JAYBHARAT CREDIT LTD, MUMBAI V. ASST CIT (OSD) (8)(1), MUMBAI

ITA 1973/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84412 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 17-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LAV KUMAR
• Keywords: Gift; Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.1973/MUM/2013 (A.Y.2009-10) JAYABHARAT CREDIT LIMITED, 22, RAJABAHADUR MANSION, 4 TH FLOOR, MUMBAI SAMACHAR MARG, FORT, MUMBAI 400 023. PAN:AAACJ 0926B (APPELLANT ) VS. THE ASSTT. COMMISSIONER OF INCOME TAX 8(1),, ROOM NO.209, AAYKAR BHAVAN, M.K.ROAD, CHURCHGATE, MUMBAI 400 020. (RESPONDENT) APPELLANT BY : SHRI HARESH P. SHAH RESPONDENT BY : SHRI LA V KUMAR DATE OF HEARING : 17/12/2014 DATE OF PRONOUNCEMENT : 17 /12/2014 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-17, MUMBAI DATED 18/12/2014 FOR THE A SSESSMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1.THE GROUNDS MENTIONED HERE UNDER ARE WITHOUT PRE JUDICE TO ONE ANOTHER 1 ON THE FACTS AND CIRCUMSTANCES THE CASE THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) 17 HAS FAILED TO APPRECIATE THAT THE APPE LLANT HAD INCURRED EXPENSES IN FURTHERANCE OF LEGITIMATE BUSINESS INTEREST.. 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 17 HAS FAILED TO APPRECIATE THE FACT THAT THE IT IS CUSTOMARY PRACTICE IN INDIA TO GIVE GIFTS TO ITS VALUABLE CUSTOMERS AT THE TIME OF DIWALI. 3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 17 FAILED TO APPRECIATE THE FACT THAT EXEMPT INCOME EARNED BY THE APPELLANT IS ONLY RS.15 2/= AND DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT 1961 BEING RS.3,7 6,176/=. IT IS NOT JUSTIFIED TO DISALLOW RS3,76,176/= AGAINST EXEMPT INCOME OF RS15 2/= ITA NO.1973/MUM/2013 (A.Y.2009-10) 2 2. FIRST TWO GROUNDS RELATE TO DISALLOWANCE OF BUSI NESS PROMOTION EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT A SUM OF RS.5,23,025/- WAS CLAIMED UNDER MISCELLANEOUS EXPEN SES WHICH INCLUDE THE DIWALI CUSTOMARY GIFTS TO THE CUSTOMERS AND BANKERS. FROM THE DETAILS FILED , THE AO NOTICED THAT MAJORITY OF THE VOUCHERS WERE PREPARED IN THE NAME OF ONE OF THE DIRECTORS AND THUS, HE OBSERVED THAT ASSESSEE WAS N OT ABLE TO ESTABLISH THE NEXUS BETWEEN THE EXPENSES INCURRED AND THE BUSINESS OF T HE ASSESSEE. THE EXPLANATION FILED BY THE ASSESSEE WAS GENERAL IN NATURE AND IT WAS FOR THE ASSESSEE TO PROVE THE EXPENDITURE. SINCE ASSESSEE HAS FAILED TO DO SO HE DISALLOWED THE ENTIRE AMOUNT. LD. CIT(A) HAS UPHELD THE DISALLOWANCE ON THE BASIS OF HIS EARLIER ORDER VIDE WHICH DISALLOWANCE WAS CONFIRMED. ONE OF THE REASONS FOR UPHOLDING DISALLOWANCE WAS THAT SOME GOLD COINS AND SILVER LAGDI WERE ALSO GI VEN AS GIFT WHICH WERE ALSO CLAIMED AS MISCELLANEOUS EXPENDITURE. 3. ON THESE FACTS IT WAS SUBMITTED BY LD. AR THAT L D. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE. HE SUBMITTED THAT LD. CIT(A) HAS SIMPLY RELIED UPON THE EARLIER YEARS EXPENSES, WHEREAS IN THE CURRENT YEAR THE GIFT GIVEN WERE NOT IN THE SHAPE OF GOLD AND SILVER COINS. LD. AR INVITED OUR ATTENTION TO THE DETAILS WHICH ARE SUBMITTED IN THE PAPER BOOK AND IT WAS SUBMITTED T HAT OUT OF TOTAL EXPENDITURE OF RS.5,23,025/- GIFTS WERE ONLY AMOUNTING TO RS.1,86, 551/- AND REST OF THE AMOUNT OF RS.3,36,474/- WAS PAID TO THE HOTEL IN RESPECT OF STAY OF DIRECTORS AND EMPLOYEES OF THE ASSESSEE. THUS, IT WAS PLEADED BY HIM THAT DI SALLOWANCE CONFIRMED BY LD. CIT(A) SHOULD BE DELETED AND APPROPRIATE RELIEF SHOULD BE GIVEN TO THE ASSESSEE. 4. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR T HAT AO HAS RECORDED A FINDING THAT ACCORDING TO THE VOUCHERS ASSESSEE COULD NOT P ROVE THE INCURRENCE OF EXPENDITURE FOR THE PURPOSE OF BUSINESS. THUS, IT WAS SUBMITTED BY LD. DR THAT DISALLOWANCE HAS RIGHTLY BEEN MADE BY AO AND IT H AS RIGHTLY BEEN CONFIRMED BY LD. CIT(A). ITA NO.1973/MUM/2013 (A.Y.2009-10) 3 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. ACCORDING TO DETAILS FILED BEFORE US O F THE MISCELLANEOUS EXPENSES OF RS.5,23,025/-, ONLY A SUM OF RS.1,86,551/- IS INCUR RED ON GIFTS. KEEPING IN VIEW ALL THESE DETAILS WHICH ARE FILED ALONGWITH VOUCHERS, WE ARE OF THE OPINION THAT DISALLOWANCE IN ITS ENTIRETY COULD NOT BE MADE AND IT WILL MEET THE ENDS OF JUSTICE IF DISALLOWANCE TO THE EXTENT OF 20% OF TOTAL SUM OF R S.5,23,025/- IS UPHELD AND THUS, THE DISALLOWANCE IS WORKED OUT AT RS.1,04,605/-, W HICH WE UPHOLD AND REST OF THE DISALLOWANCE IS DELETED. GROUND NO. 1 & 2 ARE PART LY ALLOWED. 6. GROUND NO.3 WAS NOT PRESSED , THEREFORE, THE SAM E IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN T HE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 17/12/2014 ! ' #$ % &'( 17/12/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 17/12/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS