M/s. Alpha Enterprises, Hubli V. ITO, Ward-1(1), Hubli

ITA 1830/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9267 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1830/BANG/2016 (ASSESSMENT YEAR: 2012-13) ASSESSEE BY : MS. SUMAN LUNKAR, CA REVENUE BY : MS. S. PRAVEENA, ADDL. CIT DATE OF HEARING : 1.12.2016 DATE OF PRONOUNCEMENT : 5.12 .2016 ORDER PER GEORGE GEORGE K, JM : THIS APPEAL AT INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST CIT(A) ORDER DATED 30.8.2016. THE RELEVANT ASSESSME NT YEAR IS 2012 2013. M/S. ALPHA ENTERPRISES, KCC & 1 BUILDING, J C NAGAR, HUBLI. PAN : AAJFA1169 M VS. INCOME TAX OFFICER WARD-1(1), HUBLI. APPELLANT RESPONDENT ITA NO. 1830/BANG/2016 PAGE 2 OF 4 2. BRIEF FACTS OF THE CASE ARE AS FOLLOWS : THE ASSESSEE IS A REGISTERED PARTNERSHIP FIRM. IT CARRIES ON BUSINESS OF TRADING IN SWITCH GEARS, ELECTRICAL PAN ELS AND OTHER ELECTRICAL GOODS. THE RETURN OF INCOME FOR THE AY 2012-13 WAS FILED DECLARING TOTAL INCOME OF RS.13,43,980/-. ASSESSME NT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE UNDER SECTION 14 3(2) OF THE ACT ON 28.8.2013. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 13.3.2015. IN THE ASSES SMENT COMPLETED U/S 143(3) OF THE ACT, THE AO HAD DISALLOWED THE CO MMISSION PAID AMOUNTING TO RS.13,89,188/- AND ALSO MADE DISALLOWA NCE OF CERTAIN PERSONAL EXPENDITURE AMOUNTING TO RS.1,28,944/-. 3. AGGRIEVED BY THE DISALLOWANCE, THE ASSESSEE PREF ERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) SUSTA INED THE DISALLOWANCE TO 50% OF THE COMMISSION PAYMENT. WIT H REGARD TO DISALLOWANCE OF RS.1,28,944/- TOWARDS PERSONAL EXPE NSES OF THE PARTNERS, THE ACTION OF THE AO WAS CONFIRMED. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FO R THE SUBMITTED BOTH THE ISSUES THAT WERE CONSIDERED IN ASSESSEES OWN CASE FOR THE AY 2010-11 BY THE TRIBUNAL VIDE ORDER DATED 16.9.20 16 IN ITA NO. 549/B/2016. THE LEARNED DR PRESENT WAS DULY HEARD. 5. I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED TH E MATERIAL ON RECORD. THE AO HAD DISALLOWED A SUM OF RS.13,89,18 8/- PAID AS COMMISSION TO THREE PERSONS. THE AO HAD MADE DISAL LOWANCE FOR THE PRECEDING AY NAMELY AY 2010-11 GIVING IDENTICAL REASONS. FOR THE PRECEDING AY, THE TRIBUNAL IN ASSESSEES OWN CA SE (SUPRA) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEL ETED THE CIT(A) ACTION FOR SUSTAINING 50% OF THE DISALLOWANCE WITH REGARD TO THE ITA NO. 1830/BANG/2016 PAGE 3 OF 4 COMMISSION PAYMENT. THE RELEVANT FINDINGS OF THE T RIBUNAL READS AS FOLLOWS: I HAVE CONSIDERED THE FACTS OF THE CASE AND GONE T HROUGH THE ORDERS OF THE LOWER AUTHORITIES. I FIND FORCE IN T HE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE ABOUT THE FIRST I SSUE I.E., 50% DISALLOWANCE OUT OF COMMISSION EXPENSES BECAUSE THIS IS NOT THE CASE OF THE REVENUE THAT SECTION 40A (2B ) IS APPLICABLE IN RESPECT OF THESE PAYMENTS. HAVING AL LOWED DEDUCTION FOR 50% OF THE EXPENSES, LEARNED CIT(A) H AS NOT INDICATED ANY VALID BASIS FOR UPHOLDING THE BALANCE DISALLOWANCE. HENCE, I DELETE THE BALANCE DISALLOW ANCE OUT OF COMMISSION EXPENSES. 5.1 IN VIEW OF THE COORDINATE BENCHS ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010-11 (SUPRA), WE ALLO W GROUND NO. 3 TO 3.5. 5.2. AS REGARDS THE DISALLOWANCE OF PERSONAL EXPENS ES, WE FIND THE TRIBUNAL IN ASSESSEES OWN CASE IN AY 2010-11 (SUPR A) HAD DECIDED THE ISSUE AGAINST THE ASSESSEE. THE RELEVANT FINDI NG OF THE TRIBUNAL READS AS FOLLOWS: REGARDING THE SECOND ISSUE, I FIND THAT THE DISALL OWANCE OF RS.50,000/- WAS MADE BY THE A.O. MAINLY ON ACCOUNT OF PERSONAL USE OF VEHICLES AND TELEPHONES. THIS IS N OT SHOWN BY THE ASSESSEE THAT THE PARTNERS WERE HAVING PERSO NAL VEHICLES AND TELEPHONES FOR PERSONAL USE. HENCE PE RSONAL USE OF VEHICLES AND TELEPHONES CANNOT BE RULED OUT. HENCE, ON THIS ISSUE, I FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A). IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1830/BANG/2016 PAGE 4 OF 4 5.3 IN VIEW OF THE ABOVE SAID FINDING OF THE TRIBUN AL, WE HOLD THE AUTHORITIES BELOW JUSTIFIED IN MAKING DISALLOWANCE ON ACCOUNT OF PERSONAL EXPENSES. 6. NO OTHER ISSUES WERE ARGUED BEFORE US. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 5-12-2016. SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER PLACE : BANGALORE DATED : 05/12/2016 /NS/ COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A)-II BANGALORE 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT RE GISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE