ACIT, CHENNAI V. M/s. MGM Transports Pvt Ltd., CHENNAI

ITA 1283/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0720 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: T VASUDEVAN
• Section: 143(3); 194C; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NOS.694 AND 177/MDS/2010, ASSESSMENT YEARS : 2005-06 AND 2006-07 MGM TRANSPORT PVT. LTD., NO. 189, WALTAX ROAD, CHENNAI 600 003. [PAN:AACCM5458M] VS. THE COMMISSIONER OF INCOME TAX CHENNAI III, CHENNAI 600 034. (APPELLANT) (RESPONDENT) I.T.A. NO.165/MDS/2010 AND I.T.A. NOS.567, 1282 &12 83/MDS/2011 ASSESSMENT YEARS : 2006-07 AND 2007-08, 2005-06 & 2 008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(2), AAYAKAR BHAVAN, MAIN BUILDING, IV FLOOR, 21, M.G. ROAD, NUNGAMBAKKAM, CHENNAI 34. VS. MGM TRANSPORT PVT. LTD., NO. 189, WALTAX ROAD, CHENNAI 600 003. (APPELLANT) (RESPONDENT) A SSESSE E BY : SHRI T. VASUDEVAN, ADVOCATE DEPARTMENT BY : DR. S. MOHARANA, CIT DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT : 25.02.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER I.T.A. NO. 694/MDS/2010 & I.T.A. NO. 1282/MDS/2011 THESE APPEALS RELATING TO THE ASSESSMENT YEAR 2005 -06 I.E., I.T.A. NO. 694/MDS/2010 HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF CIT, CHENNAI DATED 18.03.2010 IN C.NO. 3033/17/III/2008- 09 PASSED UNDER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 2 SECTION 263 OF THE INCOME TAX ACT 1961 [IN SHORT TH E ACT]. WHEREAS, I.T.A. NO. 1282/MDS/2011 HAS BEEN PREFERRED BY THE REVENUE , AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) V, CHENNAI DATED 21.04.2011 PASSED IN ITA NO. 161/10-11 IN CONSEQUENTIAL PROCEE DINGS UNDER SECTION 143(3) R.W.S. 263 OF THE ACT. 2. FACTS COMMON TO BOTH CASES ARE THAT THE ASSESSE E IS A COMPANY ENGAGED IN THE BUSINESS OF TRANSPORT CONTRACTOR. FO R THE IMPUGNED ASSESSMENT YEAR, IT HAD FILED ITS RETURN ON 31.10.2 005 DECLARING LOSS OF ` .2,34,86,902/-. AT THE FIRST INSTANCE, THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAFTER, THE ASSESSING OFFIC ER FINALIZED REGULAR ASSESSMENT ON 28.12.2007 UNDER SECTION 143(3) OF TH E ACT COMPUTING LOSS OF ` .1,68,68,118/-. SUBSEQUENTLY, THE CIT ISSUED A NOTI CE TO THE ASSESSEE DATED 23.11.2009 UNDER SECTION 263 OF THE ACT BY TERMING THE ASSESSMENT ABOVE SAID FINALIZED ON 28.12.2007 AS PREJUDICIAL T O INTEREST OF THE REVENUE. THE REASONS TAKEN IN THE NOTICE WERE THAT THE ASSES SEE; IN ITS PROFIT AND LOSS ACCOUNT, HAD DEBITED HIRE CHARGES PAYMENT OF ` .1,44,84,017/- AND PROFESSIONAL CHARGES OF ` .1,76,080/- BY FOLLOWING NETTING FORMULA INSTEAD OF DEDUCTING TDS ON GROSS AMOUNT OF PAYMENT. IN CITS OPINION, THE TDS PROVISIONS UNDER SECTION 194C AND SECTION 194 J OF THE ACT WERE APPLICABLE WHICH WOULD INVITE DISALLOWANCE UNDER SECTION 40(A) (IA) OF THE ACT AND THE ASSESSING OFFICER HAD OMITTED TO MAKE THE SAME. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 3 3. IN RESPONSE, THE ASSESSEE FILED ITS REPLY DEFEN DING THE ASSESSMENT FINALIZED AND SUBMITTED THAT THE PAYEE OF THE ABOVE SAID CHARGES IN QUESTION WAS ITS SISTER CONCERN NAMELY M/S. NAMAKKAL SOUTH I NDIA TRANSPORTS [NSIT] WHO WAS IN THE SAME BUSINESS. PER ASSESSEE, INSTEAD OF SUB-CONTRACTING THE OBLIGATIONS FURTHER, THEY UTILIZED EACH OTHERS FLE ET BY RESORTING TO CROSS ENGAGEMENT ON DAILY BASIS PER THE GIVEN CIRCUMSTANC ES LEADING TO A HIGH FREQUENCY OF THE ARRANGEMENT. IT FURTHER CLARIFIED THAT AT THE END OF THE YEAR, BOTH ENTITIES WOULD RECONCILE THE SERVICES OFFERED BY EACH OTHER FOLLOWED BY NETTING AND PAYMENT WOULD BE MADE TO THE ENTITY HAV ING EXCESS ACCOUNT. HOWEVER, THE CIT WAS NOT SATISFIED WITH ASSESSEES EXPLANATION ABOVE SAID; IN WHOSE OPINION, THE ASSESSING OFFICER HAD NOT APP LIED ABOVE SAID PROVISIONS OF THE ACT IN MAKING THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. THEREFORE, VIDE ORDER DATED 18.03.2010, HE SET ASIDE THE ASSESSMENT ORDER BY HOLDING THAT IT WAS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE ASSESSING OFFICER TO FRAME FRESH ASSESSMENT. IN THIS BACKDROP OF FACTS, THE ASSESSEE HAS FILED APPEAL I.T.A. NO. 694/MDS/2010 CHALLENGING 263 ORDER. 4. AT THE SAME TIME, WE NOTICE THAT IN CONSEQUENTI AL PROCEEDINGS, THE ASSESSING OFFICER FINALIZED ASSESSMENT UNDER SECTIO N 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DATED 23.12.2010 HOLDING THERE IN THAT THE ASSESSEES I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 4 ARRANGEMENT OF RECONCILIATION AND NETTING AND OF MA KING PAYMENTS TO THE SISTER CONCERN WOULD ATTRACT THE PROVISIONS OF SECT ION 194C AND 194J ON GROSS BASIS AND FAILURE THEREOF, WOULD LEAD TO DISA LLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, HE MADE DISALL OWANCE UNDER SECTION 40(A)(IA) R.W.S. 194C OF THE ACT TO THE TUNE OF ` .1,44,84,017/-. SIMILARLY, HE ALSO MADE DISALLOWANCE OF AN AMOUNT OF ` .1,76,080/- TOWARDS PROFESSIONAL CHARGES (SUPRA). 5. IN ASSESSEES APPEAL AGAINST THE ASSESSMENT ORD ER, THE CIT(A) HAS HELD THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) IS NOT ATTRACTED IN CASE OF NETTING FORMULA ADOPTED BY THE ASSESSEE. ACCORDINGL Y, HE HAS DELETED DISALLOWANCE OF ` .1,44,84,017/- UNDER SECTION 194C. AT THE SAME TIME , HE HAD UPHELD THE DISALLOWANCE MADE UNDER SECTION 194J MADE BY THE ASSESSING OFFICER. THEREFORE, THE REVENUE IS AGGRIEVED AND IS IN APPE AL. IN THIS BACKDROP, WE TAKE UP APPEAL OF THE ASSESSEE IN 263 PROCEEDINGS FIRST (SUPRA). 6. THE AR OF THE ASSESSEE SUBMITS IN I.T.A. NO. 69 4/MDS/2010 THAT THE CIT HAS WRONGLY EXERCISED JURISDICTION UNDER SECTIO N 263 OF THE ACT AS THE ASSESSING OFFICER HAD RIGHTLY FINALIZED THE ASSESSM ENT IN QUESTION DATED 28.12.2007. 7. OPPOSING THIS, THE REVENUE SUBMITS THAT SINCE T HE ASSESSING OFFICER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 5 HAD NOT CONSIDERED THE VITAL ASPECTS OF THE CASE PE RTAINING TO ASSESSEES TRANSACTIONS WITH ITS SISTER CONCERN IN DETAIL, THE CIT HAD INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT. 8. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CIT ORDER. WE NOTICE THAT THE ASSESSING OFFICER HAD PASSED THE ASSESSMEN T ORDER IN QUESTION ON 28.12.2007. HOWEVER, THE SAME IS NOWHERE FORTHCOMIN G IN THE PAPER BOOK FILED BY THE ASSESSEE, WHICH COULD INFER THAT THE A SSESSING OFFICER HAD APPLIED HIS MIND BEFORE FINALIZING THE ASSESSMENT Q UA THE FACTUAL ASPECT OF THE CASE AFORESAID. IN THIS REGARD, WE ARE AWARE OF THE LATEST CASE LAW REPORTED AS [2012] 343 ITR 329 (DEL), WHEREIN IT HA S BEEN HELD WHEN THE ASSESSING OFFICER DOES NOT CONDUCT A PROPER ENQUIRY BEFORE FINALIZING THE ASSESSMENT IN QUESTION, IT ITSELF IS AN INSTANCE CA USING PREJUDICE TO THE INTEREST OF THE REVENUE GIVING RISE TO THE EXERCISE OF JURISDICTION BY THE CIT UNDER SECTION 263 OF THE ACT. HENCE, ON THIS SCOR E ALONE, WE UPHOLD THE ORDER OF THE CIT UNDER CHALLENGE. 9. NOW, WE COME TO I.T.A. NO. 1282/MDS/2011 FILED BY THE REVENUE. IN THIS APPEAL, THE SOLE ARGUMENT OF THE REVENUE IS TH AT THE CIT(A) HAS WRONGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 194C OF THE ACT AS THE ASSESSEE WAS LIABLE TO DEDUCT TDS QUA GROSS AMOUNT INSTEAD OF NETTING FORMULA (SUPRA) QUA PAYMENTS MAD E IN FURTHERANCE TO CROSS ENGAGEMENT OF THE VEHICLES WITH ITS SISTER CO NCERN. PER REVENUE, THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 6 MODUS OPERANDI ADOPTED BY THE ASSESSEE IS AKIN TO S UB-CONTRACTORSHIP; WHEREIN FIRST IT ITSELF ENTERED INTO AN AGREEMENT W ITH THE PAYERS AND THEN, IT ENTERED INTO SUB-CONTRACT WITH ITS SISTER CONCERN I N PERFORMING THE OBLIGATION CREATED BY AGREEMENTS. THE DR VEHEMENTLY REITERATES THE SUBMISSIONS RAISED IN THE GROUNDS AND BY CITING THE CASE LAW OF [2010] 236 CTR (KAR) 105 SMT. J. RAMA VS. CIT AND [2009] 225 CTR (RAJ) 125 S HREE CHOUDHARY TRANSPORT COMPANY AS WELL AS CBDT CIRCULAR 715 DATE D 08.08.1995, HE CONTENDS THAT IN CASE OF SUB-CONTRACTORSHIP TDS HAS TO BE DEDUCTED IN ALL TRANSACTIONS INSTEAD OF APPLYING NETTING FORMULA. I N THE LIGHT THEREOF, HE PRAYS FOR ACCEPTANCE OF THE APPEAL. 10. OPPOSING THIS, THE ASSESSEES SUBMISSION IS TH AT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND DRAWS SUPPORT FROM THE REASONS CONTAINED IN THE ORDER UNDER CHALLENGE. IT FURTHER SUBMITS THAT THERE IS NO EVIDENCE OF SUB- CONTRACTORSHIP OR ANY OBLIGATION HAVING BEEN PERFOR MED BY ASSESSEES SISTER CONCERN WHICH WOULD ATTRACT SECTION 194C OF THE AC T. IN THE ALTERNATIVE, THE ASSESSEE ALSO SUBMITS THAT AT THE BEST, THE PRESENT IS AN INSTANCE OF DEFICIENCY IN DEDUCTING TDS INSTEAD ITS NON-COMPLIA NCE. THEREFORE, THE AR CONTENDS THAT IN SUCH CASES, DISALLOWANCE UNDER SEC TION 40(A)(IA) IS NOT ATTRACTED. HE ALSO PLACED ON RECORD A PAPER BOOK CO NTAINING FOLLOWING PARTICULARS AND PRAYS FOR REJECTION OF THE APPEAL: 1. TERMS OF CONTRACT BETWEEN ASSESSEE AND SRI VISHN U CEMENT LTD. 2. TERMS OF CONTRACT BETWEEN ASSESSEE AND THE INDIA CEMENTS LTD. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 7 3. TERMS OF CONTRACT BETWEEN ASSESSEE AND RMC READY MIX (INDIA) 4. DECISION OF GUJARAT HIGH COURT IN CIT V. PRASHAN T H SHAH DATED 09.10.2012. 5. CIT VS. POOMPUHAR SHIPPING CORP. LTD. 282 ITR 3 (MAD.HC) 6. CIT V. UNITED RICE LAND LTD. (P&H HC) 7. DCIT V. SATISH AGGARWAL & CO. (AMRT. TRIB) 122 I TD 35 8. MYTHRI TRANSPORT CORPORATION VS. ACIY (VIZAG TRI B) 124 ITD 40. 9. SEVEN HILLS CARGO CARRIER VS. ITO (VIZAG TRIB) D T. 26.11.11. 10. SAIBABA TRANSPORT VS. ITO, WARD 3, NADIAD (AHM) DT. 15.6.12. 11. WE HAVE HEARD BOTH PARTIES AT LENGTH AND PERUS ED THE ASSESSMENT ORDER, CIT(A)S ORDER AS WELL AS THE ABOVE SAID MAT ERIAL SUBMITTED BY BOTH PARTIES. UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRANSPORT CONTRACTOR HAVING FLEET OF VARIOUS CATEGORIES OF CA RRIAGE VEHICLES. IT ALSO HAS A SISTER CONCERN NAMELY NSIT IN THE SAME LINE OF BU SINESS HAVING ITS OWN FLEET OF SAME CATEGORY OF VEHICLES. AS THE RECORDS SUGGEST, THE ASSESSEE IS HAVING AGREEMENT WITH VARIOUS ENTITIES FOR CARRIAGE OF READYMIX CEMENTS, ETC. IN THE PAPER BOOK AVAILABLE, WE FIND AT PAGE N O. 3 IN THE AGREEMENT DATED 31.07.2008 [CLAUSE 6.6] THAT THE SAID CONTRAC T IS NOT TRANSFERRABLE/ ASSIGNABLE. THEREFORE, THE ASSESSEE ADOPTED CROSS H IRING FORMULA WITH ITS SISTER CONCERN. ACCORDINGLY, BOTH ENTITIES WOULD CR OSS ENGAGE EACH OTHERS VEHICLES AS AND WHEN THE SITUATION AROSE. THEY WOUL D TAKE EACH OTHERS VEHICLE AND PERFORM THEMSELVES THE OBLIGATIONS CREA TED IN THE AGREEMENTS. ACCORDINGLY, THE PAYMENTS WOULD BE COMPUTED WITH RE GARD TO THE VEHICLES AND NOT FOR OBLIGATIONS. THE SAME WOULD LEAD TO VO LUMINOUS ENTRIES IN FAVOUR OF BOTH SISTER CONCERNS AGAINST EACH OTHER. AT THE END OF THE RELEVANT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 8 ASSESSMENT YEAR, BOTH CHOSE TO RECONCILE EACH OTHER S ENTRIES AND THE ONE WHO HAD EXCESS OF THEM GOT PAID AS PER THE NETTING FORMULA. THE REVENUE CONTENDS THAT INSTEAD OF DEDUCTING TDS AFTER NETTIN G FORMULA, IT SHOULD HAVE TREATED EACH ENGAGEMENT WITH ITS SISTER CONCERN AS A SEPARATE TRANSACTION AND COMPUTED TDS ACCORDINGLY. THIS, IN OUR OPINION, IS NOT THE CORRECT INTERPRETATION OF THE PROVISION (SUPRA) IN ITS CORR ECT PERSPECTIVE. AFTER PERUSAL OF SECTION 194C, WE FIND THAT THE SAME IS NOT ONLY APPLICABLE IN CASE OF PAYMENT TO A CONTRACTOR, BUT ALSO TO A SUB-CONTRACT OR [194C EXPLANATION III]. HOWEVER, WE NOTICE FROM THE FACTS IN HAND THAT NO L IABILITY ARISES AS EVEN THE ASSESSING OFFICER NOWHERE DISPUTES THAT THE ASSESSE E HAD PERFORMED THE CONTRACTUAL OBLIGATIONS ITSELF INSTEAD OF FURTHER D ELEGATING IT TO ITS SISTER CONCERN. RISK AND RESPONSIBILITY ARISING OUT OF THE CONTRACT HAVE BEEN PERFORMED BY THE ASSESSEE WHICH HAVE NOWHERE BEEN P ASSED UPON TO THE SISTER CONCERN. IN OUR VIEW, THE CROSS HIRING VEHIC LES CANNOT BE TERMED AS SUB-CONTRACT WHICH WOULD INVITE APPLICATION OF SECT ION 194C. SO FAR AS CASE LAW CITED BY THE REVENUE IS CONCERNED, WE ALSO EXPR ESS OUR RESPECTFUL AGREEMENT THAT IN CASE OF A SUB-CONTRACT, THE PROVI SION IS APPLICABLE. BUT, AS CLARIFIED HEREINABOVE, ONCE THE CIRCUMSTANCES POINT TOWARDS NON-EXISTENCE OF A SUB-CONTRACT, WE ARE UNABLE TO AGREE WITH THE METICULOUS ARGUMENTS SUBMITTED BY THE REVENUE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 9 12. THERE IS ANOTHER ASPECT OF THE MATTER. THE PRE SENT IS A CASE WHERE THERE IS NO ALTOGETHER DEFAULT ON THE PART OF THE A SSESSEE IN DEDUCTING THE TDS. RATHER, THE ONLY ISSUE BETWEEN THE PARTIES IS THAT THE ASSESSEE HAD PREFERRED TO DEDUCT THE TDS OF NETTING FORMULA INST EAD OF GROSS TRANSACTIONS. IN THIS REGARD, WE NOTICE THAT IT IS, AT THE BEST A CASE OF SHORTFALL OF THE TDS WHICH DOES NOT ATTRACT DISALLOWANCE UNDER SECTION 4 0(A)(IA) OF THE ACT. WHILST HOLDING SO, WE FIND SUPPORT FROM VARIOUS COO RDINATE BENCH DECISIONS OF ITAT NAMELY I.T.A. NO. 20/MUM/2010 TITLED AS DCI T V. M/S. CHANDABHOY & JASSOBHOY, I.T.A. NO. 2061/MDS/2012 DECIDED ON 29 .01.2012 M/S. KEC INTERNATIONAL LTD. V. ITO WHICH HAVE REASONABLY BEE N ALSO FORTIFIED BY THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. S.K. TEKRIWAL 183 OF 2012 [G.A. NO. 2069/2012]. THEREFOR E, ON THIS SCORE AS WELL, WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A). 13. IN VIEW OF THE ABOVE DISCUSSION, BOTH THESE AP PEALS IN I.T.A. NO. 694/MDS/2010 FILED BY THE ASSESSEE CHALLENGING ORDE R UNDER SECTION 263 OF THE ACT AS WELL AS I.T.A. NO. 1282/MDS/2011 FILED BY THE REVENUE CHALLENGING CIT(A)S ORDER IN CONSEQUENTIAL PROCEED INGS ARE DISMISSED. I.T.A. NOS. 165 AND 177/MDS/2010 [A.Y. 2006-07] 14. THESE CROSS APPEALS BY THE ASSESSEE AND REVENU E RESPECTIVELY; ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) V, I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 10 CHENNAI DATED 27.11.2009 PASSED IN ITA NO. 530/2008 -09 FOR ASSESSMENT YEAR 2006-07, IN PROCEEDINGS UNDER SECTION 143(3) O F THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 15. FACTS APROPOS ARE THAT FOR THE IMPUGNED ASSESS MENT YEAR, THE ASSESSEE HAD RETURNED NIL INCOME. 16. IN SCRUTINY PROCEEDINGS, THE ASSESSING OFFIC ER NOTICED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF ` .1,20,38,214/- INCLUDING HIRING CHARGES OF ` .65,82,357/- PAID TO ITS SISTER CONCERN NAMELY NSIT [SAME PAYEE AS IN I.T.A. NO. 694/MDS/2010] BY ADOPTING NETTING FORMUL A. PER ASSESSING OFFICER, INSTEAD OF ADOPTING NETTING FORMULA AND THEN DEDUCT ING TDS, THE ASSESSEE SHOULD HAVE DEDUCTED TDS ON GROSS AMOUNT OF HIRING CHARGES. THEREFORE, IN THE ASSESSMENT ORDER DATED 23.12.2008, HE INVOKED S ECTION 40(A)(IA), AND DISALLOWED/ADDED THE DIFFERENCE AMOUNT OF ` .41,75,907/- IN ASSESSEES TOTAL INCOME. IN THE SAID ORDER, HE ALSO DISALLOWED/ADDED AN AMOUNT OF ` .2,80,013/- AND ` .5,50,549/- PAID BY THE ASSESSEE IN THE SHAPE OF PI PELINE GANG EXPENSES AND LABOUR GANG EXPENSES FOR SHORTFAL L AND NON-DEDUCTION OF TDS RESPECTIVELY. IN THE SAME MANNER, THE ASSESSING OFFICER ALSO MADE VARIOUS OTHER ADDITIONS; NAMELY AN AMOUNT OF ` .28,17,700/- @ 10% AS BATA TO DRIVERS AND CLEANERS BY HOLDING THAT IN EVIDENCE, ONLY SELF-MAD E VOUCHERS HAD BEEN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 11 PRODUCED BY THE ASSESSEE. FURTHER, THE ASSESSING OF FICER MADE ANOTHER ADDITION OF LOADING AND UNLOADING CHARGES OF ` .9,95,751/- AS UNNECESSARY EXPENDITURE. QUA MISCELLANEOUS EXPENSES OF ` .23,13,179/-, THE ASSESSEE ITSELF IS STATED TO HAVE ADMITTED THAT AN AMOUNT OF ` .4,08,995/- WAS NOT RELATED TO BUSINESS ACTIVITY, WHICH ULTIMATELY WAS ADDED. 17. AS THE ASSESSMENT ORDER REVEALS, THE ASSESSING OFFICER MADE OTHER ADDITIONS OF ` .29,16,964/- CLAIMED AS SPARES AND REPAIRS, ` .16,55,230/- AS ADMINISTRATIVE EXPENSES, ` .9,58,956/- AS HIRE CHARGES, ` .4,02,724/- AS FOREIGN TRAVEL EXPENSES BY CITING THE REASONS OF AS SESSEES FAILURE IN SUBMITTING BILLS AND VOUCHERS IN SUPPORT, ESTIMATIO N BASIS, LACK OF VERIFICATION AND WANT OF DETAILS, ETC. ACCORDINGLY, THE ASSESSEE S TOTAL INCOME STOOD COMPUTED AS ` .2,69,93,500/-. 18. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. WE N OTICE FROM THE CIT(A)S ORDER UNDER CHALLENGE THAT HE HAS CONFIRME D THE ADDITION UNDER SECTION 40(A)(IA) OF ` .41,75,907/- AND FOREIGN TRAVEL EXPENSES. AT THE SA ME TIME, HE HAS RESTRICTED THE ADDITION OF BATA (SUPRA ) AND SPARES AND REPAIRS @ 5% OF THE CLAIM RAISED AND DELETED THE ADDITION OF LOADING AND UNLOADING CHARGES AS MADE BY THE ASSESSING OFFICER. IN THIS FACTUAL BACKDROP, THE ASSESSEE HAS IMPUGN ED IN CIT(A)S ORDER TO THE EXTENT IT CONFIRMS ADDITION MADE BY THE ASSE SSING OFFICER (SUPRA). I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 12 WHEREAS, REVENUES ONLY GRIEVANCE IS THE LOADING AN D UNLOADING CHARGES, ADDITION HAS BEEN WRONGLY DELETED. 19. IN THEIR ARGUMENTS, BOTH REPRESENTATIVES REITE RATED THEIR RESPECTIVE PLEADINGS RAISED IN THE GROUNDS AND PRAYED FOR ACCE PTANCE OF THE APPEALS. AT THE SAME TIME, THEY HAVE ALSO SUPPORTED CIT(A)S ORDER TO THE EXTENT IT FAVOURS THEIR RESPECTIVE INTERESTS. 20. WE HAVE HEARD BOTH PARTIES AT LENGTH AND ALSO PERUSED THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS CIT(A). SO FAR AS DISALLOWANCE CONFIRMED BY THE CIT(A) UNDER SECTION 40(A)(IA) IS CONCERNED, WE FIND THAT IN I.T.A. NO. 1282/MDS/2011 DECIDED HEREINABOVE, WE HAVE HELD THA T THE TDS WAS NOT LIABLE TO BE DEDUCTED UNDER SECTION 194C OF THE AC T. HENCE, THIS GROUND DOES NOT REQUIRE ANY FRESH ADJUDICATION. ACCORDINGL Y IT STANDS DECIDED IN FAVOUR OF THE ASSESSEE. 21. COMING TO THE OTHER ADDITIONS. WE FIND THAT TH E LOWER APPELLATE AUTHORITY HAS APPLIED ITS MIND IN DETAIL AND ONLY A FTER MINUTELY EXAMINING THE RELEVANT MATERIAL ON RECORD; IT HAS PROCEEDED TO AC CEPT ASSESSEES APPEAL IN PART (SUPRA). APART FROM RAISING BALD ASSERTIONS IN SUPPORT OF THE GROUNDS RAISED IN RESPECTIVE APPEALS, NEITHER PARTY BEFORE US HAS BEEN ABLE TO PINPOINT ANY ILLEGALITY OR INFIRMITY IN THE WELL RE ASONED ORDER OF THE CIT(A) BY TENDERING SOME COGENT MATERIAL. IT IS TRITE PREPOSI TION OF LAW THAT UNLESS THERE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 13 IS GLARING ERROR OF FACT OR LAW IN THE CASE CONCERN ED IS NOT HIGHLIGHTED BY ANY AGGRIEVED PARTY, THE OPINION OF THE FIRST APPELLATE AUTHORITY IS NOT TO BE INTERFERED WITH. IN THE PRESENT CASE, ALL EXPENSES OF ASSESSEE EXCEPT FOREIGN TRAVEL EXPENSES (SUPRA), PERTAINING TO THE PARTICUL AR LINE OF BUSINESS. IN OUR OPINION, THE CIT(A) HAS AN HOLISTIC VIEW IN CONFIRM ING THE ADDITION OF BATA, SPARES & REPAIRS BY RESTRICTING THE ADDITION TO 5%. QUA FOREIGN TRAVEL EXPENSES, THE ASSESSEE ADMITTEDLY FAILS TO LEAD EVI DENCE PROVING THE AIM AND OBJECT OF THE TRAVEL IN QUESTION, WITHOUT WHICH AN INFERENCE IS NECESSARILY TO BE DRAWN THAT THE SAME WAS NOT FOR BUSINESS PROM OTION, ETC. ON THE SAME ANALOGY, THE REVENUES GROUNDS PERTAINING TO LOADIN G AND UNLOADING CHARGES (SUPRA) HAS ALSO BEEN HELD TO BE A PART OF ASSESSEES BUSINESS BY THE CIT(A). KEEPING IN MIND OUR ABOVE DISCUSSIONS, WE SEE NO REASON TO UPSET WELL REASONED FINDINGS OF THE CIT(A) EXCEPT D ISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AS ABOVE. 22. ACCORDINGLY, ASSESSEES APPEAL IS PARTLY ACCEP TED AND REVENUES APPEAL IS DISMISSED. I.T.A. NO. 567/MDS/2011[A.Y. 2007-08] 23. THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE G ROUNDS IN APPEAL: 2.1. THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 40(A)(IA) OF RS. 1,75,30,888 ON HIRE CHARGES PAID TO M/S. NS IT WITHOUT DEDUCTION OF TAX AT SOURCE. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 14 2.2 TO 2.14 XXXXXXXXXXXXXX 3.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE ON PAYMENT OF BETTA TO DRIVERS AND CLEANERS TO RS. 10 LAKHS AS AGAINST RS. 25,03,819 MADE BY THE AO. 3.2 XXXXXXXXXXXXXX 4.1 THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE A MOUNT RS. 14,27,577 DISALLOWED BY THE AO UNDER THE HEAD LOADING AND UNL OADING CHARGES. 4.2 XXXXXXXXXXXXXX 5.1 THE LEARNED .CIT(A) HAS ERRED IN RESTRICTING TH E DISALLOWANCE OF MISCELLANEOUS EXPENSES TO RS. 1,50 LAKHS AS AGAINST RS. 3,65,551 DISALLOWED BY THE AO FOR NON PRODUCTION OF VOUCHERS. 5.2 XXXXXXXXXXXXXXX 6.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING DI SALLOWANCE UNDER SPARES AND REPAIRS TO 10% OF AMOUNT CLAIMED IN RESP ECT OF UNRECOGNISED SERVICE STATIONS. 6.2 TO 6.3 XXXXXXXXXXXXXX 7.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING TH E DISALLOWANCE OF RS.14,13,908 MADE BY A.O. TO RS. 2,50,000 ON ACCOUN T OF ADMINISTRATIVE EXPENSES. 7.2 XXXXXXXXXXXXXX 8.1 THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE C LAIM OF THE ASSESSEE OF FOREIGN TRAVEL EXPENSES OF ` 2,14,685 DISALLOWED BY THE A.O. 8.2 TO 8.3 XXXXXXXXXXXXX 9.1 THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O TO ALLOW THE SUM OF TDS OF RS. 24,89,210 REMITTED BEFORE THE DUE DATE F OR FILING THE R/I IN THIS ASSESSMENT YEAR. 9.2 & 10 XXXXXXXXXXXXX 24. BY REFERRING TO GROUND NO. 2.1, REPRODUCED HER EINABOVE, BOTH REPRESENTATIVES FAIRLY CONCEDE THAT THE SAME IS COV ERED IN ASSESSEES FAVOUR I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 15 IN VIEW OF OUR DISCUSSION IN I.T.A. NO. 1282/MDS/20 11 DECIDED HEREINABOVE. SO, WE REJECT THE INSTANT GROUND RAISED BY THE REVE NUE. 25. QUA OTHER GROUNDS, THE REVENUE REITERATES THE PLEADING ABOVE SAID AND PRAYS FOR ACCEPTANCE OF THE APPEAL BY SETTING A SIDE CIT(A)S ORDER MODIFYING/ADDITION MADE BY THE ASSESSING OFFICER. 26. PER CONTRA, THE ASSESSEE CHOOSES TO STRONGLY S UPPORT THE ORDER UNDER CHALLENGE PASSED BY THE CIT(A) AND PRAYS FOR REJECT ION OF THE APPEAL. 27. WE HAVE HEARD BOTH PARTIES. THE OTHER GROUNDS APART FROM GROUND NO. 2.1 CHALLENGE DELETION OF DISALLOWANCE/ADDITION BY THE CIT(A) WHICH WERE MADE BY THE ASSESSING OFFICER IN THE COURSE OF ASSE SSEES REGULAR ASSESSMENT. IN THE COURSE OF SCRUTINY ASSESSMENT PERTAINING TO THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD CLAIMED BATA TO DRIVERS AND CLEANERS, LOADING AND UNLOADING CHARGES, MISCELLANE OUS EXPENSES, SPARES & REPAIRS, ADMINISTRATIVE EXPENSES, TRAVEL EXPENSES A ND PAYMENTS MADE QUA OTHER EXPENSES TO THE TUNE OF ` .25,30,382/-, ` .14,27,577/-, ` .3,65,551/-, ` .30,59,040/-, ` .40,13,908/-, ` .2,14,685/- AND ` .51,47,412/- RESPECTIVELY. IN THE ASSESSMENT ORDER DATED 10.12.2009, THE ASSESSIN G OFFICER DISALLOWED/ ADDED BACK THE SAME IN ASSESSEES TOTAL INCOME FOR WANT OF SATISFACTORY DETAILED VERIFICATION AND IN THE ABSENCE OF COGENT EVIDENCE PRODUCED. ACCORDINGLY, HE COMPUTED THE ADDITION @ 10% QUA BAT A CLAIMED, FULL AMOUNT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 16 OF LOADING AND UNLOADING CHARGES, 10% OF MISCELLANE OUS EXPENSES AND SPARES & REPAIRS, 25% OF ADMINISTRATIVE EXPENSES AS WELL AS GROSS AMOUNT OF FOREIGN TRAVEL EXPENSES. SIMILARLY, QUA A CLAIM OF ` .51,47,412/-, THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE HAD MADE THE PAYMENTS BELATEDLY IN GOVERNMENT ACCOUNT NOT IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR, IT ATTRACTED DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED TOTAL INCOME OF THE ASSESSEE AS ` .3,95,24,480/- INSTEAD OF ` .1,44,00,639/- AS DECLARED BY THE ASSESSEE. 28. THE ASSESSEE IMPUGNED THE ASSESSMENT ORDER IN APPEAL. WE FIND FROM THE CIT(A)S ORDER THAT THE SOME OF THE ADDITI ONS HAVE BEEN MODIFIED I.E. 10% QUA BATA TO DRIVERS AND CLEANERS, LOADING AND UNLOADING CHARGES, ADDITION HAD BEEN DELETED IN TOTO, MISCELLANEOUS EX PENSES STAND RESTRICTED TO 1.50 LAKHS & ADDITION OF SPARES AND REPAIRS HAS BEEN LIMITED TO ` .8,69,264/-. FURTHER, THE CIT(A) HAS ESTIMATED DISA LLOWANCE OF ADMINISTRATIVE EXPENSES @ ` .2.50 LAKHS AND GRANTED RELIEF OF AN AMOUNT OF ` .2,14,685/-. REGARDING DISALLOWANCE UNDER SECTION 4 0(A)(IA) MADE BY THE ASSESSING OFFICER (SUPRA), THE CIT(A) HAS PLACED RE LIANCE ON THE CASE LAW OF CIT VS. ALOM EXTRUSIONS LTD. [319 ITR 306 (SC)] AND DELETED THE ADDITION. THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 17 29. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E FINDINGS OF THE ASSESSING OFFICER AND CIT(A). WE NOTICE FROM THE CA SE FILE BEFORE US THAT ADDITIONS MADE BY THE ASSESSING OFFICER HAVE BEEN D ELETED/PARTLY CONFIRMED BY THE LOWER APPELLATE AUTHORITY (SUPRA). IN OUR VI EW, ALMOST ALL ADDITIONS [BARRING FOREIGN TRAVEL EXPENSES AND ADDITION UNDER SECTION 40(A)(IA)] RELATE TO FACTUAL VERIFICATIONS. IN OUR VIEW, KEEPING IN M IND THE LINE OF ASSESSEES BUSINESS AND REASONS OF LOWER APPELLATE AUTHORITY I N SUPPORT OF THE ORDER, WHICH ARE NOT CONTROVERTED BY THE REVENUE BY LEADIN G SOME COGENT EVIDENCE, WE HARDLY SEE ANY REASON TO INTERFERE WIT H THE RELIEF GRANTED. SO FAR AS DISALLOWANCE UNDER SECTION 40(A)(IA) IS CONC ERNED, THE HONBLE APEX COURT HAS SETTLED THE LAW IN THE CASE OF CIT V. AL OM EXTRUSIONS LTD. (SUPRA) IN FAVOUR OF THE ASSESSEE AND AGAINST REVENUE THAT EVEN THE BELATED PAYMENTS MADE BEFORE THE DUE DATE ARE SUFFICIENT TO REJECT THE DISALLOWANCE. THEREFORE THIS GROUND ALSO FAILS. 30. THIS LEAVES US WITH REVENUES GROUND CHALLENGI NG CIT(A) ORDER SO FAR AS DELETION OF ADDITION OF FOREIGN TRAVEL EXPENSES IS CONCERNED. IN THIS CONTEXT, WE FIND THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD FAILED TO PROVE THE CORRELATION OF THE BUSINESS PURPOSES WITH THE FOREIGN VISIT IN QUESTION BY LEADING COGENT EVIDENCE ON RECORD. THE CIT(A) HAS SIMPLY DELETED THE ADDITION BY HOLDING THAT THE FOREIGN TR AVEL IN QUESTION WAS FOR MAINTAINING GOOD RELATIONSHIP AND SUPPLY OF VEHICLE S. EVEN THE ASSESSEE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 18 BEFORE US DOES NOT DISPUTE THE VEHEMENT CONTENTION OF THE REVENUE THAT THERE IS NO MATERIAL ON RECORD TO SUPPORT THE FINDI NG OF THE CIT(A). IN PRECEDING ASSESSMENT YEAR AS WELL, THE CIT(A) HAS C ONFIRMED THE ADDITION AND WE HAVE UPHELD THE ORDER [I.T.A. NO. 177/MDS/20 10]. THEREFORE, WE HOLD THAT THE ADDITION HAD BEEN RIGHTLY MADE BY THE ASSE SSING OFFICER, BUT WRONGLY INTERFERED WITH BY THE CIT(A). HENCE, GROUN D NO. 8.1 RAISED BY THE REVENUE IS ACCEPTED. I.T.A. NO. 1283/MDS/2011 [A.Y. 2008-09] 31. THE EFFECTIVE GROUNDS RAISED BY THE REVENUE RE AD AS FOLLOWS: 2.1. THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 40(A)(IA) OF RS. 2,60,90,630 ON HIRE CHARGES PAID TO M/S. NSIT WITHOUT DEDUCTION OF TAX AT SOURCE. 3.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE ON PAYMENT OF BATTA TO DRIVERS AND CLEANERS TO RS. 7.5 LAKHS AS AGAINST RS. 21,35,010/- MADE BY THE AO. 4.1 THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE A MOUNT RS. 14,88,747 DISALLOWED BY THE AO UNDER THE HEAD LOADING AND UN LOADING CHARGES. 5.1 THE LEARNED .CIT(A) HAS ERRED IN RESTRICTING T HE DISALLOWANCE OF MISCELLANEOUS EXPENSES TO RS. 50,000 AS AGAINST RS. 2,41,826/- DISALLOWED BY THE AO FOR NON-PRODUCTION OF VOUCHERS. 6.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING DI SALLOWANCE UNDER SPARES AND REPAIRS TO RS. 12 LAKHS AGAINST DISALLOW ANCE OF RS.41,86,564. 7.1 THE LEARNED CIT(A) HAS ERRED IN RESTRICTING TH E DISALLOWANCE OF RS.27,50,408 MADE BY A.O. TO RS. 2,50,000 ON ACCOUN T OF ADMINISTRATIVE EXPENSES. 32. IN THE COURSE OF HEARING, THE DR REITERATES TH E PLEADINGS ABOVE SAID AT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 19 THE BEHEST OF THE REVENUE AND SUBMITTED THAT THE AD DITIONS IN QUESTION MADE BY THE ASSESSING OFFICER HAVE BEEN WRONGLY MOD IFIED BY THE CIT(A). HENCE, HE PRAYED FOR ACCEPTANCE OF THE APPEAL. 33. PER CONTRA, THE ASSESSEE SUBMITS THAT ALL THE GROUNDS ARE COVERED BY OUR FINDINGS IN THE APPEALS DECIDED HEREINABOVE IN I.T.A. NO. 567/MDS/2011 FOR THE ASSESSMENT YEAR 2007-08. 34. IN REBUTTAL, THE REVENUE FAILS TO DRAW ANY DIS TINGUISHING FEATURES. 35. WE HAVE HEARD BOTH PARTIES AT LENGTH AND ALSO PERUSED THE ASSESSMENT ORDER, CIT(A)S ORDER AS WELL AS GROUNDS RAISED IN I.T.A. NO. 567/MDS/2011 DECIDED HEREINABOVE. IT TRANSPIRES THA T IN THE SAID CASE, THE REVENUE HAS RAISED SAME VERY GROUNDS CHALLENGING DE LETION OF ADDITION BY THE CIT(A) PERTAINING TO DISALLOWANCE UNDER SECTION 40(A)(IA), BATA TO DRIVERS AND CLEANERS, LOADING AND UNLOADING CHARGES, MISCEL LANEOUS EXPENSES, SPARES & REPAIRS, AS WELL AS ADMINISTRATIVE EXPENSE S. AS ALREADY CLARIFIED, THE REVENUE MERELY ASSERTS THAT THE GROUNDS REQUIRE INDEPENDENT ADJUDICATION. WE FAIL TO AGREE WITH THE ABOVE SAID SUBMISSION SINCE NO DISTINGUISHING FEATURES HAVE BEEN POINTED OUT BY TH E REVENUE. SINCE WE HAVE CONFIRMED CIT(A)S ORDER QUA ASSESSMENT YEAR 2 007-08 EXCEPT ADDITION ON FOREIGN TRAVEL EXPENSES, WHICH IS NOT A N ISSUE IN THE INSTANT CASE, WE SEE NO REASON TO ADOPT A DIFFERENT APPROACH. ACC ORDINGLY, THE WELL I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. . 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 694, 177/M/10, 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 1282, &165/M/10, 567 & 1283/M/11 20 REASONED FINDINGS OF THE CIT(A) ARE CONFIRMED. 36. TO SUM UP, ASSESSEES APPEAL I.T.A. NO. 694/MD S/2010 IS DISMISSED WHEREAS I.T.A. NO. 177/MDS/2010 IS PARTLY ACCEPTED QUA DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. SIMILARLY, REVENUE S APPEALS I.T.A. NO. 1282, 165/MDS/2010 I.T.A. NO. 1283/MDS/2011 ARE DISMISSED , WHEREAS I.T.A. NO. 567/MDS/2011 IS PARTLY ACCEPTED QUA GROUND OF FOREI GN TRAVEL EXPENSES. ORDER PRONOUNCED ON MONDAY, THE 25 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 25.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.