ACIT, New Delhi V. M/s. Delair India Pvt. Ltd., New Delhi

ITA 1151/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65483 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHI LAL
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI JOGINDER SINGH: JUDICIAL MEMBER & SHRI SHAMIM YAHYA: ACCOUNTANT MEMBER ITA NO. 1151/DEL/12 A.YRS. 2008-09 ACIT, CIRCLE 10(1), VS. DELAIR INDIA PVT. LTD., NEW DELHI. 20, RAJPUR ROAD, CIVIL LINES, NEW DELHI. PAN: AAACD 0156 F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI PRITHI LAL SR. DR RESPONDENT BY : SHRI RANJAN CHOPRA CA O R D E R PER JOGINDER SINGH, J.M: : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 30-12-2011 PASSED BY THE LD. FIRST APPELLATE AUTHORITY NEW DEL HI. 2. THE FIRST GROUND RAISED BY THE REVENUE IS WHETHE R ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. FIRST APPELLATE AUTHORITY IS JUSTIFIED IN DELETING THE ADDITION OF RS. 6,14,259/ - MADE U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS ON COMMISSION PAID TO EMPLOYEES. ITA NO. 1151/DEL/12 DELAIR INDIA PVT. LTD. . 2 2.1. THE CRUX OF THE ARGUMENTS ON BEHALF OF THE REV ENUE IS THAT THE ASSESSEE COMPANY PAID RS. 6,14,259/- TO EMPLOYEES ON WHICH N O TDS WAS DEDUCTED, THEREFORE, IT WAS RIGHTLY DISALLOWED U/S 40(A)(IA) OF THE ACT. 2.2. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY ASSERTING THAT THE T DS WAS DULY DEDUCTED FOR WHICH OUR ATTENTION WAS INVITED TO PARA 5 OF TH E IMPUGNED ORDER. 2.3. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT TH E DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON THE PLEA THAT TDS WAS NOT DEDUCTED BY THE ASSESSEE ON THE COMMISSION PAID TO THE EMPLOYEES. T HE STAND OF THE ASSESSEE IS THAT THE AMOUNT OF RS. 6,14,259/- WAS PART OF TH E SALARY AND THIS INFORMATION WAS EXPLAINED TO THE ASSESSING OFFICER AS WELL AS BEFORE THE LD. CIT(A). THE BREAK UP OF THE AMOUNT WAS ALSO CLAIMED TO BE MADE BY THE ASSESSEE. THERE IS UNCONTROVERTED FINDING IN THE IM PUGNED ORDER THAT THE AMOUNT OF RS. 4,88,847/- WAS PAID TO 6 EMPLOYEES A ND SUCH EMPLOYEES HAD DULY SHOWN THAT TDS WAS DEDUCTED AND THE BALANCE CO MMISSION OF RS. 1,25,412/- WAS PAID TO 11 EMPLOYEES AND NO TDS WAS DEDUCTED FROM SUCH EMPLOYEES AS THE GROSS SALARY WAS BELOW TAXABLE LIM IT. IN VIEW OF THESE FACTS WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A ), THEREFORE, IT IS AFFIRMED. 3. THE NEXT GROUND PERTAINS TO DELETION OF ADDITION OF RS. 18,60,8983/- ON ACCOUNT OF NON-DEDUCTION OF TDS ON THE PAYMENTS MADE TO SISTER CONCERN. ITA NO. 1151/DEL/12 DELAIR INDIA PVT. LTD. . 3 3.1. AFTER CONSIDERING THE ASSERTIONS MADE BY THE R ESPECTIVE COUNSELS AND ON PERUSAL OF RECORD, WE FIND THAT DETAILED BREAK U P OF THE EXPENSES HAS BEEN GIVEN BEFORE THE AUTHORITIES AS IS OOZING OUT FROM DETAILED FINDING IN PARA 6 ( PAGE 4) OF THE IMPUGNED ORDER. OUT OF THE 5 PAYME NTS, 4 PAYMENTS WERE MADE TO SISTER CONCERN, WHILE ONE PAYMENT WAS OF R ENTED ACCOMMODATION PAID TO ANOTHER SISTER CONCERN. THIS BREAK UP IS AL SO MENTIONED AT PAGE 5 OF THE IMPUGNED ORDER. THE TOTALITY OF FACTS POINTS OU T THAT RS. 70,000/- WERE PAID AS REIMBURSEMENT OF RENT AND THE REMAINING AMO UNT OUT OF RS. 1,54,909/- WAS REIMBURSED ON OTHER EXPENSES. THE RE NT PAYMENT WAS WITHIN THE PRESCRIBED LIMIT U/S 194-I OF THE ACT. THEREFOR E, NO TDS WAS TO BE DEDUCTED ON THIS AMOUNT. THE LD. CIT(A) HAS CONSID ERED THE ISSUE IN A REQUIRED MANNER AND THE DISALLOWANCE OF RS. 1,54,90 9/- WAS RIGHTLY DELETED. 4. THE AMOUNT OF RS. 6,53,602/- PAID FOR USED CAR; RS. 2,64,785/- WAS REIMBURSED ON TELEPHONE EXPENSES; RS. 7,07,184/- WA S REIMBURSED ON DIESEL EXPENSES AND RS. 8,09,437/- WAS REIMBURSED ON OTHER EXPENSES. THE LD. CIT(A) VIDE ITS REASONED ORDER HAS RIGHTLY DELETED THESE ADDITIONS, IN WHICH NO INFIRMITY WAS POINTED OUT BY THE REVENUE. IF THE TOTALITY OF FACTS ARE PERUSED AND ANALYZED, THERE IS NO JUSTIFICATION TO INTERFERE WITH THE CONCLUSION DRAWN IN THE IMPUGNED ORDER ON THE IMPUG NED ISSUE. THE SAME IS UPHELD. 5. THE NEXT GROUND PERTAINS TO DELETION OF ADDITION OF RS. 1,09,820/- MADE ON ACCOUNT OF NON-DEDUCTION OF TDS U/S 194C. T HE CRUX OF THE ARGUMENT ON BEHALF OF THE ASSESSEE FROM THE ASSESSM ENT STAGE ITSELF IS THAT THESE ARE TRADE EXPENSES, IN THE NATURE OF PARTICIP ATION CHARGES AND WAS PAID AS RENTAL FOR SPACE IN THE TRADE EXHIBITION. THERE IS A FURTHER CLAIM THAT THE ITA NO. 1151/DEL/12 DELAIR INDIA PVT. LTD. . 4 IMPUGNED AMOUNTS ARE BELOW TAXABLE LIMIT, THEREFORE , NO TDS WAS REQUIRED TO BE DEDUCTED. DOCUMENTARY EVIDENCE WAS PRODUCED B EFORE THE LD. CIT(A) IN THE FORM OF 3 BILLS EVIDENCING THAT THESE EXPENS ES WERE PARTICIPATION CHARGES FOR INDUSTRIAL EXPO 2007. THESE BILLS HAVE BEEN DULY ANALYZED/ EXAMINED BY THE CIT(A) EVIDENCING THAT THESE EXPEN SES DID NOT FALL IN INDIVIDUAL CATEGORY OF ADVERTISING CHARGES. THEREFO RE, THERE IS NO JUSTIFICATION TO INTERFERE WITH SUCH FINDING. THERE FORE, THE STAND OF THE LD. CIT(A) IS AFFIRMED. 6. THE LAST GROUND PERTAINS TO RELIEF OF RS. 86,967 /- OUT OF THE ADDITION OF RS. 94,527/- MADE ON ACCOUNT OF DISALLOWANCE OF GEN ERAL CHARGES. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL SUBMI SSIONS WE FIND THAT THE ASSESSEE DEBITED RS. 16,68,369/- AS OTHER EXPENSES. THE ASSESSING OFFICER NOTICED THAT THE GENERAL CHARGES OF RS. 1,69,468/- WERE ALSO INCLUDED IN THIS AMOUNT, FOR WHICH QUERY WAS RAISED BY THE ASSESSING OFFICER . CERTAIN AMOUNTS, LIKE DIWALI GIFTS, STATIONERY; ART DIMEN SION; 2 GOLD COIN WERE HELD TO BE FOR NON-BUSINESS PURPOSES. 6.1. AS PER THE REVENUE, NO JUSTIFICATION WAS PROVI DED BY THE ASSESSEE FOR SUCH EXPENSES. HOWEVER, THE LD. CIT(A) EXAMINED TH E CLAIM OF THE ASSESSEE VIS A VIS OBSERVATION MADE IN THE ASSESSMENT ORDER. THE BILLS WERE EXAMINED BY THE LD. CIT(A) AND FOUND THAT THESE WERE DIWALI GIFTS AND SOME PERSONAL ARTICLES AND SWEETS ETC., WHICH COST LESS THAN RS. ONE THOUSAND PER ARTICLE, EXCEPT 2 GOLD COINS COSTING RS. 17,170/-. SINCE THE VALUE OF THESE ARTICLES WAS LESS THAN RS. ONE THOUSAND PER ARTICLE, THEREFO RE, EVEN AS PER EARLIER PROVISION OF SEC. 37(3) READ WITH RULE 6D, SUCH EX PENDITURE ON PRESENTS WAS WITHIN THE LIMIT. THERE IS NO ACTUAL FINDING IN THE ASSESSMENT ORDER THAT THESE ITA NO. 1151/DEL/12 DELAIR INDIA PVT. LTD. . 5 ARTICLES WERE FOR NON-BUSINESS PURPOSES. IT IS THE ASSESSEE WHO IS THE BEST JUDGE OF THE BUSINESS. THE PROOF OF PURCHASING AND PURPOSE WAS DULY EXPLAINED BEFORE THE LD. CIT(A). EVEN OTHERWISE, T HE DISALLOWANCE WAS RESTRICTED TO RS. 7,565/- WHERE THE LD. CIT(A) WAS SATISFIED TO THE EFFECT THAT THE EXPENSES WERE FOR NON-BUSINESS PURPOSES. THE RE LIEF OF RS. 86,962/- WAS RIGHTLY GRANTED, WHICH IS AFFIRMED. 7. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21-09-2012. SD/- SD/- ( SHAMIM YAHYA ) ( JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21-09-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA NO. 1151/DEL/12 DELAIR INDIA PVT. LTD. . 6