SH. RAM BABU GUPTA, Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, Jaipur

ITA 14/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5949 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 04-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHANWAR SINGH
• Assessee Lawyers: S L PODDAR
• Keywords: Depreciation; Corroborative evidences; Revenue expenditure; Capital expenditure

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 14/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 SHRI RAM BABU GUPTA S-2, CHAMELI WALA MARKET M.I. ROAD, JAIPUR CUKE VS. THE DCIT CIRCLE-2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACPPG 7427 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS @ REVENUE BY : SHRI BHANWAR SINGH, (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 25/09/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 26 /09/2019 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF CIT(A)-1, JAIPUR DATED 26.11.2018 FOR THE A SSESSMENT YEAR 2014-15 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING G ROUNDS. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4,39,464/- ON ACCOUNT OF FOREIGN TRAVELLING EXPENSE S OUT OF TOTAL EXPENSES OF RS. 8,78,928/-. ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3 6,750/- FOR TRADE MARK REGISTRATION EXPENSES. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN NOT ALLOWING CARRIED FORWARD OF LO NG TERM CAPITAL LOSS OF DEBT MUTUAL FUND OF RS. 10,31, 572/- SUFFERED BY THE ASSESSEE. 2.1 AT THE OUTSET OF THE HEARING, THE LD.AR OF THE ASSESSEE SUBMITTED THAT HE WANTS TO WITHDRAW THE GROUND NO. 3 RAISED IN T HE GROUNDS OF APPEAL FOR WHICH THE LD. DR HAS NO OBJECTION. HENCE, THE GROUND NO. 3 RAISED BY THE ASSESSEE IS DISMISSED TREATING THE S AME AS WITHDRAWN BY THE LD.AR OF THE ASSESSEE. 3.1 IN GROUND NO. 1, THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4,39,46 4/- ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES OUT OF TOTAL EXPENSES O F RS. 8,78,928/. 3.2 BRIEF FACTS OF THE CASE ARE THAT AO DURING THE COURSE OF ASSESSMENT PROCEEDING OBSERVED THAT THE ASSESSEE H AD DEBITED AN AMOUNT OF RS. 87,89,282/- ON ACCOUNT OF EXHIBITION AND FOREIGN TRAVELLING EXPENSES. ON EXAMINATION OF THE DETAILS OF EXHIBITION AND FOREIGN TRAVELLING EXPENSES, THE AO FOUND THAT THE BILLS AND VOUCHERS CONCERNING THE ISSUE WERE HANDMADE AND THE EXPENSES WERE INCURRED ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 3 IN CASH IN CERTAIN CASES. THE AO NOTED THAT LOOKING TO TURNOVER OF THE ASSESSEE, THE EXPENSES INCURRED BY THE ASSESSEE ARE AT HIGHER SIDE FOR WHICH THE AO DISALLOWED THE EXPENSES @ 10% WHICH COMES TO RS. 8,78,928/- U/S 37 OF THE ACT AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. 3.3 IN FIRST APPEAL, THE LD. CIT(A) HAS RESTRICTED T HE DISALLOWANCE TO THE EXTENT OF 5% GIVING RELIEF OF RS. 4,39,465/- BY OBSERVING AS UNDER:- 3.2.2. DETERMINATION I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. IT IS NOTED THAT THE AO HAS DISALLOWED 10% O F EXHIBITION AND FOREIGN TRAVELLING EXPENSES BY MENTI ONING THAT VARIOUS VOUCHERS ARE HANDMADE AND THE EXPENSES WERE MADE IN CASH IN CERTAIN INSTANCES. THE APPELLANT HAS SUBMITTED THAT THE AO DID NOT MENTION SPECIFIC INST ANCES WHERE EXPENSES DEBITED IS NOT FULLY VOUCHED. IT IS A LSO ADMITTED THAT SOME EXPENDITURE WHICH IS FOR LOCAL T RAVELLING IN FOREIGN CITIES AND FOODING EXPENSES WERE INCURRED IN CASH. CONSIDERING THE DEFECTS POINTED OUT BY THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT, IT APPEARS T HAT DISALLOWANCE MADE BY THE AO IS ON HIGHER SIDE. IN VI EW OF THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, TH E DISALLOWANCES ARE RESTRICTED TO 5% OF SUCH EXPENSES. THE APPELLANT GETS A RELIEF OF RS. 4,39,465/-. 3.4 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE HAS PRAYED FOR DELETION OF ADDITION RESTRICTED @ 5% BY T HE LD. CIT(A) TO THE ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 4 EXTENT OF RS. 4,39,465/- FOR WHICH THE LD.AR OF THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION AS UNDER:- IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAS CLAIMED RS. 87,89,282/- ON ACCOUNT OF EXHIBITION EXPENSE AND FOREIGN TRAVELING EXP. THE ASSESSEE IS EXPORTER AND HIS WHOLE SALES ARE EXPORT SALES TO TH E FOREIGN CUSTOMERS. THE ASSESSEE HAS PARTICIPATED IN EXHIBITIONS IN FOREIGN COUNTRIES AND PAID CHARGES F OR THE SAME. ALL THE PAYMENTS ARE BY ACCOUNT PAYEE CHEQUES AND COMPLETE SUPPORTING VOUCHERS WERE PRODUCED. COPY OF TRAVELING EXPENSES, LEDGER ACCOUN T ALONG WITH SUPPORTING VOUCHERS ARE AVAILABLE ON PAP ER BOOK PAGE NO. 1 TO 104. ONLY SOME SMALL EXPENDITURE WHICH IS FOR LOCAL TRAVELING IN FOREIGN CITIES AND FOODING EXPENSES ARE INCURRED IN CASH. THE LEARNED ASSESSIN G OFFICER DID NOT MENTION A SINGLE INSTANCE WHERE EXPENDITURE DEBITED IS NOT VOUCHED PROPERTY AND NO SUPPORTING EVIDENCES ARE AVAILABLE. HE DISALLOWED 1 0% OUT OF TOTAL EXHIBITION AND FOREIGN TRAVELING EXPEN SES INCURRED BY THE ASSESSEE ON AD-HOC BASIS. THE LEARNED CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 5% ON THE GROUND THAT SOME EXPENDITURE WHICH IS FOR LOCAL TRAVELING IN FOREIGN CITIES AND FOODING EXPENSES WERE INCURRED IN CASH. IN THIS REGARD IT IS SUBMITTED THAT IN FOREIGN COUNTRY IT IS NOT POSSIBLE TO THE ASSESSEE FOR MAKING PAYMENT BY CHEQUE OR ANY OTHER MODE. SO HE MADE THE PAYMENTS IN CASH. WHEN THE ASSESSEE HAS PRODUCED ALL THE BIL LS AND VOUCHERS REGARDING EACH EXPENDITURE, HENCE IS THE NO ROOM LEFT FOR SUSTAINING THE DISALLOWANCE 5% ON AD-HOC BASIS WITHOUT SPECIFYING ANY DEFECT. HENC E THE DISALLOWANCE SUSTAINED BY THE LEARNED CIT(A) DESERVES TO BE DELETED. ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 5 3.5 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS PASSED BY THE REVENUE AUTHORITIES. 3.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT TH E ASSESSEE (INDIVIDUAL) IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADIN G & EXPORT OF GOLD AND SILVER JEWELLERY. THE ASSESSEE IN HIS PROFIT AND LOSS ACCOUNT CLAIMED A SUM OF RS. 87,89,282/- ON ACCOUNT OF EXHIBITION E XPENSES AND FOREIGN TRAVELLING EXPENSES. THE ASSESSEE IS AN EXPORTER AND HIS WHOLESALES BUSINESS IS EXPORT SALES TO THE FOREIGN CUSTOMERS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAD PARTICIPATED IN EXHIB ITION IN FOREIGN COUNTRIES AND INCURRED CHARGES FOR THE SAME. THE AO WHILE MAKING ADDITION IN THE CASE OF THE ASSESSEE HAD MENTIONED THAT SOME OF THE BILLS AND VOUCHERS ARE HANDMADE AND SOME OF THE EXP ENSES WERE PAID IN CASH BY THE ASSESSEE. APART FROM THIS, NO OTHER ALLEGATION HAS BEEN RAISED BY THE AO. IT IS PERTINENT TO MENTION HERE T HAT THE AO HAS NOWHERE POINTED OUT DURING THE COURSE OF INVESTIGATI ON THAT EXPENSES INCURRED BY THE ASSESSEE WERE IN PERSONAL IN NATURE AND AO MERELY MADE THE ADDITION ON THE GROUND THAT THE BILLS AND VOUCHERS ARE HANDMADE AND CERTAIN EXPENSES ARE INCURRED IN CASH. AT THE SAME TIME, ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 6 AO HAS NOT DISPUTED WITH REGARD TO INCURRING OF EX PENSES FOR BUSINESS PURPOSES. IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE, AO AS WELL AS LD. CIT(A) WERE NOT RIGHT IN MAKING ADDITION O R RESTRICTING ADDITION MORE PARTICULARLY WHEN THE ASSESSEE HAD PRO DUCED ALL THE BILLS AND VOUCHERS REGARDING EACH EXPENSES. THEREFORE, WE A RE OF THE CONSIDERED VIEW THAT THE ORDERS PASSED BY THE REVENU E AUTHORITIES ON THIS ISSUE ARE NOT SUSTAINABLE. HENCE, THE GROUND N O. 1 RAISED BY THE ASSESSEE IS ALLOWED. 4.1 IN GROUND NO. 2, THE ASSESSEE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 36,750/ - FOR TRADE MARK REGISTRATION EXPENSES. 4.2 BRIEF FACTS OF THE CASE ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING NOTED THAT THE ASSESSEE HAD D EBITED A SUM OF RS. 49,000/- ON ACCOUNT OF TRADE MARK REGISTRATION EXPENSES WHICH IS AN EXPENDITURE OF CAPITAL NATURE. THE AO FURTHER NOTED THAT THE EXPENSES INCURRED FOR REGISTRATION EXPENSES ARE ONETIME EXPE NSES AND ARE OF CAPITAL IN NATURE AND THE EFFECT OF THE SAME IS FOR A LONG PERIOD. THE AO THUS DISALLOWED THE TRADE MARKET REGISTRATION EXPENS ES OF RS. 49,000/-. HOWEVER, THE AO ALLOWED DEPRECIATION @ 25% OF SUCH EXP ENSES WHICH ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 7 COMES TO RS. 12,250. THUS THE AO MADE AN ADDITION OF RS. 36,750/- (RS. 49,000 MINUS RS. 12,250) TO THE TOTAL INCOME O F THE ASSESSEE. 4.3 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED TH E ACTION OF THE AO BY OBSERVING AS UNDER:- 3..3.3 DETERMINATION I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. THE AO NOTED THAT THE APPELLANT HAS PAID RS. 49,000/- TOWARDS TRADEMARK REGISTRATION EXPENSES. THE AO ALLOWED DEPRECIATION @ 25% ON SUCH EXPENSES AND DISALLOWED THE BALANCE. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS SUBMITTED THAT EXPENDITURE WAS INCURRED ON ACCOUNT OF CONSULTANCY CHARGES TO PROFESSIONALS FOR REGISTRATION THE TRADEMARK. THE APPELLANT HAS FAILED TO SUBMIT ANY EVIDENCE IN ITS SUPPORT. CONSIDERING THE TOTALITY OF FACTS, IT IS HELD THAT THE AO WAS JUSTIFIED IN DISALLOWING SUCH EXPENDITURE. HENCE, TH IS GROUND OF APPEAL IS HEREBY REJECTED. 4.4 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE HAS PRAYED FOR DELETION OF ADDITION OF RS. 49,000/- CON FIRMED BY THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE FILED THE WRITTEN SUBMISSION AS UNDER:- THE ASSESSEE HAS PAID FEES FOR REGISTERING TRADEMARK FOR RS. 49,000/- WHICH IS LEGAL EXPENDITURE AND ALLOWABLE AS A REVENUE EXPENDITURE. THE LEARNED ASSESSING OFFICER TREAT ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 8 THIS EXPENDITURE AS CAPITAL NATURE AND ALLOWED ONLY 25% AS DEPRECIATION. THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER FOR RS. 36,750/- IS NOT JUSTIFIED AS THE EXPENDITURE INCURRED ON ACCOUNT OF CONSULTANCY CHARGES TO PROFESSIONALS FOR REGISTERING THE TRADEMARK IS A REVENUE EXPENDITURE AND SHOULD BE ALLOWED AS REVENUE EXPENDITURE. THE EVIDENCES REGARDING INCURRING OF EXPENDITURE IS AVAILABLE ON PAPER BOOK PAGE NO. 105. THE LEARNED CIT(A) HAS SUSTAINED THIS ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF EXPENDITURE CLAIMED, WHEREAS THE ASSESSEE HAS ENCLOSED THE COPY OF INVOICE OF RS. 49,000/- IN THE PAPER BOOK WHICH IS ALSO AVAILABLE BEFORE YOUR HONOR. THEREFORE THE ADDITION DESERVES TO BE DELETED. 4.5 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE REVENUE AUTHORITIES. 4.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE ASSESSEE HAS CLAIMED TO HAVE INCURRED THE EXPENSES OF RS. 36,750/- TOWARDS FEE PA ID FOR REGISTRATION OF TRADEMARK. THE AO HAD TREATED THE SAME AS CAPITAL IN NATURE AS ACCORDING TO AO THE EXPENSES INCURRED FOR REGISTRAT ION OF TRADEMARK ARE ONETIME EXPENSES AND THE EFFECT OF THE SAME ARE FOR A LONG PERIOD. THUS THE EXPENSES AMOUNTING TO RS. 49,000/- WAS DISAL LOWED BY AO. ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 9 HOWEVER, AO DISALLOWED THE DEPRECIATION @ 25% WHICH C OMES TO RS. 12,250/-. CONCLUSIVELY, THE AO DISALLOWED A SUM OF R S. 36,750/- UNDER THIS HEAD. THE LD. CIT(A) IN FIRST APPEAL, CONFIRMED THE ACTION OF THE AO. FROM THE RECORDS, WE NOTICED THAT THE EVIDENCE REGA RDING INCURRING OF EXPENSES ON ACCOUNT OF REGISTRATION OF TRADEMARK TO THE TUNE OF RS. 49,000/- IS AVAILABLE AT 105 OF THE PAPER BOOK FIL ED BY THE ASSESSEE. THE DOCUMENT PLACED ON RECORD BY THE ASSESSEE REFLEC TS THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE ON ACCOUNT OF CONSULTANCY CHARGES TO PROFESSIONAL FOR REGISTERING THE TRADEMA RK. DURING THE COURSE OF HEARING, IT WAS SUBMITTED AT BAR BY THE LD.AR OF THE ASSESSEE THAT SO FAR REGISTRATION OF TRADEMARK HAS NOT BEEN DONE AND THESE EXPENSES WERE EXCLUSIVELY INCURRED BY THE ASSESSEE ON ACCOUNT OF CONSULTANCY CHARGES TO PROFESSIONALS TOWARDS FEE FOR REGISTERING THE TRADEMARK WHEREAS ON THE CONTRARY THE REVENUE AUTHORITIES DISA LLOWED THOSE EXPENSES ON ACCOUNT OF FAILURE ON THE PART OF THE A SSESSEE TO SUBMIT THE DOCUMENT IN SUPPORT OF HIS CLAIM. IT IS PERTINE NT TO MENTION THAT THE ASSESSEE HAS ALREADY PLACED ON RECORD THE DOCUMENT BEFORE REVENUE AUTHORITIES WHICH IS AT PAGE 105 OF THE PAPER BOOK. THUS UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUE AU THORITIES WERE NOT ITA NO. 14/JP/2019 SHRI RAM BABU GUPTA VS DCIT, CIRCLE 2, JAIPUR 10 EXPECTED TO WIPE OUT SAID DOCUMENT WITHOUT VERIFYING THE AUTHENTICITY OF THE ISSUE IN QUESTION AND THUS DISALLOWED THE EX PENSES WITHOUT ANY BASIS OR REASONING. HENCE, IN OUR CONSIDERED VIEW, T HE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ISSUE ARE NOT SUSTA INABLE AND THE ADDITION SO MADE IS DELETED. THUS GROUND NO. 2 OF TH E ASSESSEE IS ALLOWED. 5.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2019. SD/- SD/- FOE FLAG ;KNO LANHI XKSLKBZ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 26/09/2019. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAM BABU GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-THE DCIT, CIRCLE -2, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 14/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR