The Dy. CIT, Anand Circle, Anand V. M/s. Anupam Industries Ltd., Anand

ITA 1624/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2714 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 30-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Keywords: Gift; Earning of tax free income; Corroborative evidences
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, ANAND CIRCLE, 204, 3 RD FLOOR, S.P. PATEL COMPLEX, NEAR OLD C.K. HALL, MAYFAIR ROAD, ANAND - 388001 (APPELLANT) VS M/S. ANUPAM INDUSTRIES LTD. 138, GIDC INDUSTRIES ESTATE, VITHAL UDYOGNAGAR, ANAND - 388121 PAN: A ABCA9602Q (RESPONDENT) REVENUE BY : S H RI APARNA AGARWAL , CIT - D . R. ASSESSEE BY: SHRI M.K. PATEL, A.R. DATE OF HEARING : 13 - 02 - 2 019 DATE OF PRONOUNCEMENT : 21 - 02 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THE REVENUE HAS RAISED TWO GROUNDS OF APPEAL ARISEN FROM THE ORDER OF LD. CIT(A) BARODA DATED 14 TH APRIL, 2017 IN PROCEEDING U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE BRIEF FACT OF THE C ASE IS RETURN OF INCOME DECLARING INCOME OF R S. 8 , 70 ,75, 800/ - WAS FILED ON 30 TH NOV, 2014. SUBSEQUENTLY, THE CASE WAS I T A NO . 1624 / A HD/20 17 A SS ESSMENT YEAR 2014 - 15 I.T.A NO. 1624 /AHD/20 17 A.Y. 2014 - 15 PAGE NO D CIT VS. M/S. ANUPAM INDUSTRIES LTD. 2 SELECTED UNDER SCRUTINY BY ISSUING OF NOTI CE U/S. 143(2) OF THE ACT ON 31 ST AUGUST, 2015. ASSESSMENT WAS FINALIZED U/S. 1 43(3) ON 26 TH MAY, 2016. THE ASSESSEE HAS FILED TWO GROUNDS OF APPEAL WHICH ARE ADJUDICATED AS UNDER: - GROUND NO. 1 (DISALLOWANCE OUT OF SALE PROMOTION EXPENSES) 3. THE ASSESSING OFFICER HAS NOT NOTICED THAT ASSESSEE HAS DEBITED SALES PROMOTION EXPENSES BY THE AMOUNT OF RS. 2 , 04 , 592/ - FOR VARIOUS KINDS OF GIFTS GIVEN BY THE ASSESSEE. THE ASSESSING OFFICER HAS DISALLOWED THE WHOLE EXPENSES OF RS.2 , 04 , 592/ - ON THE GROUND THAT ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM WITH SUPPORTING EVIDENCES THAT THES E EXPENSE S WERE INCURRED FOR THE BUSINESS. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING THE DISALLOWANCE TO THE 50% OF THESE EXPENSES TO THE AMOUNT OF RS. 1 , 02 , 29 6/ - . 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. WE HAVE NOTICED THAT OUT OF SALE PROMOTION EXPENSES, THE ASSESSEE HAS INCURRED THE AFORESAID EXPENSES TOWARDS VARIOUS GIFTS AND PRESENTATION S MADE TO CLIENTS. THE LD. CIT(A) HAS RESTRICTED THE DISALLOWANCE TO THE 50% OF SUCH EXPENSES CONSIDERING THE TURNOVER AND INCOME OF THE ASSESSEE SHOWN DURING THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING DETAILED FINDINGS OF LD. CIT(A), WE ARE INCLINED WITH THE DECISION OF R ESTRICTING THE DISALLOWANCE OF AFORESAID EXPENSES INCURRED IN THE FORM OF GIFT S WITHOUT SUPPORTING WITH SPECIFIC EVIDENCES, THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND THE SAME IS DISMISSED. DISALLOWANCE U/S. 14A R.W. RU LE 8D I.T.A NO. 1624 /AHD/20 17 A.Y. 2014 - 15 PAGE NO D CIT VS. M/S. ANUPAM INDUSTRIES LTD. 3 6 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT SECTION 14A OF THE INCOME TAX ACT, 1961 PROVIDES FOR DISALLOWANCE OF EXPENDITURE IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME. THE ASSESSING OFFICER WAS OF THE VIEW TH AT RULE 8D R.W.S. 14A OF THE ACT PROVIDES FOR DISALLOWANCE OF THE EXPENDITURE EVEN WHERE THE ASSESSEE IN PARTICULAR YEAR HAD NOT EARNED ANY EXEMPT INCOME. THEREFORE, THE ASSESSING OFFICER HAS COMPUTED DISALLOWANCE AS PER SECTION 14A R.W . RULE 8D TO THE A MOUNT OF RS. 3,20,25,739 / - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7 . THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS RESTRICTED THE ADDITION TO THE AMOUNT OF RS. 2 LAC ON THE GROUND OF ADMINISTRATIVE EXPENSES. 8 . WE HA VE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD . IT IS NOTICED THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION AND THE HON BLE GUJARAT HUGH COURT IN THE CASE OF CIT VS. CORRTECH PVT. LTD. (2014) 45 T AXMAN.COM 16 HELD THAT WHERE ASSESSEE HAS NOT SHOWN ANY EXEMPT INCOME THERE CANNOT BE ANY EXPENSES TO BE DISALLOWED. IN THE LIGHT OF THE ABOVE FACTS AND JUDICIAL FINDINGS, WE DO NOT FIND ANY MERIT IN THE GROUND OF APPEAL, THEREFORE, THE SAME IS DISMISSE D. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 02 - 201 9 A D/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21 / 02 /2019 I.T.A NO. 1624 /AHD/20 17 A.Y. 2014 - 15 PAGE NO D CIT VS. M/S. ANUPAM INDUSTRIES LTD. 4 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,