Hindustan Plywood Company (Regd.), New Delhi V. ITO, New Delhi

ITA 145/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6980 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 17-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL SENIOR
• Assessee Lawyers: ASHU TANDA N CAS
• Keywords: Depreciation; Business expenditure; Non-deduction of tax
• Section: 201(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-I : NEW DELHI) BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.145/DEL./2014 (ASSESSMENT YEAR : 2009-10) M/S. HINDUSTAN PLYWOOD COMPANY (REGD.), VS. ITO, W ARD 39 (4), D 26, PLOT NO.346, CHATTARPUR PAHARI, NEW DELH I. NEW DELHI 110 074. (PAN : AACFJ0833J) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI ANIL KUMAR GUPTA & ASHU TANDA N, CAS REVENUE BY : SHRI ROBIN RAWAL, SENIOR DR DATE OF HEARING : 17.02.2016 DATE OF PRONOUNCEMENT : 19.02.2016 O R D E R THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (APPEALS) DATED 15.10.2013. 2. GROUNDS NO.1 & 4 RELATE TO THE SIMILAR ISSUE WHI CH READ AS UNDER :- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS OF THE CASE IN SUSTAINING THE ADDITION IN A SUM OF RS.2,52,042/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTERES T PAID TO VARIOUS LOAN DEPOSITORS WITHOUT DEDUCTION OF TAX AT SOURCE IN CO MPLETE DISREGARD TO THE CORRECT LEGAL POSITION AND VARIOUS JUDICIAL PRONOUN CEMENTS. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AGA IN ERRED IN LAW AND ON FACTS OF THE CASE IN SUSTAINING THE ADDI TION OF RS.1,44,000/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 BEING CAR HIRE CHARGES PAID WITHOUT DEDUCTION OF TA X AT SOURCE INCOMPLETE DISREGARD TO THE SUBMISSIONS MADE BY THE APPELLANT FIRM. 3. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME. I NOTED THAT THE AO FOUND DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THAT THE ASSESSEE ITA NO.145/DEL./2014 2 HAS NOT DEDUCTED TAX AT SOURCE ON ACCOUNT OF INTERE ST PAID TO VARIOUS LOAN DEPOSITORS AMOUNTING TO RS.2,52,043/-. SIMILARLY, THE ASSESSEE HAS PAID CAR HIRE CHARGES WITHOUT DEDUCTION OF THE TAX AT SOURCE AMOU NTING TO RS.1,44,000/-. THE AO, THEREFORE, DISALLOWED BOTH THE EXPENSES U/S 40( A)(IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT). THE PROVISIONS OF S ECTION 40(A)(IA) ARE VERY CLEAR IF THE ASSESSEE FAILS TO DEDUCT THE TAX AT SOURCE O R AFTER DEDUCTION HAS NOT PAID BEFORE THE DUE DATE SPECIFIED IN SUB -SECTION (1) O F SECTION 139, THE SAME WILL NOT BE ALLOWED IN COMPUTING THE INCOME UNDER THE HEAD ' PROFIT AND GAINS OF BUSINESS OR PROFESSION'. BEFORE HE, THE LD. A.R. HAS TAKEN A SUBMISSION THAT THE 2 ND PROVISO TO SECTION 40(A)(IA) AS INSERTED BY FINANCE ACT, 2012 WOULD APPLY IN THE CASE OF THE ASSESSEE. ACCORDING TO HIM, 2 ND PROVISO IS CURATIVE IN NATURE INTENDED TO SUPPLY AN OBVIOUS OMISSION, TAKE CARE OF AN UNIN TENDED CONSEQUENCE AND MAKE THE SECTION WORKABLE. SECTION 40(A)(IA) WITHOU T THE SECOND PROVISO RESULTED IN THE UNINTENDED CONSEQUENCE OF DISALLOWANCE OF LE GITIMATE BUSINESS EXPENDITURE EVEN IN A CASE WHERE THE PAYEE IN RECEI PT OF THE INCOME HAD PAID TAX, AND, THEREFORE, HE TOOK THE PLEA THAT THE SECOND PR OVISO ALTHOUGH INSERTED W.E.F. 1 ST APRIL, 2013 BUT BEING CURATIVE IN NATURE HAS RETRO SPECTIVE EFFECT AND ACCORDINGLY CONTENDED THAT THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER SO THAT THE ASSESSEE CAN PROVIDE ALL THE DE TAILS IN TERMS OF THE SECOND PROVISO TO SECTION 40(A)(IA). I NOTED THAT THE SAI D SUBMISSION OF THE LD. AR IS DULY COVERED BY THE DECISION OF THE ITAT, KOLKATA B ENCH IN THE CASE OF SANTOSH KUMAR KEDIA VS. ITO IN ITA NO.1905/KOL/2014 FOR THE AY 2007-08 IN WHICH THE TRIBUNAL VIDE ORDER DATED 04.03.2015 HELD AS UN DER :- ITA NO.145/DEL./2014 3 5. I HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. I FIND FROM FIRST ARGUME NT MADE BY LD. COUNSEL FOR THE ASSESSEE THAT THE SECOND PROVISO TO SECTION 40( A)(IA) OF THE ACT INSERTED BY THE FINANCE ACT, 2012 WOULD APPLY IN TH E INSTANT CASE. ACCORDING TO HIM, THE SECOND PROVISO IS CURATIVE IN NATURE INTENDED TO SUPPLY AN OBVIOUS OMISSION, TAKE CARE OF AN UNINTEN DED CONSEQUENCE AND MAKE THE SECTION WORKABLE. SECTION 40(A)(IA) WITHOU T THE SECOND PROVISO RESULTED IN THE UNINTENDED CONSEQUENCE OF DISALLOWA NCE OF LEGITIMATE BUSINESS EXPENDITURE EVEN IN A CASE WHERE THE PAYEE IN RECEIPT OF THE INCOME HAD PAID TAX. ACCORDING TO HIM, IT HAS FOR L ONG BEEN THE LEGAL POSITION THAT IF THE PAYEE HAS PAID TAX ON HIS INCO ME, NO RECOVERY OF ANY TAX CAN BE MADE FROM THE PERSON WHO HAD FAILED TO D EDUCT THE INCOME TAX AT SOURCE FROM SUCH AMOUNT. IN GRINDLAYS BANK V CIT , (1992) 193 ITR 457 (CAL) DECIDED ON SEPTEMBER 5, 1989, IT WAS HELD BY THE HON'BLE CALCUTTA HIGH COURT AS FOLLOWS AT PAGES 469-470 OF THE REPORTS: A POINT HAS BEEN MADE BY THE ASSESSEE THAT AS A RE SULT OF THIS DEDUCTION THE DEPARTMENT IS REALIZING THE TAX TWICE ON THE SA ME INCOME. IT DOES NOT APPEAR THAT THIS POINT WAS AGITATED BEFORE THE TRIB UNAL. WE, HOWEVER, MAKE IT CLEAR THAT IF THE AMOUNT OF TAX HAS ALREADY BEEN REALISED FROM THE EMPLOYEES CONCERNED DIRECTLY, THERE CANNOT BE ANY Q UESTION OF FURTHER REALISATION OF TAX AS THE SAME INCOME CANNOT BE TAX ED TWICE. IF THE TAX HAS BEEN REALISED ONCE, IT CANNOT BE REALISED ONCE AGAI N, BUT THAT DOES NOT MEAN THAT THE ASSESSEE WILL NOT BE LIABLE FOR PAYME NT OF INTEREST OR ANY OTHER LEGAL CONSEQUENCE FOR THEIR FAILURE TO DEDUCT OR TO PAY TAX IN ACCORDANCE WITH LAW TO THE REVENUE.' (EMPHASIS SUPP LIED) THAT SUCH WAS THE LEGAL POSITION WAS ACCEPTED BY TH E CENTRAL BOARD OF DIRECT TAXES IN ITS CIRCULAR NO.275/20L/95-IT(B) DA TED JANUARY 29, 1997. REFERENCE IN THIS BEHALF MAY ALSO BE MADE TO THE JU DGMENT OF THE HON'BLE SUPREME COURT IN HINDUSTAN COCA COLA BEVERAGE P. LT D. V CIT, (2007) 293 ITR 226 (SC) WHERE THE SAME VIEW WAS TAKEN. I F IND THAT THE AFORESAID SETTLED POSITION IN LAW HAS ALSO BEEN LEGISLATIVELY RECOGNIZED BY INSERTION OF A PROVISO IN SUB-SECTION (1) OF SECTION 201 OF T HE ACT BY THE FINANCE ACT, 2012. THUS, THE SETTLED POSITION IN LAW IS THA T IF THE DEDUCTEE/PAYEE HAS PAID THE TAX, NO RECOVERY CAN BE MADE FROM THE PERSON RESPONSIBLE FOR PAYING OF INCOME FROM WHICH HE FAILED TO DEDUCT TAX AT SOURCE. IN A CASE WHERE THE DEDUCTEE/PAYEE HAS PAID THE TAX ON SUCH I NCOME, THE PERSON RESPONSIBLE FOR PAYING THE INCOME IS NO LONGER REQU IRED TO DEDUCT OR DEPOSIT ANY TAX AT SOURCE. IN THE SIMILAR CIRCUMSTA NCES, I FIND THAT THE FIRST PROVISO TO SECTION 40(A)(IA) INSERTED BY THE FINANC E ACT; 2010, WHICH HAS BEEN HELD TO BE CURATIVE AND THEREFORE, RETROSPECTI VE IN ITS OPERATION BY THE HON'BLE CALCUTTA HIGH COURT IN ITAT NO. 302 OF 2011 , GA 3200/2011, CIT V VIRGIN CREATIONS DECIDED ON NOVEMBER 23, 2011 PROVIDES FOR ALLOWANCE OF THE EXPENDITURE IN ANY SUBSEQUENT YEAR IN WHICH TAX HAS BEEN DEDUCTED AND DEPOSITED. THE INTENTION OF THE LEGISL ATURE CLEARLY IS NOT TO DISALLOW LEGITIMATE BUSINESS EXPENDITURE. THE ALLOW ANCE OF SUCH EXPENDITURE IS SOUGHT TO BE MADE SUBJECT TO DEDUCTI ON AND PAYMENT OF TAX AT SOURCE. HOWEVER, IN A CASE WHERE THE DEDUCTEE/PA YEE HAS PAID TAX AND AS SUCH THE PERSON RESPONSIBLE FOR PAYING IS NO LON GER REQUIRED TO DEDUCT ITA NO.145/DEL./2014 4 OR PAY ANY TAX, LEGITIMATE BUSINESS EXPENDITURE WOU LD STAND DISALLOWED SINCE THE SITUATION CONTEMPLATED BY THE FIRST PROVI SO VIZ. DEDUCTION AND PAYMENT OF TAX IN A SUBSEQUENT YEAR WOULD NEVER COM E ABOUT. SUCH UNINTENDED CONSEQUENCE HAS BEEN SOUGHT TO BE TAKEN CARE OF BY THE SECOND PROVISO INSERTED IN SECTION 40(A)(IA) BY THE FINANC E ACT, 2012. THERE CAN BE NO DOUBT THAT THE SECOND PROVISO WAS INSERTED TO SUPPLY AN OBVIOUS OMISSION AND MAKE THE SECTION WORKABLE. THE INSERTI ON OF SECOND PROVISO WAS EXPLAINED BY MEMORANDUM EXPLAINING THE PROVISIO N IN FINANCE BILL, 2012, REPORTED IN 342 ITR (STATUTES) 234 AT 260 & 2 61, WHICH READS AS UNDER:- 'E.RATIONALIZATION OF TAX DEDUCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE [TCS) PROVISIONS 1. DEEMED DATE OF PAYMENT OF TAX BY THE RESIDENT PAYEE . UNDER THE EXISTING PROVISIONS OF CHAPTER XVLL-8 OF THE INCOME-TAX ACT; A PERSON IS REQUIRED TO DEDUCT TAX ON CERTAIN SPECIFI ED PAYMENTS AT THE SPECIFIED RATES IF THE PAYMENT EXCEEDS SPECIFIED TH RESHOLD. IN CASE OF NON- DEDUCTION OF TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER, HE IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 2 01(1) IN RESPECT OF THE AMOUNT OF SUCH NON-DEDUCTION. HOWEVER, SECTION 191 OF THE ACT PROVIDES THAT A PERSON SHALL BE DEEMED TO BE ASSESSEE IN DEF AULT IN RESPECT OF NON/SHORT DEDUCTION OF TAX ONLY IN CASES WHERE THE PAYEE HAS ALSO FAILED TO PAY THE TAX DIRECTLY. THEREFORE, THE DEDUCTOR CANNO T BE TREATED AS ASSESSEE IN DEFAULT IN RESPECT OF NON/SHORT DEDUCTION OF TAX IF THE PAYEE HAS DISCHARGED HIS TAX LIABILITY. THE PAYER IS LIABLE TO PAY INTEREST UNDER SECTION 2 01(1A) ON THE AMOUNT OF NON/SHORT DEDUCTION OF TAX FROM THE DATE ON WHICH S UCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH THE PAYEE HAS DISCHARGED HIS T AX LIABILITY DIRECTLY. AS THERE IS NO ONE-TO-ONE CORRELATION BETWEEN THE T AX TO BE DEDUCTED BY THE PAYER AND THE TAX PAID BY THE PAYEE, THERE IS L ACK OF CLARITY AS TO WHEN IT CAN BE SAID THAT PAYER HAS PAID THE TAXES DIRECT LY. ALSO, THERE IS NO CLARITY ON THE ISSUE OF THE CUT-OFF DATE, I.E; THE DATE ON WHICH IT CAN BE SAID THAT THE PAYEE HAS DISCHARGED HIS TAX LIABILITY. IN ORDER TO PROVIDE CLARITY REGARDING DISCHARGE OF TAX LIABILITY BY THE RESIDENT PAYEE ON PAYMENT OF ANY SUM RECEIVED BY HI M WITHOUT DEDUCTION OF TAX, IT PROPOSED TO AMEND SECTION 201 TO PROVIDE THAT THE PAYER WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT PAYEE SHALL NOT BE DEEMED TO BE AN ASSESSE E IN DEALT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAYEE- (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 13 9 ; (II) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND ITA NO.145/DEL./2014 5 (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED B Y HIM IN SUCH RETURN OF INCOME, AND THE PAYER FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED. THE DATE OF PAYMENT OF TAXES BY THE RESIDENT PAYEE SHALL BE DEEMED TO BE THE DATE ON WHICH RETURN HAS BEEN FURNISHED BY THE PAYER. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE THE PAYER FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 2 01(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE SUCH RESIDENT, THE INTEREST UNDER SECTION 201(1A)(I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF I NCOME BY SUCH RESIDENT PAYEE. AMENDMENTS ON SIMILAR LINES ARE ALSO PROPOSED TO BE MADE IN THE PROVISIONS OF SECTION 206C RELATING TO TCS FOR CLAR IFYING THE DEEMED DATE OF DISCHARGE OF TAX LIABILITY BY THE BUYER OR LICEN SEE OR LESSEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST JULY, 20 12. II. DISALLOWANCE OF BUSINESS EXPENDITURE ON ACCOUNT OF NON-DEDUCTION OF TAX ON PAYMENT TO RESIDENT PAYEE. A RELATED ISSUE TO THE ABOVE IS THE DISALLOWANCE UN DER SECTION 40(A)(IA) OF CERTAIN BUSINESS EXPENDITURE LIKE INTEREST, COMMISS ION, BROKERAGE, PROFESSIONAL FEE, ETC. DUE TO NON-DEDUCTION OF TAX IT HAS BEEN PROVIDED THAT IN CASE THE TAX IS DEDUCTED IN SUBSEQUENT PREVIOUS YEAR, THE EXPENDITURE SHALL BE ALLOWED IN THAT SUBSEQUENT PREVIOUS YEAR O F DEDUCTION. IN ORDER TO RATIONALIZE THE PROVISIONS OF DISALLOWA NCE ON ACCOUNT OF NON- DEDUCTION OF TAX FROM THE PAYMENTS MADE TO A RESIDE NT PAYEE, IT IS PROPOSED TO AMEND SECTION 40(A)(IA) TO PROVIDE THAT WHERE AN ASSESSEE MAKES PAYMENT OF THE NATURE SPECIFIED IN THE SAID S ECTION TO A RESIDENT PAYEE WITHOUT DEDUCTION OF TAX AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE PAYEE, THE, FOR THE PURPOSE OF ALLOWING DEDUCTION OF SUCH SUM, IT SHALL BE DEEMED THAT THE ASSESSEE HAD DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYE E. THESE BENEFICIAL PROVISIONS ARE PROPOSED TO BE APPL ICABLE ONLY IN THE CASE OF RESIDENT PAYEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2 013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS.' ITA NO.145/DEL./2014 6 THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. ANSAL LANDMARK TOWNSHIP PVT. LTD. 377 ITR 635 HAS TAKEN THE SIMI LAR VIEW. NO CONTRARY DECISION WAS BROUGHT TO MY KNOWLEDGE BY THE LD. D.R. BY RESPECTFULLY FOLLOWING THE SAID DECISION, I RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSES SEE SHALL PROVIDE ALL THE DETAILS TO THE ASSESSING OFFICER WITH REGARD TO THE RECIPIE NTS OF THE INCOME AND TAXES PAID BY THEM. THE ASSESSING OFFICE R SHALL CARRY OU T NECESSARY VERIFICATION IN RESPECT OF THE PAYMENTS AND TAXES OF SUCH INCOME AN D ALSO FILING THE RETURN BY THE RECIPIENT. IN CASE, THE ASSESSING OFFICER FINDS THAT THE RECIPIENT HAS DULY PAID THE TAXES ON THE INCOME, THE ADDITION MADE BY THE A SSESSING OFFICER SHALL STAND DELETED. THUS, BOTH THE GROUNDS NO.1 & 4 ARE STATI STICALLY ALLOWED. 4. GROUND NO.2 RELATES TO THE SUSTENANCE OF THE ADD ITION OF A SUM OF RS.3,60,540/- MADE BY THE AO ON ACCOUNT OF REMUNERA TION PAID TO PARTNERS OF THE ASSESSEE FIRM IN EXCESS OF THE LIMITS PRESCRIBE D U/S 40(B) OF THE ACT. 5. THE BRIEF FACTS OF THE GROUND ARE THAT ON PERUSA L OF THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE, THE AO NOTED THAT THE ASSE SSEE INCLUDED A SUM OF RS.10,20,430/- BEING THE PROFIT ON SALE OF THE GODD OWN ON WHICH IT HAD BEEN CLAIMING DEPRECIATION FORM YEAR TO YEAR. THE AO WA S OF THE VIEW THAT THE SALARY PAID TO THE PARTNERS IS NOT TO BE PAID ON THESE PRO FITS. THE PROFIT ON SALE OF THE GODDOWN HAS TO BE EXCLUDED FOR THE PURPOSE OF COMPU TATION OF REMUNERATION TO THE PARTNERS. HE, THEREFORE, RECOMPUTED THE PARTNE RS REMUNERATION AND DISALLOWED A SUM OF RS.3,60,540/- OUT OF RS.5,40,00 0/- CLAIMED BY THE ASSESSEE ITA NO.145/DEL./2014 7 AS SALARY PAID TO THE PARTNERS. WHEN THE MATTER WE NT BEFORE THE CIT (A), THE CIT (A) CONFIRMED THE ORDER OF THE AO. 6. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. IT IS NOT DENIED THAT THE SUM OF RS.10,20,430/- WAS CREDITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT BEING PROFIT ON SALE OF THE GODDOWN. AS PER SECTION 40 ( B)(V) WHICH LAID OUT THE QUANTUM OF REMUNERATION PAYABLE TO THE PARTNERS LAY S DOWN AS UNDER :- ( V ) ANY PAYMENT OF REMUNERATION TO ANY PARTNER WHO I S A WORKING PARTNER, WHICH IS AUTHORISED BY, AND IS IN ACCORDAN CE WITH, THE TERMS OF THE PARTNERSHIP DEED AND RELATES TO ANY PERIOD FALLING AFTER THE DATE OF SUCH PARTNERSHIP DEED IN SO FAR AS THE AMOUNT OF SUCH PA YMENT TO ALL THE PARTNERS DURING THE PREVIOUS YEAR EXCEEDS THE AGGRE GATE AMOUNT COMPUTED AS HEREUNDER : (A) ON THE FIRST RS.75,000 OF THE BOOK-PROFIT OF RS.50, 000/- OR IN CASE OF LOSS OF BOOK PROFIT, WHICHEVER IS MORE; (B) ON THE NEXT RS.75,000/- OF THE BOOK PROFIT AT THE R ATE OF 60%. EXPLANATION 3 DEFINES BOOK PROFIT WHICH MANDATES AS UNDER :- EXPLANATION 3.FOR THE PURPOSES OF THIS CLAUSE, 'B OOK-PROFIT' MEANS THE NET PROFIT, AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR, COMPUTED IN THE MANNER LAID DOWN IN CHAPTER I V-D AS INCREASED BY THE AGGREGATE AMOUNT OF THE REMUNERATION PAID OR PA YABLE TO ALL THE PARTNERS OF THE FIRM IF SUCH AMOUNT HAS BEEN DEDUCT ED WHILE COMPUTING THE NET PROFIT. FROM THE SAID EXPLANATION 3, IT IS APPARENT THAT TH E BOOK PROFIT HAS TO BE THE PROFIT AS HAS BEEN SHOWN IN THE PROFIT & LOSS ACCOU NT FOR THE RELEVANT PREVIOUS YEAR. THE PROFIT RECEIVED BY THE ASSESSEE ON THE S ALE OF GODDOWN AMOUNTING TO RS.10,20,430/- WAS DULY CREDITED IN THE PROFIT & LO SS ACCOUNT AS PREPARED BY THE ASSESSEE AND IS PART OF THE NET PROFIT AS HAS BEEN SHOWN IN THE PROFIT & LOSS ACCOUNT. IN VIEW OF THIS FACT, I AM OF THE VIEW TH AT BOTH THE AUTHORITIES BELOW DID ITA NO.145/DEL./2014 8 NOT APPRECIATE THE PROVISION OF SECTION 40(B)(V), E XPLANATION 3 AND MIS- INTERPRETED DEFINITION OF THE BOOK PROFIT AS GIVEN UNDER EXPLANATION 3 TO SECTION 40(B) OF THE ACT. I ACCORDINGLY SET ASIDE THE ORDE R OF THE CIT (A) AND DELETE THE DISALLOWANCE MADE BY THE AO AMOUNTING TO RS.3,60,54 0/-. MY AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF THE HONBLE CALCU TTA HIGH COURT IN THE CASE OF MD. SERAJUDDIN & BROTHERS VS. CIT 210 TAXMAN 84 A S WELL AS THE FOLLOWING DECISIONS:- (I) SURESH A. SHROFF & CO. (MUMB.) (2013) 140 ITD 1 / 153 TTJ 666; (II) CIT VS. J.J. INDUSTRIES (2013) (GUJ.) 216 TAXMAN 162; (III) S.P. EQUIPMENT & SERVICES VS. ASSTT.CIT (JAIPUR) (2010) 36 SOT 325; (IV) ITO VS. JAMNADAS MULJIBHAI 99 TTJ 197 (RAJKOT); (V) DEEPA AGRO AGENCIES VS. ITO 154 TAXMAN 80 (BANG. TRIB.); (VI) ALLEN CAREER INSTITUTION VS. ADDL. CIT (2010) 37 DTR 379 (JP)(TRIB); (VII) ACIT VS. BILAWALA & CO. (2009) 32 SOT 486 / 133 T TJ 168 (MUM.)(TRIB.) NO CONTRARY DECISION WAS BROUGHT TO MY KNOWLEDGE. THUS, THIS GROUND STANDS ALLOWED. 7. GROUND NO.3 RELATES TO THE SUSTENANCE OF THE ADD ITION OF RS.15,650/- MADE BY THE AO ON ACCOUNT OF AMOUNT PAID FOR THE PURCHAS E OF COMPUTER. 8. I HEARD THE RIVAL SUBMISSIONS. I NOTED THAT EVE N THOUGH THE ASSESSEE CLAIMS THE PAYMENT FOR SUCH PURCHASE OF THE COMPUTE R HAS BEEN MADE THROUGH CHEQUE TO THE SUPPLIER OF THE COMPUTER BUT HE COULD NOT ADDUCE ANY EVIDENCE, CONFIRMATION OF THE PARTY AS WELL AS COPY OF THE IN VOICE EVEN THOUGH THE SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE. NO DOUBT, THE ASSESSEE IS ITA NO.145/DEL./2014 9 ENTITLED FOR DEDUCTION U/S 37 OF ANY EXPENDITURE WH ICH HAS BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF THE BUSINESS BUT, IN MY OPINION, THE ASSESSEE IS BOUND TO PROVE THE GENUINENESS OF THE EXPENDITURE. IT IS A CASE WHERE THE ASSESSEE HAS NOT DISCHARGE HIS ONUS PROVING THE GENUINENESS OF T HE EXPENDITURE. I ACCORDINGLY CONFIRM THE DISALLOWANCE OF RS.15,650/-. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2016. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.