Murlidhar Tractors, JAMNAGAR V. The Income Tax Officer, Ward-2(2)., JAMNAGAR

ITA 1190/RJT/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1316 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 27-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K CHAKRAVARTY
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 143(3)

Judgement Text

ITA NO. 1190 / RJT/201 0 ASSESSMENT YEAR: 20 05 - 06 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (CONDUCTED THROUGH E - COURT AT AHMEDABAD) BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ITA NO. 1190 /RJT/201 0 ASSESSMENT YEAR: 20 05 - 06 MURLIDHAR TRACTOR S, VS. INCOME TAX OFFICER JAMNAGAR RAJKOT HIGHWAY, WARD 2(2), JAMNAGAR. HAPA, JAMNAGAR. [PAN: A GNPS 8711 R ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CHETAN AGARWAL, C.A. RESPONDENT BY : SHRI V.K. CHAKRAVARTY, SR. D.R. DATE OF HEARIN G : 18 .04.2016 DATE OF PRONOUNCEMENT : 29 .04.2016 O R D E R PER S.S. GODARA, J.M. TH IS ASSESSEE S APPEAL FOR A SSESSMENT Y EAR 20 05 - 06 , ARISE S FROM ORDER OF THE CIT(A), JAMNAGAR DATED 2 1 .0 7 . 201 0 , PASSED IN CASE NO.CIT(A) /JAM/ 196 / 07 - 08/584 , IN PROCEEDI NGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE PLEADS THREE SUBSTANTIVE GROUNDS INTER ALIA CHALLENGING DISALL OWANCE /ADDITION OF RS.6,39,744 / - IN RESPECT OF AMOUNTS WRITTEN OFF UNDER THE HEAD SALES PROMOTION EXPEN SES , RS.51,248/ - @ 20% OUT OF TEA AND ENTERTAINMENT, TELEPHONE, MOBILE AND VEHICLE EXPENSE AND RS.34,843/ - @ 20% OUT OF DEP RECIATION ON M OTOR VEHICLES CITING N ON - BUSINESS USE OF THE VEHICLES ; RESPECTIVELY. 3. LEARNED AUTHORISED REPRESENTATIVE APPEARING AT ASS ESSEE S BEHEST DOES NOT PRESS THE LATTER TWO GROUNDS KEEPING IN MIND SMALLNESS OF THE AMOUN T S INVOLVED . T HE ITA NO. 1190 / RJT/201 0 ASSESSMENT YEAR: 20 05 - 06 PAGE 2 OF 4 REVENUE IS F AIR ENOUGH IN NOT OPPOSING THE SAME. WE ACC ORDINGLY AFFIRM THE LOWER APP ELLATE FINDINGS QUA GROUNDS NO . 2 & 3. 4. THIS LEAVES US WITH THE SOLITARY SURVIVING ISSUE OF CORRECTNESS OF DISALLOWANCE/ ADDITION OF RS.6 , 39 , 744/ - . THE ASS ESSEE CLAIMS THE SAME AS SAL E S PROMOTION E XPENS E S AS DEBITED IN ITS PROFIT & LOSS ACCOUNT. THE A SSESSING OFFICER SOUGHT FOR RECIPIENTS THEREOF. THE A SSESS ING OFFICER REJECTED ASS ESSEE S REQUEST TO ISSUE SUMMONS OF THE SAID PARTIES. I T DOES NOT SEEMS TO H A V E PROVID ED NECESSARY DETAILS . THE A SSESSING OFFICER ACC ORDINGLY INVOKED THE I MPUGNED DISALLOWANCE CITING ASS ESSEE S ACT IN NOT FUR NISHING ADDRESSES O F TH E PARTIES TO MAKE TH E IMPUGNED DISALLOWANCE IN ASSESSMENT ORDER DATED 18.12.2007. 5. THE CIT ( A ) AFFIR M S A SSESSING OFFICER S FINDINGS AS UNDER : - 5. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AR, SINCE ON ANOTHER GROUP OF APPEAL IN WHICH AR H AS SUBMITTED ADDITIONAL EVIDENCES, THE SUBMISSION WAS SENT FOR AO'S COMMENT, AND THE AO WAS REQUIRED TO OFFER COMMENTS ON THIS GROUND ALSO, AFTER VERIFICATION. THE AO HAS SUBMITTED THAT IN REMAND PROCEEDINGS THAT THE APPELLANT HAS CHANGED ITS STAND ON N ATURE OF THESE EXPENSES, THE APPELLANT HAS NOW CLAIMED THAT THE EXPENSES OF RS.639744 DEBITED TO PROFIT AND LOSS ACCOUNT AS SALES PROMOTION EXPENSES WERE IN FACT BAD DEBTS WRITTEN OFF AND NOT EXPENDITURE PAID BY WAY OF CASH/CHEQUE. IN REJOIND ER, AR HAS ALSO REITERATED THE CONTENTION THAT THE SAID EXPENDITURE WAS BAD DEBTS AND NOT SALES PROMOTION AS CLAIMED. IT IS SEEN THAT AT THE ASSESSMENT STAGE THE APPELLANT CLAIMED TO HAVE INCURRED SALES PROMOTION EXPENSES ON FARMERS AND VILLAGERS AND HAS S UBMITTED VOUCHERS ACCORDINGLY. BEFORE ME IN APPEAL STAGE, THE AR CLAIMS THAT THE SALES PROMOTION EXPENSES ARE GENUINE SINCE IT HAS RESULTED INTO INCREASE IN SALES. SUDDENLY IN REMAND PROCEEDINGS THE APPELLANT HAS CHANGED ITS STAND AND CLAIMS THAT THE SA ID EXPENDITURE WAS BAD DEBTS. THE APPELLANT IS CHANGING ITS STAND ACCORDING TO HIS CONVENIENCE, WHEN THE AR FAILED TO SUBSTANTIATE HIS CLAIM OF SALES PROMOTION EXPENSES, THEY HAVE CHANGED THEIR STAND. IN AUDITED PROFIT AND LOSS ACCOUNT THE EXPENDITURE IS DEBITED AS SALES PROMOTION EXPENSES, AT ASSESSMENT STAGE THE APPELLANT HAS CLAIMED AND SUBMITTED VOUCHERS FOR EXPENDITURE AS SALES PROMOTION. EVEN BEFORE ME, AR HAS CLAIMED THE EXP E NDITURE AS SAL E S PROMOTION AND STA T ED THAT IT HAS RESULT ED INTO INCREASE I N SALES. HENCE THE FRESH CLAIM THAT TH E SAID EXPENDITURE IS BAD DEBTS CANNOT BE ACCEPTED. IT MAY BE FUR T HER POINTED OUT THAT EVEN TILL DATE APPELLANT HAS NOT BEEN ABLE TO PROVIDE ADDRESSES OF TH E SE PERSONS. HENCE THE DISALLOWANCE IS CONFIRMED. ITA NO. 1190 / RJT/201 0 ASSESSMENT YEAR: 20 05 - 06 PAGE 3 OF 4 6. WE H AVE HEA R D BOTH THE PARTIES. RELEVANT FACTS NARRATED IN THE PRECEDING PA RAGRAPHS ARE NO T REPEAT E D FOR THE SAKE OF BREVITY. WE FIND THAT THE CIT ( A ) HAS REJECTED AS SESSEE S CONTENTION OF CLAIMING THE IMPUGNED EXPENS E S OF RS.6,39,744/ - AS BAD DEBTS ARISING F R O M NON - RECOVERY OF TH E TRACTOR SALE AMOUNT. IT IS TO BE SEEN FROM PAGE NOS. 4 TO 29 OF THE PAPER BOOK THAT THE ASS ESSEE S BOOKS TREAT THE IMPUGNED AMOUNTS AS SALES PROMOTION (DISCOUNT) MISC ELLANEOUS B ALANCES WRITTEN OFF IN CASE OF TRACTOR S SALE MADE TO ITS CUSTOMERS FROM 0 1. 0 4.2004 TO 31. 0 3.2004. T HE REVENUE IS FAIR ENOUGH IN NOT DISPUTING CORRECTNESS OF THESE DOCUMENTS. IT HAS COME ON RECORD THAT THIS ASS ESSEE FIRM TRADES IN TRACTORS MANUFACTURED BY MAHINDRA & MAHINDRA L IMITED. WE OBSERVE IN TH IS FAC TUAL BACKDROPS OF FACTS THAT T H E IMPUGNED AMOUNTS SUBJECT MATTER OF THIS ISSUE ARE NOTHING BUT SALE PROCEEDS ARIS I NG FROM TRACTOR SALE S . T HE ASS ESSEE S CUSTOMERS/PURCHASERS OF THESE TRACTORS HAVE NOT PAID THE ENTIRE AMOUNT. NATURE OF THESE PAYMENTS CAN H ARDLY BE QUESTIONED SINCE THEY DIRECTLY ARISE OUT OF SALES AS DULY AUDITED IN ASS ESSEE S BOOKS/LED G ER ACCOUNT. WE HOLD IN THESE PEC ULIAR FACTS AND CIRCUMSTANCES THAT THE SAME ARE IN THE NATURE OF TRADING RECEIPTS ENTITLED FOR THE IMPUGNED BAD DEBT DEDUCTI ON ONLY. THE CIT ( A ) DOES NOT QUOTE VIOLATION OF THE RELEVANT STATUTORY PROVISION UNDER 36(2) OF THE ACT. WE ACCEPT ASS ESSEE S ARGUMENTS ACCORDINGLY. THIS DISALLOWANCE /ADDITION OF RS.6,39,744/ - STANDS DELETED. 7. THIS ASS ESSEE S APP E AL IS PARTLY ALLOWE D. PRONOUNCED IN THE OPEN C OURT TODAY ON TH E 29 TH DAY OF APRIL, 2016. SD/ - SD/ - N.K. BILLAIYA S.S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 29 TH DAY OF APRIL , 2016 PBN/ * ITA NO. 1190 / RJT/201 0 ASSESSMENT YEAR: 20 05 - 06 PAGE 4 OF 4 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT