Sh. Manoj Jain, Chandigarh V. ITO, Chandigarh

ITA 162/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2533 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.RANO JAIN, ACCOUNTANT MEMBER ITA NO. 162/CHD/2015 ASSESSMENT YEAR: 2011-12 SHRI MANOJ JAIN, VS THE ITO, SCO 49, 2 ND FLOOR, WARD 5(3), SECTOR 47-D, CHANDIGARH. CHANDIGARH. PAN: ACTPJ7080L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 08.01.2016 DATE OF PRONOUNCEMENT : 11.01.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH FOR ASSESSMENT YEAR 2011-12 CHALLENGING THE ADDITION OF RS. 7,74,5 54/-. 2. THE ASSESSEE WAS INTO THE BUSINESS OF PURCHASING AND BOOKING THE ADVERTISEMENTS. THE ASSESSING OFFI CER NOTICED THAT THERE WAS A FALL IN PERCENTAGE OF PROF ITS TO 2.38% FROM 2.92% IN THE PRECEDING YEAR AND 5.89% IN THE YEAR BEFORE THAT. THE ASSESSEE SUBMITTED BEFOR E ASSESSING OFFICER THAT OUT OF TOTAL TURNOVER OF RS. 11.78 CR, SALES MADE TO SISTER CONCERN M/S DESIGN INDYA W ERE OF RS. 3.78 CR ON NO PROFIT BASIS. THUS, 32.06% OF THE TOTAL TURNOVER WAS AT NO PROFIT BASIS. THE ASSESSI NG 2 OFFICER PROPOSED TO DISALLOW PROPORTIONATE EXPENSES INCURRED IN RELATION TO ADVERTISEMENT PURCHASED WHI CH WAS DIVERTED TO M/S DESIGN INDYA ON NO PROFIT BASIS CONSIDERING THAT THE DECLINE IN THE PERCENTAGE PROF IT WAS DUE TO SALES OF 32.06% OF ADVERTISEMENT PURCHASED O N NO PROFIT BASIS. THE ASSESSING OFFICER WAS NOT SAT ISFIED WITH THE EXPLANATION OF THE ASSESSEE AND PROPORTION ATELY DISALLOWED EXPENSES IN A SUM OF RS.7,75,554/-. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT ALONGWITH COMPLE TE VOUCHERS, THEREFORE, ADDITION IS UNJUSTIFIED. THE LD. CIT(APPEALS), ON THE SAME REASONING AS HAVE BEEN GI VEN BY THE ASSESSING OFFICER, CONFIRMED THE ADDITION AN D DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 4. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY JUSTIFICATION TO SUSTAIN THE ADDITION. THE ASS ESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND PRODUCED THE SAME BEFORE ASSESSING OFFICER WHICH HAVE BEEN EXAMINED. THE ASSESSING OFFICER HAS NOT POINTED OU T ANY SPECIFIC DEFECT IN THE MAINTENANCE OF THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE SAME FALL IN THE PROF IT RATE WOULD NOT BE A GROUND FOR MAKING THE ADDITION OR DISALLOWING THE EXPENDITURE. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NOTED THAT, IT IS NOT DISPUTED THAT EXPENSES WERE INCURRED IN CARRYING OUT BUSINESS WHI CH ARE REASONABLE AND GENUINE. THE DISALLOWANCE WAS 3 MADE PROPORTIONATELY WHERE ASSESSEE HAS MADE SALES WITHOUT PROFIT. IT IS WELL SETTLED LAW THAT ASSESS EE CANNOT BE ASKED TO MAXIMIZE THE PROFIT AND THERE MA Y BE SO MANY CIRCUMSTANCES IN WHICH BUSINESSMAN MIGHT NO T HAVE EARNED THE PROFIT. THEREFORE, MERELY ASSESSEE HAS MADE SALES TO THE ASSOCIATE CONCERNS ON NO PROFIT B ASIS, WOULD NOT JUSTIFY THE STAND OF THE DEPARTMENT TO DISALLOW THE EXPENSES. SINCE, ASSESSING OFFICER HI MSELF ADMITTED IN THE ASSESSMENT ORDER THAT ASSESSEE HAS INCURRED EXPENSES IN CARRYING OUT BUSINESS WHICH AR E REASONABLE AND GENUINE, THERE IS NO REASON TO DISAL LOW THE ADVERTISEMENT EXPENSES. THUS, THERE IS NO BASIS , WHAT-SO-EVER TO MAKE THE ADDITION AGAINST THE ASSES SEE WHICH APPEARS TO BE ADHOC IN NATURE. WE, ACCORDING LY, SET ASIDE ORDERS OF AUTHORITIES BELOW AND DELETE TH E ENTIRE ADDITION. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN ) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH JANUARY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD