Meba Brass Pandit, V. ACIT, Range-I,

ITA 160/DEL/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53316 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 30-11-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 13-01-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K SAMPATH SHRI SALIL MISHRA
• Keywords: Depreciation
• Section: 43B; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.159 & 160/DEL/2006 ASSESSMENT YEAR : 2001-02 & 2002-03 M/S MEBA BRASS, PANDIT NAGLA, BY PASS, MORADABAD (UP). PAN : AADFM6635Q VS. ASSTT. COMMISSIONER OF INCOME- TAX, RANGE-I, MORADABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : SHRI SALIL MISHRA, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS PASSED BY THE CIT (A) DA TED 19 TH SEPTEMBER, 2005 FOR ASSESSMENT YEARS 2001-02 & 2002-03. GROUNDS OF APPEAL IN BOTH THE APPEALS ARE AS UNDER:- ITA NO159/DEL/2006 1. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.343 17/- OUT OF VEHICLE RUNNING & MAINTENANCE EXPENSES CLAIMED AT RS.3,43,162/-. DISALLOWANCES HAVE MADE SIMPLY UPON PRESUMPTION AND ESTIMATE BASES WITHOUT SPECIFYING ANY AM OUNT WHILE DAY-TO-DAY DETAILS OF EXPENSES WERE FILED. MORE SO EXPENSES INCURRED FOR GOODS CARRIAGE VEHICL ES & VAN ETC. WHICH EXCLUSIVELY USED FOR BUSINESS PURPOSES, H AVE ALSO BEEN DISALLOWED WITHOUT ANY REASON. ITA NOS.159 & 160/DEL/2006 2 2. THAT THE LD. LOWER AUTHORITIES HAVE UNLAWFULLY DISAL LOWED DEPRECIATION AT RS.53850/- BY APPLYING SEC.38(2) OF I T ACT WHILE THE SAME IS NOT APPLICABLE FOR VEHICLE DEPRECIATION. THEY HAVE ALSO NOT CONSIDERED TO THE FACTS THAT DEPRECIATION IS ALLO WABLE AT FULL RATE EVEN FOR A SINGLE DAY RUNNING FOR BUSINESS PURPOSES. 3. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.800 00/- OUT OF FOREIGN EXHIBITION & TOUR EXPENSES. DISALLOWANCES H AVE MADE SIMPLY UPON PRESUMPTION AND ESTIMATE BASES WITHOUT PLACI NG ANY ADVERSE MATERIAL ON RECORD. 4. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.381 80/- OUT OF TELEPHONE EXPENSE FOR PERSONAL USE OF THE PARTNERS. 5. THAT THE LD. LOWER AUTHORITIES HAVE UNLAWFULLY DISAL LOWED RS.5118/- OUT OF P.F. PAYMENT, SAME WAS NOT THE CONTRIBU TION OF EMPLOYEES BUT WAS PAID BY THE APPELLANT FROM HIS OWN A CCOUNT ON BEHALF OF THE EMPLOYEES. THEREFORE, BECAUSE IT WAS NOT THE CONTRIBUTION OF THE EMPLOYEES THE SAME OUGHT TO BE ALLOWE D. MORE SO THE PAYMENT WAS MADE WITHIN GRACE PERIOD. 6. THAT THE LD. LOWER AUTHORITIES HAVE NO JUSTIFICATION TO DISALLOW RS.48565/- ON ACCOUNT OF BONUS PAID TO EMPLO YEES. THE SAME WAS PAID BEFORE THE DUE DATE OF FILING RETURN AS CERTIFIED BY THE CHARTERED ACCOUNTANT. LD. CIT (APPEALS) HAS UNLAWF ULLY DISBELIEVED TO CA CERTIFICATE FILED BEFORE HIM AS ADDI TIONAL EVIDENCE IN CONFIRMATION OF PAYMENT. NO OPPORTUNITY WA S GIVEN TO EXPLAIN THE DEFICIENCY, IF ANY, IN PAYMENT DATES BEF ORE REJECTING THE CLAIM. 7. THAT LD. LOWER AUTHORITIES HAVE ERRED IN LAW TO MAKE AN ADDITION OF RS.30000/- IN TRADING RESULTS. ADDITION HAS MADE ON ESTIMATE & PRESUMPTION BASES WITHOUT POINTING OUT ANY OMISSION OR DISCREPANCY IN ACCOUNT BOOKS. 8. THAT LD. CIT (A) HAS UNLAWFULLY CONFIRMED TO AN AD DITION OF RS.44214 ON ACCOUNT OF ELECTRICITY EXPENSES, BY HOLDIN G THAT PAYMENT DOES NOT FALL WITHIN THE ACCOUNTING PERIOD. IT I S EVIDENT FROM THE COPY OF ELECTRICITY EXPENSES ACCOUNT ON RECORD THAT EXPENSES WERE INCURRED DURING THE YEAR AND THE PAYMEN T WAS MADE TO M/S JAIN ELECTRIC STORE MORADABAD THROUGH ACCOU NT PAYEE CH NO.287 DATED 26.8.2000 (NOT 26.8.2004 AS MEN TIONED IN APPELLATE ORDER BY LD. CIT (A). 9. THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE LD LOWER AUTHORITIES HAVE ERRED IN LAW TO HOLD THAT DEPB IS DIFFERENT FROM DRAWBACK AND NOT COVERED WITHIN THE MEANING OF SE CTION 28(IIIA) (IIIB) AND (IIIC) OF IT ACT. THEY HAVE ALS O ERRED IN LAW NOT ITA NOS.159 & 160/DEL/2006 3 TO GIVE THE BENEFIT OF DEPB WHILE CALCULATING DEDUCTION U/S 80HHC OF IT ACT. 10. THAT THE CLAIM OF DEDUCTION U/S 80HHC WAS MADE IN ACCORDANCE OF LAW AS CALCULATED AND CERTIFIED BY CHAR TERED ACCOUNT IN HIS AUDIT REPORT. LD. LOWER AUTHORITIES HAVE UNJUSTLY AND UNLAWFULLY DISALLOWED THE CLAIM BY APPLYING THE R ATIO OF DECISION OF HONBLE SC GIVEN IN CASE OF IPCA LABORA TORY LTD. (266 ITR 521). FACTS OF OUR CASE ARE ENTIRELY DIFFERENT FR OM THE REFERRED CASE LAW. NO WHERE IT HAS BEEN HOLD THAT THE DEDUCTION U/S 80HHC SHALL BE ALLOWED ONLY IF THERE WILL BE POS ITIVE PROFIT AFTER REDUCING 90% AMOUNT OF INCENTIVE AMOUNT CREDITED IN ACCOUNTS, AS APPLIED BY LD. LOWER AUTHORITIES TO REJECT THE CLAIM OF DEDUCTION U/S 80HHC. THOSE LD. LOWER AUTHORITIES HAVE UNLAWFULLY IGNORED TO THE DIRECT DECISION OF SPECIAL BENCH HONBLE TRIBUNAL BE NCH DELHI GIVEN IN CASE OF LAL SONS ENTERPRISES (82 TTJ 1048). 11. THAT THE INVESTMENT IN BANK FDRS WAS MADE TO GET VARIOUS OBLIGATIONS FROM BANK BY INCREASING THEIR FIX ED DEPOSITS. INVESTMENTS WERE FULLY IN LIEU OF EXPORT BUSINESS. BA NK HAS ALLOWED VARIOUS FACILITIES LIKE AS BILL CREDIT, MARKE T TREND INFORMATION, AND QUICK COLLECTION * CONVERSION OF MON EY ON HIGHER DOLLAR RATES OF THE ETC. INVESTED WAS NOT MADE J UST FOR THE PURPOSE OF EARNING INTEREST INCOME FROM BANK. THE REFORE, BANK INTEREST INCOME WAS FULLY ON ACCOUNT OF EXPORT BUS INESS. THERE IS NO JUSTIFICATION TO ASSESS THE SAME AS OTHER SO URCES INCOME AND NOT TO GIVE FULL BENEFIT OF DEDUCTION U/S 80 HHC. IT IS WORTHYFUL TO MENTION THAT DESPITE OF THE FACTS THAT LD A .O. HAS NOT GIVEN ANY OTHERWISE COMMENTS UPON THE ASSESSEE S SUBMISSIONS IN HIS REPORT, LD. CIT (A) HAS CONFIRMED TO THE ACTION OF LD. A.O. ON THIS POINT ON THE BASES OF ASSESSMENT OR DER ONLY. 12. THAT THE APPELLANT RESERVE THE RIGHT TO RAISE ANY OTHE R POINT OR GROUND AT THE TIME OF HEARING THE APPEAL WITH DU E PERMISSION OF HONBLE COURT. ITA NO160/DEL/2006 1. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.244 11/- OUT OF VEHICLE RUNNING & MAINTENANCE EXPENSES CLAIMED AT RS.244111/-. DISALLOWANCES HAVE MADE SIMPLY UPON PRESUMPTION AND ESTIMATE BASES WITHOUT SPECIFYING ANY AM OUNT WHILE DAY-TO-DAY DETAILS OF EXPENSES WERE FILED. ITA NOS.159 & 160/DEL/2006 4 MORE SO EXPENSES INCURRED FOR GOODS CARRIAGE VEHICL ES & VAN ETC. WHICH EXCLUSIVELY USED FOR BUSINESS PURPOSES, H AVE ALSO BEEN DISALLOWED WITHOUT ANY REASON. 2. THAT THE LD. LOWER AUTHORITIES HAVE UNLAWFULLY DIS ALLOWED DEPRECIATION AT RS.43080/- BY APPLYING SEC.38(2) OF I T ACT WHILE THE SAME IS NOT APPLICABLE FOR VEHICLE DEPRECIATION. THEY HAVE ALSO NOT CONSIDERED TO THE FACTS THAT DEPRECIATION IS ALL OWABLE AT FULL RATE EVEN FOR A SINGLE DAY RUNNING FOR BUSINESS PURPOSES. 3. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.90000/- O UT OF FOREIGN EXHIBITION & TOUR EXPENSES. DISALLOWANCES H AVE MADE SIMPLY UPON PRESUMPTION AND ESTIMATE BASES WITHOUT PLACI NG ANY ADVERSE MATERIAL ON RECORD. 4. THAT IN VIEW OF FACTS & CIRCUMSTANCES OF THE CASE LD . LOWER AUTHORITIES HAVE ERRED IN LAW TO DISALLOW RS.44320/- O UT OF TELEPHONE EXPENSE FOR PERSONAL USE OF THE PARTNERS. 5. THAT THE LD. LOWER AUTHORITIES HAVE UNLAWFULLY DISAL LOWED RS.27136/- OUT OF P.F. PAYMENT, SAME WAS NOT THE CONTRIB UTION OF EMPLOYEES BUT WAS PAID BY THE APPELLANT FROM HIS OWN A CCOUNT ON BEHALF OF THE EMPLOYEES. THEREFORE, BECAUSE IT WAS NOT THE CONTRIBUTION OF THE EMPLOYEES THE SAME OUGHT TO BE ALLOWE D. MORE SO THE PAYMENT WAS MADE WITHIN GRACE PERIOD. 6. THAT LD. LOWER AUTHORITIES HAVE ERRED IN LAW TO MAK E AN ADDITION OF RS.30000/- IN TRADING RESULTS. ADDITION HAS MADE ON ESTIMATE & PRESUMPTION BASES WITHOUT POINTING OUT ANY OMISSION OR DISCREPANCY IN ACCOUNT BOOKS. 7. THAT LD. CIT (A) HAS UNLAWFULLY CONFIRMED TO AN AD DITION OF RS.14234/- ON ACCOUNT OF SALES TAX EXPENSES, BY HOLDI NG THAT PAYMENT IN THE NATURE OF PENALTY IS NOT AN ALLOWABLE EXPENDITURE. IT IS EVIDENT FROM THE COPY OF ACCOUNT ON RECORD THAT PAYMENT WAS MADE ON ACCOUNT OF TAX AND NOT THE PENALTY , THEREFORE, IT WAS AN ALLOWABLE EXPENDITURE UNDER THE HE AD OF P&L A/C. 8. THAT THE CLAIM OF DEDUCTION U/S 80HHC WAS CORRECTLY MAD E ON REALIZED FOB VALUE OF RS.11,62,51,077/- AS CERTIF IED BY THE BANK, THERE IS NO JUSTIFICATION TO DISALLOW THE CLAIM FO R WANT OF EXTENSION ORDER. EXTENSION ORDER FROM HIGHER AUTHORITI ES IS THE INTERNAL MATTER OF BANK, APPELLANT HAD FILED COPY OF AP PLICATION APPLIED TO RESERVE BANK OF INDIA FOR EXTENSION. 9. THAT THE APPELLANT RESERVE THE RIGHT TO RAISE ANY OTHER POINT OR GROUND AT THE TIME OF HEARING THE APPEAL WITH DU E PERMISSION OF HONBLE COURT. ITA NOS.159 & 160/DEL/2006 5 2. AS MANY OF THE ISSUES ARE IDENTICAL FOR BOTH THE YEA RS, WE WILL DISCUSS THE FACTS RELEVANT TO ASSESSMENT YEAR 2001-02 AND T HE DECISIONS TAKEN THEREON WILL BE APPLICABLE TO THE SIMI LAR GROUNDS FOR ASSESSMENT YEAR 2003-03 AND AT APPROPRIATE PLACE THOSE G ROUNDS WILL BE DISCUSSED. 3. GROUND NO.1 AND 2 ARE COMMON IN BOTH THE YEARS AN D IT WILL BE APPROPRIATE TO ADJUDICATE BOTH THE GROUNDS TOGETHER. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE AT `24,59,780/- WHICH H AS BEEN ASSESSED AT A SUM OF ` 1,22,74,820/- BY MAKING VARIOUS AD DITIONS WHICH INCLUDE ADDITIONS AGITATED IN GROUND NOS.1 AND 2 OF THE AMOUNTS OF ` 34,317/- AND ` 53,850/-. IT HAS BEEN NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED A SUM OF ` 3,43,162 /- TOWARDS VEHICLE RUNNING AND MAINTENANCE EXPENSES AND CONSIDERI NG THE PERSONAL EXPENSES ELEMENT AND THE PILFERAGE, ETC., HE MADE ESTIMATED DISALLOWANCE OF 10%. SIMILARLY, HE DISALLOWED DEPREC IATION ON CARS TO THE EXTENT OF ` 53,850/- BEING 10% OF THE DEPRECIAT ION CLAIMED AT ` 5,38,497/-. 4. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS BEE N CONFIRMED BY THE CIT (A). 5. IT IS THE CASE OF THE LEARNED AR THAT THE VEHICLE OWNED BY THE ASSESSEE ARE ALSO COMMERCIAL VEHICLES AND THE DISALLOWANCE ON ACCOUNT OF PERSONAL USER, ETC. SHOULD HAVE BEEN RESTRIC TED ONLY TO THE CARS AND SCOOTERS IN REGARD TO WHICH PERSONAL ELEMENT M AY BE INVOLVED. HE SUBMITTED THAT ALL THE DETAILS WERE GIV EN TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS MADE DISALLOWANCE O F 10% IN A ROUTINE MANNER WITHOUT LOOKING INTO THE DETAILS FILE D BY THE ASSESSEE. HE, THEREFORE, SUBMITTED THAT THE MATTER MAY BE RESTO RED BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RESTRICT T HE DISALLOWANCE OF ITA NOS.159 & 160/DEL/2006 6 10% ONLY TOWARDS THE CAR AND SCOOTER AMOUNT. ON THE ISSUE OF DISALLOWANCE OF DEPRECIATION, HE SUBMITTED THAT DEPRE CIATION IS NOT ENTIRELY WITH RESPECT TO CAR AS THE SAME RELATES TO OTH ER VEHICLES ALSO AND, SIMILARLY, THIS ISSUE MAY ALSO BE RESTORED BACK TO T HE FILE OF ASSESSING OFFICER. 6. ON THE OTHER HAND, RELYING UPON THE ORDER OF ASSESSI NG OFFICER AND CIT (A), IT IS THE CASE OF THE LEARNED DR THAT TH E DISALLOWANCE HAS RIGHTLY BEEN SUSTAINED BY THE CIT (A) AND HIS ORDER SHO ULD BE UPHELD AND THIS GROUND OF THE ASSESSEE SHOULD BE DISMISSED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THERE IS A FORCE IN THE CLAIM OF THE ASSESSEE THAT PERSONAL ELEMENT CANNOT BE INVOKED IN THE VEHICLES OTHER THAN CARS AND SCOOTERS. WE, THEREFORE, REMIT TH E MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RESTRICT THE DISALLOWANCE OF 10% ONLY WITH REGARD TO EXPENSES RELATING TO CARS AND SCOOTERS. SIMILARLY, THE ASSESSING OFFICER WILL RECOMPUTED THE DI SALLOWANCE U/S 38(2) WITH REGARD TO CARS AND SCOOTERS ONLY AS NO PERSON AL USER CAN BE ATTRIBUTED TO OTHER VEHICLES. THUS, FOR BOTH THE YEA RS, GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3 FOR BOTH THE YEARS RAISES A COMMON ISSUE I.E., DISALLOWANCE ON ACCOUNT OF FOREIGN EXHIBITION AND TO UR EXPENSES. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED FOREI GN EXHIBITION EXPENSES AT ` 16,83,476/- AND ` 18,38,206/ - FOR FOREIGN TRAVEL EXPENSES. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE DID NOT FURNISH FULL DETAILS OR TRIP-WISE EXPENSES AND ONLY LEDGER ACCOUNT WAS FILED. ACCORDING TO THE ASSESSING OFFICER, PERSONAL ELEMENT IN FOREIGN VISIT OF THE PARTNERS COULD NOT BE RULED OUT. HE OBSERVED THAT APPROXIMATELY ` 8 LAC WAS CONSIDERED AS INCURRED FOR F OREIGN EXCHANGE ITA NOS.159 & 160/DEL/2006 7 IN THE NATURE OF PERSONAL EXPENDITURE, THEREFORE, HE DISALLOWED 10% THEREOF RELYING UPON THE DECISION OF ITAT. LEARNED CIT (A) HAS UPHELD THE DISALLOWANCE. IT IS THE CASE OF THE LEARNED AR TH AT FULL DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND COPY OF THESE DET AILS ARE SUBMITTED AT PAGES 31-33 OF THE PAPER BOOK. REFERRIN G TO THESE DETAILS, IT IS THE CASE OF THE LEARNED AR THAT WITHOUT RECORDING ANY SPECIFIC AMOUNT, THE ASSESSING OFFICER HAS MADE AD HOC DI SALLOWANCE OF 10%. HE SUBMITTED THAT THIS IS NOT PERMISSIBLE IN LA W AND LEARNED CIT (A) HAS WRONGLY UPHELD THE DISALLOWANCE AND THE D ISALLOWANCE SHOULD BE DELETED. 9. ON THE OTHER HAND, THE LEARNED DR RELYING UPON T HE ORDER OF ASSESSING OFFICER AND CIT (A) PLEADED THAT IN THE ABSENC E OF COMPLETE DETAILS, THE ASSESSING OFFICER WAS RIGHT IN MAKING ESTIMA TED ADDITION OF 10% AND, THEREFORE, CIT (A) IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE AND HIS ORDER SHOULD BE UPHELD. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT HAS BEEN MENTIONED BY THE ASSESSING OFFICER THAT ` 8 LAC HAS BEEN INCURRED FOR PURCHASING FOREIGN EXCHANGE AND HE HAS DISALLOWED 10% THEREOF ON THE PRESUMPTION T HAT THERE WILL BE A PERSONAL ELEMENT WITH REGARD TO THAT EXPENSES. W ITHOUT BRINGING ON RECORD ANY MATERIAL THAT SUCH PERSONAL EXPENSES WERE INVOLVED, IT IS NOT PERMISSIBLE FOR THE ASSESSING OFFICER TO MAKE THE DISA LLOWANCE. IT IS NOT THE CASE OF ASSESSING OFFICER THAT THE ASSESSEE DID NO T FURNISH THE DETAILS ASKED FOR BY THE ASSESSING OFFICER. IT IS ONL Y FROM THE DETAILS THE ASSESSING OFFICER COULD FOUND THAT THE ASSESSEE HAS INCURRED A SUM OF ` 8 LAC FOR PURCHASE OF FOREIGN EXC HANGE. IN THE ABSENCE OF ANY SPECIFIC FINDING RECORDED BY THE ASSESSING OFFICER, WE ARE OF THE OPINION THAT THE DISALLOWANCE HAS WRONGLY BEEN SUSTAINED BY ITA NOS.159 & 160/DEL/2006 8 THE CIT (A) AND THAT THE SAME IS DELETED FOR BOTH THE YEARS AND THIS GROUND OF THE ASSESSEE FOR BOTH THE YEARS IS CONSIDERED TO BE ALLOWED. 11. GROUND NO.4 RELATES TO THE DISALLOWANCE MADE ON A CCOUNT OF TELEPHONE EXPENSES. THIS GROUND IS ALSO COMMON FOR BOTH THE YEARS. IT IS OBSERVED BY THE ASSESSING OFFICER THAT TELEPHONE AN D MOBILE EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE AT ` 3,81,818/ - AND ON ACCOUNT OF PERSONAL USER HE HAS DISALLOWED 10% THEREOF. LEARNED CIT (A) HAS UPHELD THE DISALLOWANCE. 12. THE LEARNED AR CONTENDED THAT NO SUCH DISALLOWANC E IS PERMISSIBLE UNDER LAW AND AS THE TELEPHONE AND MOBILES WERE NOT USED BY THE ASSESSEE FOR NON-BUSINESS PURPOSES. HE, THEREFORE, SU BMITTED THAT THE DISALLOWANCE HAS WRONGLY BEEN SUSTAINED BY THE CIT (A). 13. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE DISALLOWANCE HAS RIGHTLY BEEN SUSTAINED BY THE CIT (A) AND HIS ORDER SHOULD BE UPHELD. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF THE MATERIAL PLACED BEFORE US. IN THE PAPER BOOK TH E ASSESSEE DID NOT FILE THE DETAILS OF TELEPHONE EXPENSES. NO MATERIAL H AS BEEN BROUGHT ON RECORD TO SHOW THAT THERE WAS NO PERSONAL USER. HOW EVER, KEEPING IN VIEW THE FACTS OF THE CASE, WE RESTRICT THE DISALLOW ANCE TO 5%. THE ASSESSING OFFICER WILL CALCULATE THE DISALLOWANCE ACCORD INGLY. THIS GROUND FOR BOTH THE YEARS IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 15. GROUND NO.5 IS ALSO COMMON GROUND FOR BOTH THE YE ARS FOR THE REASON THAT THE RELEVANT AMOUNTS WERE NOT PAID WITHIN THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS, IT IS THE CASE OF THE ASSESSEE THAT NOW IF THE PAYMENT IS MADE BEFORE THE DUE DATE FOR F ILING THE RETURN, ITA NOS.159 & 160/DEL/2006 9 THEN, NO DISALLOWANCE IS CALLED FOR U/S 43B OF THE ACT AND, FOR THIS PURPOSE, RELIANCE HAS BEEN PLACED ON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOME EXTRUSIONS LTD. 319 ITR 306 (SC) AFTER HEARING BOTH THE PARTIES, WE FIND SUBSTANCE IN T HE SUBMISSIONS MADE BY THE LEARNED AR. IN THE ORDER ITSELF THE ASSESSI NG OFFICER HAS MENTIONED THAT THE AMOUNT OF ` 5,118/- PERTAINING T O SEPTEMBER WAS PAID ON OCTOBER 17. THEREFORE, THERE IS NO DOUBT TH AT THE PAYMENT HAS BEEN MADE DURING THE FINANCIAL YEAR ITSELF. SIMILA RLY, FOR ANOTHER YEAR THE LAST PAYMENT OF PF IS MADE ON 20 TH APRIL AND ALL THE DATES ON WHICH PF IS PAID IS PRIOR TO THE DUE DATE OF FILING THE RET URN. THEREFORE, KEEPING IN VIEW THESE FACTS AND THE AFOREMENTIONED DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ALOME EXTRUSIONS (SUPRA), WE DELETE THE DISALLOWANCE AND THIS GROUND FOR BOTH THE YEARS IS ALLOWED. 16. GROUND NO.6 FOR ASSESSMENT YEAR 2001-02 RELATES TO B ONUS PAID TO THE EMPLOYEES. IT HAS BEEN PAID BY THE ASSESSEE TO IT S EMPLOYEES ON 30 TH OCTOBER, 2001 AND THE RELEVANT DOCUMENTS IN THIS REG ARD ARE FILED AT PAGES 35-37 OF THE PAPER BOOK. THE DUE DAT E FOR FILING THE RETURN IS 30 TH OCTOBER, 2010, THEREFORE, AFTER HEARING BOTH THE P ARTIES, WE SEE NO JUSTIFICATION IN SUSTAINING THIS DISALLOWANCE A ND THE SAME IS DELETED. THIS GROUND OF THE ASSESSEE IS ALLOWED. 17. GROUND NO.7 FOR ASSESSMENT YEAR 2001-02 AND GROUND NO.6 FOR ASSESSMENT YEAR 2002-03 ARE COMMON. ADDITION OF ` 30,0 00/- HAS BEEN MADE BY THE ASSESSING OFFICER FOR THE TRADING RESUL TS. IT IS THE CASE OF THE ASSESSING OFFICER THAT THE GP OF THE ASSESSEE HA S DECLINED TO 22.89% FROM 27.76% OF THE EARLIER YEAR AND, IN T HIS MANNER, HE HAS ADDED A SUM OF ` 30,000/- TO THE INCOME OF THE ASSESSEE. SIMILARLY, FOR ASSESSMENT YEAR 2002-03 NOTING THE FACT THAT GP OF THE ASSESSEE HAS DECLINED TO 21.94% TO 22.89%, AN ADDITION OF ` 30,0 00/- HAS BEEN MADE. ITA NOS.159 & 160/DEL/2006 10 18. IT IS THE CASE OF THE LEARNED AR THAT THIS ADDITIO N IS NOT PERMISSIBLE AS NO DEFECT WHATSOEVER WAS FOUND BY THE ASSESSI NG OFFICER IN THE MAINTENANCE OF BOOKS OF ACCOUNT AND, THUS, HE PLEADED THAT THIS ADDITION IS LIABLE TO BE DELETED FOR BOTH T HE YEARS. 19. ON THE OTHER HAND, IT WAS SUBMITTED BY THE LEARNE D DR THAT KEEPING IN VIEW THAT THERE IS DECLINE IN GP RATE FOR BOTH THE YEARS AND THE SAME HAVE BEEN SUSTAINED BY THE CIT (A) FOR BOTH T HE YEARS, ORDER OF THE CIT (A) SHOULD BE UPHELD FOR BOTH THE YEARS. 20. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE ADDITION HAS BEEN MADE ONLY ON AD HOC BASIS WITHOUT POINTING OUT ANY DEFECT IN THE BOOK S OF ACCOUNT OF THE ASSESSEE. THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS ALSO N OT BEEN REJECTED, THEREFORE, WE SEE NO JUSTIFICATION IN THE A DDITION MADE OF ` 30,000/- FOR BOTH THE YEARS AND THE SAME IS DELETED. THIS GROUND OF THE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. 21. GROUND NO.8 FOR ASSESSMENT YEAR 2001-02 RELATES TO DISALLOWANCE MADE OF ` 44,214/-. THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF THESE EXPENSES ON THE GROUND THAT THE P AYMENTS ARE MADE TO M/S JAIN ELECTRICAL STORE ON 26 TH AUGUST, 2004. AS AGAINST THIS, IT IS THE CASE OF THE ASSESSEE THAT THE PAYMENTS WAS MADE B Y CHEQUE DATED 26 TH AUGUST, 2000. THEREFORE, THIS IS A MATTER FOR VERIFI CATION AND AFTER HEARING BOTH THE PARTIES, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RE-ADJUDICATE THE ISSUE AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. THIS G ROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 22. GROUND NO.7 FOR ASSESSMENT YEAR 2002-03 WAS NOT PRESSE D, HENCE, DISMISSED BEING NOT PRESSED. ITA NOS.159 & 160/DEL/2006 11 23. IN RESPECT OF GROUND NO.9 AND 10 FOR ASSESSMENT YEAR 2001-02 AND GROUND NO.8 FOR ASSESSMENT YEAR 2002-03, IT IS THE C ASE OF THE LEARNED AR THAT THE MATTER SHOULD GO BACK TO THE FIL E OF ASSESSING OFFICER TO CONSIDER THE ISSUE OF DEDUCTION U/S 80HHC IN THE LIGHT OF THE AMENDMENT LATER BROUGHT ON THE STATUTE WITH RETROSPEC TIVE EFFECT. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PA RTIES, WE RESTORE THESE GROUNDS TO THE FILE OF ASSESSING OFFICER TO RE-CONSI DER THE CLAIM OF THE ASSESSEE U/S 80HHC AS PER AMENDED PROVISIONS OF LAW. HE WILL GIVE THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING AN D AFTER GIVING SUCH OPPORTUNITY, THE CLAIM OF THE ASSESSEE REGARDING DE DUCTION U/S 80HHC WILL BE RE-ADJUDICATED. 24. NOW, WE ARE LEFT WITH ONLY THE GROUND NO.11 WHI CH ALSO RELATES TO GRANT OF DEDUCTION U/S 80HHC ON THE INTEREST RECEIVED BY THE ASSESSEE ON FDR. AS WE ARE RESTORING THE ISSUE OF GRANT OF DEDU CTION OF 80HHC TO THE FILE OF ASSESSING OFFICER, THIS GROUND IS ALSO RESTO RED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO RE-ADJUDICATE THE SAME AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. 25. IN VIEW OF THE ABOVE DISCUSSION, BOTH THE APPEALS F ILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.12.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 09.12.2011. DK ITA NOS.159 & 160/DEL/2006 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES