ALPS CORPORATION, Jaipur V. ACIT, Jaipur

ITA 1138/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54196 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 1138/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AADFA 2337 D M/S. ALPS CORPORATION VS. THE ACIT 191 B1/B2, JHOTWARA INDUSTRIAL AREA CIRCLE- 6 JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO. 1230/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AADFA 2337 D THE ACIT VS M/S. ALPS CORPORATION CIRCLE-6 191 B1/B2, JHOTWARA INDUSTRIAL AREA JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: NONE (ADJOURNMENT APPLICATION REJEC TED) DEPARTMENT BY : MISS. ROSHANTA MEENA DATE OF HEARING: 27-09-2011 DATE OF PRONOUNCEMENT:30-09-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEA LS AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 09-08-20 10 FOR THE ASSESSMENT YEAR 2007-08. 2 2.1 THE APPEALS WERE FIXED FOR HEARING ON DIFFERENT DATES BUT THE LD.AR HAS ALWAYS SOUGHT ADJOURNMENTS BY FILING THE APPLIC ATIONS. DATE OF FIXATION OF APPEALS DATE OF APPLICATION FOR ADJOURNMENTS 07-02-11 4-02-11 29-04-11 28-04-11 9-05-11 6-05-11 15-06-11 14-06-11 12-07-11 11-07-11 30-08-02 - 05-09-02 - 27-09-02 26-09-02 2.2 FROM THE ABOVE, IT IS CLEAR THAT THE LD.AR HAS FILED THE ADJOURNMENT APPLICATIONS IN ADVANCE AND EVERY TIME THE REGISTRY HAS TO ISSUE FRESH NOTICES. THUS LOT OF TIME AND MONEY HAS BEEN SPENT IN INTIMATING THE ASSESSEE ABOUT THE ADJOURNMENT DATES. WE THEREFORE, REJECT THE ADJOURNMENT APPLICATION DATED 26-09-09 OF THE ASSESSEE AND DECI DE THE APPEAL EX-PARTE ON MERITS. 3.1 THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE L D CIT(A) HAS ERRED IN RESTRICTING THE EXPENDITURE TO RS. 5.00 LACS AS AGA INST DISALLOWANCE MADE BY THE AO OF ENTIRE EXPENSES CLAIMED ON ACCOUNT OF RE PAIR & MAINTENANCE AMOUNTING TO RS. 21,91,707/-. 3.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS. 21,91,707/- ON AC COUNT OF MAINTENANCE 3 OF REPAIR AND MAINTENANCE CHARGES. THE ASSESSEE WAS REQUESTED TO FURNISH DETAILS OF REPAIRS AND MAINTENANCE EXPENSES. THE LD .AR VIDE LETTER DATED 12- 11-09 INTIMATED THAT DETAILS OF REPAIR AND MAINTENA NCE ARE BEING ENCLOSED. HOWEVER, THE BILLS AND EVIDENCES IN RESPECT OF CLAI MS WERE NOT PRODUCED. THE AO THEREFORE, DISALLOWED THE ENTIRE EXPENDITURE OF RS. 21,91,707/-. THE AO FURTHER OBSERVED THAT ONUS WAS ON THE ASSESSEE T O SUBSTANTIATE THE CLAIM OF THE EXPENDITURE AND FOR THIS PROPOSITION, RELIAN CE HAS BEEN PLACED ON THE DECISION OF HONB'LE APEX COURT IN THE OF L.H. SUGA R FACTORY & OIL MILLS (P) LTD. VS LD. CIT (1980) 125 ITR 293. 3.3 THE LD CIT(A) REDUCED THE DISALLOWANCE TO RS. 5 .00 LACS AFTER OBSERVING AS UNDER:- CHALLENGING THE SAID VIEW OF THE ASSESSING OFFICE R SHRI JAIN HIS SUBMISSION HAS ARGUED THAT THE APPELL ANT IS ENGAGED IN EXPORT ACTIVITY AND TOTAL TURNOVER FOR THE YEAR REMAINED RS. 6,99,94,446/- AND THE SAID CLAIM IS ON LY 3.13% OF THE TURNOVER WHICH IS VERY REASONABLE LOOKING TO T HE NATURE AND SIZE OF THE BUSINESS PARTICULARLY WHEN THE OFFI CE BUILDING WAS VERY OLD ON WHICH NO RENT HAS BEEN PAID AND IN EARLIER YEAR ALSO THERE WAS INSIGNIFICANT CLAIM FOR REPAIR AND M AINTENANCE TO BUILDING WHICH REQUIRED SUBSTANTIAL REPAIRING WORK IN THE INTEREST OF BUSINESS. HE HAD FURTHER ARGUED THAT AL L THE BILLS AND VOUCHERS WERE PRODUCED BEFORE TAX AUDITORS AND SINC E ONE OF THE PARTNER IN WHOSE POSSESSION THESE BILLS WERE LY ING HAS 4 RETIRED AND THEREFORE, EXACT BILLS COULD NOT BE PRO DUCED AND A REQUEST WAS MADE TO ALLOW THE SAID CLAIM. I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS B Y SHRI JAIN QUITE CAREFULLY. IT IS AN ADMITTED FACT T HAT NEITHER IN ASSESSMENT PROCEEDINGS NOR IN APPELLATE PROCEEDINGS SUCH BILLS/ VOUCHERS COULD BE PRODUCED EXCEPT BROAD HEADWISE DE TAILS OF EXPENDITURE CLAIMED HOWEVER, CONSIDERING THE ARGUME NTS OF SHRI JAIN, NATURE OF BUSINESS ACTIVITY OF THE APPEL LANT, TURN OVER OF RS. 6,99,94,446/-, THE FACT THAT IT WAS RENT FRE E BUILDING ON WHICH INSIGNIFICANT REPAIRING EXPENDITURES WERE CLA IMED IN EARLIER 5 YEARS AND IT ALSO INCLUDES EXP. ON COMPRE SSOR REPAIRS, EPABX REPAIRS, TRANSFORMER REPAIR, ANNUAL MAINTENAN CE CONTRACT FOR ELECTRICAL FITTINGS. REPAIRING FOR DAM UR ROAD OUTSIDE FACTORY AND EXP. ON GRIDERS AGGREGATING AT RS. 4,08 ,418/- AND THEREFORE, CONSIDERING ALL SUPPORTING FACTS AND CIR CUMSTANCES, IN MY CONSIDERED VIEW IT SHALL BE JUSTIFIABLE TO RE STRICT THE DISALLOWANCE TO A TOKEN AMOUNT OF RS. 5 LAC AND ACC ORDINGLY ON THIS ACCOUNT THE APPELLANT GETS RELIEF OF RS. 16,91 ,707/-. 3.4 WE HAVE HEARD THE LD DR AND PERUSED THE MATERIA LS AVAILABLE ON RECORD. WHEN THE EVIDENCES ARE NOT BEING PLACED DUE TO VALID REASONS THEN ONE HAS TO ESTIMATE THE EXPENSES. WE HAVE NOTICED T HAT N.P. RATE DURING THE YEAR IS 3.01% AS AGAINST 3.48% OF THE IMMEDIATELY P RECEDING YEAR. THE FALL IN N.P. RATE AS COMPARED TO LAST YEAR CAN RESULT AT THE MOST OF THE ADDITION TO THE EXTENT OF AROUND RS. 3.50 LACS. THE ASSESSEE FILED THE DETAILS BEFORE 5 THE AO AND THE LD CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE CONSIDERED DISALLOWANCE OF RS.5.00 LACS AS REASONAB LE. WE THEREFORE, FEEL THAT THE LD CIT(A) WAS JUSTIFIED IN REDUCING THE DI SALLOWANCE TO RS. 5.00 LACS. 4.0 NOW WE TAKE UP THE APPEAL OF THE ASSESSEE. 4.1 THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2.00 LACS ON ACCOUNT OF REMUNERATION PAID TO WORKING PARTNERS 4.2 WE HAVE CONSIDERED THE REASONS GIVEN BY THE LD CIT(A) IN UPHOLDING THE ADDITION OF RS. 2.00 LACS. IT WILL BE USEFUL TO REPRODUCE THE FINDINGS OF THE LD CIT(A). I HAVE CONSIDERED FACTS OF THE CASE AND ARGUMENTS TAKEN BY SHRI. JAIN QUITE CAREFULLY. THIS IS AN ADMITTED FACT THAT IN THE PARTNERSHIP DEED DATED 1. 4.1996 AND SUPPLEMENTARY DEED DATED 14.2.2003 THERE IS NO REFERENCE TO PAY SPECIFIC AMOUNT OF REMUNERATION TO THESE WORKING PARTNERS AND THEREFORE, AS PER PROVIS IONS OF SEC .40(B) OF I.T ACT SUCH CLAIM IS NOT ALLOWABL E. ON THIS ISSUE WHILE ISSUING CLARIFICATION CBDT VIDE CI RCULAR NO. 739 DT. 25.3.1996 HAS CLARIFIED THAT IN CASE WH ERE NEITHER THE AMOUNT HAS BEEN QUALIFIED NOR EVEN THE LIMIT OF TOTAL REMUNERATION TO A PARTNER HAS BEEN SPECIFI ED THEN NO DEDUCTION U/S 40(B) WILL BE ADMISSIBLE UNLESS TH E 6 PARTNERSHIP DEED EITHER SPECIFIES THE AMOUNT OF REMUNERATION PAYABLE TO EACH INDIVIDUAL WORKING PAR TNER OR LAYS DOWN THE MANNER OF QUANTIFYING SUCH REMUNERATION. KEEPING IN VIEW THE SPECIFIC PROVISIO N AND CBDT CIRCULAR, IN MY CONSIDERED VIEW THE ASSESSING OFFICER HAS CORRECTLY DISALLOWED THE SAID CLAIM OF REMUNERATION OF RS. 2 LAC TO THE WORKING PARTNER S OF THE APPELLANT FIRM WHICH IS HEREBY CONFIRMED BY REJECTING RELEVANT GROUND OF APPEAL. WE, THEREFORE, FEEL THAT THE LD CIT(A) WAS JUSTIFIE D IN CONFIRMING THE ADDITION OF RS. 2.00 LACS. 5.1 THE SECOND GRIEVANCE OF THE ASSESSEE IS THAT TH E LD CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5.00 LACS ON ACCO UNT OF DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENDITURE. 5.2 THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DISP OSING THE APPEAL OF THE REVENUE. FOLLOWING OUR FINDINGS, WE HOLD THAT T HE LD CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO RS. 5. 00 LACS. 6.1 THE THIRD GRIEVANCE OF THE ASSESSEE IS THAT THE LD CIT(A) HAS ERRED IN LAW IN HOLDING THAT IT IS PREMATURE TO BE DECIDED A BOUT ISSUING THE NOTICE U/S 271(1)( C) OF THE ACT. 7 6.2 WE HAVE PERUSED THE MATERIALS AVAILABLE ON RECO RD. NO APPEAL IS PROVIDED AGAINST INITIATION OF PENALTY. THE AO HAS ONLY ISSUE THE SHOW CAUSE AND PENALTY IS STILL LEVIABLE. THE ASSESSEE W ILL GET THE OPPORTUNITY TO EXPLAIN ITS POSITION BEFORE THE AO AND IN CASE THE ASSESSEE IS NOT SATISFIED FROM THE ORDER OF THE AO THEN THE ASSESSEE CAN FILE APPEAL AGAINST THE PENALTY ORDER. THE LD CIT(A) WAS THEREFORE, JUSTIFI ED IN SAYING THAT NO APPEAL LIES AGAINST INITIATION OF PENALTY. 7. IN THE RESULT, THE APPEALS OF THE REVENUE AS WEL L AS ASSESSEE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 30/09/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. ALPS CORPORATION, JAIPUR 2. THE ACIT, CIRCLE- 6, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1138/JP /10) A.R, ITAT, JAIPUR 8