELD THE DISALLOWANCE OF MARKET SURV EY EXPENDITURE OF ` 57,46,615/- WITHOUT DISPUTING ITS GENUINENESS. I.T.A. NO. 1133/MDS/11 2 2. WHEN THE MATTER CAME UP BEFORE US, LEARNED A.R. SUBMITTED THAT A SIMILAR SURVEY EXPENDITURE LAID OUT TO M/S H OLIDON MARKETING PVT. LTD., FOR PRECEDING ASSESSMENT YEAR 2006-07, W AS A SUBJECT MATTER IN THE APPEAL BEFORE THIS TRIBUNAL IN I.T.A. NO. 847/MDS/2010. PLACING ON RECORD A COPY OF ORDER DATED 6 TH MAY, 2011 OF THIS TRIBUNAL, LEARNED A.R. SUBMITTED THAT THE CLAIM WAS ALLOWED BY THIS TRIBUNAL. 3. LEARNED D.R. FAIRLY ADMITTED THAT THE DECISION OF TRIBUNAL IN I.T.A. NO. 847/MDS/2010 WENT IN FAVOUR OF ASSESSEE. NEVERTHELESS, ACCORDING TO HIM, THE NUMBER OF CUSTOMERS NEWLY INT RODUCED AND NUMBER OF CUSTOMERS DROPPED WERE DIFFERENT FOR THE IMPUGNED ASSESSMENT YEAR. 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. CLAIM OF SIMILAR MARKET SURVEY EXPENDITURE BY THE A SSESSEE HAD COME UP BEFORE THIS TRIBUNAL FOR ASSESSMENT YEAR 20 06-07 IN ASSESSEES APPEAL. AT PARA 5 OF ITS ORDER DATED 6. 5.2011 IN I.T.A. NO. 847/MDS/2010, TRIBUNAL HAD DECIDED AS UNDER:- I.T.A. NO. 1133/MDS/11 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUTSET, ONE MUST KEEP IN MIND THAT A BUSINESSMAN KNOWS WHAT IS GOOD FOR HIS BUSINESS. HIS DECISION AS A BUSINESSMAN CANNOT BE JUDGED BY SITTING IN AN ARM CHAIR. A BUSINESSMAN KNOWS PRACTICAL DIFFIC ULTIES INVOLVED IN HIS BUSINESS. THE FACT THAT 63 NEW CUSTOMERS WERE ADDED DURING THE YEAR, WHEREAS, 55 OLD CUSTOMERS WERE DROPPED DURING THE RELEVANT ASSESSMENT YEAR, REMAINS UNDISPUTED. AFTER THIS, THOUGH THE TURNOVER DROPPED, THE PROFITS WENT UP. IT IS ALSO TO BE NOTED THAT AS PER THE P&L ACCOUNT, THE PROFITS HAVE GONE UP BY ` 6,00,000/- DURING THE RELEVANT ASSESSMENT YEAR. IT IS ALSO NOT DISPU TED BY THE REVENUE THAT M/S HALIDON MARKETING (P) LTD. WAS IN THE BUSI NESS AS STATED OR THAT IT WAS PAID FOR THE PURPOSES OTHER THAN THE BU SINESS REQUIREMENTS OF THE ASSESSEE. THE EXPLANATION AS P ROVIDED BY THE ASSESSEE CANNOT BE BLINDLY BRUSHED ASIDE WITHOUT TH ERE BEING ANY EVIDENCE TO THE CONTRARY. THE ASSESSEE HAS PRODUCE D THE AGREEMENT ENTERED WITH M/S HALIDON MARKETING (P) LTD. THE AS SESSEE HAS PRODUCED THE SURVEY REPORTS WHICH WAS SEEN BY THE L D. CIT(APPEALS) ALONG WITH A LIST OF 9 NEW CUSTOMERS. THE FACT THA T 63 NEW CUSTOMER WERE INTRODUCED WHILE 55 CUSTOMERS WERE DROPPED ALS O REMAINS UNDISPUTED. WHAT WAS THE EXPLANATION OF THE ASSESS EE WHICH WAS TOO GENERAL AND WITHOUT SPECIFICS, DOES NOT COME OUT OF THE ORDER OF THE A.O. A PERUSAL OF THE ORDER OF THE LD. CIT(APPEALS ) ALSO SHOWS THAT ANOTHER NEW NINE CUSTOMERS WERE ADDED. IT SHOWS TH AT THE CIT(APPEALS) HAS MISTAKEN THE ENGAGEMENT OF M/S HAL IDON MARKETING (P) LTD. TO PROMOTE SALES, WHEREAS, IT HAS BEEN CLE ARLY MENTIONED BY THE ASSESSEE THAT M/S HALIDON MARKETING (P) LTD. WA S ENGAGED FOR CONDUCTING THE SURVEY AND ASSIST THE ASSESSEE IN GE TTING BETTER BUSINESS. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON THE PAYMENT TO M/S HALIDON MARKETING (P) LTD. IS FOR THE PURPOSE OF BUSINESS O F THE ASSESSEE AND IS LIABLE TO BE ALLOWED AND WE DO SO. THUS THE APP EAL OF THE ASSESSEE IS ALLOWED. 5. WE DO NOT FIND ANY CHANGE IN THE FACT SITUATION FOR THE IMPUGNED ASSESSMENT YEAR. JUST BECAUSE NUMBER OF C USTOMERS I.T.A. NO. 1133/MDS/11 4 INTRODUCED AND NUMBER OF CUSTOMERS DROPPED HAS CHAN GED WILL NOT BE A REASON TO DEVIATE FROM THE VIEW TAKEN BY THE T RIBUNAL ON SIMILAR FACT SITUATION FOR THE EARLIER YEAR. WE ARE, THERE FORE, OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN THE APPEAL FILED BY IT. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 30 TH JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH JANUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I, COMBATORE (4) CIT-I, COIMBATORE (5) D.R. (6) GUARD FILE