Compass Shipping & Trading Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 114/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58164 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: ANIL NAIR
• Keywords: Business expenditure
• Section: 37

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI D BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 114/MDS/2010 ASSESSMENT YEAR: 2005-06 COMPASS SHIPPING & TRADING PVT. LTD., 29, RAJAJI SALAI, CHENNAI 1. [PAN:AAACC1235G] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III (2), CHENNAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL NAIR, FCA REVENUE BY : SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL DATE OF HEARING : 13.03.2012 DATE OF PRONOUNCEMENT : 29.03.2012 ORDER PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) II, CHENNAI DATED 19.10.2009 IN ITA NO. 187/07-08 F OR THE ASSESSMENT YEAR 2005-06. SHRI ANIL NAIR, FCA REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K.E.B. RENGARAJAN, JR. STANDING COUNSEL REPRESENTED ON BEHALF OF THE REVENUE. 2. THIS APPEAL WAS FOUND TO HAVE BEEN FILED LATE B Y 10 DAYS AND THE ASSESSEE FILED CONDONATION PETITION FOR THE DELAY I N SUPPORT OF AN AFFIDAVIT BY TAKING THE PLEA THAT THE ASSESSEE WAS OUT OF THE CO UNTRY AND COULD NOT ABLE TO ACT UPON THE ORDER OF THE CIT(A), THEREBY CAUSED 10 DAYS DELAY IN FILING I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 114 1414 14/M/10 /M/10 /M/10 /M/10 2 THE APPEAL. THE DELAY IS NEITHER WANTON NOR WILLFUL BUT DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE AND PRAYED FOR C ONDONING THE DELAY AND ADMIT THE APPEAL FOR HEARING AS THE ASSESSEE WAS PR EVENTED BY SUFFICIENT CAUSE IN FILING OF THE APPEAL BEYOND STIPULATED TIM E. 2.1 TO THIS PLEA OF THE CONDONATION OF DELAY, THE L D. DR DID NOT STRONGLY OBJECT. 2.2 AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD WITH REGARD TO LIMITATION ISSUE, WE ARE SATISFIED T HAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM NOT FILING THE A PPEAL WITHIN THE STIPULATED TIME AS HE WAS OUT OF THE COUNTRY AND HE HAS SUPPOR TED SUCH SUBMISSION WITH THE AFFIDAVIT. AS SUCH, WHILE ACCEPTING THE PL EA OF THE ASSESSEE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THE COMMISSIONER OF INCOME TAX, APPEALS ERRED IN CONFIRMING THE ADDITION OF THE AMOUNT OF ` . 5,24,560/- BEING CONSULTANCY CHARGES PAID TO CAPTAIN VIJAY SAXENA. 2. THE COMMISSIONER OF INCOME TAX, APPEALS ERRED I N CONFIRMING THE ADDITION OF THE AMOUNT OF ` . 1,05,584/- BEING THE CREDIT BALANCE IN THE ACCOUNT OF M/S BINNY LTD. 3. THE COMMISSIONER OF INCOME TAX, APPEALS ERRED I N CONFIRMING THE ADDITION OF THE AMOUNT OF ` . 7,905/- BEING THE CREDIT BALANCE IN THE ACCOUNT OF M/S J B BODA SURVEYORS PVT LTD. 4. THE COMMISSIONER OF INCOME TAX, APPEALS ERRED I N CONFIRMING THE ADDITION OF THE AMOUNT OF ` . 67,691/- BEING THE CREDIT BALANCE IN THE ACCOUNT OF M/S. BOTHRA SHIPPING SERVICES. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 114 1414 14/M/10 /M/10 /M/10 /M/10 3 4. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED THAT GROUND NO.2 OF THE PRESENT APPEAL IS NOT PRESS ED AND, THEREFORE, WE DISMISS THIS GROUND OF APPEAL AS NOT PRESSED. 5. GROUND NO.1 RELATES TO ADDITION OF ` .5,24,560/- MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT. THE ASSESS ING OFFICER DISALLOWED THIS AMOUNT, WHICH WAS PAID TO CAPTAIN VIJAY SAXENA TOWARDS CONSULTANCY CHARGES ON THE GROUND THAT CAPTAIN VIJAY SAXENA DID NOT RESPOND TO THE LETTER ISSUED BY THE ASSESSING OFFICER, WHO REQUEST ED TO CORROBORATE THE AMOUNT, MODE OF RECEIPT, TDS MADE AND NATURE OF SER VICES RENDERED BY HIM TO THE ASSESSEE COMPANY. 6. THE CIT(A) CONFIRMED THE SAID DISALLOWANCE ON T HE GROUND THAT NEITHER CAPTAIN VIJAY SAXENA WAS PRODUCED NOR ANY CONFIRMAT ION LETTER WAS FILED FROM CAPT. SAXENA DURING THE APPELLATE PROCEEDINGS SINCE THE DETAILS FURNISHED BY THE ASSESSEE COULD NOT BE VERIFIED. 7. DURING THE COURSE OF HEARING, IT WAS SUBMITTED BY THE ASSESSEE THAT THESE EXPENSES ARE INCURRED TOWARDS CONSULTANCY CHA RGES PAID TO CAPT. SAXENA, WHO HAS RENDERED HIS SERVICES TO THE ASSESS EE COMPANY ENGAGED IN THE SHIPPING BUSINESS. IT WAS SUBMITTED THAT THE SE PAYMENTS WERE MADE TOWARDS PROFESSIONAL CHARGES TO CAPT. SAXENA AND TH EREFORE WAS INCURRED WHOLLY FOR THE PURPOSE OF BUSINESS AND PLEADED THAT THE DISALLOWANCE MAY BE DELETED. HE ALSO SUBMITTED THAT A PERUSAL OF BOO KS OF ACCOUNTS OF THE ASSESSEE AND COPY OF INVOICE FROM CAPT. SAXENA WILL CLEARLY PROVE THAT ALL I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 114 1414 14/M/10 /M/10 /M/10 /M/10 4 THE PAYMENTS ARE ONLY TOWARDS PROFESSIONAL CHARGES AND EXPENSES RELATED TO THE BUSINESS OF THE ASSESSEE. 8. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATER IALS AVAILABLE ON RECORD. THE PROFESSIONAL CHARGES RECEIVED BY CAPT. SAXENA ARE TO BE ALLOWED AS BUSINESS EXPENDITURE. THE EXPENSES WERE INCURRED WHOLLY FOR THE PURPOSE BY THE ASSESSEE AS CAPT. SAXENA RENDERED TH E SERVICES TO THE ASSESSEE COMPANY, WHICH IS IN THE SHIPPING BUSINESS . THEREFORE, WE DIRECT THE ASSESSING OFFICER TO ALLOW THESE EXPENSES UNDER SECTION 37 (1) OF THE ACT. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOW ED. 9. GROUND NO. 3 RELATES TO ADDITION OF ` .7,905/- BEING CREDIT BALANCE IN THE ACCOUNTS OF J.B. BODA SURVEYORS PVT. LTD. AND G ROUND NO. 4 RELATES TO ADDITION OF ` .67,691/- BEING CREDIT BALANCE IN THE ACCOUNT OF M/ S. BOTHRA SHIPPING SERVICES. 10. THE ASSESSING OFFICER TREATED THESE TWO AMOUNT S AS INCOME UNDER SECTION 41(1) OF THE ACT ON THE GROUND THAT THE SAI D PARTIES HAVE INFORMED THAT THERE IS NO OUTSTANDING BALANCE IN THEIR BOOKS . BOTH THE ADDITIONS WERE CONFIRMED BY THE CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES ON THESE ISSUES . THE ASSESSEE SUBMITTED THAT IT HAD PAID ` .2755/- TO M/S. J.B. BODA SURVEYORS PVT. LTD. DURING THE FINANCIAL YEAR 2005-06 AND SUBMITTED LED GER EXTRACT OF M/S. J.B. BODA SURVEYORS PVT. LTD. IN THE BOOKS OF ASSESSEE. SIMILARLY, IT WAS SUBMITTED THAT AN AMOUNT OF ` .67,691/- WAS PAID TO M/S. BOTHRA SHIPPING I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 114 1414 14/M/10 /M/10 /M/10 /M/10 5 SERVICES ON 19.04.2005 AND SUBMITTED THAT THE ASSES SING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION UNDER SECTION 41(1 ) AS THE ASSESSEE HAS MADE PAYMENTS TO SUNDRY CREDITORS. SINCE THE ASSESS EE HAS MADE PAYMENTS TO THE SUNDRY CREDITORS, IN OUR VIEW, THE ASSESSING OFFICER WAS NOT CORRECT IN TREATING THE OUTSTANDING BALANCE TO BE P AID TO THE SUNDRY CREDITORS AS INCOME UNDER SECTION 41(1) AND THEREFORE, WE DIR ECT THE ASSESSING OFFICER TO DELETE ` .2,755/- IN THE CASE OF M/S. J.B. BODA SURVEYORS PV T. LTD. AND ` .67,691/- IN THE CASE OF M/S. BOTHRA SHIPPING SERVI CES. HENCE, THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29.03.2012. SD/ - SD/ - (DR. O.K. NARAYANAN) VICE-PRESIDENT (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER CHENNAI, DATED, THE 29.03.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.