ACIT, New Delhi V. M/s. Punjab Stainless Steel Industries, New Delhi

ITA 120/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3739 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 01-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: H MITTER

Judgement Text

I.T.A. NO. 120 /DEL/2010 1/4 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH F BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 120 /DEL/2010 (ASSESSMENT YEAR 2004-05) ACIT, CIRCLE 19(1), VS. M/S. PUNJAB STAINLESS NEW DELHI. STEEL INDUSTRIES, A-70, SWZIRPUR INDL. AREA, DELHI (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAAFD4223G APPELLANT BY: MISS ANUSHA KHURANA, SR. DR RESPONDENT BY: SHRI H MITTER, CA ORDER PER A. K. GARODIA, AM: 1. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF LD. CIT(A) XXII, NEW DELHI DATED 16.10.2009 FOR THE ASSESSMENT YEAR 2004-05. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) ERRED IN LAW AND ON F ACTS IN DELETING THE DISALLOWANCE MADE BY THE A.O. AMOUNTING TO RS.1,46,06,893/-/-, BEING 50% OF POLISHING CHARGES. 2) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,46,06,893/-, BEIN G 50% OF POLISHING CHARGES, WITHOUT APPRECIATING THE I.T.A. NO. 120 /DEL/2010 2/4 FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE NECESS ARY EVIDENCE IN SUPPORT OF THE CLAIM MADE BY IT. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED B Y THE A.O. AT PAGE 5 OF THE ASSESSMENT ORDER THAT THE ASS ESSEE HAS DEBITED IN THE P& L ACCOUNT AN AMOUNT OF RS.2,92,17,786/- AS POLISHING CHARGES PAID TO VARIO US PARTIES UNDER THE HEAD JOB WORK EXPENSES. THE A.O. ASKED THE ASSESSEE TO GIVE DETAILS OF THESE PARTIES WITH ADDRESSES AND CONFIRMATION AND ASKED THE ASSESSEE T O PRODUCE THEM. AS PER THE ORDER SHEET ENTRIES ON VA RIOUS DATES OF DECEMBER 2000, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT THE POLISHING WORKERS ARE PETTY ARTISANS MOVING FROM PLACE TO PLACE AND THEY HAVE NO PERMANENT ADDRESS AND HENCE THEIR ADDRESSES AND CONFIRMATION CANNOT BE PROVIDED AND THEY COULD NOT BE PRODUCED ALSO. THE ASSESSEE FURNISHED THE ADDRESSE S OF 20 PERSONS ONLY WHEREAS THE TOTAL PARTIES ARE 398. IT WAS ALSO SUBMITTED BEFORE THE A.O. THAT AVERAGE RAT ES OF POLISHING WORKS OUT TO RS.18.87 PER KG. THE A.O. W AS NOT SATISFIED AND HAD DISALLOWED 50% OF SUCH EXPENS ES AND DISALLOWANCE WAS WORKED OUT AT RS.146.06 LACS. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DELETED THE ENTIRE DISALLOWANCE. IT IS OBSERVED BY THE CIT(A) IN PARA 7.4 OF HIS ORDER THAT ALTHOUGH HIS PREDECESSOR FOR THE I.T.A. NO. 120 /DEL/2010 3/4 ASSESSMENT YEAR 2001-02, 2002-03 & 2005-06 HAVE REDUCED THE DISALLOWANCE FROM 50% TO 15% BUT IT IS OBSERVED BY HIM THAT SUCH REDUCTION IS AD HOC AND N OT SUPPORTED BY ANY RELIABLE FORMULATION. IN THE PRES ENT YEAR HE DELETED THE ENTIRE DISALLOWANCE AGAINST WHI CH THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). WHE N ENQUIRED ABOUT THE OUTCOME IN ASSESSMENT YEAR 2005- 06, IT IS SUBMITTED THAT THE TRIBUNAL ORDER FOR THE ASSESSMENT YEAR 2005-06 IS AVAILABLE AT PAGE 80-85 OF THE PAPER BOOK AND IT IS POINTED OUT THAT IN THIS Y EAR, THE TRIBUNAL HAS UPHELD THE DISALLOWANCE TO THE EXTENT OF 15% OF THE TOTAL EXPENSES AS AGAINST DISALLOWANCE O F 50% MADE BY THE A.O. HE AGREED THAT IN THE PRESENT YEAR, DISALLOWANCE MADE BY THE A.O. MAY BE CONFIRME D TO THE EXTENT OF 15% IN VIEW OF THIS TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE TRIBUNAL ORDER IN THE ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN I.T.A. NO. 2747 & 2004/DEL/2009 DATED 26.11.2009 IS AVAILABLE AT PAGES 80-85 OF THE PAPER BOOK AND AS P ER PARA 9.8 OF THIS TRIBUNAL ORDER, THE TRIBUNAL HAS I.T.A. NO. 120 /DEL/2010 4/4 CONFIRMED THE DISALLOWANCE TO THE EXTENT OF 15%. T HE LD. A.R. FOR THE ASSESSEE TRIED TO CONVINCE US REGA RDING DIFFERENCE IN FACTS IN THE PRESENT YEAR AND THE ASSESSMENT YEAR 2005-06 BUT HE COULD NOT SATISFY US REGARDING DIFFERENCE IN FACTS AND HENCE WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THE PRESENT YEAR. RESPECTFULLY FOLLOWING THE TRIBUNAL DECISION IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 , IN THE PRESENT YEAR ALSO, WE HOLD THAT DISALLOWANCE OF 15% WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY AND DIRECT THE A.O. TO MAKE THE DISALLOWANCE TO THE EXTENT OF 15% OF THE TOTAL EXPE NSES INCURRED BY THE ASSESSEE UNDER THIS HEAD I.E. POLIS HING CHARGES. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS PARTLY A LLOWED. 6. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 8 TH JUNE 2010. SD./- SD./- (RAJPAL YADAV) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:18 TH JUNE, 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI