SHRIRAM CHITS (MAHARASHTRA) LTD, MUMBAI V. DCIT CIR 3(3), MUMBAI

ITA 1902/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9991 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

1 ITA 1902/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.1902/MUM/2015 (ASSESSMENT YEAR: 2010-11) M/S SHRIRAM CHITS (MAHARASHTRA) LTD, A 418- 419, BEZZOLA COMPLEX, OPP. SUMAN NAGAR, SION-TROMBAY ROAD, CHEMBUR(E), MUMBAI 400 071 PAN : AAECS7592Q VS DCIT, CIRCLE 3(3), MUMBAI APPELLANT BY SHRI PRAKASH JOTWANI REVENUE BY SHRI V JUSTIN DATE OF HEARING 22-01-2018 DATE OF PRONOUNCEMENT 28-02-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE CIT(A)-8, MUMBAI DATED 22-12-2014 AND IT PERTAINS T O AY 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY ENGAGED IN THE BUSINESS OF MANAGEMENT OF ASSETS OF MUTUAL F UNDS FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 12-10-2010 DECLARING TO TAL INCOME AT RS.1,24,16,820. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) ON 26- 03-2013 DETERMINING THE TOTAL INCOME AT RS.6,97,26, 980 INTERALIA MAKING ADDITION TOWARDS REVERSAL OF PROVISION, SERVICE TAX EXPENSES AND INTEREST 2 ITA 1902/MUM/2015 ON SERVICE TAX EXPENSES, DISALLOWANCE OF FOREMAN CO MMISSION, ADDITION TOWARDS UNRECONCILED AIR INFORMATION AND ADHOC DISA LLOWANCE OF 50% OF STAFF MEETING EXPENSES. 3. AGGRIEVED BY THE ORDER, ASSESSEE PREFERRED APPEA L BEFORE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS FILED ELABORATE WRI TTEN SUBMISSIONS TO CHALLENGE ALL ADDITIONS MADE BY THE AO. THE CIT(A) , VIDE HIS ORDER DATED 22-12-2014 PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE WHEREIN HE HAS DELETED ADDITION MADE BY THE AO TOWARDS REVE RSAL OF PROVISION, SERVICE TAX EXPENSES AND INTEREST ON SERVICE TAX EX PENSES, FOREMAN COMMISSION; HOWEVER, CONFIRMED ADDITION MADE BY THE AO TOWARDS ADHOC DISALLOWANCE OF 50% OF STAFF MEETING EXPENSES . THE RELEVANT PORTION OF THE ORDER OF CIT(A) INSOFAR AS DISALLOWA NCE OF STAFF MEETING EXPENSES IS REPRODUCED BELOW:- GROUND NO. 4 I FIND THAT THE AO AT PARA 9.2 OF THE ASSESSMENT OR DER HAD GIVEN AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AS TO WHY EXPENDITURE CLAIMED U NDER THE HEAD 'STAFF MEETING EXPENSES' SHOULD NOT BE DISALLOWED IN ABSENCE OF AN Y SATISFACTORY EXPLANATION/EVIDENCES. IN RESPONSE TO IT, THE ASSES SEE FILED A REPLY DATED 19/3/2013 WHICH HAS BEEN EXTRACTED AT PARA 9.3 OF THE ASSESSM ENT ORDER. I FIND THAT THE REPLY GIVEN BY THE ASSESSEE IS GENERAL IN NATURE WITHOUT ANY SUPPORTING EVIDENCE. THE ASSESSEE FAILED TO FILE VOUCHERS/BILLS BEFORE THE A O. THE LEARNED A/R OF THE APPELLANT FAILED TO FILE THE RELEVANT VOUCHERS/BILLS BEFORE M E DURING THE APPELLATE PROCEEDINGS. IN VIEW OF THE ABOVE, RELYING ON THE DECISION IN TH E CASE OF CIT V. CALCUTTA AGENCY LTD. 19 ITR 191 (SC); CIT V. TRANSPORT CORPORATION OF INDIA LTD. 256 ITR 701(AP) AND CIT V. IMPERIAL CHEMICAL INDUSTRIES (I) LTD. 74 ITR 17 THE DISALLOWANCE OF RS.46,54,789/- MADE BY THE AO IS CONFIRMED. 4. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD . CIT(A) WAS ERRED IN CONFIRMING ADDITION MADE BY THE AO TOWARDS ADHO C DISALLOWANCE OF 50% OF STAFF MEETING EXPENSES DESPITE FILING DETAIL S OF EXPENSES WHICH 3 ITA 1902/MUM/2015 INCLUDES CONVEYANCE ALLOWANCE PAID TO STAFF BUT WRO NGLY POSTED UNDER THE HEAD STAFF MEETING EXPENSES. THE ASSESSEE FURT HER SUBMITTED THAT IT HAS FURNISHED NECESSARY RECONCILIATION OF SALARY AS PER GROSS SALARY BILLS TO SALARY EXPENSES DEBITED TO THE P&L ACCOUNT WHICH INCLUDES CONVEYANCE ALLOWANCE PAID TO STAFF WHICH IS PART OF STAFF MEETING EXPENSES. HOWEVER, THE AO IGNORED THE EVIDENCES FI LED BY THE ASSESSEE AND MADE ADHOC DISALLOWANCE OF 50% OF STAF F MEETING EXPENSES. THEREFORE, THE ISSUE MAY BE SENT BACK TO THE AO FOR FURTHER VERIFICATION IN THE LIGHT OF EVIDENCES FILED BY THE ASSESSEE. 5. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE ONLY ISSUE CAME UP FOR OUR CONSIDER ATION IS ADHOC DISALLOWANCE OF 50% STAFF MEETING EXPENSES. THE AO DISALLOWED STAFF MEETING EXPENSES ON THE GROUND THAT THE ASSESSEE FA ILED TO FURNISH ANY EVIDENCE TO JUSTIFY STAFF MEETING EXPENSES EVEN THO UGH SUCH EXPENSES HAS BEEN DRASTICALLY INCREASED FROM RS.2,38,825 TO RS.93,03,579 WHEN COMPARED TO PREVIOUS FINANCIAL YEAR. IT IS THE CON TENTION OF THE ASSESSEE THAT STAFF MEETING EXPENSES INCLUDE CONVEYANCE ALLO WANCE OF SALARY ACCOUNT OF RS.83,19,566 WHICH WAS WRONGLY GROUPED U NDER STAFF MEETING EXPENSES ACCOUNT. IF CONVEYANCE ALLOWANCE OF RS.83 ,19,566 IS EXCLUDED, ACTUAL STAFF MEETING EXPENSES COMES TO RS .9,90,012. 4 ITA 1902/MUM/2015 THEREFORE, THERE IS NO REASON FOR THE AO TO MAKE AD HOC DISALLOWANCE OF 50% OF EXPENSES. 7. HAVING HEARD BOTH THE SIDES, WE FIND MERITS IN T HE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS FURNI SHED STATEMENT SHOWING RECONCILIATION OF SALARY AND ALLOWANCES TO STAFF AS PER SALARY STATEMENT FOR THE YEAR AND SALARY EXPENSES DEBITED IN THE P&L ACCOUNT AS PER WHICH CONVEYANCE ALLOWANCE IS INCLUDED IN ST AFF MEETING EXPENSES WHICH IS PART OF SALARY PAID AS CONVEYANCE ALLOWANCE TO THE STAFF. HOWEVER, WE DO NOT KNOW WHETHER RE-CONCILIA TION FILED BY THE ASSESSEE IS FILED BEFORE THE AO AT THE TIME OF ASSE SSMENT OR NOT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE I SSUE NEEDS TO BE RE- EXAMINED BY THE AO IN THE LIGHT OF EVIDENCE FILED B Y THE ASSESSEE. IF THE RECONCILIATION FILED BY THE ASSESSEE IS FOUND TO BE CORRECT, THEN THE AO IS DIRECTED TO DELETE ADDITION MADE TOWARDS ADHOC DISA LLOWANCE OF 50% OF STAFF MEETING EXPENSES. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28 TH FEBRUARY, 2018 PK/- 5 ITA 1902/MUM/2015 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI