M.P. Chini Industries Ltd., Kolkata V. ACIT, Cir-4(1), Kolkata, Karnataka

ITA 1698/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6479 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ADD L
• Assessee Lawyers: B K CHATURVEDI
• Keywords: Business expenditure
• Section: 143(3); 37

Judgement Text

1 ITA NO.1698/KOL/2016 M.P.CHINI INDUSTRIES LTD. A.Y. 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A KOL KATA [BEFORE HONBLE SHRI S.S. GODARA, JM & SHRI M.BAL AGANESH, AM ] ITA NO.1698/KOL/2016 ASSESSMENT YEAR : 2006-07 M.P.CHINI INDUSTRIES LTD. -VERSUS- A.C.I.T., CIR CLE-4(1) KOLKATA KOLKATA (PAN:AACCC 4268 M) (RESPONDENT) FOR THE APPELLANT: SHRI B.K.CHATURVEDI, AR FOR THE RESPONDENT: SHRI SALLONG YADEN,ADDL. CIT DATE OF HEARING : 01.05.2018. DATE OF PRONOUNCEMENT : 04.05.2018. ORDER PER S.S. GODARA, JM: 1. THIS ASSESSEES APPEAL FOR A.Y.2006-07 EMANATES FROM THE CIT(A)-2, KOLKATAS ORDER DATED 08.07.2016, PASSED IN APPEAL NO.379/CIT(A)-2/14-15, AFFIRMING ASSESSING OFFICERS ACTION INTER-ALIA DIS ALLOWING AMOUNTS WRITTEN OFF ON ACCOUNT OF SHORT FALL IN REIMBURSEMENTS BY THE ZONA L DEVELOPMENT COUNCIL, CONTRIBUTION TO EMPLOYEES CLUB, REPAIRS TO MACHIN ERIES, AS WELL AS ROAD AND BUILDINGS, PRIOR PERIOD EXPENSES TO THE TUNE OF RS. 53,000, RS.16,300, RS.6,00,000/-, RS.1,30,000/- AND RS.35,107/-; RESPECTIVELY, IN PR OCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. WE COME TO THE FIRST ISSUE OF DISALLOWANCE OF R S.53,000/- ON ACCOUNT OF SHORT FALL IN REIMBURSEMENT BY THE ZONAL DEVELOPMENT COUN CIL. THERE IS NO DISPUTE THAT THE ASSESSEE HAD ACTUALLY INCURRED AN AMOUNT OF RS.2,10 ,500/- ON RENOVATION OF AN EXISTING BRIDGE. THE CONCERNED ZONAL DEVELOPMENT CO UNCIL REIMBURSED IT A SUM OF RS.1,57,500/- ONLY THEREBY CAUSING THE SHORT FALL I N QUESTION OF RS.53,000/-. THE ASSESSEE CLAIMED THE SAME AS ITS BUSINESS EXPENDIT URE WRITTEN OFF IN THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER OBSERVED THAT THERE WAS NO EVIDENCE ON ACCOUNT OF ANY DENIAL OF THE REIMBURSEMENT CHARGES WHICH COULD PROVE THE INSTANT CLAIM UNDER CHALLENGE. WE HAVE GIVEN OUR THOUGHTFUL CONSI DERATION TO RIVAL SUBMISSIONS. WE NOTICE THAT THERE IS NO DISPUTE SO FAR AS THE AS SESSEE HAVING ACTUALLY INCURRED THE 2 ITA NO.1698/KOL/2016 M.P.CHINI INDUSTRIES LTD. A.Y. 2006-07 AMOUNT IN QUESTION RS.2,10,500/- FOR RENOVATION OF EXISTING BRIDGE AS WELL AS THE CONSEQUENTIAL SHORT FALL ARE CONCERNED. WE OBSERVE IN THESE FACTS THAT THE LOWER AUTHORITIES FAILURE IN NOT DOUBTING THE ACTUAL REI MBURSEMENT FROM THE ZONAL DEVELOPMENT COUNCIL AS WELL AS THE GROSS EXPENDITUR E FORM SUFFICIENT REASONS FOR US TO CONCLUDE THAT THE ASSESSEE HAS RIGHTLY WRITTEN O FF THE AMOUNT IN DISPUTE AS ITS BUSINESS EXPENDITURE IN THE RELEVANT PREVIOUS YEAR. THERE IS NO MATERIAL TILL DATE INDICATING RECOVERY THEREOF. WE THEREFORE DELETE TH E IMPUGNED DISALLOWANCE OF RS.53,000/-. 3. THE ASSESSEES SECOND SUBSTANTIVE GROUND IS THA T BOTH THE LOWER AUTHORITIES HAVE ERRED ON FACTS AS WELL AS IN LAW IN DISALLOWIN G ITS CONTRIBUTION PAID TO THE EMPLOYEES CLUB TO THE TUNE OF RS.16,300/-. WE NOTI CE THAT THERE IS NO DETAILED DISCUSSION APART FROM THE FACT BOTH THE LOWER AUTHO RITIES HAVE REJECTED THE IMPUGNED CLAIM WITHOUT GIVING ANY REASON. THE ASSESSEE IS A COMPANY SUPPOSED TO PROMOTE HARMONY AMONGST ITS STAFF/WORKMEN SO AS TO REALISE MAXIMUM POTENTIAL OF ITS WORK STRENGTH. WE THEREFORE SEE NO REASON TO REJECT THIS CLAIM SINCE THE IMPUGNED SUM IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF ITS BUSINESS ALLOWABLE U/S 37 OF THE ACT. THIS SECOND SUBSTANTIVE GROUND IN THE INSTANT APPEAL IS ALSO ACCEPTED. 4. THE ASSESSEES THIRD AND FOURTH SUBSTANTIVE GRO UNDS PLEAD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AS WELL AS ON FACTS I N DISALLOWING REPAIRS OF MACHINERIES AS WELL AS ROADS AND BRIDGES TO THE TUNE OF RS.6,00 ,000/- AND RS.1,30,000/; RESPECTIVELY ON ADHOC BASIS. THE ASSESSING OFFICER QUOTED ASSESSEES FAILURE IN NOT FURNISHING ALL THE RELEVANT EVIDENCE IN SUPPORT OF THE IMPUGNED CLAIMS. WE FIND THAT THE ASSESSEE HAD PLACED ON RECORD ALL COGENT DETAIL S THAT IT HAD INCURRED THE IMPUGNED EXPENDITURE IN THE FORMER HEAD AND QUA SUGAR GODOWN S, FACTORY BUILDING, RESIDENTIAL COLONY IN THE LATTER ONE. THE ASSESSING OFFICER MAD E THE IMPUGNED LATTER DISALLOWANCE @ 5% ON ADHOC BASIS. THE CIT(A)S DETA ILED RELEVANT PORTION ON THESE TWO ISSUES REVEALS THAT THE ASSESSEE HAD REITERATED ITS EARLIER SUBMISSION DURING THE COURSE OF LOWER APPELLATE PROCEEDINGS. BOTH THE LOW ER AUTHORITIES SEEM TO HAVE NOT CONSIDERED THE SAID DETAILS APART FROM COMPARING TH E IMPUGNED EXPENDITURE AMOUNTS 3 ITA NO.1698/KOL/2016 M.P.CHINI INDUSTRIES LTD. A.Y. 2006-07 VIS-A-VIS THE PRECEDING ASSESSMENT YEAR IN THE FORM ER HEAD. THERE IS NO DISCUSSION MUCH LESS A DETAILED ONE IN THE LOWER APPELLATE ORD ER QUA EITHER OF THE TWO ISSUES. WE THEREFORE CONCLUDE IN THESE FACTS OF THE CASE THAT SUCH AN ADHOC DISALLOWANCE WITHOUT ANY DOUBT ON GENUINENESS ASPECT IS NOT WARRANTED I N THE GIVEN FACTS OF THE CASE. WE THEREFORE DIRECT THE AO TO DELETE BOTH THE IMPUGNED DISALLOWANCE OF RS.6,00,000/- AND RS.1,30,000/-; RESPECTIVELY. 5. THIS LEAVES US WITH ASSESSEES LAST SUBSTANTIVE GROUND CHALLENGING THE DISALLOWANCE IN RESPECT OF PRIOR PERIOD EXPENDITURE OF RS.35,107/-. LEARNED COUNSEL PLEADS BEFORE US THAT THE ASSESSEE HAD ALREADY DISA LLOWED THE SAME IN ITS COMPUTATION WHICH AMOUNTS TO DOUBLE ADDITION QUA THE VERY ISSUE . WE REMIT THE INSTANT ISSUE BACK TO THE ASSESSING OFFICER TO VERIFY THE NECESSARY FA CTS. THE INSTANT GROUND IS TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES. 6. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 04.05.2018. SD/- SD/- [M.BALAGANESH] [ S.S. GODARA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 04.05.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.M.P.CHINI INDUSTRIES LTD., 10, CAMAC STREET, KOLK ATA-700017. 2. A.C.I.T., CIRCLE-4(1), KOLKATA. 3. CIT(A)-2, KOLKATA 4. C.I.T.-2, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES 4 ITA NO.1698/KOL/2016 M.P.CHINI INDUSTRIES LTD. A.Y. 2006-07