Income Tax Officer, New Delhi V. M/s. Modi Intercontinental Pvt. Ltd, Ghazipur

ITA 1526/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4115 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: R K KAPOOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 1526/DEL/10 ASSTT. YR: 2006-07 INCOME-TAX OFFICER, VS. M/S MODI INTERCONTINENTA L PVT. LTD. WARD 5(4), NEW DELHI. B-4, GROUND FLOOR, MAIN VI LLAGE ROAD, GHAZIPUR, DELHI. PAN/ GIR NO.AAAPCM0542J ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. Y. KAKKAR SR. DR ASSESSEE BY : SHRI R.K. KAPOOR CA O R D E R PER R.P. TOLANI, J.M: : THIS IS REVENUES APPEAL AGAINST CIT(A)S ORDER DA TED 25-1-2010 RELATING TO A.Y. 2006-07. FOLLOWING GROUNDS ARE RAI SED: 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS TO CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 13,14,749/- MADE BY THE AO ON ACCOUNT OF EXH IBITION EXPENSE. 3. THE LEARNED CIT(APPEALS) IGNORED THE FACT THAT T HE ASSESSEE NEITHER EXPLAINED THE NATURE OF THE EXPEND ITURE NOR PRODUCED ANY EVIDENCE IN SUPPORT THESE EXPENSES. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF H EARING. 2. LEARNED DR RELIED ON THE ORDER OF AO AND CONTEND S THAT CIT(A) HAS GIVEN RELIEF WITHOUT APPRECIATING THE FACTS ABOUT T HE DATE OF EXHIBITION, NON- 2 PRODUCTION OF AGREEMENT BETWEEN ASSESSEE AND M/S RA DICI NOVACIPS SPA ITALY, THEREFORE, HIS ORDER SHOULD BE REVERSED. 3. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE ASSESSMENT ORDER, WHEREIN PARA 2 A CLEAR FINDING IS GIVEN THAT ALL TH E BOOKS OF ACCOUNT WERE PRODUCED. DETAILS OF BUSINESS PROMOTION EXPENSES AR E GIVEN ON PAPER BOOK PAGE NOS. 1 & 2 SUPPORTED BY CONFIRMATORY LETTERS A ND TDS CERTIFICATES IN THE SUBSEQUENT PAGES. VIDE LETTER DATED 26-12-2008 , ASSESSEE HAD SUBMITTED ALL THE DETAILS OF EXHIBITION EXPENSES INCURRED BY THE ASSESSEE FIRM FROM TIME TO TIME THROUGH A/C PAYEE CHEQUES. BESIDES, DETAILS WERE ALSO FILED VIDE LETTER DATED 3-12-2008. THE ASSESSEE INCURRED A SUM OF RS. 13,14,749/- ON EXHIBITION HELD AT PRAGATI MAIDAN, NEW DELHI. SINCE THE ASSESSEE WAS NEW IN THE BUSINESS, IT IMPRESSED UPON THE JOINT VENTURE P ARTNERS THAT THE EXHIBITION EXPENSES SHOULD BE SHARED. ON THE BASIS OF THIS UN DERSTANDING, WHICH IS REFERRED TO BY ASSESSEE AS AN AGREEMENT, AN AMOUNT OF RS. 9,62,836/- HAS BEEN RECEIVED FROM M/S RADICI NOVACIPS SPA AS THEIR SHARE, WHICH HAS BEEN CREDITED IN THE BUSINESS PROMOTION EXPENSES ACCOUNT . THUS, THE EFFECTIVE EXPENSES INCURRED BY THE ASSESSEE FOR EXHIBITION AR E RS. 3,51,914/-. IT IS ARGUED THAT THE VEHEMENCE BY AO AND DR THAT THE AGR EEMENT OUGHT TO HAVE BEEN PRODUCED, IT IS CONTENDED THAT THE SAME WAS BY AN ORAL UNDERSTANDING AND THE FACT THAT THE AMOUNT HAS BEEN RECEIVED PROV ES THE AGREEMENT. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. CIT(A) HAS DELETED TH E ADDITION BY FOLLOWING OBSERVATIONS: 3.2. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF T HE AO AND THE ARGUMENTS MADE ON BEHALF OF THE APPELLANT. ON CONSI DERATION, I FIND THAT THE SUBJECT DISALLOWANCE AHS BEEN MADE BY THE LD. AO FOR NON DEDUCTION OF TAX ON THE EXHIBITION EXPENSES OF RS. 13,14,749/- INCURRED BY THE APPELLANT COMPANY FOR P ARTICIPATING 3 IN THE EXHIBITION HELD AT PRAGATI MAIDAN, NEW DELHI IN FEB. 2006. FURTHER, AS THE RADICI OF ITALY WAS THE MANU FACTURER OF THE PRODUCTS BEING PROMOTED/ PUT ON DISPLAY, A SUM OF RS. 9,62,836/- WAS BORNE BY IT AND ONLY A SUM OF RS. 3, 51,914/- WAS TO BE BORNE BY THE APPELLANT COMPANY. IN THIS SITUA TION, WHAT WAS REQUIRED TO BE DONE BY THE AO WAS TO FIRST EXAM INE THE NATURE OF EXPENSES AND THEN TO MAKE OUT A CASE WITH REFERENCE TO SPECIFIC PROVISIONS OF LAW WHICH MANDATED DEDUCT ION OF TAX THEREON. HOWEVER, SINCE THE AO HAS NOT BROUGHT ON R ECORD ANY ITEM OF EXPENDITURE WHICH CALLED FOR DEDUCTION OF T AX, THE DISALLOWANCE FOR NON DEDUCTION OF TAX CANNOT BE HEL D TO BE IN ORDER. FURTHER, THERE IS NO MERIT IN AOS OBSERVAT ION THAT THE ASSESSEE COMPANY FAILED TO SUBMIT COPY OF AGREEMENT WITH RADICI NOVACIPS AND ALSO PROOF OF RECEIPT OF 18000 EURO. FOR THE PURPOSES OF ADMISSIBILITY OF EXPENDITURE WHAT I S TO BE SEEN IS THE ACTUAL EXPENDITURE DEBITED TO THE PROFIT & L OSS ACCOUNT AFTER NETTING OFF REIMBURSEMENTS ETC., IF ANY, RECE IVED BY THE APPELLANT ASSESSEE. HOWEVER, IN THE PRESENT CASE TH E LD. AO NOWHERE RECORDS A FINDING THAT THE CLAIM OF THE APP ELLANT WITH REGARD TO REIMBURSEMENT OF RS. 9,62,836/- WAS EITHE R INCORRECT OR BOGUS. ACCORDINGLY, THE DISALLOWANCE MADE BY LD. AO IS NOT SUSTAINABLE AND THE SAME IS ALSO BEING DIRECTED TO BE DELETED. 4.1. WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) INA SMUCH AS THE AO HAS NOT RAISED ANY OBJECTION ABOUT THE ASSESSEES PARTI CIPATION IN PRAGATI MAIDAN EXHIBITION. AO HAS MISCONCEIVED THAT ASSESSEES CLA IM OF EXPENDITURE WAS RS. 13,14,749/- AS THE ACTUAL EXPENDITURE INCURRED BY ASSESSEE IS RS. 3,51,914/-. ASSESSEES EXPLANATION THAT THE REIMBUR SEMENT WAS ON AN ORAL UNDERSTANDING CANNOT BE DENIED AS THE RADICI NOVAC IPS HAS IN FACT REIMBURSED 18000 EURO, WHICH CORROBORATES ASSESSEE S STATEMENT. 4.2. LEARNED DR CONTENTION THAT REIMBURSEMENT COU LD HAVE BEEN INCOME OF THE ASSESSEE , DOES NOT CARRY ANY MERIT INASMUCH IN THAT CASE, THE ENTIRE EXPENSES WILL HAVE TO BE ALLOWED TO THE ASSESSEE. I F THE ASSESSEES CONTENTION THAT 18000 EURO WERE REIMBURSED IS NOT ACCEPTED, IN THAT CASE, THE ENTIRE 4 EXPENDITURE IS TO BE ALLOWED TO THE ASSESSEE. IN VI EW OF THESE OBSERVATIONS, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A), DELETI NG THE ADDITION IN QUESTION. HIS ORDER IS UPHELD. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29-04-2011. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29-04-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR