CHANDRASHEKHAR R. MORE, MUMBAI V. ACIT 11(2), MUMBAI

ITA 1913/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4029 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 21-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T ROUMUAN PAITE
• Assessee Lawyers: MATHURDEV VASUDEVAN
• Keywords: Depreciation
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI , ! ! ! ! '! !, $ BEFORE SHRI SANJAY ARORA, A. M. AND SHRI VIJAY PAL RAO, J. M. ./ I.T.A. NO. 1913/MUM/2012 ( ' ( !)( ' ( !)( ' ( !)( ' ( !)( / / / / ASSESSMENT YEAR: 2008-09) CHANDRASHEKHAR R. MORE 2/52, SHRI GANESH SOCIETY DR. ANNIE BESANT ROAD, WORLI, MUMBAI-40 018 ' ' ' ' / VS. ASST. CIT-11(2), AAYAKAR BHAVAN, MUMBAI-400 018 * ./ + ./ PAN/GIR NO. ( *, / APPELLANT ) : ( -.*, / RESPONDENT ) *, / / APPELLANT BY : SHRI MATHURDEV VASUDEVAN -.*, 0 / / RESPONDENT BY : SHRI T. ROUMUAN PAITE '! 0 12 / // / DATE OF HEARING : 04.07.2013 3) 0 12 / DATE OF PRONOUNCEMENT : 26.07.2013 4 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI (CIT(A) FOR SHORT) DATED 16.01.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 19.10.2010. 2 ITA NO.1913/MUM/2012 (A.Y. 2008-09) CHANDRASHEKHAR R. MORE VS. ASST. CIT 2. THE APPEAL RAISES TWO ISSUES PER ITS TWO GROUNDS , WHICH WE SHALL TAKE UP IN SERIATIM. THE FIRST GROUND CONCERNS THE DISALLOWANC E OF BUSINESS PROMOTION EXPENSES, INCURRED AND CLAIMED IN THE SUM OF RS.1,62,934/-, D EBITED BY THE ASSESSEE TO THE INCOME AND EXPENDITURE ACCOUNT FOR THE RELEVANT YEAR; THE ASSESSEE BEING A PRACTICING CHARTERED ACCOUNTANT. WHILE THE ASSESSING OFFICER (A.O.) DISA LLOWED THE ASSESSEES CLAIM IN THE ABSENCE OF FAILURE TO SUPPORT ITS CLAIM WITH EVIDEN CE, THE LD. CIT(A) CONFIRMED THE SAME ON MERITS. THE DETAILS IN ITS RESPECT AS FURNISHED REVEALED THE SAID EXPENDITURE TO BE FOR PURCHASE OF GOLD COINS, RESTAURANT AND HOTEL BILLS, ETC., AND WHICH COULD NOT BE EXPLAINED IN TERMS OF ANY BUSINESS PURPOSE. AGGRIEVED, THE AS SESSEE IS IN SECOND APPEAL. 3. BEFORE US, IT WAS EXPLAINED BY THE LD. AR, THE A SSESSEES COUNSEL, THAT BESIDES ACCOUNTING AND AUDIT WORK, THE ASSESSEE IS ENGAGED IN PROVIDING FINANCIAL CONSULTANCY SERVICES, WHICH INCLUDES LOAN SYNDICATION FOR HIS C LIENTS. THE EXPENDITURE OF BUSINESS PROMOTION IS INCURRED TOWARD THIS AREA OF HIS PRAC TICE . HE WOULD FURTHER ELABORATE THAT, AS IS COMMON KNOWLEDGE, THE BANK MANAGERS OR OTHER OFFICIALS OF THE RELEVANT FINANCIAL INSTITUTIONS NEED TO BE OBLIGED TO SECURE BUSINESS AND BE SUCCESSFUL THEREIN, AND IT IS IN THIS RESPECT THAT THE EXPENDITURE ON PURCHASE OF GO LD COINS; HOTEL AND RESTAURANT BILLS, STOOD INCURRED. CLEARLY, OBLIGING PEOPLE TO OBTAIN AND SUCCEED IN BUSINESS, TO WHICH A PARALLEL WAS DRAWN BY THE LD. AR DURING HEARING, IS MORALLY DEPRECIABLE. EVEN SO, AS WE ARE CONCERNED WITH THE LEGALITY OF THE DISALLOWANCE , SOLICITING CLIENTS OR BUSINESS, EVEN AS OBSERVED DURING THE COURSE OF HEARING ITSELF, IS PR OHIBITED UNDER THE PROVISIONS OF THE CHARTERED ACCOUNTANTS ACT, 1949, WHICH CONTAINS A S EPARATE CHAPTER ON PROFESSIONAL CONDUCT, MUCH LESS FOR CONSIDERATIONS OTHER THAN ME RIT. FURTHER, WHERE AND TO THE EXTENT THE OFFICIALS TO WHOM THE GOLD COINS HAVE BEEN GIVE N OR STAND ENTERTAINED IN HOTELS OR RESTAURANTS ARE EMPLOYEES OF THE STATE OR OF A STAT E UNDERTAKING, THE SAME WOULD STAND TO FALL UNDER EXPLANATION TO SECTION 37(1) OF THE ACT INASMUCH AS SUCH CONS IDERATIONS OR PERSONAL GRATIFICATIONS ARE PROSCRIBED FOR ACCEPTAN CE BY PUBLIC SERVANTS. FURTHER, IT WAS SPECIFICALLY ENQUIRED BY THE BENCH OF THE LD. AR, I F HE COULD SHOW OF ANY OF THE EXPENSES AS HAVING BEEN INCURRED IN RENDERING PROFESSIONAL S ERVICES TO HIS CLIENTS, AND WHICH HE 3 ITA NO.1913/MUM/2012 (A.Y. 2008-09) CHANDRASHEKHAR R. MORE VS. ASST. CIT FAILED TO, AND WHICH WE IN FACT FIND NOT TO BE THE ASSESSEES CLAIM EVEN BEFORE THE AUTHORITIES BELOW. UNDER THE CIRCUMSTANCES, WE, THEREFORE, FIND NO INF IRMITY IN THE IMPUGNED DISALLOWANCE AND CONFIRM THE SAME. WE DECIDE ACCORD INGLY. 4. THE ONLY OTHER ISSUE, RAISED PER ITS GROUND NO.2 BY THE ASSESSEE, IS IN RESPECT OF DISALLOWANCE OF 20% OF VEHICLE MAINTENANCE EXPENSES AND DEPRECIATION ON MOTOR CAR, CLAIMED IN THE SUM OF RS.2,59,274/- AND RS.1,24,636 /- RESPECTIVELY. THE ASSESSEE BEING UNABLE TO EXHIBIT, WITH REFERENCE TO THE RECORD, TH AT THERE HAD BEEN NO PERSONAL, NON- BUSINESS USER OF THE VEHICLE/S, PART DISALLOWANCE T OWARD THE ESTIMATED EXPENDITURE FOR PERSONAL USER WAS MADE BY THE AO. THE SAME STOOD CO NFIRMED IN APPEAL, WITH THE LD. CIT(A) FINDING THE SAID ESTIMATION TOWARD NON-BUSIN ESS USER AS REASONABLE. THE ASSESSEE APPEALS AGAINST THE CONFIRMATION OF DISALLOWANCE OF DEPRECIATION. 5. BEFORE US, THE ASSESSEE WOULD EMPHASIZE ON THE I MPERMISSIBILITY IN LAW FOR SUCH DISALLOWANCE. EVEN AS CLARIFIED DURING THE COURSE O F HEARING ITSELF, A REFERENCE TO SECTION 38(2) OF THE ACT WOULD CLEARLY SHOW THAT THE A.O. C AN DETERMINE, HAVING REGARD TO THE USER OF, AMONG OTHERS, PLANT AND MACHINERY, FOR PUR POSES OF BUSINESS, I.E., WHERE THE SAME IS NOT USED EXCLUSIVELY FOR THE PURPOSES OF THE ASS ESSEES BUSINESS OR PROFESSION, THE EXTENT TO WHICH THE EXPENDITURE ON REPAIR, RENT AND DEPRECIATION THEREON IS TO BE ALLOWED. THE ASSESSEE ADMITTEDLY HAS NOT BEEN ABLE TO SHOW T HAT THERE HAS BEEN NO USER OTHER THAN FOR PROFESSIONAL PURPOSES. IN FACT, THERE IS NO CLA IM IN THIS REGARD EVEN BEFORE THE AUTHORITIES BELOW. ON THE CONTRARY, THE ASSESSEE TA CITLY ADMITS OF A NON-BUSINESS USER INASMUCH AS HE DOES NOT DISPUTE THE SIMILAR DISALLO WANCE OF EXPENSES ON THE MAINTENANCE OF THE MOTOR CAR/S, SO THAT THE ASSESSEES CHALLENG E IS RESTRICTED TO THE LEGAL COMPETENCE OF THE DISALLOWANCE, QUA WHICH ALONE THE MATTER WAS ARGUED BEFORE US. WE HA VE ALREADY CLARIFIED QUA THE LEGAL VALIDITY OF THE IMPUGNED DISALLOWANCE. E VEN ON QUANTUM WE FIND THE ESTIMATE, EVEN AS FOUND BY THE LD. CIT(A), AS R EASONABLE. UNDER THE CIRCUMSTANCES, WE DECLINE TO INTERFERE WITH THE SAME. WE DECIDE AC CORDINGLY. 4 ITA NO.1913/MUM/2012 (A.Y. 2008-09) CHANDRASHEKHAR R. MORE VS. ASST. CIT 6. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 5 16 ' (51 0 5 0 1 78 ORDER PRONOUNCED IN THE OPEN COURT ON JULY 26, 2013 SD/- S D/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; 9' DATED : 26.07.2013 !.'. ./ ROSHANI , SR. PS 4 0 -1' :')1 4 0 -1' :')1 4 0 -1' :')1 4 0 -1' :')1/ COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT 3. ; ( ) / THE CIT(A) 4. ; / CIT - CONCERNED 5. '!>? -1' , , / DR, ITAT, MUMBAI 6. ?@( A / GUARD FILE 4' 4' 4' 4' / BY ORDER, B BB B/ // / 7 7 7 7 (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI