M/s. Semitronik Industries, Gandhinagar V. The Income tax Officer, Ward-4, Gandhinagar

ITA 1913/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2074 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PF JAIN
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI N.S.SAINI, A.M. ) I.T.A. NO. 1913/AHD./2009 ASSESSMENT YEAR : 2006-07 SEMITRONIK INDUSTRIES, GANDHINAGAR -VS.- THE I.T.O., WARD-4, GANDHINAGAR (PAN : AAGFS 1212G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.F.JAIN RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR .D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 13.03.2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), GANDH INAGAR CONFIRMING THE AD HOC DISALLOWANCES OF BUSINESS EXPENSES AS DETAILED BELO W FOR THE ASSESSMENT YEAR 2006-07. I) OFFICE EXPENSES RS. 7,695/- II) MISC EXP. RS. 11,259/- III) MISC. REPAIRS RS. 5,890/- IV) TRAVELLING EXP. RS. 63,590/- 2. AT THE TIME OF HEARING BEFORE US, SHRI P.F. JAIN APPEARED ON BEHALF OF THE ASSESSEE AND POINTED OUT THAT ALL THE DETAILS WERE DULY FURNISHE D BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 10.03.2009 WHICH HAS BEEN REPRODUCED BY THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER, AS UNDER: ' THE APPELLANT IS ENGAGED IN MFG. AND TRADING OF CON TROL PANNEL AND MACHINERY PARTS. BANKS OF ACCOUNTS ARE AUDITED AN D EXPENSES ARE FULLY VOUCHED. DURING COURSE OF HEARING VARIOUS DETAILS AS CALLED FOR WERE DULY SUBMITTED. HOWEVER DISALLOWANCES OUT OF VARIOUS HAVE BEEN MADE ON GENERAL BASIS AS DETAILED BELOW. 1. OFFICE EXPENSES - FULL DETAILS OF OFFICE EXPEN SE OF RS. 76954/- ALONG WITH NARRATION OF EXPENSES WERE DULY FURNISHED THE SAM E ARE FULLY VOUCHED BUT 10% OF THIS EXPENSE OF RS.7695/- HAS BEEN DISALLOWED ON THE GROUND OF ABSENCE OF FULL DETAILS WHEREAS THE ACCOUNT SUBMITTED CONTAI NED THE FULL DETAILS. COPY OF ACCOUNT IS ENCLOSED HEREWITH. 2. MISC. EXPENSES - DURING THE YEAR MISC EXPENSES OF RS. 112588/- HAS BEEN INCURRED WHEREAS IT HAS BEEN TAKEN AT WRONG FIGUR E OF RS. 121588/- AND 10% 2 THERE FROM HAS BEEN DISALLOWED EVEN THOUGH THE AC COUNT SUBMITTED CONTAINED DATE WISE DETAILS OF EXPENSES SUPPORTED BY VOUCHE R. COPY OF ACCOUNT IS ENCLOSED HEREWITH. 3. SUBSCRIPTION EXP. - THE ASSESSES HAS PAID OF R S.5000/- ONLY TOWARDS SUBSCRIPTION EXP. WHEREAS THE AC HAS MENTIONED T HE SAME AT WRONG FIGURE OF RS.80522/- AND HAS DISALLOWED RS.8050/- FROM I T BEING 10% FROM IT. THE AMOUNT OF RS.80522/- RELATES TO STATIONERY AND PR INTING EXP. COPY OF ACCOUNT IS ENCLOSED HEREWITH. 4. MISC. REPAIRING EXP. - THE ASSESSEE HAS INCURR ED OF RS.29451/- WHICH RELATES TO MAINTENANCE OF FACTORY GARDEN AND THE EXPENSES ARE FULLY VOUCHED. THE DETAILED ACCOUNT AS GIVEN IS ENCLOSED. OUT OF THIS DISALLOWANCE AT THE RATE OF 20% OF RS. 5890/-HAS BEEN MADE. COPY OF ACCOUN T IF ENCLOSED HEREWITH. 5. RENT EXP. - THE ASSESSES HAS CLAIMED RENT EX P. OF RS.41000/- AS PER LAST YEAR THE EXPENSE RELATES TO RENT GIVEN TO R.K. SH AHU FOR BRANCH OFFICE AT CHANDIGANDH. COPY OF ACCOUNT IS ENCLOSED HEREWIT H. 6. PACKING EXP. - THE EXPENSES TOWARDS PACKING AR E OF RS.107160/- AND SAME ARE FULLY VOUCHED. COPY OF ACCOUNT IS ENCLOSED HE REWITH. 10% OF IT AT RS.10710/- HAS BEEN DISALLOWED. 7. FACTORY CARE EXP. - DURING THE YEAR ASSESSEE H AS INCURRED FACTORY EXP. OF 66815/- ON ITS MAINTENANCE. 20% OF IT HAS BEEN DI SALLOWED AT RS.13360/- WITHOUT APPRECIATING THE FACTS. EXPENSES ARE FOR BUSINESS ARID NO DISALLOWANCE IS WARRANTED. COPY OF ACCOUNT IS ENCLOSED HEREWIT H. 8. TRAVELING EXP. - THE ASSESSEE HAS INCURRED TRA VELING EXP. FOR BUSINESS PURPOSE OF RS.851071 OUT OF WHICH RS.215198/- HAS BEEN RECOVERED LEAVING NET EXP. OF RS. 635853/- DATE WISE DETAILS HAS BEEN G IVEN AND THE EXPENSES ARE FULLY VOUCHED. HOWEVER 10% OUT OF IT OF RS.63590/ - HAS BEEN DISALLOWED. FROM THE DETAILS OF ALL THE ABOVE EXPENSES IT WIL L BE APPRECIATED THAT THE EXPENSES INCURRED FIRE FOR BUSINESS PURPOSES AND THE SAME ARE FULLY VOUCHED AND DULY AUDITED AND THEREFORE THERE WAS NO JUSTI FICATION FOR DISALLOWANCE OF PART EXPENSES WHEN FULL DETAILS IN THIS REGARD IS AVAILABLE AND DULY MENTIONED IN THE COPIES OF ACCOUNTS OF EXPENSES DULY FURNIS HED. THEREFORE THE APPELLANT RESPECTFULLY PRAYS FOR THE ALLOWANCE OF FULL EXPE NSES. KINDLY CONSIDER THE APPEAL IN ITS PROPER PERSPECTIVE AND OBLIGE. ' 2.1 COUNSEL OF THE ASSESSEE ALSO PRODUCED A COPY OF THE RETURN OF FRINGE BENEFITS IN FORM NO.3B FOR THE ASSESSMENT YEAR 2006-07 FILED WHEREIN THE ASSESSEE HAS PAID TAX AMOUNTING TO RS.69,330/-. IT WAS CONTENDED THAT THE ASSESSEE HAS PAID FRINGE BENEFITS IN RESPECT OF USE OF TELEPHONE REPAIRS, CONVEYANCE, TOUR AND TRAVEL, ETC . THEREFORE, THERE IS NO JUSTIFICATION 3 WHATSOEVER FOR MAKING AD HOC DISALLOWANCE OUT OF VARIOUS EXPENSES WHICH WERE DU LY CONSIDERED FOR THE PURPOSE OF PAYING FRINGE BENEFIT TAX. 3. ON THE OTHER HAND, SHRI SAMIT TEKRIWAL, SR.D.R. APPEARED ON BEHALF OF THE REVENUE AND VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). HE SUBMITTED THAT COMPLETE DETAILS OF EXPENSES WERE FURNISHED. THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER IS RIGHTLY CONFIRMED BY THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS). 4. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT VIDE LETTER DAT ED 10.03.2009, THE ASSESSEE HAS FURNISHED THE DETAILS FOR BETTER APPRECIATION OF FACTS. THE ASSES SEE HAS ALSO PAID FRINGE BENEFIT TAXES AMOUNTING TO RS. 69,330/- FOR THE ASSESSMENT YEAR U NDER APPEAL. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS MADE AD HOC DISALLOWANCES WITHOUT POINTING OUT ANY EXPENSES IN CURRED FOR NON-BUSINESS PURPOSES. THEREFORE, AD HOC DISALLOWANCES MADE BY THE ASSESSING OFFICER IN RESPECT OF AFORESAID FOUR ITEMS AND CONFIRMED BY LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) IS HEREBY DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.02.2011. SD/- SD/- (N.S.SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23/02/2011 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, 4) CIT CONCERNED, 5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMED ABAD TALUKDAR/SR.P.S. 4