Chatterjee Management Servives Pvt. Ltd., Kolkata V. THE DCIT, CIR-8, KOLKATA, Kolkata

ITA 1333/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0626 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 14-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P NAG
• Assessee Lawyers: A K TIBREWL
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI VEERAVALLI DURGA RAO, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1333 / KOL / 2016 ASSESSMENT YEAR :2005-06 CHATTERJEE MANAGEMENT SERVICES PVT. LTD., 9B, WOOD STREET, 3 RD FLOOR, KOLKATA-700016 [ PAN NO.AABCC 4005 D ] V/S . DCIT, CIRC,E-8, KOLKATA /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. TIBREWL, FCA /BY RESPONDENT SHRI R.P. NAG, ADDL. CIT-DR /DATE OF HEARING 14-12-2017 /DATE OF PRONOUNCEMENT 15-12-2017 / O R D E R PER VERAVALLI DURGA RAO, JUDICIAL MEMBER:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY OF COMMISSIONER OF INCOME TAX (APPEALS)-15, KOLK ATA IN APPEAL NO.179/CIT(A)-15/15-16/CIR-8/R&T/KOL DATED 21.03.20 16. 2. FACTS IN BRIEF ARE THAT ASSESSEE IS IN THE BUSIN ESS OF CONSULTANCY SERVICES, FILED RETURN OF INCOME DECLARING TOTAL LOSS AT 2,35,95,212/-. THE RETURN OF INCOME FILED BY ASSESSEE WAS PROCESSED U/S 143(1) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AFTER F OLLOWING DUE PROCEDURE ASSESSMENT IS COMPLETED U/S. 143(3) OF THE ACT. ITA NO.1333/KOL/2016 A.Y. 2005-06 C.M.S.P. LTD. VS. DCIT, CIR-8 KOL. PAGE 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE HAS CLAIMED TRAVEL AND C ONVEYANCE EXPENSES OF 20,59,268/- INCLUDES A SUM OF 7,23,054/- IS EXPENSE INCURRED FOR THE DIRECTOR. THE ASSESSEE HAS NOT FILED ANY BILL & VOU CHERS ETC. THE AO OF THE OPINION THAT ABOVE EXPENSES ARE PERSONAL IN NATURE IN THE ABSENCE OF DETAILS 20% OF 7,23,054/- I.E. 1,44,620/- BEING DISALLOWED. 4. ON APPEAL BEFORE LD. CIT(A) THE LD. CIT(A) HAS C ONFIRMED THE ORDER OF AO. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE HAS SUBMI TTED THAT ALL THE BILLS AND VOUCHERS FILE BEFORE AO WITHOUT EXAMINING THE S IMPLY THE AO HAS DISALLOWED 20% OF THE EXPENSE INCURRED BY THE ASSES SEE WHICH ARE FOR THE PURPOSE OF BUSINESS AND SAME IS CONFIRMED BY LD. CI T(A) WITHOUT ANY BASIS. LD. DR HAS SUBMITTED THAT NO DETAILS WERE FILED BEF ORE THE AO EVEN BEFORE LD. CIT(A). HE STRONGLY SUPPORTED THE ORDER PASSED BY A UTHORITIES BELOW. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE FIND THA T ASSESSEE HAS INCURRED CONVEYANCE EXPENSE OF 7,23,054/- AND BEFORE AO ASSESSEE IS NOT ABLE TO SUBSTANTIATE THAT THESE EXPENSES ARE INCURRED FULLY FOR THE PURPOSE OF BUSINESS. THEREFORE, THE AO HAS DISALLOWED 20% OF T HE EXPENSE INCURRED BY ASSESSEE BY CONSIDERING IT AS PERSONAL EXPENSE. LD. CIT(A) CONFIRMED THE ORDER OF AO SUBSEQUENTLY. WE FIND THAT BY TAKING IN TO CONSIDERATION OF ENTIRE FACTS AND CIRCUMSTANCE OF THE CASE AND IN THE INTER EST OF JUSTICE THE DISALLOWANCE MADE BY AO IS HIGHER SIDE UNDER THE SA ME IS SCALED DOWN TO 10%. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A). THE GROUND OF APPEAL IS ALLOWED PARTLY. AO IS DIRECTED ACCORDINGL Y. 7. NEXT GROUND RELATES TO OFFICE EXPENSE. ITA NO.1333/KOL/2016 A.Y. 2005-06 C.M.S.P. LTD. VS. DCIT, CIR-8 KOL. PAGE 3 8. IN THE ASSESSMENT ORDER, THE AO HAS OBSERVED THA T ASSESSEE HAS INCURRED A SUM OF 17,00,719/- TOWARDS OFFICE MANAGEMENT AS AGAINST TH E EXPENSE OF 6,00,105/- INCURRED IN PRECEDING PREVIOUS YEAR WHIC H IS APPROXIMATELY THREE TIMES WHERE THE CONSULTANCY FEE RECEIVED HAS BEEN INCREASED ONLY 60% FROM THE PRECEDING YEAR. THE ASS ESSEE HAS NOT SUBMITTED ANY DETAILS OR COGENT BILLS. IN THE ABSENCE OF DETA ILS, THE AO OF THE OPINION THAT THE ENTIRE EXPENSE INCURRED BY ASSESSEE CANNOT BE C ONSIDERED FOR THE PURPOSE OF ASSESSEES BUSINESS. THEREFORE, HE IS DI SALLOWED 10% OF TOTAL EXPENSE OF 17,00,719/- IS BEING DISALLOWED I.E. 1,70,172- BEING IN PERSONAL NATURE. 9. AN APPEAL BEFORE LD. CIT(A) CONFIRMED THE ORDER OF AO 10. BEFORE US LD. COUNSEL FOR ASSESSEE HAS SUBMITTE D THAT SO FAR AS THE ORDER TO CONSIDER THE ASSESSEE HAS RECEIVED A FEE W HICH IS 60% MORE THAN THE EARLIER YEAR. THEREFORE THE ASSESSEE HAS TO INCUR M ORE EXPENSE TO INCREASE THE BUSINESS OF ASSESSEE. THIS FACT IS NOT DISPUTED BY THE AO. THE CASE OF ASSESSEE BEFORE AO IS THAT SOME OF THE EXPENSE MUST HAVE INCURRED FOR PERSONAL PURPOSE AND THEREFORE HE HAS DISALLOWED 10 % OF THE EXPENSE INCURRED SUBMITTED THAT ENTIRE EXPENSE BY THE ASSES SEE ARE RELATED TO ONLY BUSINESS OF ASSESSEE AND SAME MAY BE ALLOWED. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT HAS NO T FILED ANY DETAILS BEFORE AO EVEN BEFORE LD. CIT(A). THEREFORE, HE CONFIRMED THE ORDER OF AO. 11. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH F ACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE HA D INCURRED AN EXPENSE FOR THE PURPOSE OF OFFICE EXPENSE WHICH IS CONNECTED WI TH THE BUSINESS OF ASSESSEE AND THERE IS INCREASE OF CONSULTANCY FEE R ECEIVED IS MORE THAN 60% IN THIS YEAR UNDER CONSIDERATION COMPARATIVELY EARL IER YEAR. THE CASE OF THE ASSESSING OFFICER IS THAT ASSESSEE HAS NOT FILED AN Y DETAILS IN RESPECT OF EXPENSE INCURRED BY THE ASSESSEE. THEREFORE, HE IS OF THE OPINION THAT THERE IS ITA NO.1333/KOL/2016 A.Y. 2005-06 C.M.S.P. LTD. VS. DCIT, CIR-8 KOL. PAGE 4 POSSIBILITY OF INCURRING PERSONAL EXPENSE. THEREFOR E IT IS DISALLOWE 10% OF THE TOTAL EXPENSE INCURRED BY THE ASSESSEE AND SAME IS CONFIRMED BY LD. CIT(A). WE HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES AND WE ARE OF THE OPINION THAT DISALLOWANCE MADE BY THE AO IS HIGHER SIDE. TH EREFORE, WE SCALE DOWN THE DISALLOWANCE MADE BY AO FROM 10% TO 5%. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A). THE GROUND RA ISED BY ASSESSEE IS PARTLY ALLOWED. AO IS DIRECTED ACCORDINGLY. 12. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED PAR TLY. ORDER PRONOUNCED IN THE OPEN COURT 15 /12/2017 SD/- SD/- (WASEEM AHMED) (VEERAVALLI DURGA RAO) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S #- 15 / 12 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-CHATTERJEE MANAGEMENT SERVICES PVT. LTD. 9B, WOOD ST. 3 RD FL. KOL-16 2. /RESPONDENT-DCIT, CIR-8, KOLKATA 3. / 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5. 3 66/, /, / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO /,