M/s. Century Designer, Kolkata V. DCIT, C ircle- 40, Kolkata, Kolkata

ITA 1438/KOL/2010

• Counselvise Citation: 143823514 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 13-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: R SALARPURIA
• Keywords: Gift; Corroborative evidences

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITTAL, JM & HONBLE SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A NO. 1438/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEAR : 2004-05 M/S. CENTURY DESIGNER - VS.- DY. COMMISSIONER OF INCOME TAX KOLKATA [PAN : AABFC 8167 H] CIRCLE-40, KOLKATA. [ +, +, +, +, /APPELLANT ] ]] ] [ ./+, ./+, ./+, ./+,/ // / RESPONDENT ] ]] ] +, +, +, +, / FOR THE APPELLANT : SHRI R. SALARPURIA ./+, ./+, ./+, ./+, / FOR THE RESPONDENT : SHRI S. K. ROY 0 /ORDER . . . . . .. . ! ! ! ! , ' ' ' ' PER S. V. MEHROTRA, A. M. THE ASSESSEE HAS PREFERRED THIS APPEAL FOR ASSESSM ENT YEAR 2004-05 AGAINST ORDER OF LD. CIT(A)-XXXII DATED 13.01.2010. 2. THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEAR, C ARRIED ON THE BUSINESS OF EXTERNAL FINISHING OF BUILDING AS WORKS CONTRACTOR. THE ASSESSEE FIRM HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.7,52,810/-. ASSESSING OFFICER NOTICED FROM THE TDS CERTIFICATES FILED WITH THE RETURN OF INCOME THAT IN RESPECT OF SOME CASES THE AMOUNT PAID/CREDITED AS PER TDS CERTIFICATES WERE NOT AT ALL TAKEN INTO ACCOUNT AND IN SOME CASES A PART OF THE AMOUNT PAID/CREDITED AS PER TDS CERTIFICATE WERE TAKEN INTO ACCOUNT IN THE INCOME O F THE PREVIOUS YEAR. AFTER CONSIDERING THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE, AS REPRODUCED AT PAGE-2 OF HIS ORDER, BE OBSERVED AS UNDER :- 1. SANJEEVANI PROJECTS PVT. LTD. 32,625.00 30,71,694.00 51,548.00 30,39,069.00 SANJE EVANI PROJECTS PVT. LTD. HAS DEDUCTED TDS ON PAYMENT MADE DURING THE YEAR, THE OUTSTANDING BALANCE AS ON 01.04.03 ITA NO. 1438/KOL/2010 2 AMOUNTING TO RS.10,99,087.00, ADVANCE PAID DURING THE YEAR RS.14,70,514.00 AND RECEIVED DURING THE YEAR AMOUNTING TO RS.25,50,678.00 .HOWEVER, IN THE YEAR CONCERN TDS HAS BEEN DEDUCTED ON THE R/A BILL RAISED IN THE YEAR 2002-03 AMOUNTING TO RS.5,21,016.00. 2. DAKOJI PROPERTIES LTD. 33,378.75 50,000.00 1,000.00 16,621.25 TDS HAS BEEN DEDUCTED ON ADVANCE RS.16,621.25 RECEIVED DURING THE YEAR 2003-04. 3. KALYAN BHARTI TRUST 6,04,633,50 8,16,562.00 16,031.00 2,11,928.50 TDS H AS BEEN DEDUCTED ON ADVANCE RS.2,11,928.50 RECEIVED DURING THE YEAR 2003-04. 4. HRV (INDIA) PVT. LTD. -- 12,50,000.00 25,625.00 12,50,000.00 TDS HAS BEEN DEDUCTED ON ADVANCE RS.12,50,000 RECEIVED DURING THE YEAR 2003-04. 5. ELGINE IMPEX PVT. LTD. -- 4,69,340.00 9,622.00 4,69,340.00 TDS HAS BEE N DEDUCTED ON ADVANCE RS.3,52,719.00 AND ON DEBTORS COLLECTION OF RS.1,16,621.00. 6. MERLINE PROJECTS LTD. 1,87,593.55 4,00,000.00 8,400.00 2,12,406.45 TDS HA S BEEN DEDUCTED ON WORKS EXECUTED DURING THE YEAR RS.1,87,593.55 AND ON ADVANCE OF RS.2,12,406.45. TOTAL 8,58,230.80 60,57,596.00 1,12,226.00 FURTHER, HE CONSIDERED THE VARIOUS EXPENSES CLAIMED BY THE ASSESSEE AND TAKING NOTE OF THE FACT THAT THEY WERE ON SELF MADE VOUCHERS AND ALSO ON AC COUNT OF PERSONAL EXPENSES, MADE DISALLOWANCES AS UNDER :- I) LABOUR CHARGES : RS.60,000/- II) CAR RUNNING AND MAINTENANCE : RS.32,900/- III) TELEPHONE EXPENSES : RS.27,870/- IV) SALES PROMOTION : RS.20,837/- V) ADV. & PUBLICITY : RS. 5,000/- ITA NO. 1438/KOL/2010 3 LD. CIT(A) DISMISSED THE ASSESSEES APPEAL. 3. BEING AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 4. THE FIRST GROUND OF THIS APPEAL READS AS UNDER : - 1. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER WAS WHOLLY WRONG AND UNJUSTIFIED IN MAKING ARBITRARY, ADHOC AND ESTIMATED DISALLOWANCE OF THE FOLLOWING EXPENSES ME RELY ON ASSUMPTIONS AND PRESUMPTIONS AND ON VAGUE AND FLIMSY GROUNDS WI THOUT FINDING ANY DEFECT OR DISCREPANCY IN THE AUDITED ACCOUNTS : A) RS.60,000/- @ 10% (APPROX) OF RS.61,26,847/- ON A/C OF LABOUR CHARGES ON THE ALLEGED GROUND THAT THE CLAIM WAS MA DE ON THE BASIS OF SELF-MADE VOUCHERS B) RS.32,900/- 10% (APPROX) OF RS.3,29,003/- O N A/C OF CAR RUNNING & MAINTENANCE CHARGES FOR ALLEGED WANT OF EVIDENCE AN D PERSONAL USE OF THE CARS BY THE PARTNERS OF THE ASSESSEE FIRM C) RS.27,870/- 10% (APPROX) OF RS.2,78,700/- ON A /C OF TELEPHONE INCLUDING MOBILE CHARGES FOR ALLEGED PERSONAL USER OF THEM BY THE PARTNERS. D) RS.20,837/- 10% (APPROX) OF RS.2,08,377/- ON A/ C OF EXPENSES TOWARDS CALENDAR, DIARY, HOTEL, CAR HIRE AND MISCEL LANEOUS GIFTS FOR ALLEGED WANT OF EVIDENCE. E) RS.5,000/- 10% (APPROX) OF RS.69,304/- ON A/C OF PA YMENTS ALLEGEDLY MADE BY THE PARTNERS TO DIFFERENT PUJA COMMITTEES I N THEIR PERSONAL CAPACITY AND CLAIMED UNDER THE HEAD ADVERTISEMENT A ND PUBLICITY EXPENSE. WITHOUT PREJUDICE AND EVEN OTHERWISE THE ADHOC DISA LLOWANCES MADE ON ESTIMATE WERE HIGHLY EXCESSIVE AND WHOLLY UNREAS ONABLE. 5. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS MADE AN ADHOC DISALLOWANCE. HE DID NOT POINT OUT ANY SPE CIFIC ITEM WHICH WAS DISALLOWABLE. FURTHER, HE SUBMITTED THAT ASSESSEES ACCOUNTS HAD BEEN AUDITED AND THE ASSESSEE HAD GIVEN THE LEDGER ACCOUNT IN RESPECT OF THESE EXPENSES. LD. COUNSEL HAS REFER RED THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BATA INDIA LIMITED [1993] 20 1 ITR 884 (CAL.). IN THE ALTERNATE, LD. COUNSEL SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER ARE EXCESSIVE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF ITA NO. 1438/KOL/2010 4 THE CASE. WE WILL SEPARATELY DEAL WITH ALL THE DISA LLOWANCES. LABOUR CHARGES 7 ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIM ED TOTAL SUM OF RS.61,26,847/- ON THE BASIS OF SELF-MADE VOUCHERS. HE, THEREFORE, DISALLO WED RS.60,000/- FOR WANT OF PROPER SUPPORTING EVIDENCES WHICH WAS CONFIRMED BY THE LD. CIT(A). WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ACCOUNT AS S ELF MADE VOUCHERS WERE NOT OPEN FOR VERIFICATION AND, THEREFORE, DISALLOWANCE WAS CALLE D FOR. IT IS TRUE THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC ITEM BUT THE ASSESSEE ALSO COULD NOT PRODUCE ANY CLINCHING EVIDENCE TO SUBSTANTIATE HIS CLAIM. UNDER SUCH CIRCUMSTANCES, A VERY REASONABLE DISALLOWANCE TO THE EXTENT OF RS.60,000/- WAS JUSTIFIED. WE, THEREFORE, CONFIRM T HE SAME. 7.1 AS FAR AS DISALLOWANCE OF RS,32,900/- FOR CAR RUNNING AND MAINTENANCE CHARGES OF RS.3,29,003.71 IS CONCERNED, THE SAME WAS FULLY JUS TIFIED IN VIEW OF SECTION 38 SUB-SECTION (2) OF INCOME TAX ACT. WE CONFIRM THE SAME. 7.2 AS FAR AS TELEPHONE EXPENSES ARE CONCERNED ASSESSING OFFICER DISALLOWED RS.27,8 70/- BEING 10% OF THE EXPENSES CLAIMED ON THE GROUND THA T MOBILE PHONES HAD ALSO BEEN USED BY PARTNERS FOR PERSONAL PURPOSES. IN OUR OPINION, DIS ALLOWANCE WAS QUITE JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS IT IS NOT THE CASE OF THE ASSESSEE THAT PARTNERS HAD USED SEPARATE MOBILE PHONES ONLY FOR THEIR BUSINESS PURPOSES. 7.3 AS REGARDS, DISALLOWANCE OUT OF SALES PROVISION EXPENSES OF RS.2,08,377/-, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) BECAUSE DISALLOWANCE WAS MADE ON THE GROUND THAT THE EXPENSES WERE NOT FULLY SUPPORTED B Y BILLS AND VOUCHERS. 7.4 AS FAR AS DISALLOWANCE OUT OF ADVERTISEMENT & PUBLICITY OF RS.69,304/- IS CONCERNED, WE FIND THAT THE SAID AMOUNT WAS PAID MOSTLY TO DIFFER ENT PUJA COMMITTEES. ASSESSING OFFICER DISALLOWED RS.5,000/- WHICH IN OUR OPINION WAS NOT JUSTIFIED IN VIEW OF DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. BATA IND IA LIMITED [1993] 201 ITR 884 (CAL.) WHEREIN IT HAS BEEN OBSERVED AS UNDER :- ..IN THE FESTIVAL MONTHS, THE SHOPS IN THIS PAR T OF THE COUNTRY HAD TO PAY CONTRIBUTIONS TOWARDS COMMUNITY CELEBRATIONS TO KEEP THE YOUTHS IN THE NEIGHBOURHOOD OF THE SHOPS HAPPY TO ENSURE SMOO TH CONDUCT OF THE BUSINESS. THE EXPENDITURE COULD BE SAID TO BE AN EX PENDITURE REQUIRED TO ITA NO. 1438/KOL/2010 5 MAINTAIN THE BUSINESS. NO ELEMENT WAS THERE IN THE EXPENDITURE AS COULD BE TERMED AS SALES PROMOTION WE, ACCORDINGLY, DELETE THE SAME. THIS GROUND IS P ARTLY ALLOWED. 8. GROUND NOS. 2 & 3 RAISED BY THE ASSESSEE ARE A S UNDER :- 2. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER WAS WHOLLY WRONG AND UNJUSTIFIED IN ARBITRA RILY DISALLOWING THE CREDIT FOR TDS AMOUNT OF RS.97,266/- (TDS CLAIMED R S.1,12,226/- ON. THE BASIS OF THE TDS CERTIFICATES ISSUED BY 6 (SIX) CONTRACTEE PARTIES LESS ALLOWED RS.15,000/- OUT OF IT ON A PROPORTIONATE BA SIS) ON A TOTALLY MISCONCEIVED NOTION WITHOUT PROPERLY CONSIDERING AN D ANALYZING THE SAID TDS CERTIFICATES AND ALSO THE RELATED FACTS DULY EX PLAINED BEFORE HIM. ACTION OF THE A.O WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 3. FOR THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER WAS WHOLLY WRONG AND UNJUSTIFIED IN DISALLO WING THE SAID TDS OF RS.97,266/- DEDUCTED DURING THE YEAR EVEN AFTER HE HAS FULLY ACCEPTED THE FACT WITHOUT DISPUTE THAT THE ON A/C RUNNING ADVANC ES RECEIVED DURING THE YEAR FOR EXECUTING THE ONGOING CONTRACT JOB AND ALS O THE B/F OUTSTANDING BALANCES RECEIVABLE ON A/C OF CONTRACT WORK, ALREAD Y DISCLOSED IN THE EARLIER YEARS, BUT RECEIVED DURING THE YEAR AND BOT H FOUND CREDITED IN THE SAID 6 (SIX) TDS CERTIFICATES WERE NOT INCOME ASSES SABLE FOR THE A.Y 2004-05. ACTION OF THE A.O IN DISALLOWING THE SAID TDS WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. 9. APROPOS GROUND NOS. 2 & 3, FACTS HAVE BEEN NOTED EARLIER. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, WE DIRECT THE ASSE SSING OFFICER TO ALLOW CREDIT OF TDS IN THE YEAR IN WHICH INCOME IS OFFERED FOR TAXATION BECAUSE AS PER SECTION 205 WHERE TAX IS DEDUCTIBLE AT SOURCE, THE ASSESSEE SHALL NOT BE CALLED UPON TO PA Y TAX HIMSELF TO THE EXTENT TO WHICH TAX HAD TO BE DEDUCTED FROM THAT INCOME. EFFECT HAS TO BE GIVEN T O THIS SECTION ACCORDINGLY. BOTH THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 0 0 0 0 '1 '1 '1 '1 2 1% 3 4 2 1% 3 4 2 1% 3 4 2 1% 3 4 5' 5' 5' 5' ORDER PRONOUNCED IN THE COURT ON 08. 09. 2011. [ . . . . . . . . , ,, , ] [ . . . . . .. . ! ! ! ! , ' ' ' ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 08TH SEPTEMBER, 2011. ITA NO. 1438/KOL/2010 6 0 6 .7 87(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT : M/S. CENTURY DESIGNER, C/O. SALARPURI A JAJODIA & CO., 7, C.R. AVENUE, KOLKATA-700 072. 2 ./+, / RESPONDENT : DY. COMMISSIONER OF INCOME TAX, CIR CLE-40, 18, RABINDRA SARANI, KOLKATA -700 001. 3. 0 - % / CIT, 4. 0% ()/ CIT(A), KOLKATA. 5. '3 .%/ DR, KOLKATA BENCHES, KOLKATA [/7 ./ TRUE COPY] 0%1/ BY ORDER, #A /ASSTT REGISTRAR [KKC 'BC %DA E' /SR.PS]