The ACIT, Circle-1(1), Baroda V. Ambalal Sarabhai Enterprises Limited, Baroda

ITA 1764/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1166 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 15-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KHAN
• Keywords: Business expenditure; Audit objection; Tax effect
• Section: 14A

Judgement Text

ITA NO. 1764/AHD/2015 DCIT VS. AMBALAL SARABHAI ENTERPRISES LTD ASSESSMENT YEAR: 2003-04 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] ITA NO. 1764/AHD/2015 ASSESSMENT YEAR: 2003-04 DCIT ..................APPELLANT CIRCLE 1(1)(1), VADODARA VS. AMBALAL SARABHAI ENTERPRISES LIMITED ............................RESPONDENT WADI WADI, VADODARA 390 023 [PAN : AABCA 6893 K] APPEARANCES BY: MS KHAN, FOR THE APPELLANT PARIN SHAH, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 11.09.2018 DATE OF PRONOUNCING THE ORDER : 11.09.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 20.03.2015, PASSED BY THE LEARNED C IT(A)-1, VADODARA FOR THE ASSESSMENT YEAR 2003-04, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN (I) ALLOWING VARIOUS EXPENSES VIZ. MISCELLANEOUS E XPENSES, TELEPHONE EXPENSES, VEHICLE EXPENSES, ETC. AGGREGATING TO RS. 2,42,418/-WITHOUT APPRECIATING THE FINDINGS BROUGHT OUT BY AO IN THE ASSESSMENT ORDER, ALSO IGNORING THE FACT THAT ASSESSEE FAILED TO SUBSTANTI ATE ITS CLAIM. (II) DELETING ADHOC DISALLOWANCE OF RS.1,33,522/- MADE @5% OUT OF SELLING EXPENSES, IGNORING THE FACT THAT ASSESSEE FAILED TO ESTABLISH THE NEXUS BETWEEN PERSONAL EXPENSES & BUSINESS EXPENSES. (III) DELETING DISALLOWANCE OF RS.4,92,000/- CLAIM ED AS A LOSS IN RESPECT OF ITS PACKART PRESS UNIT, IGNORING THE FACT THAT THE PACK ART PRESS UNIT WAS CLOSED AND THAT, THERE WERE NO BUSINESS ACTIVITIES DURING THE YEAR. (IV) DELETING DISALLOWANCE OF RS.1,85,994/-, BEING PRIOR PERIOD EXPENSES, IGNORING THE SYSTEM OF ACCOUNTING REGULARLY FOLLOWE D BY ASSESSEE, WHICH IS MERCANTILE. ITA NO. 1764/AHD/2015 DCIT VS. AMBALAL SARABHAI ENTERPRISES LTD ASSESSMENT YEAR: 2003-04 PAGE 2 OF 2 (V) DELETING DISALLOWANCE OF RS.1,48,456/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES, WITHOUT APPRECIATING THE FACT THAT ASSESS EE NEITHER COULD GIVE PLAUSIBLE EXPLANATION, NOR COULD JUSTIFY THE LONG P ERIOD OF STAY. (VI) RESTRICTING DISALLOWANCE OF RS.67,50,000/- MAD E U/S 14A OF THE IT ACT TO RS.33,75,000/-, WITHOUT APPRECIATING THE FACT THAT AO HAS RIGHTLY COMPUTED THE DISALLOWANCE AS PER PROVISIONS OF RULE 8D OF IT RULES. 2. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE NEEDS TO BE DISMISSED ON ACCO UNT OF LOW TAX EFFECT IN VIEW OF THE RECENT CBDT CIRCULAR NO.3 OF 2018 DATED 11.07.2 018. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT PRIMA-FACIE THIS APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF THE RECENT CBDT CIRCULAR NO. 3/2018 IN F.NO .279/MISC. 142/2007-ITJ (PT) DATED 11 TH JULY, 2018, VIDE WHICH IT HAS BEEN DECIDED BY THE BOARD THAT NO DEPARTMENTAL APPEALS SHOULD BE FILED BEFORE THE TRI BUNAL IF THE TAX EFFECT BY VIRTUE OF THE COMMISSIONER OF INCOME-TAX (APPEALS)S ORDER IS BELOW RS. 20 LACS. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (10) OF THE INSTR UCTIONS WHEREIN IT HAS BEEN PROVIDED THAT THESE INSTRUCTIONS WILL NOT BE APPLIC ABLE, WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT/RULE IS UNDER CHALLENGE OR WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULAR HAS BEEN HELD TO BE ILLEGAL OR WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPA RTMENT OR WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/BANK ACCOUNTS ETC. WE FIND THAT THE PRESENT CASE DOES NOT FALL WITHIN THE EXEMPTION CLAUSE AND THE TAX EFFECT IS LESS THAN RS.20 LACS. THEREFORE, THE PRESENT APPEAL IS NOT MAINTA INABLE AND HENCE DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 11 TH SEPTEMBER, 2018 SD/- SD/- RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 11 TH DAY OF SEPTEMBER, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD