ACIT, Meerut V. Smt. Indira Rani Gupta, Meerut

ITA 1983/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65807 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Business income; Revenue expenditure
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO. 1983/DEL/2011 ASSESSMENT YEAR: 2004- 2005 ACIT VS. INDIRA RANI GUPTA, CIRCLE - 1 C/O M/S. INDIRA TRADERS, MEERUT 155, NEW MOHANPURI MEERUT ACUPG15768 (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI SAT PAL SING H, SR. DR RESPONDENT BY : SHRI K. SAMPATH, A DVOCATE ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLA TE ORDER RAISING THE TWO ISSUES. FIRSTLY AS TO WHETHER THE LD. CIT(A) HAS ER RED IN DELETING THE ADDITION OF RS. 10,000/- U/S 40A(3) OF THE ACT IGNO RING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GU RMUKH SINGH VS. ITO (1991) 191 ITR 667(SC) ? (GROUND NO.1). SECONDLY AS TO WHETHER THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 9, 19,621/- MADE ON ACCOUNT OF DISALLOWANCE OF PAYMENT MADE ON ACCOUNT OF HIRIN G OF TRUCKS ON AN ESTIMATE BASIS INVOKING THE PROVISIONS OF SECTION 4 4AE IGNORING THE PROVISION OF SECTION 44AA AND 44AB OF THE IT ACT ? (GROUND NO . 2) ITA NO. 1983/DEL/2011 2 2. GROUND NO. 1 THE RELEVANT FACTS ARE THAT T HE ASSESSEE HAD MADE PAYMENT OF RS. 50,000/- IN CASH FOR PURCHASING A C HILLING PLANT. THE AO DISALLOWED RS. 10,000/- OUT OF THE SAID AMOUNT U/S 40A(3( OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE THE LD. CIT(A) REMAINED THAT THE SUM OF RS. 50,000/- WAS SPENT IN PURCHASING A CHILLING PLA NT, WHICH IS NOT A REVENUE EXPENDITURE, HENCE IT SHOULD NOT BE TO FALL WITHIN THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IT WAS SUBMITTED THAT SECTION 40 DEALS WITH PAYMENTS NOT DEDUCTIBLE IN CERTAIN CIRCUMSTANCES, AND SINCE IT F ALLS WITHIN CHAPTER IV, I.E. COMPUTATION OF BUSINESS INCOME, THE AUTOMATIC INFER ENCE IS THAT THE SECTION TALKS OF REVENUE EXPENDITURE ONLY. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ATAR SINGH GURMUKH SINGH (SUPRA) WAS AL SO DISTINGUISHED BY THE ASSESEE WITH THIS SUBMISSION THAT THE INTENTION OF THE LEGISLATURE TO BRING ON THE STATUTE SECTION 40A(3) IS TO CURB ILLEGAL PAYME NTS AND BLACK MONEY WHICH AGAIN GOES TO SHOW THAT THE INTENDMENT HAS ES SENTIALLY BEEN TOWARDS REVENUE EXPENDITURE ONLY. BEING CONVENIENCED WITH T HESE SUBMISSIONS THE LD. CIT(A) HAS DELETED THE ADDITION OF SRS. 10,000/ - IN QUESTION. 3. IN SUPPORT OF THE GROUND, THE LD. DR HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. THE LD. AR ON THE OTHER HA ND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER ON THE ISSUE. HE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 4. HAVING GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND THE DECISION CITED, WE DO NOT FIND REASONS TO INTERFERE WITH THE FIRST APPELLATE ITA NO. 1983/DEL/2011 3 ORDER ON THE ISSUE. THERE IS NO DISPUTE THAT SECTIO N 40A (3) APPLIES TO EXPENDITURE WHICH IS REVENUE IN NATURE AND RESTRICT S ALLOWANCE OF DEDUCTION IN CASE OF CASH PAYMENT ONLY. HOWEVER IN THE PRESEN T CASE BEFORE US, THE ASSESSEE HAD NEITHER CLAIMED A REVENUE DEDUCTION NO R HAS MADE ANY REVENUE EXPENDITURE BUT HAD MADE A CAPITAL EXPENDIT URE OF RS. 50,000/- IN PURCHASING OF A CHILLING PLANT. IN ABSENCE OF REBUT TAL OF THESE MATERIAL FACTS, WE ARE NOT INCLINED TO INTERFERE THE FIRST APPELLAT E ORDER IN THIS REGARD. THE SAME IS UPHELD. THE ISSUE IS DECIDED IN FAVOUR OF T HE ASSESSEE. GROUND NO. 1 INVOLVING THE ISSUE IS THUS REJECTED. 5. GROUND NO.2 - THE FACTS IN BRIEF ARE THAT THE AO OBSERVED T HAT THE ASSESEE HAD SHOWN HIRING OF TRUCKS FROM SHRI MANOJ KUMAR GUPTA FOR WHICH PAYMENT OF RS. 1.83 CRORES AND ODDS HAVE BEEN MADE, WHEREAS THE ASSESSEE HAD SHOWN INCOME OF RS. 70,500/- ONLY . TH E AO ACCORDINGLY ON ESTIMATE BASIS OF 5% OF PAYMENTS HELD THAT IT IS ON HIGHER SIDE AND MADE DISALLOWANCE ON THIS COUNT RESULTING INTO AN ADDITI ON OF RS. 9,19,621/-. THE ASSESSEE CONTENDED THAT IN ITS RETURN OF INCOME THE ASSESSEE HAD DECLARED AN INCOME OF RS. 6,73,805/-. IT WAS SUBMITTED THAT SHE OWNS 7 TRAWLERS FOR TRANSPORTATION OF MILK FROM VARIOUS STATE GOVERNMEN TS ON CONTRACT. MILK BEING A PERISHABLE COMMODITY, IT HAS TO BE TRANSPOR TED ON THE DAY AND TIME APPOINTED BY THE SENDING AGENCY. SOMETIMES THE TRAN SPORTATION REQUIRES MORE THAN A DAY TO REACH THE DESTINATION. THUS THE ASSESSEE HAS TO KEEP A STAND BY ARRANGEMENT , WHICH COULD BE READILY USED AND FOR THE PURPOSE, IT ITA NO. 1983/DEL/2011 4 KEEPS A STANDING ARRANGEMENT WITH OTHERS IN THE TRA DE AND IN TIMES OF NEED, THEIR TRUCKS TOO ARE BORROWED OR THEY ARE IN TURN ALLOWED TO BORROW THE ASSESEES TRUCKS. IT WAS SUBMITTED THAT MOST OF THE PAYMENTS IN THE ASSESSEES BUSINESS ARE THROUGH BANK ACCOUNT WHICH WERE DULY BEEN PRODUCED BEFORE THE LD. AO. IT WAS CONTENDED FURTHE R THAT SINCE THE ASSESSEE OWNS 7 TRUCKS HENCE CASE STANDS COVERED UN DER THE PRESUMPTORY TAX SCHEME AS ENVISAGED U/S 44AE OF THE I.T. ACT AND THE RETURN OF INCOME WAS FURNISHED ON THAT BASIS ONLY. IT WAS CONTENDED THAT THE AO HAS WRONGLY CONSIDERED THE OVERALL RECEIPTS OF THE BUSINESS OF THE ASSESSEE WHICH STOOD AT RS. 2.48 CRORES FROM VARIOUS STATE GOVERNMENTS. IT WAS ALSO CONTENDED THAT THE ASSESSEE HAD CLEARLY SHOWN THE VARIOUS ENT RIES AS REFLECTED IN ITS BOOKS OF ACCOUNTS ON ACCOUNT OF FREIGHT RECEIVED AN D PAID. COPIES OF ALL THESE ACCOUNTS WERE MADE AVAILABLE WITH COPIES OF C ORRESPONDING BANK ACCOUNT. THE ASSESSEE HAD ALSO SHOWN SEPARATE INCOM E BEING COMMISSION RECEIPTS FOR ORGANIZING TRANSPORT FOR OTHERS. BEING CONVINCED WITH THESE SUBMISSIONS THE LD. CIT(A) HAS DELETED THE ADDITION . 6. IN SUPPORT OF THE ISSUE THE LD. DR HAS PLACE D RELIANCE ON THE ASSESSMENT ORDER. THE LD. AR ON THE OTHER HAND TRI ED TO JUSTIFY THE FIRST APPELLATE ORDER IN THIS REGARD. AND ALSO PLACED RE LIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT JUDGMENT IN CIT VS. ANIL KUMAR ARYA 310 ITR 205. ITA NO. 1983/DEL/2011 5 7. CONSIDERING THE ABOVE SUBMISSIONS WE FIND T HAT UNDISPUTEDLY THE ASSESSEE WAS OWNING 7 TRAWLERS ONLY, HENCE WE DO NO T FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN HOLDING THAT THE PROVISION S OF SECTION 44 AE WERE VERY MUCH APPLICABLE IN THE CASE OF THE ASSESSEE. I T IS ALSO ESTABLISHED PREPOSITION OF LAW THAT PAYMENTS RELATING TO TRUCKS BELONGING TO OTHER PARTIES CANNOT BE CONSIDERED AS ASSESSEES TURN OVE R HENCE IN OUR VIEW THE LD. CIT(A) HAS RIGHTLY HELD SO IN VIEW OF THE DECIS ION OF AGRA BENCH OF TRIBUNAL IN THE CASE OF PARAS TRASNPORT CO. VS. ITO 92 TTJ 607 (AGRA) FOLLOWED BY HIM. THIS MATERIAL OBSERVATION OF THE L D. CIT(A) THAT ALL THE PAYMENTS WERE MADE BY THE CHEQUES TO HIRE THE TRUCK S BELONGING TO OTHER PARTIES HAS ALSO NOT BEEN REBUTTED BY THE REVENUE B EFORE US. UNDER THESE CIRCUMSTANCES WE FULLY CONCUR WITH THE FINDING OF T HE LD. CIT(A) THAT SIMPLY ON GUESS WORK AND ESTIMATE THE AO WAS NOT JUSTIFIED IN DISALLOWING 5% OF THE PAYMENT IN QUESTION. THE FIRST APPELLATE ORDER ON THE ISSUE IS REASONED ONE, WE THUS UPHOLD THE SAME. THE ISSUE IS THUS DEC IDED IN FAVOUR OF THE ASSESSEE. GROUND NO. 2 IS ACCORDINGLY REJECTED. 8. IN THE RESULT APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2012. SD/- SD/- (A.N. PAHUJA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 26.10. 2012 *VEENA ITA NO. 1983/DEL/2011 6 COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT