M/s.E-Vector(India) Pvt. Ltd., Bangalore V. ITO-Ward-2(1)(4), Bangalore

ITA 1751/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5499 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SOWMYA ACHAR ADDITIONAL
• Keywords: Business expenditure; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1751/BANG/2016 ASSESSMENT YEARS : 2012-13 M/S. E-VECTOR (INDIA) PVT. LTD., C/O R. PRASANNA KUMAR & CO., NO.84/1, NEAR BANK OF BARODA, 8 TH CROSS, MALLESWARAM, BENGALURU-560003. PAN : AAACE7906J VS. INCOME TAX OFFICER, WARD-2(1)(4), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : NONE REVENUE BY : SMT. SOWMYA ACHAR, ADDITIONAL CIT DATE OF HEARING : 10.04.2017 DATE OF PRONOUNCEMENT : 21.04.2017 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIRE CTED AGAINST THE ORDER OF THE LEARNED CIT(A), BENGALURU DATED 26.05.2016 FOR THE ASSESSMENT YEAR 2012-13. THE GR OUNDS RAISED BY THE ASSESSEE ARE AS UNDER: ITA NO.1751/BANG/2016 PAGE 2 OF 5 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ORDER OF THE CIT (APPEALS) VIDE ORDER DATED 27.05.2015, F OR THE ASSESSMENT YEAR 2012-13, IS AGAINST THE LAW AND LIA BLE TO QUASH. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT, THE CLAIM OF THE APPELLANT FOR EXPENDITURE UNDER SECTION 57 OF THE A CT IS CORRECT. THUS, WITHOUT APPRECIATING THE FACTS OF THE CASE, T HE ORDER OF THE CIT (APPEALS) IS LIABLE TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT, THE DE POSITED AMOUNT BY THE APPELLANT COMPANY IS BELONG TO APPELL ANT COMPANY, THE SAME WAS DECLARE IN THE RETURNS. THERE FORE THE APPELLANT CLAIMED EXPENDITURE FOR THE APPELLANT COM PANY BUSINESS, FOR THE BUSINESS PREMISES FOR THE RENT AM OUNT, AUDIT FEES, TRAVELLING CONVINCE CHARGES, SALARY AND OTHER EXPENSES, CLAIMED AS BUSINESS EXPENDITURE IS CORRECT. THUS, T HE ORDER OF THE CIT (APPEALS) IS LIABLE TO BE SET ASIDE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT (APPEALS) FAIL TO APPRECIATE THAT, THE APPELLANT EA RNED INCOME FROM THE DEPOSIT AMOUNT AND CLAIMED EXPENDITURE OF RS.6,61,741/- IS CORRECT. THEREFORE THE CIT (APPEA LS) CONFIRMED ORDER OF THE ASSESSING AUTHORITY AND DISMISSED THE APPEAL OF THE APPELLANT IS AGAINST THE PRINCIPLE NATURAL JUSTICE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, CIT (APPEALS)OUGHT TO HAVE APPRECIATED, THE TRANSACTION OF THE APPELLANT THAT, THE DEPOSIT AMOUNT AND EARNED INCOM E AND NATURE OF THE EXPENDITURE ARE BUSINESS NATURE. HE NCE THE CLAIM OF THE APPELLANT IS CORRECT AND CIT(APPEAL) OUGHT T O HAVE REFRAINED FROM COMMUNICATING THE ASSESSMENT ORDER. IN THE INTEREST OF JUSTICE AND EQUITY. ITA NO.1751/BANG/2016 PAGE 3 OF 5 6. FOR SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING AND IT IS PRAYS THAT KINDLY MAY ALLOW THE A PPEAL IN THE INTEREST OF JUSTICE AND EQUITY. 2. THIS APPEAL WAS LAST FIXED FOR HEARING ON 14.03.201 7. ON THIS DATE, SHRI. MALLAHARAO K, ADVOCATE AND AR OF T HE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT AND IT WAS SUB MITTED IN THE SAME THAT THE APPEAL MAY BE FIXED FOR HEARING A FTER 2 WEEKS. THE HEARING WAS ADJOURNED TO 10.4.2017 AND THIS DAT E OF NEXT HEARING WAS ANNOUNCED IN THE OPEN COURT. IT WAS DU LY NOTED BY THE REPRESENTATIVE OF THE LEARNED AR OF THE ASSESSE E AND HE DULY SIGNED ON THE ORDER SHEET. ON 10.4.2017, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THERE IS NO REQUEST F OR ADJOURNMENT AND THEREFORE, THIS APPEAL WAS HEARD EX -PARTE QUA OF THE ASSESSEE. THE LEARNED DR OF THE REVENUE SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW. HE ALSO PLACED RE LIANCE ON THE JUDGMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF VIJAYA LAKSHMI SUGAR MILLS LTD., VS. CIT AS REPORTE D IN 59 TAXMAN 22 (SC). IT WAS SUBMITTED THAT UNDER SIMILA R FACTS, THE DISALLOWANCE WAS UPHELD BY THE HONBLE APEX COURT. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LEAR NED DR OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THIS JUDGMENT CITED BY THE LEARNED DR OF THE REVENUE. PARA 5 OF THE ORDER CIT(A) IS RELEVANT AN D THEREFORE, ITA NO.1751/BANG/2016 PAGE 4 OF 5 FOR THE SAKE OF READY REFERENCE, THIS PARA IS REPRO DUCED FROM THE ORDER OF THE CIT(A). THE SAME IS AS UNDER: AFTER CONSIDERING THE FACT OF THE CASE AND, THE AR GUMENTS ADVANCED BY THE APPELLANT AND PERUSING THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET MAINTAINED BY THE APPELLANT COMPA NY, IT IS SEEN THAT THE APPELLANT COMPANY HAS BEEN INCURRING LOSSE S YEAR AFTER YEAR AND NO SUBSTANTIAL BUSINESS HAS BEEN CARRIED O UT. IN FACT, THE COMPANY HAS DISCONTINUED ITS COMPANYS OPERATION W. E.F. 30.5.2002 AS RECORDED IN THE SCHEDULE TO THE ACCOUN TS. THE FINANCIAL STATEMENTS AS ON 31.3.2012 HAVE BEEN PREP ARED ON LIQUIDATION BASIS. THE EXPENSES CLAIMED BY THE APPE LLANT CLAIMED TO BE NOMINAL EXPENSES ARE AUDIT FEE RS. 70,000, TRAVE LLING AND CONVEYANCE CHARGES RS. 1,35,741, RENT PAID RS. L,86 ,000 AND SALARIES AND OTHER EXPENSES OF RS.2,70,000 WHICH HA VE BEEN CLAIMED AGAINST INCOME FROM OTHER SOURCES BEING INT EREST INCOME. CONSIDERING THE FACTS OF THE CASE, WHERE NO BUSINES S INCOME/LOSS IS DECLARED, THE EXPENSES SO CLAIMED CANNOT BE TREA TED TO HAVE BEEN EXCLUSIVELY INCURRED FOR THE PURPOSE OF. EARNI NG INTEREST INCOME ALLOWABLE U/S 57 OF THE ACT. THE DISALLOWANC E MADE BY THE ASSESSING OFFICER IS IN ORDER AND IS UPHELD. 4. FROM THE ABOVE PARA REPRODUCED, IT IS SEEN IS THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE CLAIMED TO BE NORMAL EXPENSES AND THESE ARE CLAIMED TO BE SET OFF AGAINS T INTEREST INCOME AND IT IS ALSO NOTED THAT THE BUSINESS ACTIV ITY OF THE ASSESSEE HAVE BEEN STOPPED W.E.F. 30.5.2002. NOW I N THE LIGHT OF THESE FACTS, I EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT CITED BY LEARNED DR OF THE REVEN UE. IN THAT CASE ALSO, THE INCOME OF THE ASSESSEE WAS ON ACCOUN T OF INTEREST ON FIXED DEPOSIT AND THE ASSESSEE CLAIMED DEDUCTION OF VARIOUS EXPENSES SUCH AS SALARIES, LEGAL FEES, TA & DA, POSTAGE, STATIONERY ETC. IN THE PRESENT CASE, THE E XPENSES ITA NO.1751/BANG/2016 PAGE 5 OF 5 CLAIMED ARE AUDIT FEE, TRAVELLING AND CONVEYANCE, R ENT PAID AND SALARY AND OTHER EXPENSES. HENCE IT IS SEEN THAT T HE FACTS IN THE PRESENT CASE ARE SIMILAR TO THE FACTS IN THE CASE O F VIJAYA LAKSHMI SUGAR MILLS LTD., VS. CIT (SUPRA) AND THERE FORE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF THE HONBLE APEX COURT, I DECLINE TO INTERFERE IN THE ORDER OF THE CIT(A). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF APRIL, 2017. SD/- (A.K. GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 21 ST APRIL, 2017. /NSHYLU/ COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.