ACIT, Jaipur V. GEHLOT ENTERPRISES PVT. LTD., Jaipur

ITA 129/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5210 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Assessee Lawyers: G G MUNDRA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 129, 130 & 700/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10, 10-11, & 11-12. THE ACIT, CIRCLE - 2, JAIPUR. CUKE VS. M/S. GEHLOT ENTERPRISES P. LTD., M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACG 8950 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 151, 152 & 755/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10, 10-11, & 11-12. M/S. GEHLOT ENTERPRISES P. LTD., M.I. ROAD, JAIPUR. CUKE VS. THE ACIT, CIRCLE - 2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACG 8950 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.08.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04/08/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE ARE SIX CROSS APPEALS FILED BY THE REVENUE AN D ASSESSEE PERTAINING TO ASSESSMENT YEARS 2009-10, 10-11 AND 11-12 AGAINST T HE DIFFERENT ORDERS OF LD. CIT(A)-I, JAIPUR DATED 27.12.2013 AND 19.08.2014. S INCE IDENTICAL GROUNDS HAVE BEEN RAISED IN ALL THESE YEARS BOTH BY THE ASSESSEE AND REVENUE, THESE APPEALS ARE TAKEN UP TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. 2. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE FACTS ARE IDENTICAL IN ALL THESE YEARS WHICH IS NOT DISPUTED BY THE LD. D/ R. ON THE AGREEMENT OF BOTH THE PARTIES, WE FIRST TAKE UP REVENUES APPEAL IN ITA N O. 129/JP/2014 PERTAINING TO ASSESSMENT YEAR 2009-10 AS LEAD CASE. THE REVENUE H AS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ITA NO. 129/JP/2014 AY 2009-10 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISAL LOWANCE OF FINANCIAL SERVICES CHARGES OF RS. 86,26,198/- MAD E U/S 40(A)(IA) OF THE I.T. ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISAL LOWANCE OF RS. 5,81,868/- MADE BY THE AO UNDER THE PROVISIONS OF S ECTION 14A R.W. RULE 8D OF THE I.T. RULES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISAL LOWANCE OF RS.50,000/- OUT OF STAFF & LABOUR WELFARE EXPENSES WHICH WERE NOT FOUND VERIFIABLE BY AO. 3. THE FIRST GROUND RELATES TO THE DELETION OF ADDI TION MADE ON ACCOUNT OF DISALLOWANCE OF FINANCIAL SERVICES CHARGES OF RS. 8 6,26,198/- BY THE LD. CIT (A) BY DIRECTING THE AO TO INITIATE PROCEEDINGS FOR NON DE DUCTION OF TDS ON THE AMOUNT PAID TO THE EMPLOYEES OF THE COMPANY, THE SAME IS L IABLE TO BE TAXED U/S 17 OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3.1. THE LD. D/R SUBMITTED THAT THE ASSESSEE HAD CL AIMED A SUM OF RS. 86,26,198/- AS FINANCIAL SERVICES CHARGES DURING TH E SCRUTINY ASSESSMENT. THE ASSESSEE COULD NOT PROVE THE PAYMENTS AS BEING CLAI MED TO BE REIMBURSEMENT OF EXPENSES MADE ON ACCOUNT OF AVAILING LOANS BY THE F ARMERS TO WHOM THE ASSESSEE 3 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. HAS SOLD TRACTORS. HE SUBMITTED THAT THE AO WAS JUS TIFIED IN INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AS THE ASSESSEE HAS AL SO NOT DEDUCTED TAX AT SOURCE. 3.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT BOTH THE AUTHORITIES BELOW HAVE ERRED IN NOT APPRECIATING TH E FACTS IN RIGHT PERSPECTIVE. HE REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITT EN SUBMISSIONS. IT IS CONTENDED THAT THE ASSESSEE COMPANY IS ENGAGED IN SALE OF TRA CTORS, WHICH ARE MOSTLY SOLD TO VILLAGE FARMERS WHO ARE WILLING TO PURCHASE THE TRA CTORS FROM THEM ONLY ON BANK LOANS. THE VILLAGE FARMERS ARE ILLITERATE OR NON-E DUCATED AND IT IS NOT POSSIBLE FOR THEM TO COMPLETE THE FORMALITIES OF AVAILING LOAN F ROM BANKS. THE ASSESSEE COMPANY TO PROMOTE ITS TRACTOR SALES UNDERTAKE TO GET BANK LOAN FACILITY FOR VILLAGE FARMERS AND DEPLOYS ITS SALES STAFF WHO ARE ON THEIR REGULA R PAY ROLLS FOR DOING THE ENTIRE PAPER WORK AND COMPLETE OTHER REQUIREMENTS OF BANK FOR EACH INDIVIDUAL VILLAGE FARMER WILLING TO TAKE BANK LOAN FOR PURCHASE OF TR ACTORS WHICH ARE DEALT BY COMPANY. THE PAPER WORK INVOLVES EXAMINATION OF LA ND TITLE OF FARMER, REPORT OF PATWARI, FARM LAND INSPECTION BY BANK STAFF, LEGAL AND ADVOCATE FEES, STAMPING OF LOAN DOCUMENT AND ITS TYPING STATIONERY CHARGES AND REFRESHMENTS ENTERTAINMENT EXPENSES WHILE ON INSPECTION BY STAFF AND CONNECTED OFFICIALS. THE COMPANY PAYS THE SAID EXPENSES INCURRED THROUGH ITS EMPLOYEES AS PER FIXED NORMS OF COMPANY WHICH VARIES LOOKING TO DISTANCE OF VILLAGE OF PURCHASER FARMER. THESE EXPENSES ARE DEBITED IN BOOKS OF ACCOUNTS OF COMPANY AS FINANCIAL SERVIC E CHARGES AND ARE CLAIMED AS DEDUCTION IN ITS PROFIT & LOSS ACCOUNT WHICH IN THE YEAR UNDER CONSIDERATION AMOUNTED TO RS. 86,26,198/-. THE LD. COUNSEL SUBMI TTED THAT THE EXPENSES SO INCURRED BY THE COMPANY ARE NOT COVERED UNDER THE P ROVISIONS OF SECTION 194H OF THE ACT SINCE THE NATURE OF PAYMENT IS NEITHER COMM ISSION NOR BROKERAGE WITHIN THE 4 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. MEANING OF SAID SECTION. HE FURTHER CONTENDED THAT THE LD. CIT (A) ALSO ERRED IN HOLDING THAT THE PAYMENTS ARE LIABLE TO BE TAXED UN DER SECTION 17(1) AND 17(2) OF THE ACT. HE SUBMITTED THAT THESE PAYMENT WOULD NOT COME WITHIN THE SWEEP OF SECTION 17. THEREFORE, HE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING DISALLOWANCE AND THE LD. CIT (A) WAS NOT JUSTIFIED IN HOLDING THAT SUCH PAYMENTS WERE LIABLE TO BE TAXED UNDER SECTION 17 OF THE ACT . 3.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS THE CONTENTION OF THE ASSESSEE THAT SUCH EXPENDITURE HAS BEEN CLAIMED IN THE PAST AND W AS ALLOWED BY THE REVENUE IN THE SCRUTINY ASSESSMENT. THE CONTENTION OF THE ASSE SSEE WITH REGARD TO THE NATURE OF THE PAYMENT HAS BEEN THAT THE ASSESSEE IS ENGAGED I N SALE OF TRACTORS. THE TRACTORS ARE MOSTLY SOLD TO THE VILLAGE FARMERS WHO AVAIL BA NK LOAN FACILITY FOR BUYING THE TRACTOR. FOR AVAILING BANK LOAN FACILITY, CERTAIN PAPER WORK ARE REQUIRED TO BE CARRIED OUT, WHICH AS PER ASSESSEE IS UNDERTAKEN BY ITSELF AND IN THE PROCESS OF THE SAME, THE ASSESSEE HAS INCURRED EXPENSES IN THE NATURE OF FEE TO ADVOCATE, TYPING CHARGES, REVENUE OFFICIALS FEE ETC. IT IS CONTENDED THAT THE SE EXPENSES ARE BORNE BY THE ASSESSEE AND IS NECESSARILY RELATED TO THE BUSINESS OF THE ASSESSEE, HENCE THE SAME IS ALLOWABLE DEDUCTION. THE AO HAS REJECTED THE CL AIM OF THE ASSESSEE BY OBSERVING THAT UNDER SECTION 194H OF THE ACT, THE ASSESSEE OU GHT TO HAVE DEDUCTED TAX ON SUCH PAYMENTS AND NON DEDUCTION OF TAX HAS EMPOWERE D THE AO TO DISALLOW SUCH EXPENDITURE UNDER SECTION 40(A)(IA) OF THE ACT. ON APPEAL, THE LD. CIT (A) DID NOT AFFIRM THE FINDING OF THE AO BUT HE DIRECTED THE AO TO INITIATE PROCEEDINGS AGAINST THE APPELLANT FOR NON-DEDUCTION OF TDS ON THE AMOUN T PAID TO THE EMPLOYEES AS THE SAME WAS LIABLE TO BE TAX UNDER SECTION 17 OF THE A CT. 5 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. 3.4. NOW THE ISSUE TO BE ADJUDICATED IS WHETHER THE EXPENDITURE CLAIMED BY THE ASSESSEE IN THE FORM OF PAYMENTS MADE TO THE EMPLOY EES IN THE NATURE OF FINANCIAL SERVICE CHARGES IS AMENABLE TO THE PROVISIONS OF TA X DEDUCTION AT SOURCE OR NOT. THE AO HAS RELIED ON THE PROVISIONS OF SECTION 194H. A S PER THE AO, THESE PAYMENTS WERE BROKERAGE AND COMMISSION TO THE EMPLOYEES. BEF ORE THE AO, THE ASSESSEE HAS NOT FURNISHED ANY INDEPENDENT EVIDENCE EXCEPT THE V OUCHERS MADE BY ITSELF STATING THEREIN THAT CASH PAYMENT ON ACCOUNT OF EXPENDITURE INCURRED ON BANK, CUSTOMERS, PATWARI FOR ARRANGEMENT OF LOAN FILE OF TRACTOR LOA N. IT IS A NORMAL PRACTICE THAT WHEREVER THE LOAN FACILITY IS AVAILED, CERTAIN PAP ER WORK IS CARRIED OUT BY THE CONCERNED BANKER AND THE AMOUNT INCURRED ON SUCH WO RK, NORMALLY PROCESSING CHARGES ARE DEBITED TO THE LOAN ACCOUNT OF THE CONC ERNED BENEFICIARY BY THE BANKER. THIS FACILITY, THE ASSESSEE IS CLAIMING TO HAVE BEE N PROVIDED BY ITSELF FOR FACILITATING THE LOAN TRANSACTION, IN FACT IT IS CARRIED OUT BY THE BANKER ITSELF. BUT IT IS ALSO A FACT THAT BANKERS HAVE TIE-UP WITH THE VEHICLE/TRACTOR A GENCY WHO CARRIED OUT THIS KIND OF SERVICE TO THE PROSPECTIVE CUSTOMERS. THEREFORE, I N OUR CONSIDERED VIEW, BOTH THE AUTHORITIES BELOW HAVE MISDIRECTED THEMSELVES FOR N OT APPRECIATING THE FACT THAT THE NATURE OF PAYMENT AS MADE BY THE ASSESSEE IS NEITHE R A PAYMENT IN THE NATURE OF SALARY NOR RELATED TO EMPLOYER-EMPLOYEE RELATIONSHI P. THE PAYMENT IS MADE IN RESPECT OF THE EXPENDITURE CLAIMED TO HAVE BEEN INC URRED FOR FACILITATING THE LOAN TRANSACTION. THE AO IN THE ASSESSMENT ORDER HAS CO NSIDERED THIS CLAIM OF THE ASSESSEE I.E. EXPENDITURE BEING THE REIMBURSEMENT T O THE EMPLOYEES, AND REJECTED THE SAME ON THE GROUND THAT NOT A SINGLE BILL WAS A VAILABLE WITH THE ASSESSEE. IT WAS FURTHER OBSERVED THAT THESE EXPENSES WERE INCUR RED FOR THE SERVICES PROVIDED BY THE SALESMEN AND THAT THERE WAS AN ABSOLUTE ABSENCE OF EVEN A SINGLE SUPPORTING 6 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. VOUCHER OR ANY OTHER DOCUMENTARY EVIDENCE WHICH COU LD PROVE ASSESSEES CLAIM THAT THE SAID EXPENSES WERE REIMBURSEMENTS TO THE SALESM EN. THE AO TREATED SUCH PAYMENT AS THE PAYMENT OF COMMISSION OR BROKERAGE T O THE EMPLOYEE. IN SUPPORT OF SUCH FINDING, THE AO HAS NOT PLACED ANY MATERIAL ON RECORD SUGGESTING THAT THESE PAYMENTS WERE IN THE NATURE OF BROKERAGE OR COMMIS SION. IN THE ABSENCE OF SUCH MATERIAL, IN OUR CONSIDERED VIEW, MERELY ON THE BAS IS OF CONJECTURES, THE PAYMENTS MADE TO THE EMPLOYEES WOULD NOT PARTAKE THE CHARACT ER OF PAYMENT OF BROKERAGE OR COMMISSION. ANOTHER ASPECT OF THE MATTER, WHICH THE AO HAS NOT APPRECIATED THAT IN THE NORMAL LOAN TRANSACTION, THE BANK MOSTLY DEBIT THE AMOUNT OF PROCESSING CHARGES. THE AO HAS ALSO NOT VERIFIED FROM THE BANK ER WHETHER THE SAID EXPENDITURES WERE DEBITED TO THE ACCOUNT OF THE LOA N BENEFICIARY BY THE BANKER OR NOT. WHETHER THERE WAS ANY AGREEMENT BETWEEN THE BA NKER AND THE ASSESSEE COMPANY IN THIS BEHALF. EVEN THE ASSESSEE HAS NOT FURNISHED THE REQUISITE DETAILS IN SUPPORT OF ITS CLAIM THAT SUCH PAYMENTS WERE NOTHIN G BUT REIMBURSEMENT TO THE EMPLOYEES AND SUCH EXPENDITURE IS ALLOWABLE DEDUCTI ON. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE, IT WOULD BE IN THE INTEREST OF JUSTICE IF THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR DECISION AFRESH. HENCE WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO VERIFY FROM THE BANK WHETHER ANY LOAN TRANSACTION WAS CARRIED OUT AS CLAIMED BY THE ASSESSEE AND ALSO TO VERIFY WHETHER THE EXPENDITURE INCURRED IN RESPECT OF DOCUMENTATION OF THE LOAN TRANSACTION, T HE EXPENDITURE RELATED TO VERIFICATION OF TITLE DEEDS/OWNERSHIP TITLE WAS CAR RIED OUT BY THE BANKER OR BY THE ASSESSEE COMPANY. HE WOULD ALSO VERIFY WHETHER SUC H AMOUNT RELATING TO PROCESSING OF LOAN TRANSACTION WAS CLAIMED FROM THE BENEFICIARY OF THE LOAN 7 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. TRANSACTION OR NOT. IF THE AO FINDS THAT THE ASSESS EE COMPANY HAD CARRIED OUT SUCH SERVICES ON BEHALF OF THE BANK AND BANK HAS NOT DEB ITED SUCH EXPENDITURE TO THE ACCOUNT OF THE CONCERNED BENEFICIARY AND BORNE BY T HE ASSESSEE COMPANY, IN THAT EVENT, HE WOULD GRANT DEDUCTION OF EXPENDITURE TO T HE ASSESSEE, INCURRED DURING THE COURSE OF BUSINESS OF THE ASSESSEE. THIS GROUND OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 4. GROUND NO. 2 OF REVENUES APPEAL IS AGAINST DELE TION OF ADDITION OF RS. 5,81,868/- MADE BY THE AO BY INVOKING PROVISIONS OF SECTION 14A READ WITH RULE 8D. 4.