RATAN SILK MILLS, MUMBAI V. ITO., WARD-18(1)(3), MUMBAI

ITA 1453/MUM/2012

• Counselvise Citation: 145319914 RSA 2012
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: M V SUBRAMANIAN
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI [ , [ , BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDIC IAL MEMBER ./ ITA NO S . 1452 & 1453 /M/20 12 ( [ [ / ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 ) M/S. RATAN SILK MILLS GALA WOOD WORK COMPOUND, OPP. B.D.D. CHAWL NO.114, WORLI, MUMBAI 400 0 13 PAN: AA CFR7220D / VS. I NCOME TAX OFFICER, W AR D 18 ( 1 )( 3 ), MUMBAI ( / APPELLANT) ( / RESPONDENT) ASSESSEE BY : SHRI M.V. SUBRAMANIAN , A.R. RE VENUE BY : SHRI B.P. K . PANDA , D.R. / DATE OF HEARING : 24.02 . 201 4 / DATE OF PRONOUNCEMENT : 12.03.2014 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: SINCE THE FACTS AND CIRCUMSTANCES AND THE GROUNDS OF APPEAL IN BOTH THE ABOVE TITLED APPEALS ARE IDENTICAL, HENCE THESE ARE TAKEN UP TOGETHER FOR DISPOSAL WITH TH E COMMON ORDER. AT THE OUTSET THE LD. A.R. OF THE ASSESSEE HAS STATED THAT ALMOST ALL THE GROUNDS OF APPEALS ARE COVERED WITH THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL PASSED IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2002 - 03 TO 200 4 - 05 VIDE ITA NOS.2915 & 2916/M/2007 ETC. DECIDED VIDE COMMON ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 2 ORDER DATED 23.05.12. FIRSTLY, WE TAKE UP APPEAL NO.1452/M/2012 RELEVANT TO ASSESSMENT YEAR 2005 - 06 . ITA NO.145 2 /M/2012 (A.Y. 200 5 - 0 6 ) G ROUND NO.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) - 29 ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST OF RS.4,98,045/ - FOR ALLEGED DIVERSION OF INTEREST BEARING BORROWED FUNDS. 2. LD. A.R. OF THE ASSESSEE SUBMITTED THAT T HE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL AND DECIDED IN THE OWN CASE OF THE ASSESSEE FOR EARLIER YEARS VIDE ORDER DATED 23.05.12 IN ITA NOS.2915, 2916, 6035, 6785, 2247 & 2248/M/2007. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 9. GROUND NO. 1 OF THE ASSESSEE'S AP PEAL IS AGAINST THE SUSTENANCE OF ADDITION OF ` . 11,90,550/ - , BEING 50% OF THE TOTAL DISALLOWANCES OF INTEREST OF ` . 23,81,097/ - MADE BY THE AO. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE PAID INTEREST ON LOANS TO VARIOUS FINANCIAL INSTIT UTIONS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE A.O. THAT THE ACCOUNT OF M/S. MODERN TEXTILE RAYON & SILK MILLS PVT. LTD. (HEREINAFTER CALLED MTRS) HAD OPENING BALANCE OF ` . 1.46 CRORE. THE A.O. NOTED THAT THE ASSESSEE MADE CER TAIN PURCHASES FROM THIS PARTY AND THE CLOSING BALANCE WAS AT ` . 2.00 CRORE. IN THE OPINION OF THE A.O., THE ASSESSEE DIVERTED ITS INTEREST BEARING FUNDS IN MAKING THE PAYMENT TO MTRS, A SISTER CONCERN OF THE ASSESSEE. ACCORDINGLY, THE A.O. HELD THAT THE IN TEREST ON BORROWINGS WAS NOT ALLOWABLE U/S.36(1)(III) TO THIS EXTENT. THIS HAS RESULTED INTO AN ADDITION OF ` . 23.81 LAKHS. 10. THE LEARNED CIT(A) ACCEPTED THE ASSESSEE'S STAND IN PARTICULAR THAT THE ASSESSEE WAS DEALING IN SUCH TYPES OF COMMODITIES WHICH W ERE NOT USUALLY AVAILABLE IN THE MARKET. MTRS SUPPLIED THE GOODS TO THE ASSESSEE ON THE CONDITION OF 100% ADVANCE. HE OBSERVED THAT 'THE APPELLANT, THEREFORE, IS UNDERSTANDABLY UNDER OBLIGATION TO KEEP THE ADVANCE AMOUNT WITH MTRS'. HE HOWEVER, HELD THAT T HE A.O. SHOULD HAVE ALLOWED CREDIT FOR THE SALES FIGURE DURING THE YEAR AND ADVANCE FOR 4 TO 5 MONTHS WAS JUSTIFIABLE. CONSIDERING THESE FACTS, HE DIRECTED THE A.O. TO REDUCE THE DISALLOWANCE OF INTEREST BY 50%. THE ASSESSEE IS AGGRIEVED AGAINST THE SUSTEN ANCE OF ADDITION TO THE TUNE OF ` . 11.90 LAKHS. GROUND NO.3 OF THE REVENUE'S APPEAL IS AGAINST THE RELIEF ALLOWED BY THE LD. CIT(A) ON THIS ISSUE. 11. AFTER CONSIDERING THE RIVAL SUBMISSION AND PERUSING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED FROM T HE ASSESSEE'S BALANCE SHEET (A COPY OF WHICH IS AVAILABLE ON PAGE 4 OF THE PAPER BOOK) THAT THERE IS BALANCE IN THE PARTNERS' CAPITAL ACCOUNT TO ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 3 THE TUNE OF ` . 4,71,25,950/ - . FROM THE PARTNER'S CAPITAL ACCOUNT, IT IS NOTICED THAT NO INTEREST WAS PAID TO PAR TNERS ON SUCH CREDIT BALANCES. IT, THEREFORE, BECOMES APPARENT THAT THE ASSESSEE HAD INTEREST FREE FUNDS AVAILABLE AT ITS DISPOSAL AT A HIGHER FIGURE THEN THE AMOUNT ADVANCED TO ITS SISTER CONCERN, THE CLOSING BALANCE OF WHICH H AS BEEN REPORTED BY THE A.O. AT ` . 2.00 CRORE. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (2009) 313 ITR 340 (BOM) HAS HELD THAT IF THERE ARE INTEREST FREE FUND AVAILABLE WITH THE ASSESSEE SUFFICIENT TO MEET ITS INVESTMENT AND AT THE SAME TIME, LOAN HAS BEEN RAISED, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE MADE FROM INTEREST FREE FUNDS. IN THIS CASE, THE HON'BLE JURISDICTIONAL HIGH COURT ORDERED FOR THE DISALLOWANCE OF INTEREST. AS ADMITTEDLY, THE INTEREST FREE FUNDS IN THE SHAPE OF PARTNERS' CAPITAL BALANCES ARE FAR IN EXCESS OF THE AMOUNT PAID BY THE ASSESSEE TO ITS SISTER CONCERN, IN OUR CONSIDERED OPINION, THE RATIO IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (SUPRA) WOULD SQUARELY APPLY AS NOT TO WARRANT ANY DISALLOWANCE OF INTEREST. 12. BE THAT AS IT MAY, IT IS FOUND AS AN ADMITTED POSITION THAT THE ASSESSEE WAS MAKING PURCHASES FROM THIS SISTER CONCERN, WHO WAS MANUFACTURING THE GOODS AS PER THE SPECIFIC ORDERS OF THE ASSESSEE. THE A.O. HAS HIMSELF ADMITTED THIS FACT WHE N HE NOTED THAT AS AGAINST THE OPENING BALANCE OF ` . 