M/s. Arihant Capital Markets Ltd., Indore V. The ACIT., Indore

ITA 195/IND/2010

• Counselvise Citation: 19522714 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR MITRA
• Assessee Lawyers: RANJAN AGRAWAL CAS
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM ITA NOS.194 TO 196/IND/2010 A.YS. 2004-05 TO 2006-07 M/S. ARIHANT CAPITAL MARKETS LTD., INDORE PAN - AABCA 6832 G C/O ARORA BANTHIA & TULSIYAN, SILVER ARC PLAZA, 6 TH FLOOR, 20/1, NEW PALASIA, INDORE APPELLANT VS. ACIT, CIRCLE-1(1), INDORE RESPONDENT APPELLANT BY S/SHRI AJAY TULSIYAN & RANJAN AGRAWAL, CAS RESPONDENT BY SHRI PRADEEP KUMAR MITRA, SR. DR O R D E R PER R.C. SHARMA, A.M. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE DIFFERENT ORDER OF LD. CIT(A)-II, INDORE, DATED 20. 1.2010, 4.2.2010 & 4.2.2010 FOR THE AYS 2004-05, 2005-06 & 2006- -: 2: - 2 07, RESPECTIVELY, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. ACT, 1961. 2. IN ITA NO.194/IND/2010 FILED BY THE ASSESSEE FOR TH E AY 2004-05, THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT THE LD. CIT(A) ERRED IN NOT ADMITTING THE ADDITIONAL GROUND. 2. THAT THE LD. CIT(A) ERRED IN NOT DIRECTING THE AO TO ALLOW ADJUSTMENT OF UNABSORBED LOSSES OF EARLIER YEARS. 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- UNDER THE HEAD TRAVELING & CONVEYANCE EXPENSES. 4. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.42,000/- UNDER THE HEAD MISCELLANEOUS EXPENSES. 5. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.35,000/- UNDER THE HEAD COMMUNICATION EXPENSES. 3. IN ITA NO.195/IND/2010 FILED BY THE ASSESSEE FOR T HE AY 2005-06, THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- UNDER THE HEAD COMMUNICATION INCLUDING V-SAT EXPENSES. -: 3: - 3 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.40,000/- UNDER THE HEAD MISCELLANEOUS EXPENSES. 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.75,000/- UNDER THE HEAD TRAVELING & CONVEYANCE EXPENSES. 4. IN ITA NO.196/IND/2010 FILED BY THE ASSESSEE FOR T HE AY 2006-07, THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1.THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,91,046/- UNDER SECTION 14A OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT(A) ERRED IN NOT RESTRICTING THE DISALLOWANCE TO RS.16,523/- 2. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- UNDER THE HEAD OFFICE EXPENSES. 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- UNDER THE HEAD MISCELLANEOUS EXPENSES. 4. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.50,000/- UNDER THE HEAD REPAIR & MAINTENANCE EXPENSES. -: 4: - 4 5. AS COMMON GROUNDS ARE INVOLVED IN ALL THE YEARS, AL L THE APPEALS WERE HEARD TOGETHER AND ARE NOW BEING D ISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. IN THE ASSESSMENT YEARS 2004-05 AND 2005-06, THE ASSESSEE HAS TAKEN GROUND FOR DISALLOWANCE OF TRAVELLING AND CON VEYANCE EXPENSES TO THE EXTENT OF RS. 50,000/- IN THE ASSES SMENT YEAR 2004-05 AND RS. 75,000/- DURING THE ASSESSMENT YEAR 2005- 06. WE HAD GONE THROUGH THE MATERIAL PLACED BEFORE US. THE ASSESSEE IS A MEMBER OF STOCK EXCHANGE AND IS ALSO A DEPOSITORY PARTICIPANT OF NATIONAL SECURITY DEPOSIT ORY LIMITED. IT HAS HAVING MAIN SOURCE OF INCOME FROM BROKERAGE AND COMMISSION. OUT OF THE EXPENSES CLAIMED ON TRAVELIN G AND CONVEYANCE, THE AO DISALLOWED PART OF THE EXPENDITU RE BY OBSERVING THAT EXPENSES ARE DEBITED BY SELF-PREPARE D VOUCHERS. KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS A ND THE TRAVELLING INVOLVED THEREIN, WE DIRECT THE AO TO RE STRICT THE DISALLOWANCE TO THE EXTENT OF 5 % OF THE EXPENDITUR E CLAIMED BY THE ASSESSEE. WE DIRECT ACCORDINGLY. -: 5: - 5 6. THE AO HAS ALSO DISALLOWED PART OF THE MISCELLANEOU S EXPENDITURE ON THE PLEA THAT EXPENDITURE IS NOT SUP PORTED BY PROPER BILLS AND VOUCHERS. NO SPECIFIC EXPENDITURE WHICH ARE NOT SUPPORTED BY BILLS AND VOUCHERS WERE IDENTIFIED BY THE ASSESSING OFFICER AND HE HAS MADE THIS AD HOC DISAL LOWANCE. WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE AT 5 % OF THE EXPENDITURE SO INCURRED AND CLAIMED UNDER THE HEAD MISC. EXPENSES. 7. IN THE ASSESSMENT YEAR 2004-05, THE AO HAS DISALLOWED RS. 35,000/- IN RESPECT OF EXPENDITURE I NCURRED ON COMMUNICATION INCLUDING V-SET EXPENSES BY OBSERVING THAT PART OF THE EXPENDITURE WAS ON PERSONAL ACCOUNT. TH E ASSESSEE IS A COMPANY IN VIEW OF THE DECISION OF GUJARAT HIG H COURT IN THE CASE OF SAYAJI IRON AND ENGINEERING CO. LTD., 1 21 TAXMAN 43, NO DISALLOWANCE ON ACCOUNT OF PERSONAL USE CAN BE MADE IN CASE OF ASSESSEE BEING AN INCORPORATED ENTITY. A CCORDINGLY, WE DIRECT THE AO TO DELETE THE DISALLOWANCE OF EXPE NSES MADE ON ACCOUNT OF PERSONAL USE. 8. IN THE ASSESSMENT YEAR 2004-05, THE ASSESSEE HAS ALLEGED AOS ACTION FOR NOT ADJUSTING UNABSORBED LO SSES OF -: 6: - 6 EARLIER YEARS. WE HAVE GONE THROUGH THE ORDERS AND FOUND THAT THE ASSESSEE WAS HAVING UNABSORBED LOSSES OF EARLIE R YEARS. ACCORDINGLY, WE DIRECT THE AO TO VERIFY THE RECORD AND FIND OUT THE CORRECT AMOUNT OF UNABSORBED LOSSES OF EARLIER YEARS AS PER THE ASSESSMENT ORDERS PASSED IN RESPECT OF THOSE YE ARS AND CONSIDER THE ASSESSEES CLAIM FOR ADJUSTMENT OF SUC H LOSSES AGAINST THE PROFIT OF CURRENT YEAR AS PER LAW. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ALL T HE THREE YEARS ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COUR T ON 31 ST MAY, 2011. SD/- SD/- (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST MAY, 2011. CPU* 315