The ACIT, 1 (1), V. Smt Upkar,

ITA 165/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0091 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 02-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S MUNDRA
• Section: 43B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI BHAVNESH SAINI, JM & SHRI V.K. GUPTA, A M ITA NO.165/IND/2009 AY: 2005-06 (PAN AATPR 8999 L) ACIT, BHOPAL APPELLANT VS. SMT. UPKAR RAJORIA, B-244, SHAHPURA, BHOPAL RESPONDENT DEPARTMENT BY SMT. APARNA KARAN, ADDL. CIT, DR ASSESSEE BY SHRI S.S. MUNDRA, CA O R D E R PER V.K. GUPTA, AM THIS APPEAL FIELD BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I , BHOPAL DATED 6.1.2009 FOR THE ABOVE AY. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE P ARTIES, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND PERUSE D THE FINDINGS OF THE AUTHORITIES BELOW. 3. GROUND NO.1 READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.7,19,292/- MADE BY THE AO U/S 43B OF THE IT ACT O N ACCOUNT OF PRIOR PERIOD EXPENSES. 2 4. THE FACTS, IN BRIEF, ARE THAT THE AO, IN THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT COMMERCIAL TAX AND ENTRY TAX , BOTH AGGREGATING TO RS.7,19,292/-, PERTAINED TO FY 01-02 AND 02-03 WHICH WERE PAID DURING THE YEAR UNDER CONSIDERATION A ND WERE CLAIMED AS DEDUCTION. THE AO, HOWEVER, HELD THAT ASSE SSEE HAD NOT MADE A PROVISION OF THESE EXPENSES IN RESPECTIV E FYS. HENCE, THE SAME COULD NOT BE ALLOWED U/S 43B BECAUSE THE SA ID SEC. DID NOT FACILITATE CLAIM OF THOSE EXPENSES WHICH HAD NEV ER BEEN CLAIMED BY THE ASSESSEE IN THE RELEVANT FYS. AGGRIE VED BY THIS, THE ASSESSEE CARRIED THE MATTER INTO APPEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS ARGUED THAT THESE EXPENSES WERE COVERED U/S 43B AND THEREFORE THESE WERE ALLOWABLE IN THE YEAR IN WHI CH THESE WERE ACTUALLY PAID BECAUSE THE SAID SEC. DID NOT RES TRICT THE ALLOWABILITY OF SUCH EXPENSES ON THE GROUND THAT NO PROVISION IN THE BOOKS OF ACCOUNT HAD BEEN MADE DURING THE RELEV ANT PREVIOUS YEAR. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CHEMICA LS & PLASTICS INDIA LTD. VS. CIT AS REPORTED IN 260 ITR PAGE 190 IN THIS REGARD. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE HELD THAT THESE EXPENSES WERE ALLOWABLE IN T HE YEAR UNDER CONSIDERATION ON THE BASIS OF ACTUAL PAYMENT. AGGRIEVED BY 3 THIS, THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR PLACED STRONG RELIANCE ON THE ORDER OF THE AO. THE LD. COUNSEL FOR ASSESSEE NARRATED THE FACTS, REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF ASSOCIATED PIGME NTS LTD. VS. CIT AS REPORTED IN 234 ITR PAGE 589 WHEREIN THE HIGH COURT HAD HELD THAT THERE WAS NO REQUIREMENT U/S 43B THAT DUE PROVISION SHOULD HAVE BEEN MADE IN THE BOOKS IN REGARD TO SUC H TAX OR DUTY FOR WHICH PAYMENT HAD BEEN MADE LATER ON. 5. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES AND ORDERS OF THE AUTHORITIES BELOW. IT IS NOTED THAT BO TH COMMERCIAL TAX AND ENTRY TAX PAYMENTS ARE COVERED U/S 43B AND HAVE BEEN CLAIMED IN THE YEAR UNDER CONSIDERATION ON THE BASI S OF ACTUAL PAYMENT. IT IS ALSO NOTED THAT NO PROVISION HAS BEE N MADE IN RESPECT OF THESE EXPENSES IN RESPECTIVE FYS. IN THI S BACKGROUND, IT CANNOT BE DISPUTED THAT EVEN IF THE ASSESSEE WOUL D HAVE MADE PROVISION FOR THESE EXPENSES IN THOSE YEARS, THE SA ME WOULD NOT HAVE BEEN ALLOWED IN THOSE YEARS FOR THE REASON THAT THESE HAD NOT BEEN PAID IN THOSE YEARS. HAVING STATED SO, THE RE IS NO DISPUTE THAT THESE EXPENSES ARE OTHERWISE ALLOWABLE A S EXPENDITURE WHICH MEETS THE REQUIREMENT OF PROVISION S OF SEC. 4 43B. WE ARE FURTHER OF THE VIEW THAT THERE IS NO REQ UIREMENT OF PROVISION OF SEC. 43B THAT A PROVISION OF SUCH EXPE NSES MUST BE MADE IN THE RESPECTIVE PREVIOUS YEAR TO CLAIM THE D EDUCTION OF THE SAME IN SUBSEQUENT YEAR ON THE BASIS OF ACTUAL PAYMENT. THE DECISIONS CITED BY THE ASSESSEE ALSO SUPPORT THE CL AIM OF THE ASSESSEE. ACCORDINGLY, WE HOLD THAT THERE IS NO INFI RMITY IN THE ORDER OF THE LD. CIT(A) AND, THEREFORE, WE DISMISS T HIS GROUND OF THE REVENUE. 6. GROUND NO.2 READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) ERRED IN D ELETING THE DISALLOWANCE OF RS.1,40,000/- OUT OF TOTAL DISALLOWANCES OF RS.2,00,000/- MADE ON ACCOUNT OF NON-BUSINESS AND PERSONAL EXPENSES. 7. THE FACTS, IN BRIEF, ARE THAT THE AO NOTED THAT TRAV ELING EXPENSES IN THE YEAR UNDER CONSIDERATION WERE CLAIMED AT RS.1 1,94,974/- AS AGAINST RS.3,74,407/- CLAIMED IN THE IMMEDIATELY PRECEDING YEAR. THE ASSESSEE EXPLAINED THAT SUCH INCREASE WAS D UE TO FOREIGN TRAVEL UNDERTAKEN BY THE ASSESSEE TO ATTEND A TRADE FAIR. THE AO ALSO HELD THAT TELEPHONE EXPENSES AND VEHICLE RUNNING EXPENSES MUST CONTAIN THE ELEMENT OF PERSONAL USE. ACCORDINGLY, HE MADE AN ADHOC DISALLOWANCE OF RS.2 LAKHS OUT OF A LL THESE EXPENSES. IN APPEAL BEFORE LD. CIT(A), THE ASSESSEE SUBMITTED 5 THAT SAID DISALLOWANCE WAS WITHOUT ANY BASIS AND ALL T HE DETAILS WERE AVAILABLE BEFORE THE AO AND HENCE, SUCH ADDITIO N WAS ARBITRARY AND UNREASONABLE. THE LD. CIT(A) HAVING REG ARD TO THE PROVISIONS OF SEC. 38(2) HELD THAT THE ELEMENT OF P ERSONAL USE COULD NOT BE RULED OUT ENTIRELY. HENCE, HE UPHELD T HE DISALLOWANCE OF RS.60,000/- AND DELETED THE BALANCE AMOUNT. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. LD. DR RELIED ON THE ORDER OF THE AO AND THE LD. COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE AUTHORITIES BELOW AND ALSO DREW OUR ATTENTION TO THE PAGE 19 OF THE PAPER BOOK TO SHOW THAT THE FOREIGN TRAVEL HAD BEEN UNDERTAKEN IN CONN ECTION WITH THE BUSINESS OF THE ASSESSEE AND ALL OTHER EXPENSES WERE ALSO INCURRED FOR THE PURPOSE OF BUSINESS. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES AND MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT AN A DHOC DISALLOWANCE WAS MADE BY THE AO MAINLY FOR THE REASON THAT THERE WAS SUBSTANTIAL INCREASE IN THE TRAVELING EXPE NSES IN THE YEAR UNDER CONSIDERATION AS COMPARED TO EARLIER YEA R WHICH HAS BEEN SATISFACTORILY EXPLAINED. AS REGARDS TO ELEMEN T OF PERSONAL USE IN OTHER EXPENSES, WE FIND THAT LD. CIT(A) HAS SU STAINED A 6 PART OF DISALLOWANCE WHICH, IN OUR VIEW IS REASONABL E. HENCE, WE DISMISS THIS GROUND OF THE REVENUE ALSO. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.9.2009. SD/- SD/- JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24.9.2009 {VYAS} 7