DCIT CORPORATE CIRCLE 2 (1), CHENNAI V. M/S FRENDI FASHIONS PVT LTD, CHENNAI

ITA 1438/CHNY/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7708 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 27-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Earning of tax free income; Speculation loss; Corroborative evidences; Revenue expenditure; Speculative transactions; TDS; Rule 8D; Set aside
• Section: 43B; 143(3); 14A; 133(6); 43(5); 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.1438/CHNY/2018 ( / ASSESSMENT YEAR: 2014-15) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(1) 511, WANAPARTHY BLOCK, CHENNAI-34. VS M/S. FRENDI FASHIONS PVT.LTD. 6, MKM TOWERS, ARCOT ROAD PORUR, CHENNAI-600 116. PAN: AAACF 1121A ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SURESH PERIASAMY, JCIT /RESPONDENT BY : MR.B.RAMAKRISHNAN, FCA /DATE OF HEARING : 16.03.2021 /DATE OF PRONOUNCEMENT : 31 .03.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED CIT(A)-6, CHENNAI DATED 31.01. 2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE C ASE. 2.1 THE CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE DISALLOWANCE MADE U/S.14A AS THE ASSESSEE HAS NOT E ARNED ANY EXEMPT INCOME WHEN THERE IS NO SUCH EXCEPTION PROVIDED IN RULE 8D OF IT RULES. 2 ITA NO.1438/CHNY/2018 2.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THE F ACT THAT THE CBDT CIRCULAR NO.5/2014 WHEREIN IT IS CLARIFIED THA T DISALLOWANCE U/S. 14A R.W.R. 8D HAS TO BE MADE EVEN (THE TAXPAYER IN A PARTICULAR YEAR NOT EARNED ANY EXEMPT INCOME. 2.3 THE CIT(A) ERRED IN RELYING ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF REDINGTON (INDIA) LIMITED VS ADDI.CIT IN TCA NO. NO.520 OF 2013 DATED 23.12.2016, HAS NOT BEEN ACCEPTED BY THE DEPARTMENT . 3.1 THE CIT(A) ERRED IN DELETING THE ADDITION MAD E ON ACCOUNT OF EMPLOYEES CONTRIBUTION ON ESI & PF WHEN THE SAME WERE NOT PAID BY THE ASSESSEE WITHIN THE DUE DATE OF RELEVANT ACTS. 3.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE EMPLOYEES CONTRIBUTION OF ESI & PF ARE GOVERNED BY THE SECTIO N 36(1)(VA) OF THE ACT AND NOT UNDER SECTION 43B OF THE ACT 3.3 THE RECENT BOARDS CIRCULAR NO.22/2015, DT.17 .12.2015 HAS ACCEPTED THE DECISION OF THE SUPREME COURT IN T HE CASE OF ALOM EXTRUSIONS ONLY IN RESPECT OF DISALLOWANCE U/S 43B OF THE ACT AND HAS STATED THAT THIS CIRCULAR DOES NOT APPL Y TO THE CLAIM OF DEDUCTION RELATING TO EMPLOYEES CONTRIBUTI ON TO WELFARE FUNDS WHICH ARE GOVERNED BY SECTION 36(1)(V A) OF THE ACT. 4.1 THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE ON ACCOUNT SPECULATIVE LOSS AMOUNTING TO RS.81,12,608/ - BY HOLDING THAT TRANSACTION IN FOREIGN EXCHANGE WERE I NCIDENTAL TO THE ASSESSEES REGULAR COURSE OF BUSINESS AND THUS THE LOSS WAS NOT SPECULATIVE ULS.43(5). 4.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT FORWA RD CONTRACTS IN CURRENCY IS NOT COVERED BY THE EXCEPTI ONS TO THE DEFINITION OF SPECULATIVE TRANSACTIONS AS PROVIDED IN PROVISO (A)TO (E) TO SECTION 43(5) OF THE ACT. 4.3 THE CIT(A) OUGHT TO HAVE APPRECIATED WHEN THE ASSESSEE HAS CANCELLED THE FORWARD CONTRACT, THE O NUS WAS 3 ITA NO.1438/CHNY/2018 ON THE ASSESSEE TO EXPLAIN SATISFACTORILY WHY AS SESSEE RESORTED TO CANCELLATION. IN THE INSTANT CASE, THE ASSESSEE NEITHER BEFORE THE ASSESSING OFFICER NOR BEFORE THE APPELLATE AUTHORITY, HAD DEMONSTRATE SATISFACTORILY THE NEED OF SUCH CANCELLATION. 4.4 THE CT(A) FAILED TO APPRECIATE THAT MAJORITY OF THE CASES, THE CANCELLATION OF CONTRACT NOTES HAD BEEN MADE BE FORE THE DUE DATE OF THE EXPIRY AND THEREFORE THE LOSS ACCOU NTED ON THE CANCELLATION OF CONTRACTS REPRESENTED A LOSS NOT RE LATED TO THE BUSINESS OF EXPORTS RECEIVABLES/PAYABLES. 5.1 THE CIT(A) ERRED IN DIRECTING THE AO TO DELE TE THE ADDITION MADE ON ACCOUNT OF STITCHING CHARGES BY HO LDING THAT MERE NON PRODUCTION OF THE PARTY CANNOT BE THE BASI S TO MAKE A DISALLOWANCE WHEN ALL THE SUPPORTING EVIDENCES HA VE BEEN FILED AND SUBSTANTIATED. 5.2 THE CIT(A) FAILED CONSIDER THE FACT THAT THE ADDITION WAS MADE NOT ONLY BY NON PRODUCTION OF THE PARTY, IN AD DITION TO THE ABSENCE OF DETAILS AND DOCUMENTARY EVIDENCES IN SUP PORT OF RENDERING OF SERVICES TO THE ASSESSEE COMPANY WAS N OT PROVED / SUBSTANTIATED EITHER BY THE ASSESSEE OR BY THE CONCERNED PARTY. 5.3 THE CIT(A) OMITTED TO CALL FOR REMAND REPORT ULR 46A WHEN THE ASSESSEE FURNISHED ANY DETAILS/FRESH EVIDE NCE IN SUPPORT OF ITS CLAIM DURING THE APPELLATE PROCEEDIN GS, ON WHICH THE CIT(A) RELIED ON THE SAME AND ALLOWED THE GROUN D OF THE ASSESSEE. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUC ED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING TEXTILES A ND EXPORT OF 4 ITA NO.1438/CHNY/2018 READYMADE GARMENTS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 28.11.2014 DECLARING TOT AL INCOME OF ` 1,01,61,620/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE A CT ON 23.12.2016 AND DETERMINED TOTAL INCOME AT ` 3,59,50,810/- BY MAKING VARIOUS ADDITIONS INCLUDING DISALLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME U/S.14A R.W. RULE 8D OF THE INCOME TAX RULES, 1962, DISALLOWANCE OF EMPLOYE ES CONTRIBUTION TOWARDS PF & ESI U/S.36(1)(VA) R.W.S 2(24)(X), ADDITIONS TOWARDS LOSS ON FORWARD CONTRACTS AND DIS ALLOWANCE OF STITCHING CHARGES FOR WANT OF EVIDENCE. THE ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUT HORITY AND THE LEARNED CIT(A), FOR THE DETAILED REASONS RECORDED I N HIS APPELLATE ORDER, DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF EXPENDITURE U/S.14A R.W. RULE 8D, DISALLOWANCE OF EMPLOYEES CONTRIBUTION TOWARDS PF & ESI U/S.36(1)(VA) R.W.S 2(24)(X), DISALLOWANCE OF LOSS ON FORWARD CONTRACTS AND DISALLOWANCE OF STITCHING CHARGES. A GGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 5 ITA NO.1438/CHNY/2018 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.2 OF REVENUE APPEAL IS DISALLOWANCE OF EX PENDITURE U/S.14A R.W. RULE 8D OF THE INCOME TAX RULES, 1962. THE ASSESSING OFFICER HAS DISALLOWED A SUM OF ` 10,61,800/- TOWARDS INTEREST EXPENSES UNDER RULE 8D(2)(II) AND OTHER EXPENSES UNDER RULE 8D(2)(III) ON THE GROUND THAT W HETHER OR NOT EXEMPT INCOME IS RECEIVED DURING THE YEAR, EXPE NSES RELATABLE TO SUCH EXEMPT INCOME NEEDS TO BE DISALL OWED. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT IT HAS NOT RECEIVED ANY EXEMPT INCOME FOR THE YEAR UNDER CONSIDERATION AND HENCE, QUESTION OF DISALLOWANCE O F EXPENDITURE INCURRED TOWARDS SAID EXEMPT INCOME DOE S NOT ARISE. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT ISSUE OF DISALLOWANCE OF EXPEN DITURE U/S.14A READ WITH RULE 8D, WHEN THE ASSESSEE HAS NO T EARNED ANY EXEMPT INCOME FOR THE IMPUGNED ASSESSMENT YEAR HAS BEEN CONSIDERED BY THE HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASE OF CIT VS. CHETTINAD LOGISTICS P VT.LTD. 80 6 ITA NO.1438/CHNY/2018 TAXMANN.COM 221(MAD), WHERE IT WAS HELD THAT WHEN T HERE IS NO EXEMPT INCOME, NO DISALLOWANCE U/S.14A OF THE AC T. FURTHER THE HON'BLE SUPREME COURT HAS DISMISSED SLP FILED BY THE REVENUE AGAINST THE ORDER OF HONBLE HIGH COURT OF MADRAS AND UPHELD THE FINDINGS OF HIGH COURT OF MADRAS HOLDING THAT IF NO EXEMPT INCOME, THEN NO DISALLOWANCE U/S.14A READ WI TH RULE 8D OF THE INCOME TAX RULES, 1962. THE HON'BLE JURIS DICTIONAL HIGH COURT OF MADRAS IN THE CASE OF M/S. REDINGTON INDIA LTD. VS.ADDL.CIT (2017) 77 TAXMANN.COM 257 (MAD) HAS TAK EN A SIMILAR VIEW AND HELD THAT NO DISALLOWANCE SHOULD B E MADE, IF EXEMPT INCOME IS SHOWN AS NIL. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE A ND ALSO BY FOLLOWING DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT OF MADRAS IN THE CASES DISCUSSED HEREINABOVE, DELETED ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF EXPENDITURE INCLUDING INTEREST EXPENDITURE U/S.14A READ WITH RULE 8D OF THE RULES. THE FINDINGS RECORDED BY THE LEARNED CIT(A) ARE UNCONTROVERTED . THE REVENUE HAS FAILED TO BRING ON RECORD ANY CONTRARY DECISION TO SUPPORT ITS ARGUMEN TS. THEREFORE, BY FOLLOWING THE DECISION OF HON'BLE JUR ISDICTIONAL 7 ITA NO.1438/CHNY/2018 HIGH COURT OF MADRAS IN THE CASE OF M/S. REDINGTON INDIA LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT WHEN TH ERE IS NO EXEMPT INCOME EARNED FOR THE YEAR, NO DISALLOWANCE CAN BE MADE TOWARDS EXPENSES RELATABLE TO SAID EXEMPT INCO ME U/S.14A READ WITH RULE 8D. HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LEARNED CIT(A) AND REJECT GROUN D TAKEN BY THE REVENUE. 6. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO.3 OF REVENUE APPEAL IS DISALLOWANCE OF CONTRIBUTION TO PF AND ESI U/S.36(1)(VA) R.W.S 2(24)(X) OF THE ACT. THE ASSESSING OFFICER HAS DISALLOWED A SUM OF ` 33,80,366/- OWING TO BELATED PAYMENTS MADE TOWARDS EMPLOYEES CONTRIBU TION OF ESI AND PF U/S.36(1)(VA) READ WITH 2(24)(X) OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, EMPLOYEES CONTR IBUTION TO PF & ESI NOT REMITTED WITHIN DUE DATE SPECIFIED UN DER RESPECTIVE ACTS IS NOT ALLOWABLE U/S.36(1)(VA) OF T HE ACT. IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFF ICER THAT ALTHOUGH, CONTRIBUTION TO PF & ESI WAS NOT REMI TTED BEFORE DUE DATE SPECIFIED UNDER RESPECTIVE ACTS, BUT SUCH CONTRIBUTION HAS BEEN MADE ON OR BEFORE DUE DATE FOR FURNISHING RETURN OF 8 ITA NO.1438/CHNY/2018 INCOME U/S.139(1) OF THE ACT. THEREFORE, SAME CANNO T BE DISALLOWED U/S.36(1)(VA) READ WITH 2(24)(X) OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LEARNED CIT(A) HAS DELETED ADDITIONS M ADE BY THE ASSESSING OFFICER TOWARDS EMPLOYEES CONTRIBUTION T O PF & ESI, WHICH WAS PAID BELATEDLY TO THE CREDIT OF EMPLOYEE S ACCOUNT, BUT REMITTED ON OR BEFORE DUE DATE FOR FURNISHING R ETURN OF INCOME U/S.139(1) OF THE ACT, BY PLACING RELIANCE O N THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF MA DRAS IN THE CASE OF CIT VS. M/S. INDUSTRIAL SECURITY & INTELLIG ENCE INDIA PVT. LTD., IN TCA NO.585 & 586 OF 2015 DATED 24.07.2015 AND SUCH FINDING WAS FURTHER SUPPORTED BY THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306, WHERE IT WAS HELD THAT IF EMPLOYEES CONTRIBUTION TO PF & ESI IS REMITTED ON OR BEFORE D UE DATE FOR FURNISHING RETURN OF INCOME FILED U/S.139(1) OF THE ACT, THEN SUCH PAYMENTS NEED TO BE ALLOWED AS DEDUCTION, IRRESPECT IVE OF THE FACT THAT SUCH PAYMENT HAS BEEN REMITTED BEYOND DUE DATE SPECIFIED UNDER THE RESPECTIVE ACTS. THE HON'BLE S UPREME 9 ITA NO.1438/CHNY/2018 COURT HAS ALSO CONSIDERED BOARDS CIRCULAR NO.22/20 15 DATED 17.12.2015 TO ARRIVE AT SUCH CONCLUSION. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT FINDINGS RECORDED BY LEARN ED CIT(A), IN LIGHT OF DECISION OF THE HON'BLE JURISDICTIONAL HIG H COURT OF MADRAS AND THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASES DISCUSSED HEREINABOVE, IS IN ACCORDANCE WITH LAW AND DOES NOT CALL FOR ANY INTERFERENCE FROM OUR END. TH EREFORE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LEARNED CIT(A) AND REJECT THE GROUND TAKEN BY THE REVENUE. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO.4 OF REVENUE APPEAL IS DISALLOWANCE OF LOSS ON FORWARD CONTRACTS. THE FACTS WITH REGARD TO IMPUGNE D DISPUTE ARE THAT THE ASSESSE IS INTO EXPORT OF GARMENTS AN D IN THE PROCESS, IT HAS ENTERED INTO FORWARD CONTRACTS FOR HEDGING LOSS ON FLUCTUATION IN FOREIGN CURRENCY. THE SAID LOSS H AS BEEN TREATED AS REVENUE EXPENDITURE. THE ASSESSING OFFIC ER HAS DISALLOWED LOSS CLAIMED ON FORWARD CONTRACTS ON THE GROUND THAT ASSESSEES CASE DOES NOT FALL UNDER ANY OF THE EXCE PTIONS PROVIDED UNDER THE PROVISO TO SECTION 43(5) OF THE ACT, BECAUSE THE ASSESSEE HAS ENTERED INTO FORWARD CONTRACTS NO T FOR GOODS 10 ITA NO.1438/CHNY/2018 OR MERCHANDISE, BUT FOR CURRENCY. THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAS ENTERE D INTO FORWARD CONTRACTS TO HEDGE POSSIBLE LOSS ON ACCOU NT OF FLUCTUATION IN FOREIGN CURRENCY, THEREFORE, SAME CA NNOT BE CONSIDERED AS SPECULATIVE LOSS COVERED U/S.43(5) O F THE ACT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD ALONG WITH THE ORDER OF THE LEARNED CIT(A) . THE LEARNED CIT(A) HAS RECORDED A CATEGO RICAL FINDING IN LIGHT OF DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. FRIENDS & FRIENDS SHIPPING PVT LTD IN TAX C ASE APPEAL NO.251 OF 2010 DATED 23.08.2011 THAT WHEN FORWARD CONTRACTS ENTERED INTO WITH BANKS FOR THE PURPOSE OF HEDGING LOSS DUE TO FLUCTUATION IN FOREIGN CURRENCY WHILE IMPLEMENTING EXPORT OF GOODS, THEN THE SAME CANNOT BE CONSIDERED AS SPECU LATIVE LOSS U/S.43(5) OF THE ACT. THE LEARNED CIT(A) HAS F URTHER RECORDED THAT THE ASSESSEE HAS FURNISHED NECESSARY EVIDENCES TO PROVE THAT IT HAS EXPORTED GOODS AND HEDGE POS SIBLE LOSS IN FLUCTUATION IN FOREIGN CURRENCY HAD ENTERED INTO F ORWARD CONTRACT WITH ITS BANKERS AND INCURRED LOSS. THEREFORE, WE A RE OF THE CONSIDERED VIEW THAT ONCE FORWARD CONTRACTS ARE ENT ERED INTO 11 ITA NO.1438/CHNY/2018 WITH BANKERS FOR THE PURPOSE OF HEDGING POSSIBLE LO SS IN FLUCTUATION OF FOREIGN CURRENCY, THEN THE SAME IS I N THE NATURE OF REVENUE EXPENDITURE, BUT NOT SPECULATIVE LOSS U/S.4 3(5) OF THE ACT. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETED ADDITIONS MADE BY THE ASSESSING OFF ICER TOWARDS DISALLOWANCE OF LOSS ON FORWARD CONTRACTS. HENCE, W E ARE INCLINED TO UPHOLD FINDINGS OF THE LEARNED CIT(A) A ND REJECT GROUND TAKEN BY THE REVENUE. 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.5 OF REVENUE APPEAL IS DISALLOWANCE OF U NPROVED STITCHING CHARGES OF ` 1,30,36,426/-. THE ASSESSING OFFICER HAS DISALLOWED STITCHING CHARGES PAID M/S.R DESIGN APPA REL ON THE GROUND THAT ALTHOUGH THE ASSESSEE HAS FILED NECESS ARY EVIDENCES INCLUDING CONFIRMATION FROM THE PARTY, BU T THE PARTY HAD NOT ATTENDED WHEN CALLED UPON TO APPEAR BEFORE THE ASSESSING OFFICER TO CROSS EXAMINE THE CLAIM OF THE ASSESSEE. IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT STITCHING CHARGES HAS BEEN PAID AND SUCH PAYMENT WA S SUBSTANTIATED BY NECESSARY EVIDENCE INCLUDING TDS HAS BEEN DEDUCTED AS APPLICABLE UNDER THE LAW. THEREFORE, M ERELY FOR 12 ITA NO.1438/CHNY/2018 NON-APPEARANCE OF PARTY IN RESPONSE TO 133(6) NOTIC E, NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSE , WHEN ASSESSEE HAS FILED COMPLETE DETAILS ABOUT THE EXPEN DITURE. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAS DISAL LOWED STITCHING CHARGES ONLY FOR THE REASON THAT PARTY H AS NOT APPEARED BEFORE THE ASSESSING OFFICER IN RESPONSE T O NOTICE U/S.133(6). EXCEPT THIS, NO OTHER ADVERSE COMMENT H AS BEEN MADE IN RESPECT OF PAYMENT MADE TO M/S.R DESIGN AP PARELS FOR STITCHING CHARGES. IN FACT, THE ASSESSING OFFIC ER HAS NOT DOUBTED GENUINENESS OF PAYMENT. THE LEARNED CIT(A), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY POINTED OUT THAT PAYMENTS HAVE BEEN MADE THROUGH BANKING CHANNELS AFTER DEDU CTING APPLICABLE TDS AS PER LAW. FURTHER, THE ASSESSEE HA S FILED NECESSARY EVIDENCES, INCLUDING BILLS ISSUED BY PART Y FOR RENDERING SERVICES. THEREFORE, HE OPINED THAT MERE NON- PRODUCTION OF THE PARTY CANNOT BE A BASIS TO MAKE D ISALLOWANCE, WHEN ALL OTHER SUPPORTING EVIDENCES HAVE BEEN FILED TO SUBSTANTIATE CLAIM OF EXPENDITURE. THE SAID FINDING S OF THE 13 ITA NO.1438/CHNY/2018 LEARNED CIT(A) GOES UNCONTROVERTED FROM THE REVENUE . THE REVENUE HAS FAILED TO FILE ANY EVIDENCE TO COUNTER THE FINDING OF FACTS RECORDED BY THE CIT(A) . HENCE, WE ARE INCLIN ED TO UPHOLD THE FINDINGS OF LEARNED CIT(A) AND REJECT GROUND TA KEN BY THE REVENUE. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2021 SD/- SD/- ( . ) ( . ) (V.DURGA RAO) (G.MANJUNATHA) ' % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER ' /CHENNAI, ( / DATED 31 ST MARCH, 2021 DS *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF .