M/s Rajnish International, Ludhiana V. ACIT, C-1, Ludhiana

ITA 1243/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5346 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: AMANDEEP VATS
• Keywords: Tax effect

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1243/CHD/2017 ASSESSMENT YEAR:2013-14 M/S RAJNISH INTERNATIONAL, VS. THE ACIT, CIRCLE-I, E-26, PHASE IV, FOCAL POINT, LUDHIANA LUDHIANA PAN NO. AADFR6904P (APPELLANT) (RESPONDENT) APPELLANT BY : SH.AMANDEEP VATS RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 08.01.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS CIT(A)]-2, LUDHIANA DATED 6.6.2017. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) ON AC COUNT OF EXHIBITION EXPENSES. 3. AT THE OUTSET, SHRI AMANDEEP VATS, LD. CA, REPRE SENTING THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE ON AC COUNT OF EXHIBITION 2 EXPENSES. HE HAS SUBMITTED THAT THE ASSESSEE IS EN GAGED IN THE ACTIVITY OF EXPORT OF AUTO PARTS AND FOR ITS BUSINESS ACTIVITIE S, IT ALSO PARTICIPATES IN THE EXHIBITIONS. THAT THE ASSESSEE PARTICIPATED IN THE EXHIBITION AND ALL THE BILLS AND VOUCHERS PERTAINING TO THE SAID EXPENDITU RE WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER. HOWEVER, THE LD. ASSE SSING OFFICER ALLOWED ONLY 1/3 RD OF THE EXPENSES OBSERVING THAT TWO SISTER CONCERN S OF THE ASSESSEE NAMELY AHUJA INDUSTRIAL CORPORATION AND M/ S RAJNISH INDUSTRIES PVT. LTD. ALSO USED TO MAKE PURCHASES FROM THE ASSESSEE. HE OBSERVED THAT THE EXHIBITION EXPENSES INCURRED BY THE ASSESSEE SH OULD BE APPORTIONED BETWEEN THE ASSESSEE AND ITS SISTER CONCERNS. HE, THEREFORE, APPORTIONED 1/3 RD OF THE EXPENSES TO EACH OF THE SISTER CONCERN OF T HE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ABOVE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4. BEFORE US, SHRI AMANDEEP VATS, LD. REPRESENTATIV E OF THE ASSESSEE HAS SUBMITTED THAT THE SISTER CONCERN OF THE ASSESS EE HAD NO CONCERN WITH THE EXHIBITION EXPENSES OF THE ASSESSEE AS THE SAM E WERE SOLELY RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE. HE HAS FURT HER SUBMITTED THAT EVEN OTHERWISE, SO FAR AS THE DEPARTMENT IS CONCERNED, T HE ABOVE DISALLOWANCE WILL BE TAX NEUTRAL AS THE SISTER CONCERNS OF THE A SSESSEE HAVE ALSO OFFERED SUBSTANTIAL INCOME AND HAVE BEEN TAXED AT THE MAXIM UM SLAB RATE. IF THE DISALLOWANCE IS MADE IN THE HANDS OF THE ASSESSEE, THE SAME WILL BE AN ALLOWABLE EXPENDITURE IN THE HANDS OF THE SISTER CO NCERNS YIELDING NO TAX IN THE RESULT. 5. THE LD. DR, HOWEVER, HAS VEHEMENTLY RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ASSESSING OFFICER HAD APPORTIONED THE AFORESAID EXP ENDITURE ONLY ON ASSUMPTION BASIS WITHOUT ANY EVIDENCE ON FILE THAT THE EXHIBITION EXPENSES WERE RELATED TO THE SISTER CONCERNS OF THE ASSESSEE ALSO. EVEN OTHERWISE, WE FIND FORCE IN THE CONTENTION OF THE LD. AR THAT TH E IF TAX EFFECT WILL BE NEUTRAL, THE ENTIRE EXERCISE OF DISALLOWANCE WILL B E FUTILE BUT PUSHING THE ASSESSEE AS WELL AS THE SISTER CONCERNS OF THE ASSE SSEE INTO UNNECESSARY LITIGATION. IN VIEW OF THE ABOVE, WE DO NOT FIND AN Y JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES FOR MAKING / CONFIRMING TH E AFORESAID DISALLOWANCE, THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.01.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 4