ITO, Ward-3(2), Hyderabad, Hyderabad V. RSI Softech India Private Limited, Hyd, Hyderabad

ITA 1302/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6005 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: N O N E
• Keywords: Business expenditure; Assessment record
• Section: 143(3)

Judgement Text

ITA NO 1302 OF 2 016 RSI SOFTECH INDIA P LTD HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1302/HYD/2016 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER WARD 3(2) HYDERABAD VS M/S. RSI SOFTECH INDIA PRIVATE LIMITED HYDERABAD PAN: AAACE 7499 L FOR REVENUE : SHRI A. SITARAMA RAO, DR FOR ASSESSEE : N O N E O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2010-11. IN TH IS CASE, APPEAL WAS FIXED FOR HEARING ON 2.1.2017. IT WAS NOTICED THAT HEARING NOTICE HAS BEEN SERVED ON THE ASSESSEE, BUT NONE APPEARED FOR HEARING ON 2.1.2017. THEREFORE, THE AP PEAL WAS ADJOURNED TO 30.03.2017 AND THE REGISTRY WAS DIRECT ED TO ISSUE NOTICE BY R.P.A.D. FRESH NOTICE FOR HEARING ON 30.03 .2017 BY RPAD WAS SERVED ON THE ASSESSEE AS IS EVIDENT FROM THE COPY OF THE ACKNOWLEDGEMENT PLACED ON RECORD. HOWEVER, NONE APPEARED FOR THE ASSESSEE. THEREFORE, THE APPEAL WAS HEARD E X-PARTE, QUA THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE R EVENUE ARE AS UNDER: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE. DATE OF HEARING : 30.03.2017 DATE OF PRONOUNCEMENT : 31.03.2017 ITA NO 1302 OF 2 016 RSI SOFTECH INDIA P LTD HYDERABAD PAGE 2 OF 4 2. THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE CLAIMED TOWARDS REIMBURSEMENT OF EXPENSES OF RS. 36,72,399/- INCURRED THROUGH CREDIT CARDS, AS NECESSARY EVIDENCES WERE NOT PRODUCED BY THE ASSESSEE IN SUPPORT OF THE SAME. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCES BEFORE THE AO FOR EXAMINATION OF THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE, EXCEPT FOR FILING A LEDGER EXTRACT. 4. ANY OTHER GROUNDS(S) THAT MAY BE URGED AT THE TIME OF HEARING. 2. THE LEARNED DR STRONGLY SUPPORTED THE ORDER OF T HE AO. 3. HAVING REGARD TO THE MATERIAL ON RECORD AND THE SUBMISSIONS OF THE LEARNED DR, WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 147 OF THE ACT, THE ASSESSEE HAD APPEARED THROUGH ITS REPRESENTATIVE AN D FURNISHED THE INFORMATION CALLED FOR, INCLUDING THE BOOKS OF ACCOUNT SUCH AS LEDGERS AND CASH BOOK. AFTER PERUSAL OF THE SAME, T HE AO FOUND CERTAIN DISCREPANCIES AND ISSUED A SHOW-CAUSE NOTIC E DATED 18.2.2015. THE SHOW CAUSE NOTICE CONTAINED TABLE CO NTAINING VARIOUS EXPENDITURE INCURRED BY THE ASSESSEE BY USI NG CREDIT CARDS OF THE MANAGING DIRECTOR, DIRECTOR AND SR. MA NAGEMENT PERSONS OF THE ASSESSEE. THE AO DIRECTED THE ASSESS EE TO EXPLAIN THE NATURE OF THE EXPENDITURE AND ALSO FURNISH THE RELEVANT VOUCHERS FAILING WHICH THEY WOULD BE TREATED AS NOT RELATED TO THE BUSINESS AND WOULD BE ADDED TO THE INCOME OF THE AS SESSEE. ITA NO 1302 OF 2 016 RSI SOFTECH INDIA P LTD HYDERABAD PAGE 3 OF 4 4. IN REPLY TO THE SAME, THE ASSESSEE FILED A LETTE R EXPLAINING THAT THE EXPENSES INCURRED BY USING CRED IT CARDS WERE COMPLETELY FOR THE PURPOSE OF BUSINESS AND THAT THE Y WERE USED FOR PURCHASE OF AIR TICKETS, TRAIN TICKETS, HOTEL B ILLS FOR THE DIRECTORS TRAVEL, LOCAL TRAVEL, FUEL FOR MANAGING DIRECTOR AND OTHER SR. MANAGEMENT PERSONS AND CUSTOMER SUPPORT ENGINEE RS. IT WAS STATED THAT THE BREAK-UP OF ALL THE EXPENSES WAS GI VEN, EACH AND EVERY EXPENSE-WISE, CARD-WISE AND MONTH-WISE (IN 10 SETS) ALONG WITH THE CREDIT CARD BILLS SUBMITTED IN ORIGINAL. T HE AO WAS HOWEVER, NOT CONVINCED WITH THE ASSESSEES CONTENTI ONS AND HELD THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM OF BUSINESS EXPENDITURE WITH DOCUMENTARY EVIDENCES. THEREFORE, HE DISALLOWED THE CREDIT CARD EXPENDITURE OF RS.36,72,399 AND ADD ED IT TO THE INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT (A) WHO GRANTED RELIEF TO THE ASSESSEE AND AGGRIEVED BY THE RELIEF GRANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US AND THE LEARNED DR VEHEMENTLY SUPP ORTED THE ASSESSMENT ORDER. 5. WE FIND THAT THE CIT(A) HAS GONE THROUGH THE ASSESSMENT RECORDS TO FIND THAT THE ASSESSEE HAS GI VEN THE DETAILS OF THE PAYMENTS SUCH AS SPLIT UP/LEDGER OF EACH OF THE AMOUNTS MENTIONED AS CREDIT CARD EXPENSES OF THE M.D, DIREC TOR AND THE EMPLOYEES OF THE COMPANY. THE CIT (A) HAS ALSO OBSE RVED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INST ALLING OF GIS SOFTWARE IN DIFFERENT PARTS OF THE COUNTRY WHICH AR E IN REMOTE AREA AND THAT MUCH OF THE EXPENDITURE IS INCURRED ON TRA VELLING, ACCOMMODATION, OFFICE CHARGES ETC., WHICH WERE REIM BURSED TO THE ITA NO 1302 OF 2 016 RSI SOFTECH INDIA P LTD HYDERABAD PAGE 4 OF 4 ABOVE THREE OFFICIALS. IT IS HELD BY THE CIT (A) T HAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS THROUGH C REDIT CARDS WHEN THEY WERE AWAY FROM THE H.Q AND THEREFORE, THE SAME IS TO BE ALLOWED. WHILE THE LEARNED DR VEHEMENTLY ARGUED AND SUPPORTED THE ASSESSMENT ORDER, NO EVIDENCE WAS SUB MITTED TO REBUT THE FINDINGS OF THE CIT (A). AS THE CIT (A) H AS CLEARLY CONSIDERED THE EVIDENCE ON RECORD TO HOLD THAT THE ENTIRE EXPENDITURE IS FOR THE BUSINESS OF THE ASSESSEE, IN THE ABSENCE OF ANY MATERIAL TO REBUT SUCH A FINDING, WE SEE NO REA SON TO INTERFERE WITH HER ORDER. THEREFORE, REVENUES APPEAL IS ACCO RDINGLY DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST MARCH, 2017. VINODAN/SPS COPY TO: 1 INCOME TAX OFFICER WARD 3(2) 7 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 2 M/S. RSI SOFTECH INDIA PVT LTD, PLOT NO.7, I.E. K UKATAPALLY, PRASANTH NAGAR, HYDERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER