Bulchand Trading Pvt.Ltd, Hyderabad V. ACIT, Cir-1(3), Hyderabad

ITA 1383/HYD/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7124 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 27-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: LAXMINIVAS SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M AND SMT. ASHA VIJAYARAGHAVAN,J.M ITA NO.1383/HYD/2011 ASSESSMENT YEAR 2006-07 BULCHAND TRADING PVT. LTD., HYDERABAD. (PAN AACCB 5899 F) VS ACIT, CIR - 1(3), HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI LAXMINIVAS SHARMA RESPONDENT BY : SHRI K.J. RAO DATE OF HEARING: 15-11-2011. DATE OF PRONOUNCEMENT: -11-2011. O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF THE CIT (A)-II, HYDERABAD DATED 20-5-2011 AND IT PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS BEFORE US:- 1. THE CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,25,000 (TWO LAKHS TWENTY FIVE THOUSAND) LEGAL EXPENSES, ST ATING THAT IT IS A ITA NO.1383/HYD/2011 BULCHAND TRADING PVT. LTD., HYD. L.L ========================== 2 PRIOR PERIOD EXPENDITURE, IGNORING THE FACT THAT EX PENDITURE ACCRUED AND PAID IN THE CURRENT F.Y. 2005-06. 2. THE CIT (A) ERRED IN NOT APPRECIATING THE FACT, THA T THE ASSESSEE COMPANY HAS TAKEN OVER THE RUNNING BUSINESS OF BUL CHAND & CO. AND BULCHAND ENTERPRISES RESPECTIVELY AS GOING CO NCERN W.E.F. 1-4- 2005 AND IT WAS AN ON-GOING LEGAL CASE WHICH EVEN C ONTINUED SUBSEQUENT TO THE DATE OF PAYMENT. HENCE, THE EXPE NSES WERE CRYSTALLIZED AND THE LIABILTITY TOWARDS PROFESSIONA L CHARGES PAYABLE WAS DETERMINED DURING THE CURRENT YEAR. 3. THE CIT (A) ERRED, TO RECOGNIZE THE CORRECT DATES O F PAYMENTS AS PER ASSESSEES RECORDS, AS WELL AS HE RECIPIENT. THE T HREE DAYS DIFFERENCE IS NORMALLY THE TRANSIT PERIOD. 3. BRIEF FACTS OF THE CASE ARE THAT IT WAS G ATHERED BY THE ASSESSING OFFICER THAT THE ASSESSEE MADE AN AMOUNT OF RS.2,2 5,000/- IN THE MONTH OF APRIL, 2005 TOWARDS LEGAL EXPENSES TO AN ADVOCATE NAMELY SRI YOGESH JAGIA DURING THE FINANCIAL YEAR 2005-06 RELE VANT TO THE ASSESSMENT YEAR 2006-07. THE ASSESSING OFFICER WAS OF THE OPINION THAT THIS AMOUNT HAS BEEN PAID TOWARDS LEGAL EXPENSES TO THE ADVOCATES AMOUNTING TO RS. RS.1,75,000/- SRI YOGESH JAGIA AN D RS.50,000/- TO SRI Y.N. LOHITA AND THESE AMOUNTS ARE NOT RELATING TO T HE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME ARE RELATING TO T HE EARLIER YEAR. THE ASSESSEE BEFORE THE LOWER AUTHORITIES SUBMITTED THA T THE AMOUNT WAS CRYSTALLIZED AND PAID IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE IT IS ALLOWABLE AS BUSINESS DEDUCTION. HO WEVER, THE LOWER AUTHORITIES NOT AGREED WITH THE CONTENTIONS OF THE ASSESSEE AND DISALLOWED AN AMOUNT OF RS.2,25,000/-. AGAINST THI S, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1383/HYD/2011 BULCHAND TRADING PVT. LTD., HYD. L.L ========================== 3 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ASSESSEE HEREIN FILED A COPY OF FORM NO.16A DATED 26- 4-2005 REFLECTING THE PAYMENT OF RS.50,000/- AND DE DUCTION TDS OF RS.2500/- WHICH WAS DEPOSITED IN CANARA BANK, ABID ROAD, HYDERABAD ON 19-4-2005 AND ALSO ANOTHER PAYMENT OF RS.1,75,00 0/- PAID TO SRI YOGESH JAGIA AND DEDUCTION OF TDS AMOUNTING TO RS.9 925/- DATED NIL. THE ABOVE FORMS NOS.16A WERE ISSUED TO SRI Y.N. LOH ITA ON 26-4-2005 AND TO SRI YOGESH JAGIA ON 31-3-2006 AND THESE ARE PERTAINING TO THE ASSESSMENT YEAR 2006-07. IN VIEW OF THIS, THE PAYM ENT WAS MADE TOWARDS LEGAL EXPENSES AND THE SAME ARE ALLOWABLE F OR THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, AFTER CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND ACCORDINGLY ALLOW THE GROUNDS TAKEN IN THIS APPEAL. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 22-11-2011 . SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 22-11-2011. COPY FORWARDED TO: 1. C/O M/S.LAXMINIVAS NEETH & COMPANY, 402, MOGHUL S COURT, BASHEERBAGH, HYDERABAD. 2. ACIT, CIR - 1(3), HYDERABAD. 3. CIT(A) - II, HYDERABAD. 4. CIT, AP, HYDERABAD. 5. THE D.R., ITAT, HYDERABAD. JMR* ITA NO.1383/HYD/2011 BULCHAND TRADING PVT. LTD., HYD. L.L ========================== 4