The ACIT, Circle-3, Surat V. M/s. Ess Ess Engineering, Surat

ITA 125/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73002 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 14-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 19-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER M/S ESS ESS ENGINEERING SEEMANAGAR SOCIETY-II, PALANPUR PATIA, RANDER RAOD, SURAT PAN: AABFE6746Q (APPELLANT) VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, SURAT (RESPONDENT) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, SURAT (APPELLANT) VS M/S ESS ESS ENGINEERING SEEMANAGAR SOCIETY-II, PALANPUR PATIA, RANDER RAOD, SURAT PAN: AABEFE6746Q (RESPONDENT) REVENUE BY: SRI J.P.JHANGID, SR.D.R. ASSESSEE BY: SRI MEHUL SHAH, A.R. DATE OF HEARING : 14-02-2014 DATE OF PRONOUNCEMENT : 21-02-20 14 ITA NO. 115/AHD/2011 ASSESSMENT YEAR 2007-08 ITA NO. 125/AHD/2011 ASSESSMENT YEAR 2007-08 I.T.A NOS. 115 &125/AHD/2011 A.Y. 2007-08 PAGE NO M/S ESS ESS ENGINEERING VS. ACIT 2 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THESE ARE CROSS APPEALS AGAINST THE ORDER OF LD. C IT(A)-II SURAT DATED 26-10-2010. 2. ASSESSEES APPEAL IS LATE BY ONE DAY. THE DELAY IN FILING THE APPEAL WAS CONDONED AFTER HEARING BOTH THE PARTIES AND APP EAL WAS ADMITTED FOR HEARING. FIRST WE WILL TAKE UP ASSESSEES APPEAL IN ITA NO. 115/AHD/2011 3. ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF RS. 25,42,502/- FROM T RANSPORTATION EXPENSES. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF 20% OF MISCELLANEOUS EXPENSES OF RS. 26,93/- AND OFFICE EXPENSES OF RS. 17,932/- 4. GROUND NO. 1 RELATES TO DISALLOWANCE OF RS. 25,4 2,502/- FROM TRANSPORTATION EXPENSES. 5. AT THE TIME OF HEARING BOTH THE PARTIES AGREED T HAT ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CAS E FOR THE A.Y. 2005-06 I.T.A NOS. 115 &125/AHD/2011 A.Y. 2007-08 PAGE NO M/S ESS ESS ENGINEERING VS. ACIT 3 AND 2006-07 WHEREIN THE ISSUE WAS RESTORED TO THE F ILE OF LD. CIT(A) FOR FRESH ADJUDICATION. FOLLOWING THE SAME THIS YEAR A LSO MATTER IS RESTORED BACK TO THE FILE OF LD. CIT(A) . THIS GROUND OF ASSESSE ES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 6. GROUND NO. 2 RELATES TO ADHOC DISALLOWANCE OF MI SCELLANEOUS EXPENSES. 7. AO WHILE MAKING DISALLOWANCE HAS OBSERVED AS UND ER:- 8.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, O N VERIFICATION OF THE PROFIT AND LOSS A/C., IT WAS NOTICED THAT THE A SSESSEE HAS INTER-ALIA DEBITED/CLAIMED THE FOLLOWING EXPENSES:- PARTICULARS AMT. (RS.) I) MISC. EXP. 2,693 II) OFFICE EXP. 17,932 III) TEA COUPON EXPENSES 26,579 TOTAL 47,204 8. LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE A SSESSEES SUBMISSION HAS RESTRICTED THIS DISALLOWANCE TO 20% OF MISCELLA NEOUS EXPENSES OF RS. 2,693/- AND OFFICE EXPENSES OF RS. 17,932/- WHICH APPEARS TO BE REASONABLE AND THEREFORE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND OF ASS ESSEES APPEAL IS DISMISSED. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE. I.T.A NOS. 115 &125/AHD/2011 A.Y. 2007-08 PAGE NO M/S ESS ESS ENGINEERING VS. ACIT 4 NOW COMING TO REVENUES APPEAL IN ITA NO. 125/AHD/2 011 10. REVENUE HAS TAKEN FOLLOWING GROUND OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 6, 53,980/-, MADE ON ACCOUNT OF DISALLOWANCE OUT OF SALARY AND BONUS EXP ENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE AND IN LAW , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1, 10,657/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 2(24)(X) R.W.S. 36(V)( I)(A). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2, 29,361/- MADE ON ACCOUNT OF DISALLOWANCE OUT OF INSURANCE EXPENSES. 11. GROUND NO. 1 RELATES TO DELETION OF ADDITION OF RS. 6,53,980/- MADE ON ACCOUNT OF DISALLOWANCE OUT OF SALARY AND BONUS EXP ENSES WHICH IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY TH E EARLIER ORDER OF THE TRIBUNAL FOR A.Y. 2005-06 WHEREIN THE HONBLE ITAT WHILE GIVING RELIEF TO THE ASSESSEE HAS OBSERVED AS UNDER:- 25 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(APPEALS) WHILE DELET ING THE ADHOC DISALLOWANCE OBSERVED THAT THE RECEIPTS IN THE YEAR UNDER CONSIDERATION INCREASED TO 4.54 CRORES AS AGAINST 2 .15 CRORES IN THE IMMEDIATELY PRECEDING YEAR AND CORRESPONDING, SALAR Y EXPENDITURE ALSO INCREASED TO RS.2,67,28,165/- AS AGAINST RS. 1 ,47,44,610/- IN THE PRECEDING YEAR. SINCE THE LABOUR WAS GENERALLY ILL ITERATE THEY MAY NOT HAVE SIGNED IN THE REGISTER MAINTAINED FOR THE PURP OSE. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT THE ADHOC DISALLOWANC E OF 2% OF THE SALARY WITHOUT PIN-PAINTING THE SPECIFIC DEFECTS WA S NOT JUSTIFIED. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE REVENUE DI D NOT PLACE ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE WITH THE F INDINGS OF THE LD. I.T.A NOS. 115 &125/AHD/2011 A.Y. 2007-08 PAGE NO M/S ESS ESS ENGINEERING VS. ACIT 5 CIT(APPEALS). CONSEQUENTLY, GROUND NO 3 IN THE APPE AL OF THE REVENUE FOR THE AY 2006-07 IS DISMISSED RESPECTFULLY FOLLOWING THE ABOVE, THE ORDER PASSED BY LD. CIT(A) IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL IS DISMIS SED. 12. GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS. 1,10,657/- MADE ON ACCOUNT OF DISALLOWANCE U/S. 2(44)(10) R.W.S. 36(V) (I)(A). 13. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THE MATTER BE SENT BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN TH E LIGHT OF LATEST POSITION OF LAW IN VIEW OF HONBLE JURISDICTIONAL HIGH COURT DE CISION IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION DATED 26 TH DECEMBER,2013 THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 14. GROUND NO. 3 RELATES TO DELETION OF ADDITION OF RS.2,29,361/-MADE ON ACCOUNT OF DISALLOWANCE OUT OF INSURANCE EXPENSES WHICH IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2005-06 AND 2006-07 WHEREIN THE ISSUE WAS RESTORED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION. FOLLOWING THE SAME THIS YEAR ALSO MA TTER IS RESTORED BACK TO THE FILE OF LD. CIT(A) . THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 15. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE. I.T.A NOS. 115 &125/AHD/2011 A.Y. 2007-08 PAGE NO M/S ESS ESS ENGINEERING VS. ACIT 6 16. IN THE COMBINED RESULT, ASSESSEES AND REVENUE S APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 21/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,