NEECO INDIA LTD.(Since Defunt), Kolkata V. ITO, Ward - 11(4), Kolkata, Kolkata

ITA 1997/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4716 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 28-10-2014
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA KAUSHIK

Judgement Text

I.T.A. NO. 1997/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 1997 /KOL/ 2014 ASSESSMENT YEAR: 2003-2004 NEECO INDIA LIMITED,............................... ............................APPELLANT C/O. SRI JITENDRA KAUSHIK, ADVOCATE, 19D, MUKTARAM BABU STREET, KOLKATA-700 007 [PAN : AABCN 0834 B] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-11(4), KOLKATA APPEARANCES BY: SHRI JITENDRA KAUSHIK, ADVOCATE, FOR THE ASSESSEE SHRI RAJAT KUMAR KUREEL, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 09, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 05, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA D ATED 27.08.2014. 2. THE ISSUE RAISED IN GROUND NO. 1 OF THIS APPEAL RELATES TO THE DISALLOWANCE OF RS.67,166/- MADE BY THE ASSESSING O FFICER AND CONFIRMED BY THE LD. CIT(APPEALS) OUT OF TRAVELLING EXPENSES. 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF TRADING OF INSTRUMENT PARTS, MEASUR ING INSTRUMENTS, CABLES, ETC. THE RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WAS FILED BY IT ON 14.11.2013. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, VARIOUS EXPENSES CLAIMED BY THE ASSESSEE WERE EXAMI NED BY THE ASSESSING OFFICER AND ON SUCH EXAMINATION, HE FOUND THAT THE EXPENSES CLAIMED BY THE ASSESSEE ON TRAVELLING AT RS.2,23,88 9/- WERE MORE THAN 25% OF THE COMMISSION RECEIPTS, FOR WHICH THE SAME WERE INCURRED. I.T.A. NO. 1997/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 2 OF 5 ACCORDING TO THE ASSESSING OFFICER, THE EXPENSES SO CLAIMED BY THE ASSESSEE ON TRAVELLING THUS WERE EXCESSIVE AND UNRE ASONABLE AND THERE WAS A POSSIBILITY OF CERTAIN PERSONAL ELEMENT INVOL VED THEREIN. HE, THEREFORE, MADE A DISALLOWANCE OF RS.67,166/- OUT O F TRAVELLING EXPENSES BEING 30% OF RS.2,23,889/-. ON APPEAL, THE LD. CIT( APPEALS) CONFIRMED THE SAID DISALLOWANCE. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY S UBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, NO INSTANCE WHATSOEVER WA S POINTED OUT BY THE ASSESSING OFFICER TO SHOW ANY PERSONAL OR UNVERIFIA BLE ELEMENT INVOLVED IN THE RELEVANT EXPENSES INCURRED BY THE ASSESSEE O N TRAVELLING. HE MADE AN AD HOC DISALLOWANCE OF 30% OUT OF SUCH EXPENSES MERELY ON THE GROUND THAT THE SAME WERE MORE THAN 25% OF THE CORRESPONDI NG COMMISSION RECEIPTS, FOR WHICH THE SAME WERE CLAIMED TO BE INC URRED. IN MY OPINION, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF TRAVELLING EXPENSES THUS IS NOT WELL FOUNDED AND THE LD. CIT(APPEALS) I S NOT JUSTIFIED TO CONFIRM THE SAME. I, THEREFORE, DELETE THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) ON THIS ISSUE AND ALLOW GROUND NO. 1 OF THE ASSESSEES APPEAL. 5. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE DISALLOWANCE OF RS.42,530/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF CAR HIRE CHARGES. 6. A SUM OF RS.42,530/- PAID TO M/S. GANESH TRAVELS OF CHENNAI WAS CLAIMED BY THE ASSESSEE UNDER THE HEAD CAR HIRE AN D MAINTENANCE CHARGES. FROM THE PERUSAL OF THE BILLS RAISED BY T HE SAID PARTY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT ALL THE BILLS WERE DRAWN ONLY FOR VISITS MADE BY THE ASSESEE TO TIRUPATI ON DIFFERENT DATES. SINCE THE BUSINESS PURPOSE OF THE SAID VISITS COULD NOT BE EX PLAINED BY THE ASSESSEE, CAR HIRE CHARGES TO THE EXTENT OF RS.42,5 30/- WERE DISALLOWED BY THE ASSESSING OFFICER. ON APPEAL, THE LD. CIT(APPEA LS) CONFIRMED THE SAID I.T.A. NO. 1997/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 3 OF 5 DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR THE SAME REASONS AS GIVEN BY THE ASSESSING OFFICER. 7. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE DISALLOWANCE ON ACCOUNT OF CAR HIRE CHARGES HAS BEEN MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) FOR THE FAILURE O F THE ASSESSEE TO ESTABLISH THE BUSINESS PURPOSE OF THE VISITS MADE T O TIRUPATI. EVEN AT THE TIME OF HEARING BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN AS TO HOW THE VISITS TO TIRUPATI WE RE MADE FOR THE PURPOSE OF THE ASSESSEES BUSINESS. I, THEREFORE, FIND NO J USTIFIABLE REASON TO INTEREST WITH THE IMPUGNED ORDER OF THE LD. CIT(APP EALS) CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE AND UPHOLDING THE SAME, I DISMISS GROUND NO. 2 OF THE ASSESSEES APPEAL. 8. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE DISALLOWANCE OF RS.82,017/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF SALES PROMOTION EXPENSES . 9. UNDER THE HEAD GENERAL EXPENSES, A SUM OF RS.8 2,017/- WAS CLAIMED TO BE INCURRED BY THE ASSESSEE ON SALES PRO MOTION. SINCE THE GENUINENESS OF THE SAID EXPENSES AS WELL AS BUSINES S EXPEDIENCY COULD NOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE DES PITE SPECIFIC OPPORTUNITIES GIVEN, THE ASSESSING OFFICER DISALLOW ED THE SALES PROMOTION EXPENSES CLAIMED BY THE ASSESSEE. EVEN BEFORE THE L D. CIT(APPEALS), THE ASSESSEE COULD NOT ESTABLISH ITS CASE ON THIS ISSU E AND CONSEQUENTLY THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF SALES PROMOTION EXPENSES WAS CONFIRMED BY THE LD. CIT(APPEALS). 10. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD COUNSEL FOR THE ASSESSEE HAS RELIED ON THE SUBMISSION MADE BY THE A SSESSEE ON THIS ISSUE BEFORE THE LD. CIT(APPEALS) IN WRITING AS PLACED AT PAGE NO. 5 OF THE PAPER I.T.A. NO. 1997/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 4 OF 5 BOOK, IT IS OBSERVED THAT THE SAME IS NOT SUFFICIEN T TO ESTABLISH THE GENUINENESS OF THE EXPENDITURE CLAIMED TO BE INCURR ED BY THE ASSESSEE ON SALES PROMOTION AS WELL AS ITS BUSINESS EXPEDIENCY. THE ONUS IN THIS REGARD IS ON THE ASSESSEE TO SUPPORT AND SUBSTANTIA TE ITS CASE AND SINCE THE ASSESSEE HAS FAILED TO DISCHARGE THE SAME SATIS FACTORILY BY BRINGING RELEVANT DOCUMENTARY EVIDENCE ON RECORD, I FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) CONFIRMING T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THIS ISSUE. GROUND NO. 3 IS ACCORDINGLY DISMISSED. 11. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE THE TRIBUNAL, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND CHALLENGIN G THE DISALLOWANCE OF RS.76,830/- MADE BY THE ASSESSING OFFICER AND CONFI RMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF COMMISSION. 12. IN THE APPLICATION FILED FOR ADMISSION OF THE A DDITIONAL GROUND, THE ASSESSEE HAS SUBMITTED THAT THE ISSUE RAISED IN THE ADDITIONAL GROUND IS ARISING FROM THE ORDER OF THE LD. CIT(APPEALS), BUT THE SAME WAS NOT RAISED IN THE ORIGINAL GROUNDS BY INADVERTENCE. KEE PING IN VIEW THE SUBMISSION OF THE ASSESSEE AS WELL AS THE NO OBJEC TION FROM THE LD. D.R., THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADM ITTED AND THE SAME IS BEING DISPOSED OF ON MERIT. 13. DURING THE YEAR UNDER CONSIDERATION, EXPENDITUR E OF RS.76,830/- WAS CLAIMED TO BE INCURRED BY THE ASSESSEE TOWARDS COMMISSION ON SALE. BEFORE THE ASSESSING OFFICER, THE ASSESSEE, HOWEVER , COULD NOT ESTABLISH THE GENUINENESS OF THE SAID EXPENDITURE AS WELL AS ITS BUSINESS EXPEDIENCY DESPITE SUFFICIENT OPPORTUNITY GIVEN IN THIS REGARD. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE EXPEND ITURE CLAIMED BY THE ASSESSEE ON SALES COMMISSION. ON APPEAL, THE LD. CI T(APPEALS) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON T HIS ISSUE ON THE GROUND THAT THE ASSESSEE EVEN BEFORE HIM FAILED TO ESTABLISH THE BUSINESS EXPEDIENCY OF THE SALES PROMOTION EXPENSES CLAIMED TO BE INCURRED BY IT. I.T.A. NO. 1997/KOL./2014 ASSESSMENT YEAR: 2003-2004 PAGE 5 OF 5 14. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY C ONTENDED BY THE LD. D.R., THE CLAIM OF THE ASSESSEE FOR EXPENDITURE INC URRED TOWARDS COMMISSION ON SALES CAN BE ALLOWED ONLY IF IT IS ES TABLISHED ON EVIDENCE THAT THE AMOUNT OF SUCH COMMISSION WAS PAID BY THE ASSESSEE TO THE PARTIES, WHO HAVE RENDERED SERVICES IN CONNECTION W ITH THE SALES MADE DURING THE YEAR UNDER CONSIDERATION. THE ONUS IN TH IS REGARD IS ON THE ASSESSEE AND HE HAS FAILED TO DISCHARGE THE SAME SA TISFACTORILY BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE ME. EVEN THE BA SIS OF SUCH COMMISSION PAYMENT HAS NOT BEEN EXPLAINED BY THE ASSESSEE. I, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED O RDER OF THE LD. CIT(APPEALS) CONFIRMING THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF SALES COMMISSION AND UPHOLDING THE SA ME, I DISMISS THE ADDITIONAL GROUND FILED BY THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 05, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 5 TH DAY OF AUGUST, 2016 COPIES TO : (1) NEECO INDIA LIMITED, C/O. SRI JITENDRA KAUSHIK, ADVOCATE, 19D, MUKTARAM BABU STREET, KOLKATA-700 007 (2) INCOME TAX OFFICER, WARD-11(4), KOLKATA (3) COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLK ATA; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.