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE FURT HER SUBMITTED THAT THE LD. CIT (A) OUGHT TO HAVE UPHELD THE DISALLOWANCE. HE SUBMITTED THAT THE ASSESSMENT YEAR UNDER APPEAL IS 2009-10 AND RULE 8D WAS VERY MUCH I N THE STATUTE. THE ASSESSEE HAS EARNED THE EXEMPTED INCOME, THEREFORE, THE DISA LLOWANCE RELATED TO SUCH INCOME IS REQUIRED TO BE DISALLOWED. 4.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS AND SUBMITTED TH AT THERE IS NO ILLEGALITY IN THE ORDER OF LD. CIT (A). HE DREW OUR ATTENTION TO THE FACT THAT THE AO WITHOUT EXAMINING THE FACTUAL POSITION STRAIGHT AWAY APPLIED PROVISIO NS OF SECTION 14A READ WITH RULE 8D. HE FURTHER SUBMITTED THAT THE ASSESSEE RECEIVED MEAGER DIVIDEND OF RS 30,000/- WHICH WAS DIRECTLY CREDITED IN ITS BANK ACCOUNT. T HE LD. COUNSEL SUBMITTED THAT BEFORE MAKING DISALLOWANCE, THE AO HAS TO SATISFY H IMSELF THAT THE CLAIM OF NON- INCURRING OF EXPENDITURE IS NOT JUSTIFIED AND IN TH AT EVENT ONLY HE CAN PROCEED FOR MAKING DISALLOWANCE. HE SUBMITTED THAT THE ASSESSE E WAS HAVING SUFFICIENT OWN FUNDS FOR MAKING INVESTMENT. NO BORROWED FUNDS HAVE BEEN UTILIZED. HE FURTHER 8 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. SUBMITTED THAT THE DIVIDEND INCOME IS OF RS. 30,000 /- AND DISALLOWANCE MADE IS RS. 5,81,868/- WHICH IS ALSO AGAINST THE DECISION OF HO NBLE DELHI HIGH COURT. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. AS PER SECTION 14A OF THE ACT, THE AO HAS TO SATISFY HIMSE LF IN RESPECT OF THE CLAIM OF EXPENDITURE. IN THE EVENT THE AO FINDS THAT THE EXP ENDITURE RELATED TO THE EXEMPT INCOME HAVE ALSO BEEN CLAIMED BY THE ASSESSEE WHILE COMPUTING ITS INCOME, THEN THE AO IS EMPOWERED TO MAKE DISALLOWANCE IN THE MAN NER PRESCRIBED IN RULE 8D. IN THE INSTANT CASE, THE AO HAS NOT GIVEN ANY FINDING IN RESPECT OF THE DISALLOWANCE OF EXPENSES. ON THE CONTRARY, THE ASSESSEE HAS POINTED OUT THAT IT HAD SUFFICIENT OWN FUNDS AND INVESTMENT HAS BEEN MADE OUT OF ITS OWN F UNDS. THEREFORE, THE DISALLOWANCE RELATED TO THE INTEREST WAS NOT JUSTIF IED. THUS WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDERS OF THE LD. CIT (A ). 4.4. IN RESPECT OF ADMINISTRATIVE DISALLOWANCE, AS THE ASSESSEE HAS STATED THAT EXEMPT INCOME WAS DIRECTLY CREDITED TO THE BANK ACC OUNT OF THE ASSESSEE, BUT IT CANNOT BE PRESUMED THAT NO ADMINISTRATIVE EXPENDITU RE RELATED TO SUCH EXEMPT INCOME WAS INCURRED. THEREFORE, IN RESPECT OF ADMIN ISTRATIVE DISALLOWANCE, WE SET ASIDE THE ORDER OF LD. CIT (APPEALS) AND RESTRICT T HE DISALLOWANCE TO THE EXTENT OF EARNING OF EXEMPTED INCOME OF RS. 30,000/-. THUS OU T OF TOTAL DISALLOWANCE OF RS. 5,81,868/-, THE DISALLOWANCE TO THE EXTENT OF RS. 3 0,000/- QUA THE ADMINISTRATIVE EXPENSES IS SUSTAINED. THIS GROUND OF THE REVENUE S APPEAL IS PARTLY ALLOWED. 5. GROUND NO. 3 RELATED TO DELETION OF DISALLOWANCE OF RS. 50,000/- OUT OF STAFF & LABOUR WELFARE EXPENSES. 5.1. THE LD. D/R SUPPORTED THE ORDER OF THE A.O. AN D SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 9 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. 5.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE AO HAS MADE THE DISALLOWANCE WITHOUT ANY INSTANCE. THE EX PENSES INCURRED PERTAINS TO TEA, COFFEE ETC. PROVIDED TO STAFF AND ARE DAY TO DAY PE TTY EXPENSES FOR WHICH INTERNAL VOUCHERS DULY AUTHENTICATED BY THE DIRECTORS OF THE COMPANY WERE KEPT. THE AUDITORS WHILE AUDITING ACCOUNTS HAVE FOUND NO SHOR T COMING IN THESE VOUCHERS AND, THEREFORE, CANNOT BE HELD AS NOT AMENABLE TO VERIFI CATION. HE, THEREFORE, REQUESTED THAT THE ORDER OF LD. CIT (A) BE UPHELD. 5.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. THE LD. CIT (A) HELD THAT THE EXPENSES UNDER THE HEAD SALAR Y AND LABOUR WELFARE ARE NECESSARY FOR CARRYING ON THE BUSINESS. HE OBSERVED THAT THERE IS NO EVIDENCE TO SUGGEST THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE EITHER INFLATED OR BOGUS. AT THE TIME OF HEARING OF THE APPEAL, THE LD. D/R HAS NOT CONTROVERTED THESE FINDINGS OF THE LD. CIT (A). WE, THEREFORE, DO NOT FIND ANY RE ASON TO INTERFERE IN THE ORDER OF THE LD. CIT (A), THE SAME IS HEREBY UPHELD. THE GRO UND OF THE REVENUE IS REJECTED. 5.4. SINCE THE ISSUES INVOLVED IN THE REVENUES APP EALS IN ITA NO. 130 & 700/JP/2014 FOR THE A.YS. 2010-11 AND 11-12 ARE IDE NTICAL TO ITA NO. 129/JP/2014 AND THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES O F THE CASE, THEREFORE, BY APPLYING THE DECISION ARRIVED THEREIN, ALL THE REVE NUES APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 151, 152 & 755/JP/2014 (ASSESSEE) : 6. THE GROUNDS RAISED IN THESE APPEALS ARE COMMON F OR ALL THE ASSESSMENT YEARS. AS WE HAVE DECIDED THESE GROUNDS IN THE APP EALS OF THE REVENUE, BY APPLYING THE SAME RATIO OF DECISION, THE APPEALS OF THE ASSE SSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10 ITA NOS. 129(6)/JP/2014 ACIT VS. M/S. GEHLOT ENTERPRISES P. LTD. 7. IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04/08/201 6. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 04/08/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR. 2. THE RESPONDENT- M/S. GEHLOT ENTERPRISES PVT. LTD ., JAIPUR. 3. THE CIT, 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 129(6)/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR