Newton Engineering & Chemicals Ltd., Baroda V. The Income tax Officer, Ward-4(1), Baroda

ITA 1230/AHD/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0393 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-09-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 15-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Business expenditure; Question of law
• Section: 43B; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1230-1231/AHD/2006 ASSESSMENT YEARS:2001-02 & 2002-03 DATE OF HEARNG:23.9.09 DRAFTED:0.10.09 NEWTON ENGINEERING & CHEMICALS LTD. 864/B, GIDC, MAKARPURA, VADORADA PAN NO.AAACH5391Q V/S. INCOME TAX OFFICER, WARD-4(1), VADODARA (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI S.N.SOPARKAR, AR REVENUE BY:- SHRI C.K. MISHRA, CIT, DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-III, BARODA IN APPEAL NO.CAB/III/11 & 114/05- 06 BY EVEN DATES 28-02-2006. THE ASSESSMENTS WERE F RAMED BY THE ITO, WARD- 4(1)BARODA U/S.143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 29-03-2005 FOR T HE ASSESSMENT YEARS 2001-02 AND 200-03 RESPECTIVELY. FIRST WE WILL DEAL WITH ASSESSEES APPEAL IN ITA NO .1231/AHD/2006. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.24,23,072/- ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 2 BY INVOKING PROVISION OF SECTION 43B OF THE ACT AND NON-PAYMENT CST AND SALES TAX. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM THE ACCOUNTS THAT THESE AMOUNTS ARE SHOWN AS OUTSTANDING. THE ASSESSING OFF ICER REQUIRED THE ASSESSEE TO EXPLAIN AND THE ASSESSEE CLAIMED THAT IT HAS SET OF F CENTRAL SALES TAX AND GUJARAT SALES TAX PAYABLE AS TAX DEDUCTED ON WORK CONTRACTS . THE AO HELD THE NATURE OF THESE TAXES AS PAYABLE AND ACCORDINGLY DISALLOWED U /S.43B OF THE ACT. THE CIT(A) AFTER DISCUSSING THE FACTS OF THE CASE CONFIRMED TH E DISALLOWANCE BY GIVING FOLLOWING FINDING IN PARA-8.2.3 OF HIS APPELLATE ORDER:- 8.2.3 THE ASSESSEE ALSO FILED A COPY OF SALES-TAX ASSESSMENT ORDER DATED 30-9-1999 U/S.41 & 44 OF GUJARAT SALES-TAX ACT FOR THE ACCOUNTING YEAR 1997- 98. A PERUSAL OF THE ORDER SHOWS THAT EVEN IN THIS ORDER, NO CREDIT FOR WORK CONTRACT TAX PAID IN OTHER STATES HAS BEEN CONSIDER ED. IN FACT, OUT OF TOTAL SALES-TAX TURNOVER, THE TURNOVER OF OTHER STATES HA S BEEN EXCLU9DED TO DETERMINE THE NET TURNOVER FOR THE LEVY OF SALES-TA X. THE SALES-TAX HAS BEEN LEVIED ON THE NET TURNOVER. THUS, EVEN IN THE GUJAR AT SALES-TAX ASSESSMENT ORDER, THERE IS NOTHING TO SHOW THAT THE WORK CONTR ACT TAX PAID IN OTHER STATES IS TREATED AS TAX DEDUCTED AT SOURCE AND THEREFORE, ELIGIBLE FOR SET OFF AGAINST THE ASSESSEES LIABILITY FOR SALES-TAX UNDER THE CS T OR GST. THE ASSESSEE HAS ALSO NOT PRODUCED ANY NOTIFICATION OR GOVERNMENT OR DER TO SHOW THAT THE WORK CONTRACT TAX DEDUCTED AT SOURCE IN OTHER STATS, IS DEEMED TO BE SALES-TAX PAID IN GUJARAT. THEREFORE, THE ASSESSEES CONTENTI ON THAT NO CST OR GST WAS PAYABLE BY THE ASSESSEE IN VIEW OF WORK CONTRAC T TAX DEDUCTED AT SOURCE, IS NOT ACCEPTABLE. IN PRINCIPLE, THE DISALL OWANCE MADE BY THE ASSESSING OFFICER IS CONFIRMED. HOW4VER, IT WAS STA TED BY THE APPELLANT THAT THE LIABILITY OF RS.24,23,072/- INCLUDES UNPAID GST OF RS.34,517/- & CST OF RS.9,14,543/- PERTAINING TO THE EARLIER YEAR WHICH HAS BEEN DISALLOWED IN THE ASSESSMENT OF ASSESSMENT YEAR 2001-02. THE ASSESSIN G OFFICER IS, DIRECTED TO VERIFY THIS FACT AND IF THESE AMOUNTS HAVE ALREA DY BEEN DISALLOWED IN THE ASSESSMENT YEAR 2001-02, THE SAME SHOULD BE EXCLUDE D FROM THE DISALLOWANCE IN THE ASSESSMENT YEAR 2002-03. THIS GROUND OF APPEAL NO.5, IS DISPOSED OF ACCORDINGLY. 4. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ISSUE IS SQUARELY COVERED AS REGARDS TO NONPAYMENT OF CST AND SALES TAX IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF AHMEDABAD ITAT IN THE CASE OF ITO V. TEXMAC ENGINEERS (1991) 39 TTJ 365 (AHD) AND IT WAS ALSO EXPLAINED THAT IN VIEW OF THE BUSINESS OF THE COMPANY WORKS CONTRA CTS TAX GET DEDUCT AT SOURCE AND ACCORDINGLY CLAIM WAS MADE TO SET OFF AGAINST SUCH WORK CONTRACTS FROM THE GST AND ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 3 CST PAYABLE. THE ASSESSEE CLAIMED THAT AS PER THE C OPIES OF ACCOUNT OF GST AND CST PAYABLE AND WORK CONTRACTS TAX DEDUCTIBLE AT SO URCE WERE FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS AND EVEN NOW BEFORE US TH E SAME WAS SUBMITTED. WE FIND THAT THIS ISSUE HAS ALREADY BEEN CONSIDERED BY THE AHMEDABAD BENCH IN THE CASE OF TEXMAC ENGINEERS (SUPRA), WHEREIN IT IS HELD AS UNDER:- THE SET OFF CLAIMS FOR RELEVANT ACCOUNTING YEARS A RE CARRIED FORWARD AS OUTSTANDING LIABILITY IN THE YEAR OF ITS COLLECTION AND THE SAME ARE SHOWN AS INCOME WHEN THE SALES-TAX ASSESSMENT FOR THE RELEVA NT YEAR IS FINALIZED BY THE SALES-TAX AUTHORITIES AND THE ASSESSEES CLAIM FOR SUCH SET OFF IS ALLOWED BY THE SALES-TAX AUTHORITIES AND THE SALES-TAX ASSESSM ENT ORDER IS RECEIVED BY THE ASSESSEE. THE AMOUNT OF SALES-TAX SET OFF AMOUN TING TO RS.7,994 AND RS.5,569 WERE SHOWN AS INCOME BY THE ASSESSEE IN 19 87-88. THE LEVY OF TAX ON THE SAME AMOUNT IN ASST. YR. 1984-85 THE YEAR UN DER CONSIDERATION, HAS RESULTED IN DOUBLE TAXATION OF THE AMOUNT, ONCE IN ASST. YR. 1984-85 AND AGAIN IN ASST. YR. 1987-88, THE YEAR UNDER CONSIDERATION WERE RECEIVED BY THE ASSESSEE. THIS HAS ALSO RESULTED IN DEPARTURE IN TH E COMPUTATION OF TAXABLE INCOME AGAINST THE METHOD OF ACCOUNTING CONSISTENTL Y FOLLOWED BY THE ASSESSEE IN RESPECT OF SUCH AMOUNT OF SALES-TAX SET OFF. THE ITEM REPRESENTING SALES-TAX SET OFF PERTAINING TO ASST. YR. 1983-84 AMOUNTING TO RS.29,133 AND RS.8,621 HAVE BEEN OFFERED FOR TAX IN ASST. YR. 1986-87 WHEN SALES-TAX ASSESSMENTS FOR THE ACCOUNTING YEAR 1982 WAS FINALIZED AND SALES- TAX ASSESSMENT ORDER WAS RECEIVED. THIS AMOUNT HAS ALSO BEEN SUBJECTED TO DOUBLE TAXATION ONCE IN ASST. YR. 1986-87 AND ALSO IN 1984-85. THE AMOUNT OF SALES-TAX SET OFF PERTAINING TO THE YEAR 1982 RS.9, 313 AND RS.8,61 CANNOT BE VALIDLY ADDED IN ASST. YR. 1984-85, AS THE SAID AMO UNT OF SET OFF WAS NOT COLLECTED DURING THE YEAR UNDER CONSIDERATION BUT O NLY REPRESENTS THE OPENING BALANCE IN THESE ACCOUNTS. IN VIEW OF SUCH CONSISTE NT METHOD OF ACCOUNTING FOLLOWED IN RESPECT OF SUCH AMOUNTS FOR LAST SEVERA L YEARS AND ACCEPTED BY THE DEPARTMENT, SUCH AMOUNTS OF SALES-TAX SET OFF C OULD NOT BE VALIDLY ADDED IN ASST. YR. 1984-85. THEREFORE, THE CIT(A) WAS FUL LY JUSTIFIED IN DELETING THE ENTIRE ADDITION OF RS.58,548 AS THE FACTS AND THE DOCUMENTS SUBMITTED BEFORE US IN THE SHAPE OF LEDGER ACCOUNT OF SALES TAX PAYABLE ON WORK CONTRACT, WE AT THIS S TAGE CANNOT VERIFY WHETHER WORK CONTRACT TAX WAS DEDUCTED AND THE CLAIM AS SET OFF AND THIS FACT NEEDS VERIFICATION AT THE LEVEL OF THE ASSESSING OFFICER. ACCORDINGLY, W E DIRECT THE ASSESSING OFFICER TO VERIFY, IN CASE, THE WORK CONTRACT TAX HAS ALREADY BEEN DEDUCTED THEN THE AO WILL ALLOW THE CLAIM OF THE ASSESSEE. THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. NOW WE SHALL TAKE UP ASSESSEES APPEAL IN ITA NO.12 30/AHD/2006. ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 4 5. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE I S AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.19,26,520/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF LATE PAYMENT OF P.F.,E.P.F., ESIC ETC. U/S.43B O F THE ACT. 6. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE STATE D THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE DECISION OF CHENNI SPECIAL BENCH IN THE CASE OF KWALITY MILK FOODS LTD. V. ACIT (2006) 100 ITD 199 (CHE) (SB). EVEN THIS ISSUE IS SQUARELY COVERE D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF HONBLE DELH I HIGH COURT IN THE CASE OF CIT V. P.M. ELECTRONICS LTD. (2008) 220 CTR 635 (DEL), WHEREIN THE HON'BLE DELH I HIGH COURT HAS DISCUSSED IN PARA-4 AS UNDER:- 4. ON 27 TH NOV., 1998 THE ASSESSEE HAD FILED A RETURN OF INCO ME DECLARING A LOSS OF RS.8,92,888. ON 11 TH MAY, 1999 THE RETURN WAS PROCESSED UNDER S. 143(1)(A) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, A NOTICE DT. 27 TH SEPT., 1999 UNDER S. 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE A ND ON EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO P ROVIDENT FUND PAYMENTS MADE BOTH ON ACCOUNT OF EMPLOYERS AND EMPLOYEES S HARE REVEALED THAT PAYMENTS IN THE SUM OF RS.17,94,042 WERE LATE AS PE R THE PROVISIONS OF S. 36(1)(VA) R.W S. 2(24)(X) AND S. 43B. CONSEQUENTLY , THE AO DISALLOWED THE DEDUCTION AND ADDED A SUM OF RS.17,94,042 TOWARDS E PF CONTRIBUTION. AND SUBSEQUENTLY DECIDE THIS ISSUE IN PARA-10 TO 14 OF HON'BLE DELHI HIGH COURT, WHICH READ AS UNDER:- 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHILE DOING SO TH E SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE I T PERTAINS TO A PERIOD PRIOR TO THE AMENDMENT BROUGHT ABOUT IN S. 43B OF THE ACT. T HE AFORESAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO S. 43B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA (SUPRA) . APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED TH E APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BEN CH OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. NEXUS COMPUTER (P) LTD. BY A JUDGMENT DT. 19 TH AUG., 2008, PASSED IN TAX CASE (APPEAL) NO.1192/200 8 [REPORTED AT (2008) 219 CTR (MAD.) 54 ED.] DISCUSSED THE IMPACT OF BO TH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. (SUPRA) AND VINAY CEMENT (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF T HE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED & ORS.VS. STATE OF KERALA & ANR. (2000) 162 CTR (SC) 97: 119 STC 505 AT P. 526 IN P ARA 40 AND NOTED THE FOLLOWING OBSERVATIONS : ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 5 IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKIN G ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE O RDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAIN ED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ART. 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLA RATION OF LAW, WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RE CORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT. TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUB SEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING TH AT THE ORDER OF THE COURT. TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR T HAT THE ORDER OF THE SUPREME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES. 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED & ORS. (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COUR T IN THE CASE OF NEXUS COMPUTER (P) LTD. (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS LAW DECLARED BY THE SUPREME COURT UNDER ART. 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P) LTD. (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMEN T (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN I DHARM ENDRA SHARMA (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGRE E WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COUR T IN PAMWI TISSUES LTD. (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDER ATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 7. WE FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF P.M. ELECTRONICS LTD. (SUPRA) HAS DECIDED THIS ISSUE OF PAYMENT OF EMPLOY EES CONTRIBUTION TOWARDS PROVIDENT FUND AFTER CONSIDERING THE DECISION OF HO N'BLE APEX COURT IN THE CASE OF VINAY CEMENT (SUPRA) AND ALSO DISTINGUISHED THE CASE LAW REFERRED BY TH E LD. DR OF BOMBAY HIGH COURT IN PAMWI TISSUES LTD. (SUPRA) . ACCORDINGLY, FOLLOWING DELHI HIGH COURT IN P.M. ELECTRONICS LTD. (SUPRA), WE FIND THAT THE CIT(A) HAS RECORDED A FIN DING THAT ALL THE PAYMENTS WERE MADE BEFORE THE DUE DATE OF RETURN AND THIS HAS NOT BEEN CONTROVERTED BY THE REVENUE. ACCORDINGLY, WE ALLOW THE CLAIM OF THE ASSESSEE AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 6 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.4,39,738/- BY THE ASS ESSING OFFICER BY DISALLOWING THE AMOUNT DEBITED FOR GIFTS AND PRESENTATIONS. 9. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE A SSESSEE TO GIVE DETAILS FOR GIFT ARTICLES INCLUDING GOLD AND SILVER ARTICLES AND IN THE ABSENCE OF ANY REPLY, THE ASSESSING OFFICER DISALLOWED THE ENTIRE GIFTS AT R S.6,20,730/-. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) PARTLY ALLOWED THE CLAIM OF THE ASSESSEE AND CONFIRMED THE ADDITION OF RS.4,39,738/ - BY GIVING FOLLOWING FINDING IN PARA-11.2 OF HIS APPELLATE ORDER:- 11.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPE LLANT. THE APPELLANT WAS SPECIFICALLY ASKED TO FURNISH DETAILS OF GIFTS AND PRESENTATION EXPENSES. THE ASSESSEE HAS FURNISHED THE STATEMENT. A PERUSAL OF THE STATEMENT SHOWS THAT MOST OF THE EXPENSES HAVE BEEN INCURRED THROUGH AME RICAN EXPRESS BANK CREDIT CARD. THE NATURE OF THESE EXPENSES IS NOT KN OWN. THE EXPENSES ALSO INCLUDE EXPENSES SUCH AS PAYMENT TO NARAYAN JEWELLE RS (RS.4,630/- + RS.48,300/-). EVEN IF THE ASSESSEES CONTENTION THA T IN THE NORMAL COURSE OF BUSINESS, EXPENDITURE ON GIFTS AND PRESENTATION ETC ., IS INCURRED, IS ACCEPTED, THE QUANTUM OF EXPENDITURE IS QUITE SUBSTANTIAL AND THE DETAILS OF THE EXPENSE ARE ALSO NOT FURNISHED BY THE ASSESSEE. OUT OF TOTA L EXPENSES OF RS.8,73,781/- , THE ASSESSING OFFICER HAS DISALLOWED THE EXPENDIT URE OF RS.6,20,730/- WHICH IS ABOUT 75% OF THE EXPENDITURE. IN MY VIEW, CONSID ERING THE TURNOVER OF THE ASSESSEE AT RS.50 CRORES, IT WOULD BE REASONABLE TO RESTRICT THE DISALLOWANCE TO 50% OF RS.8,79,475/-. THE ASSESSEE GETS RELIEF O F RS.1,80,992/-. THE GROUND OF APPEAL NO.8 IS PARTLY ALLOWED. 10. WE FIND THAT THE ASSESSEE HAS SUBMITTED THE DET AILS OF GIFTS AND PRESENTATION EXPENSES AND MOST OF THE EXPENSES HAVE BEEN INCURRE D THROUGH AMERICAN EXPRESS BANK CREDIT CARD. THE EXPENSES ARE NOT DOUBTED AND EVEN THE NATURE OF EXPENSES, I.E. THE BUSINESS EXPENSES HAVE NOT BEEN DOUBTED BY THE LOWER AUTHORITIES. THE EXPENSES ARE IN THE NORMAL COURSE OF BUSINESS BUT W E ARE OF THE VIEW THAT THESE EXPENSES ARE COMPARATIVELY HIGHER AND TAKING A REAS ONABLE VIEW WE RESTRICT THIS DISALLOWANCE TO 25% AS AGAINST THE DISALLOWANCE CON FIRMED BY CIT(A) AT 50%. ITA NO.1230-31/AHD/006 A.YS. 2001-02 & 2002-03 NEWTON ENGINEERING & CHEMICALS LTD. V. ITO WD-4(1) , BRD PAGE 7 ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO R E-COMPUTE THE DISALLOWANCE AND THIS ISSUE OF THE ASSESSEES APPEAL IS PARTLY ALLOW ED. 11. IN THE RESULT, BOTH THE ASSESSEES APPEALS ARE ALLO WED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2009 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/11/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-III, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD