DCIT, Trichy V. A.Francis, Trichy

ITA 1732/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4881 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 29-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S RENGA RAJAN
• Assessee Lawyers: S SRIDHAR
• Section: 40A(3)

Judgement Text

, , [ : ] IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI [ CAMP: MADURAI ) . . . ! , ' # $ %& .()(*, , # - BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER $./ ITA NO.1732/MDS/2015 ' * /* / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I(1), TRICHY. V. SHRI A. FRANCIS, A-146F, MAIN ROAD, MANDURAI, LALGUDI ROAD, TRICHY. PAN : AACPF 8525 B (12/ APPELLANT) (3412/ RESPONDENT) 12 5 6 / APPELLANT BY : SHRI S. RENGA RAJAN, JCIT 3412 5 6 / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE 5 7, / DATE OF HEARING : 16.02.2017 89/ 5 7, / DATE OF PRONOUNCEMENT : 20.04.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, TIRUC HIRAPALLI, DATED 20.05.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-12. 2 I.T.A. NO.1732/MDS/15 2. SHRI S. RENGA RAJAN, THE LD. DEPARTMENTAL REPRES ENTATIVE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERAT ION IS WITH REGARD TO DISALLOWANCE OF ` 39,66,750/- UNDER SECTION 40A(3) OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO T HE LD. D.R., THE ASSESSEE HAS TRANSFERRED HIS STOCKS TO A FIRM KNOWN AS PRIYA PROMOTERS IN WHICH THE ASSESSEE AND HIS WIFE SMT. J EAN FLEMING ROSE ARE PARTNERS. THE BOOK VALUE OF THE STOCK TRA NSFERRED WAS ` 7,56,04,064/-. THIS WAS ACCOUNTED AS PURCHASE IN T HE FIRMS BOOKS. IT IS SEEN FROM THE DAY BOOK AND LEDGER PROD UCED BY THE ASSESSEE THAT THE ASSESSEE HAS INCURRED AN EXPENDIT URE ON THE PROJECT TO THE EXTENT OF ` 39,66,750/- TOWARDS DEVELOPMENT EXPENSES ON VARIOUS OCCASIONS. THE EXPENDITURE INCURRED WAS MORE THAN THE LIMIT PRESCRIBED UNDER SECTION 40A(3) OF THE ACT. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SAME WHILE COMPUTI NG TAXABLE INCOME. THE LD. D.R. FURTHER POINTED OUT THAT THE ASSESSEE USING THE FIRM AS COLOURABLE DEVICE, AVOIDED TAXATION ON THIS EXPENDITURE. HENCE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 3. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD. COUNSE L FOR THE ASSESSEE, SUBMITTED THAT DISALLOWANCE CAN BE MADE O NLY IN CASE 3 I.T.A. NO.1732/MDS/15 THE ASSESSEE CLAIMS THE SAME IN COMPUTATION OF INCO ME. SINCE THE ASSESSEE HAS NOT CLAIMED THE EXPENDITURE, THERE CAN NOT BE ANY DISALLOWANCE AT ALL. ACCORDING TO THE LD. COUNSEL, THE LAND DEVELOPMENT EXPENDITURE WAS INCURRED FOR REMOVING T HE GRAVEL. THE PAYMENT WAS ACTUALLY IN THE NATURE OF ADVANCE. THE ASSESSEE HAS NOT CLAIMED THIS AS EXPENDITURE IN THE COMPUTAT ION OF INCOME. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(AP PEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER CAN DISALLOW THE CLAIM OF THE ASSESSEE PROV IDED THE SAME WAS CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCO ME. IN THIS CASE, IT IS NOT DISPUTED THAT THE ASSESSEE HAS NOT CLAIMED THE SAME AS DEDUCTION. THEREFORE, AS RIGHTLY OBSERVED BY TH E CIT(APPEALS), DISALLOWANCE OF AN EXPENDITURE, WHICH IS NOT CLAIME D IN THE COMPUTATION OF INCOME, CANNOT BE DISALLOWED. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 4 I.T.A. NO.1732/MDS/15 ORDER PRONOUNCED ON 20 TH APRIL, 2017 AT CHENNAI. SD/- SD/- (%& .()(* ) ( . . . ! ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN) , #/ ACCOUNTANT MEMBER ' # /JUDICIAL MEMBER /CHENNAI, ;$ /DATED, THE 20 TH APRIL, 2017. KRI. 5 3'7 ! 3'7' /DR 6. !?* @ /GF.