1.46 CRORE, THE ASSESSEE EFFECTED PURCHASE FROM IS SISTER CONCERN DURING THE YEAR AT ` . 1.42 CRORE. THERE CANNOT BE ANY DISPUTE ON THE PROPOSITION THAT IF FUNDS ARE ADVANCED FOR THE PURPOSE OF BUSINESS, TH ERE CANNOT BE ANY QUESTION OF DISALLOWANCE OF INTEREST ON THE GROUND THAT THE INTEREST FREE FUNDS WERE UTILISED TO MAKE SUCH ADVANCE. FROM THE VERY PRESCRIPTION OF SECTION 36(1)(III), IT IS DISCERNIBLE THAT THE AMOUNT OF INTEREST PAID IN RESPECT OF CAPITAL BORROWED, FOR THE PURPOSE OF BUSINESS OR PROFESSION, IS ALLOWED AS DEDUCTION. SO LONG AS THE PURPOSE OF UTILISATION OF THE CAPITAL BORROWED IS TOWARDS BUSINESS, NO DISALLOWANCE CAN BE MADE. AS ADMITTEDLY, THE ADVANCES WERE MADE BY THE ASSESSEE TO ITS SIST ER CONCERN FOR EFFECTING PURCHASES, IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) CANNOT BE HELD TO BE JUSTIFIED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF ANY INTEREST. IN THE RESULT, THIS GROUND OF THE ASSESSEE IS ALLOWED AND THAT OF THE R EVENUE IS DISMISSED. 3. IN VIEW OF ABOVE FINDINGS GIVEN BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN EARLIER YEARS, FOLLOWING THE SAME FOR THE SAKE OF CONSISTENCY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE ACCORDINGLY. GROUND NO.2 ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) - 29 ERRED IN CONFIRMING THE DISALLOWANCE OF MOTOR C AR EXPENSES OF RS. 1 , 14,877 / - BEING 20% OF THE TOTAL EXPENSES DEBITED TO PROFIT & LOSS A/C AND RS.1,88,470/ - TOWARDS DEPRECIATION ON MOT OR CAR AT 20% OF RS.9,42,352/ - BEING THE ALLEGED NON BUSINESS USE AND FOR NOT KEEPING LOG BOOK. ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 4 4. LD. A.R. HAS SUBMITTED THAT THE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE VIDE ITS ORDER DATED 23.05.12 FO R A.Y. 2002 - 03, 03 - 04 & 04 - 05 IN ITA NOS.2915, 2916, 6035, 6785, 2247 & 2248/M/2007. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 13. GROUND NO.2 OF THE ASSESSEE'S APPEAL IS AGAINST THE SUSTENANCE OF ADDITIONS OF MOTOR CAR EXPENSES. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION IN RESPECT OF MOTOR CAR EXPENSES TO THE TUNE OF `. 8,28,597/ - . THE A.O. OBSERVED THAT THE ASSESSEE HAD USED 9 MOTOR CARS, OUT OF WHICH 5 WERE IN THE NAMES OF PERSONS OTHER THAN THE ASSESSEE F IRM OR ITS PARTNERS. CONSIDERING THE NATURE OF THE BUSINESS OF THE ASSESSEE FIRM, THE A.O. ALSO FOUND THE USE OF 9 MOTOR CARS AS QUITE UNREASONABLE. ON BEING CALLED UPON TO JUSTIFY THE DEDUCTION, THE ASSESSEE STATED THAT THE USE OF THESE NINE MOTOR CARS WA S FOR THE PURPOSE OF ITS BUSINESS, BECAUSE IT WAS 100% EXPORT FIRM AND THE OVERSEAS CUSTOMERS WERE FREQUENTLY VISITING THE ASSESSEE IN CONNECTION WITH THE EXPORT ORDERS. IT WAS STATED THAT ON AN AVERAGE 5 DIFFERENT CUSTOMERS WERE ALWAYS ON VISIT FOR BUSINE SS PURPOSE TO WHOM THE ASSESSEE WAS PROVIDING CARS SO AS TO MAKE THEIR STAY COMFORTABLE. THE A.O. DID NOT ACCEPT THIS CONTENTION. HE DISALLOWED COMPLETE MOTOR CAR EXPENSES IN RESPECT OF THE FIVE CARS WHICH WERE NOT IN THE ASSESSEE'S NAME AND FOR THE REMAIN ING THREE CARS, HE MADE DISALLOWANCE AT 20% OF THE EXPENSES CLAIMED. THE LEARNED CIT(A) REDUCED THE TOTAL DISALLOWANCE TO 50%, AGAINST WHICH THE ASSESSEE IS AGGRIEVED. THERE IS NO APPEAL BY THE REVENUE ON THIS ISSUE. 14. AFTER CONSIDERING THE RIVAL SUBMISS IONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE MERE FACT, BEING THE VEHICLE NOT STANDING IN THE NAME OF THE ASSESSEE, CANNOT BE A REASON FOR MAKING OR SUSTAINING ANY DISALLOWANCE ON THE ACCOUNT OF MOTOR CAR EXPENSES. SO LONG AS THE EXP ENSES ARE INCURRED ON THE MOTOR VEHICLES FOR THE PURPOSE OF BUSINESS, THE SAME HAVE TO BE ALLOWED AS DEDUCTION. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MIRZA ATAULLAHA BAIG AND OTHER (1993) 202 ITR 291 (BOM) HAS HELD THE ASSESSEE TO BE ENTITLED TO DEPRECIATION ON VEHICLE PURCHASED WHICH WAS NOT REGISTERED IN THE ASSESSES'S NAME. IN THE LIGHT OF THIS JUDGMENT AND SEVERAL OTHER JUDGMENTS ON THE SAME ISSUE WE HOLD THAT THIS REASON OF THE A.O. FOR MAKING THE DISALLOWANCE OF EXPENSES CANNOT BE SUSTAINED. BE THAT AS IT MAY, IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE ASSESSEE DID NOT HAVE COMPLETE DETAILS IN RESPECT OF MOTOR CAR EXPENSES BECAUSE NO LOG BOOK ETC. WERE MAINTAINED. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IN OUR CONSIDERED OPINION, IT WILL BE JUST AND FAIR IF 10% OF THE TOTAL MOTOR CAR EXPENSES, IN RESPECT OF ALL THE 9 CARS, ARE HELD TO BE RELATABLE TO BE PERSONAL USE BY THE PARTNERS OF THE FIRM. WE ACCORDINGLY SUSTAIN THE DISALLOWANCE AT `. 82,859/ - . THIS GROUND IS PARTLY ALLOWED. 15. GROUND NO.3 OF THE ASSESSEE'S APPEAL IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF DEPRECIATION AND INTEREST PAID ON LOAN FOR MOTOR CAR ON THE GROUND THAT THE 5 MOTOR CARS WERE NOT REGISTERED IN THE NAME OF THE ASSESSEE. FOR THE REASONS DISCUSSED IN RESPECT OF GROUND NO. 2, WE HOLD THAT THE SUSTENANCE OF THE DISALLOWANCE OF DEPRECIATION ON THAT GROUND CANNOT BE SUSTAINED. HOWEVER, CONSIDERING THE MANDATE OF SECTION 38(2), WE SUSTAIN DISALLOWANCE OF DEPRECIATION @ 10% ON ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 5 ACCOUNT OF PERSONAL USE BY THE PARTNERS IN RESPECT OF ALL THE MOTOR CARS. IN SO FAR AS THE INTEREST PART OF `. 1,57,319/ - TOWARDS LOAN ON MOTOR CAR IS CONCERNED, IN OUR CONSIDERED OPINION, THE SAME IS DEDUCTIBLE IN VIEW OF THE FACT THAT THE CARS WE RE PURCHASED BY THE ASSESSEE FIRM AND WERE STANDING IN ITS BALANCE SHEET. FURTHER IN VIEW OF THE FACT THAT THE SAID CARS WERE USED BY THE ASSESSEE FOR THE BUSINESS PURPOSE, THERE CAN BE NO QUESTION OF DISALLOWANCE OF INTEREST FOR THE PURCHASE OF SUCH CARS. TO SUM UP, WE SUSTAIN THE DISALLOWANCE ON MOTOR CARS AT THE RATE OF 10% TOWARDS PERSONAL USE BY THE PARTNERS. THIS GROUND IS PARTLY ALLOWED. 5. IN VIEW OF THE ABOVE FINDINGS GIVEN BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN EARLIER YEARS, FOLLOWING THE SAME FOR THE SAKE OF CONSISTENCY, THIS ISSUE IS ACCORDINGLY PARTLY ALLOWED IN FAVOUR OF THE ASSESSEE RESTRICTING THE DISALLOWANCE @10% OF THE TOTAL EXPENSES CLAIMED UNDER THIS HEAD. GROUND NO.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT(A) - 29 ERRED IN CONFIRMING THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS. 50 , 000 / - OUT OF RS.14,44,441/ - INCURRED ON ACCOUNT OF SALES PROMOTION EXPENSES BEING PERSONAL IN NATURE AND INCURRED IN CASH AND THROUGH CREDIT CARD. 6. L D. A.R. HAS SUBMITTED THAT T HE ISSUE RAISED VIDE GROUND NO. 3 HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER YEARS VIDE ORDER DATED 23.05.12 IN ITA NOS.2915, 2916, 6035, 6785, 2247 & 2248/M/2007. THE R ELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 16. GROUND NO. 4 IS AGAINST THE SUSTENANCE OF DISALLOWANCE OF `. 40,706/ - BEING 50% OUT OF SALES PROMOTION EXPENSES DISALLOWED BY THE A.O. THE ASSESSEE CLAIMED DEDUCTION FOR `. 4,07,058/ - ON ACCOUNT O F SALES PROMOTION EXPENSES. THE A.O. OBSERVED THAT THE VOUCHERS FOR THESE EXPENSES WERE NOT PROPERLY BACKED BY BILLS. HE, THEREFORE, MADE DISALLOWANCE AT 20% OF SUCH EXPENSES AT `. 81,412/ - , WHICH WAS REDUCED IN THE FIRST APPEAL TO 10%. 17 . AFTER CONSIDERI NG THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE LEARNED CIT(A) WAS JUSTIFIED IN SUSTAINING THE DISALLOWANCE AT 10% OF SUCH EXPENSES IN VIEW OF THE FACTS THAT THESE EXPENSES WERE NOT PROPERLY SUBSTANTIAT ED WITH BILLS ETC. THIS GROUND IS NOT ALLOWED. ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 6 7. THOUGH THE TRIBUNAL CONFIRMED THE DISALLOWANCE IN EARLIER YEARS TO THE EXTENT OF 10% OF THE TOTAL EXPENSES UNDER THIS HEAD, WHICH COMES OUT TO BE RS.144444.10 FOR THIS YEAR BUT, SINCE THE CIT(A) HAS RESTR ICTED THE DISALLOWANCE AT RS. 50,000/ - ONLY AND THE R EVENUE HAS NOT PREFERRED ANY APPEAL ON THIS ISSUE, HENCE THE DISALLOWANCE SUSTAINED BY THE CIT(A) UNDER THIS HEAD IS CONFIRMED. GROUND NO.4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW T HE LD. CIT(A) - 29 ERRED IN CONFIRMING THE DISALLOWANCE OF A SUM OF TOTAL RS.20 , 000 / - (RS.10,000/ - EACH) ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES OUT OF RS.4,13,897/ - AND RS.87,855/ - RESPECTIVELY AS THE EXPENSES INCURRED IS IN CASH. 8 . LD. A.R. SU BMITTED THAT T HE ISSUE RAISED VIDE GROUND NO. 4 HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER YEARS VIDE ORDER DATED 23.05.12 IN ITA NOS.2915, 2916, 6035, 6785, 2247 & 2248/M/2007. THE RELEVANT FINDING S OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 18. THE LAST GROUND OF THE ASSESSEE'S APPEAL IS AGAINST THE SUSTENANCE OF ADDITION OF `. 14,285/ - BEING 50% OF THE TRAVELLING EXPENSES. THE ASSESSEE CLAIMED THE DEDUCTION OF `. 1,42,850/ - TOWARDS TRAVELLING AND CON VEYANCE EXPENSES. ONLY KUTCHA BILLS AND VOUCHERS WERE PRODUCED. THE A.O. MADE DISALLOWANCE OF 20% OF SUCH EXPENSES WHICH WAS REDUCED TO 10% IN THE FIRST APPEAL. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) WAS JUSTIFIED TO THIS EXTENT. NO FURTHER INTERFER ENCE IS CALLED FOR IN THE IMPUGNED ORDER ON THIS ISSUE. 9 . IN VIEW OF ALL THE FINDINGS GIVEN BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN EARLIER YEARS, FOLLOWING THE SAME FOR THE SAKE OF CONSISTENCY, THE DISALL O W A NCE UNDER THIS HEAD IS ACCORDINGLY RESTRICTED TO 10% OF THE TOTAL EXPENSES. GROUND NO.5 THE LD. A.R. HAS STATED THAT HE DOES NOT PRESS THE GROUND NO.5 OF APPEAL, HENCE THIS GROUND OF APPEAL IS DISMISSED BEING NOT PRESSED. ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 7 GROUND NO.6 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) - 29 ERRED IN CONFIRMING THE DISALLOWANCE OF TELEPHONE AND MOBILE CHARGES OF RS.10,000/ - OUT OF RS.2,16,761/ - INCU RRED BEING PERSONAL IN NATURE. 10 . LD. A.R. SUBMITTED THAT THE IDENTICAL ISSUE AS RAISED VIDE GROUND NO. 6 HAS ALREAD Y BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER YEARS VIDE ORDER DATED 23.05.12 IN ITA NOS.2915, 2916, 6035, 6785, 2247 & 2248/M/2007. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: 31. THERE IS A NEW GROUND FOR THIS YEAR, WHICH IS AGAINST THE SUSTENANCE OF DISALLOWANCE AT `. 21,991/ - OUT OF THE DISALLOWANCE ON ACCOUNT OF TELEPHONE EXPENSES OF `. 40,000/ - OUT OF THE TOTAL TELEPHONE EXPENSES OF `. 2,19,910/ - . THE A.O. DISALLOWED A SUM OF `. 40,000/ - OUT OF TELEPHONE AND MOBILE CHARGES OF `. 2,19,910/ - ON THE GROUND THAT THESE WERE INCURRED TOWARDS PERSONAL USE. THE LEARNED CIT(A) REDUCED THE DISALLOWANCE AT 10% OF TOTAL EXPENSES. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) WAS JUSTIFIED IN SUSTAINING TH E DISALLOWANCE AT THIS LEVEL. NO INTERFERENCE IS CALLED FOR. THIS GROUND IS NOT ALLOWED. 11. THOUGH THE TRIBUNAL CONFIRMED THE DISALLOWANCE IN EARLIER YEARS TO THE EXTENT OF 10% OF THE TOTAL EXPENSES UNDER THIS HEAD, WHICH COMES OUT TO BE RS. 21676.10 FOR THIS YEAR BUT, SINCE THE CIT(A) HAS REST RICTED THE DISALLOWANCE AT RS.1 0,000/ - ONLY AND THE R EVENUE HAS NOT PREFERRED ANY APPEAL ON THIS ISSUE, HENCE THE DISALLOWANCE SUSTAINED BY THE CIT(A) UNDER THIS HEAD IS CONFIRMED. ITA NO.1453/M/2012 (A.Y. 2006 - 07) 12. VIDE GROUND NO.1 OF THIS APPEAL THE ASSESSEE HAS AGITATED THE CONFIRMATION OF DISALLOWANCE OF INTEREST OF RS.3,86,908/ - . IN VIEW OF OUR FINDINGS GIVEN ABOVE WHILE ADJUDICATING GROUND NO.1 OF THE APPEAL FO R ASSESSMENT YEAR 2005 - 06, THIS ISSUE IS ACCO RDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 8 13. THE ISSUE TAKEN BY THE ASSESSEE IN G ROUND NO. 2 OF THIS APPEAL IS RELATING TO DISALLOWANCE OF MOTOR CAR EXPENSES OF RS.2,42,987/ - BEING 20% OF THE TOTAL EXPENSES DEBIT ED TO P ROFIT & L OSS ACCOUNT. THIS ISSUE I S IDENTICAL TO THE ISSUE RAISED BY THE ASSESSEE IN HIS GROUND NO.2 OF THE APPEAL FOR ASSESSMENT YEAR 2005 - 06 AND IN VIEW OF OUR FINDINGS GIVEN ABOVE, THIS ISSUE IS PARTLY ALLOWED IN FAVOUR OF THE ASSESSEE RESTRICTING THE DISALLOWANCE AT THE RATE OF 10% OF THE TOTAL EXPENSES CLAIMED UNDER THIS HEAD. 14. THE ISSUE TAKEN BY THE ASSESSEE IN G ROUND NO. 3 OF THIS APPEAL IS RELATING TO CONFIRMATION OF DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS.20,000/ - OUT OF RS.8,98,213/ - BEING PERSONAL IN NATURE. IN VIEW OF OUR FINDINGS GIVEN IN PARA 7 ABOVE WHILE DECIDING THE IDENTICAL ISSUE FOR ASSESSMENT YEAR 2005 - 06, THE DISALLOWANCE OF RS.20,000/ - MADE BY THE CIT(A) UNDER THIS HEAD IS HEREBY CONFIRMED. 15. THE ISSUE TAKEN BY THE ASSESSEE IN GROUND NO.4 OF THIS APPEAL I S RELATING TO DISALLOWANCE OF RS.20,000/ - ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES OUT OF RS.1,43,347/ - AND RS.87,441/ - RESPECTIVELY . IN VIEW OF OUR FINDINGS GIVEN ON THE IDENTICAL ISSUE WHILE ADJUDICATING GROUND NO.4 OF THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005 - 06, THE DISALLOWANCE UNDER THIS HEAD IS ACCORDINGLY RESTRICTED TO 10% OF THE TOTAL EXPENSES. 16. SINCE G ROUND NO. 5 IS NOT PRESSED BY THE ASSESSEE , THE SAME IS ACCORDINGLY DISMISSED. 17. THE ISSUE TAKEN BY THE ASSESSEE IN GROUND NO. 6 OF THIS APPEAL IS RELATING TO DISALLOWANCE OF RS.20,000/ - OUT OF RS.4,03,948/ - ON ACCOUNT OF TELEPHONE AND MOBILE CHARGES. I N VIEW OF OUR FINDINGS GIVEN ABOVE WHILE ADJUDICATING GROUND NO.6 OF THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2005 - 06, THE ITA NO S . 1452 & 1453 /M/20 12 M/S. RATAN SILK MILLS 9 DISAL LOWANCE OF RS.20,000/ - MADE BY THE CIT(A) UNDER THIS HEAD IS HEREBY CONFIRMED. 18. GROUND NO . 7 IS GENERAL NATURE. 19. IN THE RESULT , THE ABOVE NOTED APPEALS OF THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.03. 201 4 . 12.03.2014 SD/ - SD/ - ( / RAJENDRA ) ( [ / SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI ; / DATED 12.03. 2014 * KISHORE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI