Shivsu Canadian Clear Internatiional Limited, CHENNAI V. DCIT, CHENNAI

ITA 1149/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90652 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 07-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: Y SRIDHAR
• Keywords: Gift; Depreciation; Bad and doubtful debts

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . !' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO. 1149/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S. SHIVSU CANADIAN CLEAR INTERNATIONAL LIMITED, NO.6-B-2, PARIVAKKAM ROAD, LEELAVATHY NAGAR, POONAMALLEE, CHENNAI 600 056. PAN AAICS2574C. APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(2), CHENNAI . RESPONDENT) / APPELLANT BY : SHRI Y. SRIDHAR, CA / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT ! / DATE OF HEARING : 07.07.2015 '# ! / DATE OF PRONOUNCEMENT: 17.07.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 13 .2.2015. - - ITA 1149/15 2 2. THE FIRST ISSUE FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF DEPRECIATION OF ` 1,70,167/-. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAI MED DEPRECIATION @ 100% ON ADDITIONS TO THE LEASED OUT BUILDINGS. HOWEVER, THE ASSESSING OFFICER RESTRICTED THE DEPRE CIATION TO 10% AND THE ASSESSEE COULD NOT SUBSTANTIATE THE NAT URE OF EXPENDITURE INCURRED BY THE ASSESSEE. BEFORE THE C OMMISSIONER OF INCOME-TAX(APPEALS) ALSO, THE ASSESSEE COULD NO T SUBSTANTIATE ITS CLAIM AND SHE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. BEFORE US, THE LD. AR SUBMITTED THAT NAT URE OF EXPENDITURE IS RELATING TO CARPENTRY WORK, FALSE CE ILING ETC., WHICH ARE TEMPORARY IN NATURE AND 100% SHOULD BE GRANTED, SINCE IT IS INCURRED IN THE LEASED OUT BUILDING. HOWEVER, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM, WHETHER THE EXP ENDITURE IS INCURRED WITH REFERENCE TO THE EXTENSION OF LEASED OUT BUILDING OR ANY AREA INCREASED BY INCURRING THE EXPENDITURE. I N VIEW OF THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE THE EXPENDI TURE, WE ARE - - ITA 1149/15 3 INCLINED TO CONFIRM THE ORDER OF THE COMMISSIONER O F INCOME- TAX(APPEALS), ON THIS GROUND. THIS GROUND IS REJEC TED. 5. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE O F BAD DEBTS OF ` 9,06,250/-. 6. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE MA DE A CLAIM FOR ` 63,95,321/- AS BAD DEBTS. OUT OF THIS, ` 9,06,250/- FOUND TO BE OUT OF THE SALES RECORDED DURING THE CU RRENT YEAR. ON ENQUIRY, IT WAS FOUND THAT THE ASSESSEE HAS SUPPLIE D WATER PURIFICATION SYSTEMS TO DON BOSCO SCHOOL AND GYMKHA NA CLUB ON PROMOTIONAL BASIS AS A GIFT, BUT WHILE RECORDING THE COST OF EXPENDITURE IN SALES PROMOTION OR GIFT EXPENSES, IT WAS ERRONEOUSLY ENTERED INTO SALES AND THEREAFTER CLAIM ED AS BAD DEBTS. THE ASSESSING OFFICER CANNOT ACCEPT THE EXP ENDITURE AS GIFT AND HE DISALLOWED THE CLAIM OF THE ASSESSEE. THE SAME WAS CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS ). 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. THE LD. AR REITERATED THAT IT WAS ACTUA LLY SALES AND THOSE BECAME BAD DEBTS. CONTRARY TO THIS, THE LD. DR SUBMITTED THAT IT WAS GIFT MADE BY THE ASSESSEE FOR THE PARTI ES. IN OUR OPINION, IT IS APPROPRIATE TO EXAMINE THE ABOVE PAR TIES TO VERIFY - - ITA 1149/15 4 THE TRANSACTION WHETHER IT WAS ACTUALLY SALES AND W HETHER THE ASSESSEE ENTERED AS BAD DEBTS. ACCORDINGLY, THE IS SUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO MAKE NECESSARY ENQUIRY, WHETHER THE TRANSACTION IS SALE OR THE SAME WAS SUPPLIED TO THE PARTIES ON PROMOTION BASIS AS A GIFT. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. WITH REGARD TO CLAIM OF ROC FILING FEES OF ` 50,000/-, BEFORE US, THE LD. AR MADE AN ENDORSEMENT THAT THE ASSESSEE IS NOT INTERESTED TO PRESS THIS GROUND. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 9. WITH REGARD TO CLAIM OF POOJA, BEFORE US, THE LD . AR MADE AND MADE AN ENDORSEMENT THAT THE ASSESSEE IS NOT IN TERESTED TO PRESS CLAIM OF POOJA EXPENSES AND THE SAME IS DISMI SSED AS NOT PRESSED. 10. REGARDING CLUB EXPENSES, THE LD. AR SUBMITTED T HAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS AND IT IS TO BE ALLOWED. 11. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE LOWER AUTHORITIES. - - ITA 1149/15 5 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE ASSESSEE-COMPANY PUR CHASED THE CLUB MEMBERSHIP EXPENDITURE ON ITS OWN AND PERMITTE D ITS OFFICERS TO ENTERTAIN THE OFFICIAL GUESTS OF THE CO MPANY AND REIMBURSING THE EXPENDITURE INCURRED BY SUCH OFFICE R WHENEVER GUESTS OF THE COMPANY WERE TAKEN TO THE CLUBS AND I F SUCH EXPENSES ARE INCURRED AND REIMBURSED, THEN WE CAN C ERTAINLY APPRECIATE THAT THE COMPANY IN ORDER TO ENTERTAIN T HE COMPANY GUESTS IS REQUIRED TO SPEND THE AMOUNT ON BEHALF OF THE COMPANY. IF THE COMPANY HAS PROVIDED MONEY TO THE EMPLOYEES TO PURCHASE THE CLUB MEMBERSHIP AND IF THE SUBSCRIP TION AND THE AMOUNT INCURRED BY THE EMPLOYEES FOR THEIR PERSONAL BENEFIT IS REIMBURSED BY THE COMPANY, SUCH AMOUNTS SPENT BY TH E EMPLOYEES OF THE COMPANY CANNOT BE CONSIDERED AS BU SINESS PROMOTION SO AS TO ALLOW THE EXPENDITURE WHILE COMP UTING THE INCOME OF THE ASSESSEE. THEREFORE, WE REMIT THIS I SSUE TO THE FILE OF THE AO TO CONSIDER THE ISSUE IN THE LIGHT OF THE ABOVE OBSERVATION AND DECIDE ACCORDINGLY. 13. THE NEXT ISSUE IS WITH REGARD TO NON-CONSIDERAT ION OF SELF-ASSESSMENT TAX OF ` 19,00,000/-, THOUGH IT WAS PAID - - ITA 1149/15 6 BEFORE THE ASSESSMENT. 14. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE HA S PAID TAX OF ` 19 LAKHS AND CLAIMED UNDER THE HEAD SELF- ASSESSMENT TAX. THE AR OF THE ASSESSEE STATED THA T THEY HAVE PAID AN AMOUNT OF ` 19 LAKHS VIDE CHALLAN NOS. BELOW: - CHALLAN. DATE AM OUNT 00852 10.09 . 2010 100000 04514 16.09.2010 100000 04531 16.09 . 2010 200000 01013 17.09.2010 200000 01030 17.09.2010 400000 02050 22.09.2010 500000 01303 23.09.2010 200000 01312 23.09.2010 100000 03715 23.09.2010 100000 TOTAL 1900000 IT WAS THE STAND OF THE AR OF THE ASSESSEE THAT AN AMOUNT OF ` 19 LAKHS PAID WAS MEANT FOR SELF-ASSESSMENT TAX FO R THE ASSESSMENT YEAR 2010-11, BUT INADVERTENT MISTAKE OC CURRED IN FILING THE CHALLAN NO.400 UNDER THE HEAD TAX O N REGULAR ASSESSMENT. IT WAS THE CLAIM OF THE AR OF THE ASSES SEE THAT HAD THE TAX WAS PAID UNDER THE HEAD SELF-ASSE SSMENT TAX IN THE CHALLAN NO.300 INSTEAD OF REGULAR ASSES SMENT TAX - - ITA 1149/15 7 CHALLAN NO.400, IT WOULD NOT HAVE RESULTED INTO TAX DEMAND OF ` 34,99,670/-. IT WAS CLAIMED THAT A RECTIFICATION APPLICATION WAS MADE TO DCIT VIDE LETTER DATED 12.0 3.2013 FOR RECTIFYING THE CHALLAN NO. IT WAS FURTHER CLAIM ED BY THE AR OF THE ASSESSEE THAT THE AO HAD POWER TO CORRECT MAJOR CODES AND MINOR CODES IN CHALLANS GENERATED IN ELEC TRONIC MODE BUT SAME WAS NOT DONE BY THE AO. IN SUPPORT OF THE CLAIM, THE AR OF THE APPELLANT FURNISHED THE PRINT OUT OF THE TAX INFORMATION NETWORK GIVING THE INSTRUCTIONS REL ATING TO CORRECTION IN THE CHALLANS. AFTER CONSIDERING THE S UBMISSION MADE BY THE AR OF THE ASSESSEE, THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAD PAID THE TAXES UNDER THE MINOR HEAD 'TAX ON REGULAR ASSESSMENT' IN CHALLAN NO.400 IN THE MONTH OF SEP.2010 AND THE APPLICATION WAS MADE TO THE AO FOR CORRECTION ON 12.03.2013 I.E. AFTER 18 MONTH S FROM THE DATE OF THE SUBMISSION OF THE CHALLANS UNDER TH E HEAD MINOR HEAD 400. THE INSTRUCTIONS OF THE DEPARTMEN T STATE THAT ONLY TAX PAYER CAN CORRECT THROUGH BANK WITHIN 3 MONTHS FROM THE CHALLAN DEPOSIT DATE UNDER MINOR HE AD. FURTHER, THE INSTRUCTION STATES THAT FOR ANY CHALLA NS WITH - - ITA 1149/15 8 CHALLAN DEPOSIT DATE FROM SEP.2011 TO SEP.30.2011, THE TIME LIMIT FOR CORRECTION IN TAN/PAN, A.Y. AND AMOU NT WILL BE WITHIN 45 DAYS FROM THE CHALLAN DEPOSIT DATE. IN THE INSTANCE CASE, THE ASSESSEE UNDERSTOOD THE MISTAKE COMMITTED BY ITSELF AFTER A LAPSE OF 18 MONTHS AND SUCH A LONG PERIOD AVAILED BY THE ASSESSEE WAS WITHOUT ANY SUFFICIENT REASON. HENCE, THE CIT(APPEALS) WAS OF T HE VIEW THAT THE TAXES PAID BY THE ASSESSEE SHOULD BE TREAT ED AS TAX PAID UNDER REGULAR ASSESSMENT ONLY. THE ASSESSEE DI D NOT FURNISH ANY FURTHER INSTRUCTIONS GIVEN BY CBDT, IF ANY, FOR CORRECTING MISTAKES IN THE CHALLAN. IF ANY FURTHER INSTRUCTIONS ARE IN PLACE, THE AO IS AT LIBERTY TO MAKE CORRECTI ONS, IF DEEMED FIT. HOWEVER, THE COPY OF THE INSTRUCTIONS P LACED BEFORE THE CIT(APPEALS) DO NOT PROVIDE FOR CORRECTI ON OF THE CHALLANS AFTER 3 MONTHS FROM THE CHALLAN DEPOSIT DA TE. ACCORDINGLY, THE CIT(APPEALS) REJECTED THE GROUND. 15. IN THIS CASE, THE CIT(APPEALS), HAS EXAMINED TH E IMPROPRIETY OF THE PAYMENT AND GIVEN THE FINDING TH AT THE CLAIM OF THE ASSESSEE IS NOT IN ACCORDANCE WITH LAW. BEFORE US ALSO, THE ASSESSEE WAS NOT ABLE TO CONTROVERT THE FINDING OF THE - - ITA 1149/15 9 CIT(APPEALS). HENCE, WE HAVE NO HESITATION IN CONF IRMING THE FINDING OF THE CIT (APPEALS) ON THIS ISSUE. THIS G ROUND IS REJECTED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 17 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- ( . $ % ) ( & ' ( ) ) *+,-./01023 45067.082290.:3 ; $< /JUDICIAL MEMBER ! $<=>>2-6?06?@ABCA. &; /CHENNAI, D$ /DATED, THE 17 TH JULY, 2015. MPO* $E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I3 /CIT(A) 4. I /CIT 5. GJ% K /DR 6. %LM /GF.