M/s Laila Impex, Vijayawada V. The Addl. CIT, Range-2, Vijayawada

ITA 149/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50273 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N RAUL
• Keywords: Opportunity of being heard
• Section: 37(1); 263

Judgement Text

ITA NO.149/VIZAG/2011 LAILA IMPEX, VJA PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.149/VIZAG/2011 ASSESSMENT YEAR: 2006-07 M/S. LAILA IMPEX VIJAYAWADA VS. ADDL. CIT, RANGE-2 VIJAYAWADA (APPELLANT) PAN NO: AAAFL 7824K (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI N. RAUL, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.2.2011 PASSED BY LEARNED CIT, VIJAYAWADA IN ITS HANDS UNDER SECTION 263 OF THE ACT FOR THE ASSESSMENT YEAR 2006-07. TH E ASSESSEE IS ASSAILING THE DECISION OF LEARNED CIT IN DIRECTING THE ASSESS ING OFFICER TO DISALLOW THE AMOUNT OF RS.16.00 LAKHS, BEING THE CONTRIBUTIONS M ADE TO THE POLITICAL PARTIES. 2. THE FACTS RELATING TO THE ISSUE IS DISCUSSED I N BRIEF. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE A SSESSING OFFICER UNDER SECTION 143 BY DETERMINING THE TOTAL INCOME AT RS.2 .65 CRORES AS AGAINST THE INCOME OF RS.2.41 CRORES RETURNED BY THE ASSESS EE. IN ITS RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.15 .00 LAKHS UNDER SECTION 80GGC OF THE ACT FOR THE CONTRIBUTION MADE TO ANDHRA PRADESH CONGRESS COMMITTEE (HEREINAFTER APCC). BESIDES TH E ABOVE, THE ASSESSEE HAD ALSO CLAIMED A DEDUCTION OF RS.1.00 LAKH UNDER THE HEAD ADVERTISEMENT FOR THE CONTRIBUTION MADE TO COMMUN IST PARTY OF INDIA ITA NO.149/VIZAG/2011 LAILA IMPEX, VJA PAGE 2 OF 5 (HEREINAFTER CPI). THE RECEIPT GIVEN BY THE APC C SHOWED THAT THE SAID CONTRIBUTION WAS MADE TOWARDS SOUVENIR ACCOUNT. IN RESPECT OF CONTRIBUTION MADE TO CPI, THE ASSESSEE COULD NOT PRO DUCE THE RECEIPT. INSTEAD, IT PRODUCED A COPY OF CHEQUE LEAF GIVEN TO THE SAID PARTY. HOWEVER, IN ITS BOOKS OF ACCOUNT, THE ASSESSEE HAD SHOWN THE PAYMENT AS PAID TOWARDS ADVERTISEMENT IN SOUVENIR. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER APPEARS TO HAVE N OT ENQUIRED ABOUT THE CLAIM OF DEDUCTION OF RS.15.00 LAKHS UNDER SECTION 80GGC OF THE ACT. HOWEVER, VIDE ITS REPLY DATED NIL, THE ASSESSEE STAT ED THAT AN AMOUNT OF RS.1.00 LAKH WAS GIVEN TO CPI TOWARDS SOUVENIR ADVER TISEMENT. 2.1 IT IS PERTINENT TO NOTE HERE THAT THE EXPEND ITURE INCURRED ON ADVERTISEMENT IN ANY SOUVENIR, BROCHURE ETC. PUBLIS HED BY A POLITICAL PARTY IS NOT ALLOWABLE AS DEDUCTION AS PER THE PROVISIONS OF SEC. 37(2B) OF THE ACT. THE LEARNED CIT OPINED THAT THE AMOUNT OF RS.1.00 L AKH GIVEN TO CPI IS NOT ALLOWABLE UNDER SECTION 37(2B) OF THE ACT AS THE SA ME WAS PAID TOWARDS SOUVENIR ADVERTISEMENT. IN RESPECT OF RS.15.00 LAKH S GIVEN TO APCC ALSO, THE LEARNED CIT FELT THAT THE SAME SHOULD BE DISALL OWED UNDER SECTION 37(2B), SINCE THE RECEIPT GIVEN BY APCC STATED THAT THE SAME WAS RECEIVED TOWARDS SOUVENIR, EVEN THOUGH THE ASSESSEE HAD CL AIMED THE SAME UNDER SECTION 80GGC OF THE ACT. ACCORDINGLY, THE LEARNED CIT, BY INVOKING HIS POWER UNDER SECTION 263 OF THE ACT, DIRECTED THE AS SESSING OFFICER TO REDO THE ASSESSMENT BY DISALLOWING THE CLAIM OF DEDUCTIO N UNDER SECTION 80GGC TO THE TUNE OF RS.15.00 LAKHS AND ALSO RS.1.00 LAKH STATED ABOVE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. ACCORDING TO LEARNED AUTHORISED REPRESENTATI VE, THERE IS NO NECESSITY OF INVOKING THE PROVISIONS OF SEC. 37(2B) IN RESPEC T OF CONTRIBUTION OF RS.15.00 LAKHS MADE TO THE APCC, SINCE THE ASSESSEE ITSELF HAD DISALLOWED THE SAME AND CLAIMED IT UNDER SECTION 80GGC OF THE ACT. HE FURTHER SUBMITTED THAT DEDUCTION UNDER SECTION 80GGC IS ALL OWABLE TOWARDS ANY ITA NO.149/VIZAG/2011 LAILA IMPEX, VJA PAGE 3 OF 5 TYPE OF CONTRIBUTION MADE TO A POLITICAL PARTY AND THE SAID SECTION DOES NOT IMPOSE ANY CONDITIONS AS TO THE TYPE OF CONTRIBUTIO N. ACCORDINGLY, HE CONTENDED THAT THE LEARNED CIT IS NOT CORRECT IN LA W IN DIRECTING THE ASSESSING OFFICER DISALLOW THE CLAIM OF DEDUCTION U NDER SECTION 80GGC MADE BY THE ASSESSEE. WITH REGARD TO THE CONTRIBUT ION OF RS.1.00 LAKH MADE TO CPI, THE LEARNED A.R SUBMITTED THAT THE ASSE SSEE HAD MADE THE SAID CONTRIBUTION ON ACCOUNT OF GENERAL APPEAL MADE BY THAT PARTY AND NOT TOWARDS ADVERTISEMENT AND THE SAID FACT MAY BE VERI FIED AT THE END OF THE ASSESSING OFFICER. 4. ON THE CONTRARY, THE LEARNED CIT(D.R) CONTEN DED THAT THE PROVISIONS OF SEC.37(2B) HAD TO BE APPLIED FIRST BEFORE APPLYI NG THE SUBSEQUENT PROVISIONS OF SEC. 80GGC TO THE FACTS OF THE INSTAN T ISSUE. THE RECEIPT ISSUED BY THE APCC CLEARLY STATE THAT THE CONTRIBUT ION OF RS.15.00 LAKHS WAS TOWARDS SOUVENIR. IN RESPECT OF THE CONTRIBUTION O F RS.1.00 LAKH MADE TO THE CPI, THE ASSESSEE ITSELF HAS CLARIFIED TO THE A SSESSING OFFICER THAT THE SAME WAS GIVEN TOWARDS ADVERTISEMENT. ACCORDINGLY HE CONTENDED THAT THE ORDER OF LEARNED CIT SHOULD BE SUSTAINED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. IN SO FAR AS THE CONTRIBUTION OF RS.1.00 LAKH MADE T O THE CPI, THE ASSESSEE ITSELF HAS RECORDED THE FOLLOWING NARRATION IN RESP ECT OF THE SAID PAYMENT IN ITS BOOKS OF ACCOUNT. CHEQUE ISSUEDTO C.P.I A.P STATE COUNCIL TOWARDS AD VERTISEMENT IN SOUVENIR DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS EXPLAINED THE NATURE OF DONATION GIVEN TO POLITICAL PARTY AS UNDER: DURING THE YEAR WE HAVE GIVEN AN AMOUNT OF RS.1,00 ,000/- TO THE POLITICAL PARTY NAMED COMMUNIST PARTY OF IND IA THROUGH OUR HDFC BANK CHEQUES NO.442114 DATED 03-02 - 2006 TOWARDS SOUVENIR ADVERTISEMENT AND IS SHOWN UN DER THE HEAD ADVERTISEMENT AND SALES PROMOTION IN P & L ACCOUNT. WE ARE HEREWITH ENCLOSING A COPY OF CHEQUE S ITA NO.149/VIZAG/2011 LAILA IMPEX, VJA PAGE 4 OF 5 ISSUED TO THE PARTY TOGETHER WITH RELATED BANK STAT EMENT TO CONFIRM THE CONTRIBUTION. THIS CONTRIBUTION IS ELI GIBLE FOR DEDUCTION UNDER SECTION 80GGC OF THE INCOME TAX ACT . HENCE WE REQUEST YOUR SELVES TO KINDLY ALLOW THE SA ME UNDER SECTION 80GGC OF THE INCOME TAX ACT. THUS, IT SEEN THAT THE ASSESSEE HAD CLAIMED THE CON TRIBUTION OF RS.1.00 LAKH MADE TO CPI UNDER SECTION 37(1) OF THE ACT. HO WEVER, DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE HAS R EQUESTED THE ASSESSING OFFICER TO ALLOW THE SAME UNDER SECTION 8 0GGC OF THE ACT. HOWEVER, THE ASSESSING OFFICER DID NOT DISCUSS ANYT HING ABOUT THE SAID MATTER IN THE ASSESSMENT ORDER. THE ASSESSEE HAS A LSO FAILED TO FURNISH THE RECEIPT GIVEN BY CPI. IN ANY CASE, THE BOOKS OF AC COUNT OF THE ASSESSEE AS WELL AS THE SUBSEQUENT EXPLANATION GIVEN BY THE ASS ESSEE CLEARLY SHOW THAT THE IMPUGNED CONTRIBUTION HAS BEEN MADE TOWARDS ADV ERTISEMENT ONLY AND THE ASSESSEE ALSO HAS CLAIMED THE SAME UNDER SECTIO N 37(1) OF THE ACT IN ITS RETURN OF INCOME. HENCE THE SAID CONTRIBUTION OF RS.1.00 LAKH IS NOT ALLOWABLE AS A DEDUCTION AS PER THE PROVISIONS OF S EC. 37(2B) OF THE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF LEARNED CIT ON THE ABOVE SAID AMOUNT OF RS.1.00 LAKH. 6. WITH REGARD TO THE CONTRIBUTION OF RS.15.00 LAKH MADE TO APCC, ADMITTEDLY, THE ASSESSING OFFICER DID NOT CONDUCT A NY ENQUIRY IN THAT REGARD. THE LEARNED CIT HAS POINTED OUT CERTAIN FA CTS WITH REGARD TO THE SAID CONTRIBUTION, I.E., AS PER THE RECEIPT ISSUED BY APCC, THE SAID CONTRIBUTION WAS MADE TOWARDS SOUVENIR. HOWEVER, THE CONTENTION OF THE ASSESSEE IS THAT THE SAID CONTRIBUTION WAS MADE TOW ARDS CONGRESS PARTY PLENARY AND IN SUPPORT OF THE SAME; THE ASSESSEE H AS PRODUCED A CERTIFICATE DATED 29-12-2005 FROM THE APCC BEFORE L EARNED CIT. THUS THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY WIT H REGARD TO THE CLAIM MADE BY THE ASSESSEE UNDER SECTION 80GGC OF THE ACT AND THE ASSESSEE HAS BROUGHT IN FURTHER EVIDENCE IN SUPPORT OF ITS C LAIM. THE LEARNED CIT HAS BROUGHT OUT CERTAIN DISCREPANCIES ABOUT THE NAT URE OF CONTRIBUTION. ITA NO.149/VIZAG/2011 LAILA IMPEX, VJA PAGE 5 OF 5 HENCE, IN OUR VIEW, THE SAID ISSUE NEEDS TO BE EXAM INED AFRESH. ACCORDINGLY, WE MODIFY THE ORDER OF LEARNED CIT ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF THE ASSESSEE AFRESH IN ACCORDANCE WITH THE LAW, AFTER AFFORDING THE ASSESS EE NECESSARY OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 16-06-2011 COPY TO 1 M/S. LAILA IMPEX, D.NO.40-15-14, BRINDAVAN COLONY , VIJAYAWADA- 520 010. 2 THE ACIT, RANGE-2, VIJAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM