The ITO, Ward-2(1)., Vijayawada V. M/s OTS Advertising P Ltd, Vijayawada

ITA 188/VIZ/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7214 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: Opportunity of being heard

Judgement Text

ITA NO.188 OF 2008 OTS ADVERTISING P LTD VIJAYAWADA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 188 /VIZAG/20 08 ASSESSMENT YEAR: 2004 - 05 ITO WARD - 2(1) VIJAY AWADA VS. OTS ADVERTISING (P) LTD., VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO:AAACO 2543 H APPELLANT BY: SHRI D.S. SUNDER SINGH, DR RESPONDENT BY: SHRI C. SUBRAMANYAM, CA ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 17.12.2007 PASSED BY LEARNED CIT(A), VIJAYAWADA AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. ALL THE GROUNDS RAISED BY THE REVENUE RELATE TO A SINGLE ISSUE VIZ., WHETHER THE LEARNED CIT (A) IS JUSTIFIED IN D ELETING THE DISALLOWANCE OF RS.18,34,134/- MADE BY THE ASSESSIN G OFFICER. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RUNNING ADVERTISING A ND PUBLICITY AGENCY. DURING THE COURSE OF HEARING, THE ASSESSING OFFICER, INTER ALIA, NOTICED THAT THE ADMINISTRATIVE EXPENSES CONSISTED OF EXPENDITURE ITA NO.188 OF 2008 OTS ADVERTISING P LTD VIJAYAWADA PAGE 2 OF 4 UNDER THE HEAD MISCELLANEOUS EXPENSES TO THE TUNE OF RS.20,52,809/-. THE ASSESSEE HAD ALSO DECLARED MISC ELLANEOUS INCOME OF RS.2,54,273/-. THE ASSESSING OFFICER LINKED BOT H THE ITEMS AND WAS OF THE VIEW THAT THE CLAIM UNDER THE HEAD MISC ELLANEOUS EXPENSES IS ABNORMAL IN NATURE. HENCE HE CALLED FO R THE DETAILS OF THE SAID CLAIM, BUT THE ASSESSEE FAILED TO FURNISH THE DETAILS. THE THEN AUTHORISED REPRESENTATIVE OF THE ASSESSEE STATED BE FORE THE ASSESSING OFFICER THAT THE MISCELLANEOUS EXPENDITURE MAY INCL UDE PAINT, BRUSHES AND WASTE COTTON CLOTHS. THE EXPLANATION OF THE LEA RNED AUTHORISED REPRESENTATIVE WAS NOT CONVINCING TO THE ASSESSING OFFICER. ACCORDINGLY HE ESTIMATED THE EXPENDITURE ATTRIBUTAB LE TO THE MISCELLANEOUS INCOME AT RS.2,18,675/- AND DISALLOWE D THE BALANCE AMOUNT OF RS.18,34,134/- (RS,20,52,809 RS.2,18,67 5). IN THE APPEAL PREFERRED BY THE ASSESSEE THE LEARNED CIT (A ) DELETED THE ABOVE SAID DISALLOWANCE. HENCE THE REVENUE IS IN A PPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS FURNISHED T HE BREAK UP DETAILS OF MISCELLANEOUS EXPENDITURE BEFORE THE LEARNED CIT (A) AND THE SAME IS EXTRACTED BELOW: MISC. EXPENSES AMOUNT (IN RS.) TRAVELLING EXPENSES 4,63,414 TELEPHONE EXPENSES 4,43,852 VEHICLE MAINTENANCE 2,21,523 CONVEYANCE 2,98,738 POSTAGE 37,211 PRINTING & STATIONERY 1,51,540 BOOKS & PERIODICALS 20,804 OFFICE MAINTENANCE 1,84,118 ITA NO.188 OF 2008 OTS ADVERTISING P LTD VIJAYAWADA PAGE 3 OF 4 ADVERTISEMENTS 30,811 COMPUTER MAINTENANCE SOFTWARE 70,005 FAX EXPENSES 1,201 COURIER EXPENSES 46,175 XEROX EXPENSES 15,529 LEGAL FEE 26,011 COMMISSION PAID/BANK CHARGES 41,877 ON A CLOSE SCRUTINY OF THE BREAK UP DETAILS OF MISC ELLANEOUS EXPENDITURE CITED ABOVE, WE NOTICE THAT THESE EXPEN SES WOULD HAVE BEEN INCURRED NOT ONLY IN CONNECTION WITH THE MISCE LLANEOUS INCOME BUT ALSO FOR THE ENTIRE BUSINESS OPERATIONS OF THE ASSESSEE. HENCE, THE VIEW OF THE ASSESSING OFFICER THAT THE ABOVE SA ID EXPENSES WERE INCURRED FOR THE PURPOSE OF EARNING MISCELLANEOUS I NCOME PRIMA FACIE APPEARS TO BE INCORRECT. HOWEVER, IT WAS POINTED OU T BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE DID N OT FURNISH THE ABOVE SAID BREAK UP DETAILS OF MISCELLANEOUS EXPEND ITURE TO THE ASSESSING OFFICER AND THE LEARNED CIT (A) ALSO DID NOT CONFRONT THESE DETAILS WITH THE ASSESSING OFFICER. ACCORDINGLY, IT WAS PLEADED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE IMPUGN ED ISSUE SHOULD BE REEXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF BREAK UP DETAILS FURNISHED BY THE ASSESSEE BEFORE THE LEARNED CIT (A ). WE FIND MERIT WITH THE SAID PLEA OF THE LEARNED DEPARTMENTAL REPR ESENTATIVE. THE LEARNED CIT (A), IN OUR VIEW, SHOULD HAVE CALLED FO R A REPORT FROM THE ASSESSING OFFICER ON THE BREAK UP DETAILS FURNISHED BY THE ASSESSEE BEFORE HIM FOR THE FIRST TIME. IN VIEW OF THE ABOVE , WE SET ASIDE THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE AND REST ORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO E XAMINE THE ISSUE OF ITA NO.188 OF 2008 OTS ADVERTISING P LTD VIJAYAWADA PAGE 4 OF 4 ALLOWABILITY OF MISCELLANEOUS EXPENDITURE AFRESH, A FTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT M EMBER PVV/SPS VISAKHAPATNAM, DATE: 18-02-2011 COPY TO 1 THE IT O WARD - 2(1) VIJAYAWADA 2 M/S OTS ADVERTISING PVT. LTD., 40-6-24, HOTEL KHA NDARI LANE, VENKATESWARAPURAM, VIJAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM