M/s. Mentor Knowledge Management Pvt. Ltd., Ahmedabad V. The Income Tax Officer, Ward-4(1), Baroda

ITA 1938/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8284 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 25-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: ANIL R SHAH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH SMC, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA.NO.1938/AHD/2014 / ASSTT.YEAR : 2011-12 M/S.MENTOR KNOWLEDGE MANAGEMENT P.LTD. 505-B-WING MANUBHAI TOWER SAYAJIGUNJ, BARODA PAN : AAGCM 0536 J VS ITO, WARD - 4(1) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH, AR REVENUE BY : SHRI SANTOSH KARNANI, SR.DR / DATE OF HEARING : 12/10/2017 / DATE OF PRONOUNCEMENT: 24/10/2017 !'/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A)-III, BARODA DATED 12.5.2014 PASSED FOR THE ASSTT.YEAR 20 11-12. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF R S.2,47,507/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30.9.2011 ELECTRONICALLY AND DECLARED TOTAL INCO ME AT RS.5,99,020/-. AT THE RELEVANT TIME, THE ASSESSEE WAS ENGAGED IN THE BUSI NESS OF IMPARTING EDUCATIONAL COURSES. IT HAS COLLECTED FEES FROM ST UDENTS AND IN SOME OF THE CASES, IT HAS TO REFUND FEES. THE LD.AO OBSERVED T HAT THE ASSESSEE WAS NOT ITA NO.1938/AHD/2014 2 UNDER OBLIGATION TO REFUND FEES, AND THEREFORE, HE DISALLOWED CLAIM OF THE ASSESSEE AT RS.2,47,507/-. APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET SUBMITTED THAT IN THE ASSTT.YEAR 2010-11 SIMILAR REFUND OF RS.1,58,000/- WAS MADE WHICH WAS DISALLOWED TO THE ASSESSEE. DISPUTE TRAVELLED UPTO THE TRIBUNAL, AND THE TRIBUNAL IN ITA NO.64/AHD/2014 HAS ALLOWED CLAIM OF THE ASSESSEE. HE TOOK US THROUGH ORDER OF THE TRIBUNAL AT PAGE NO.93 OF T HE PAPER BOOK. THE DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 5. I FIND THAT IN SIMILAR CIRCUMSTANCES, THE TRIBUN AL HAS ALLOWED DEDUCTION OF REFUND MADE BY THE ASSESSEE TO THE STUDENTS. TH E FINDING OF THE TRIBUNAL READS AS UNDER: 2. WE COME TO THE FORMER ISSUE OF DISALLOWANCE OF REFUND CLAIM OF RS.L.581ACS. THE ASSESSEE IS A COMPANY IMPARTING VA RIOUS EDUCATIONAL COURSES OF MS SPARTA LTD., NEW DELHI. THERE IS NO D ISPUTE THAT IT HAS SHOWN TOTAL COMMISSION INCOME OF RS.80,48,297/- ALO NGWITH NET PROFIT OF RS.5,23,151-. IT CLAIMED TO HAVE REFUNDED THE IM PUGNED SUM OF RS.1.581ACS TO VARIOUS STUDENTS WHOSE DETAILS ARE G IVEN IN PAGE 78 OF THE PAPER BOOK. NECESSARY MODE OF PAYMENT IS BY WAY OF BANKING CHANNEL. BOTH THE LOWER AUTHORITIES DENY THIS REFUN D AS AN EXPENDITURE CLAIMED AFTER CONCLUDING THAT THERE WAS NO SUCH OBL IGATION ON THE ASSESSEE TO INCUR THE SAID HEAD AS PER ITS AGREEMEN T WITH THE ABOVE ENTITY. THEY ARE FAIR ENOUGH IN NOT DISPUTING GENUI NENESS OF THE REFUND CLAIM. IT IS VERY MUCH EVIDENT FROM PERUSING THE C ASE FILE THAT THE EIGHT STUDENTS IN QUESTION SUBMITTED THEIR REFUND REQUEST TO ASSESSEE ONLY AT BARODA INSTEAD OF THE ABOVESTATED NEW DELHI BASED E NTITY. IT HAS ALREADY COME ON RECORD THAT IT IS THE ASSESSEE IN F ACT WHO IMPARTED THE EDUCATIONAL COURSE IN QUESTION TO THE SAID STUDENT AFTER RECEIVING INCOME. WE OBSERVE IN THESE PECULIAR FACTS THAT THE ABOVE REFUND AMOUNTS TO EXPENDITURE INCURRED WHOLLY AND EXCLUSIV ELY FOR ASSESSEE'S BUSINESS SO AS TO BE ALLOWED U/S.37 OF ACT SINCE IT WAS AN EFFORT TO ITA NO.1938/AHD/2014 3 GARNER GARNER MORE AND MORE MARKET GOODWILL. WE THE REFORE DELETE THIS FORMER DISALLOWANCE OF REFUND CLAIM AMOUNTING TO RS.1.581ACS. 6. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL , I ALLOW THE FIRST GROUND AND DELETE DISALLOWANCE OF RS.2,47,507/-. 7. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE A SSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ADHOC DISALLOWANCE OUT OF THE VARIOUS EXPENDITURE. 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT THE ASSESSEE HAS INCURRED EXPENDITURE OF RS.2,08,877/-. THE ASSESSEE FAILED TO BRING SUPPORTING DETAILS, THEREFORE, THE AO MADE ADHOC DISALLOWANCE AT 20% OF THE TOTAL EXPENDITURE. ON APPEAL, THE LD.CIT(A) HAS REDUCED THIS DISALLOWA NCE TO 10%. AFTER CONSIDERING THE ORDER OF THE LD.CIT(A), I AM OF THE VIEW THAT THE LD.CIT(A) HAS ALREADY REDUCED THE DISALLOWANCE TO A SUBSTANTI AL EXTENT. THE ASSESSEE COULD NOT POINT OUT ANY DEFECT IN THE ORDERS OF THE REVENUE AUTHORITIES. IT COULD NOT SUBMIT COMPLETE DETAILS IN SUPPORT OF ITS CLAIM. THEREFORE, ESTIMATED DISALLOWANCE IS JUSTIFIED. I DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 24 TH OCTOBER, 2017 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 24/10/2017