The ACIT, Circle-11, Ahmedabad V. Navnitlal & Co., Ahmedabad

ITA 2011/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1526 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Keywords: Gift; Audit objection; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NO. 2011/AHD/2011 (ASSESSMENT YEAR: 2008-09) THE ACIT, CIRCLE-11, AHMEDABAD APPELLANT VS. NAVNITLAL & CO., 7-GANDHIKUNJ SOCIETY, VIGYAPAN BHAVAN, B/H. KOCHRAB ASHRAM, PALDI, AHMEDABAD RESPONDENT & C.O. NO.225/AHD/2011 (IN ITA NO.2011/AHD/2011) ASSESSMENT YEAR: 2008-09 NAVNITLAL & CO., 7-GANDHIKUNJ SOCIETY, VIGYAPAN BHAVAN, B/H. KOCHRAB ASHRAM, PALDI, AHMEDABAD APPELLANT VS. THE ACIT, CIRCLE-11, AHMEDABAD RESPONDENT PAN: AAAFN7215L ITA NO. 2011/AHD/11 & C.O. NO.225/A/11 A.Y. 08-09 (ACIT VS. NAVNITLAL & CO.) PAGE 2 / BY REVENUE : SHRI ALBINUS TIRKEY, SR. D.R. / BY ASSESSEE : SHRI PARIN SHAH, A.R. /DATE OF HEARING : 17.05.2016 /DATE OF PRONOUNCEMENT : 20.05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO APPEALS OF WHICH ONE IS FILED BY REVENUE AND THE OTHER APPEAL I.E. CROSS OBJECTION BY ASSESSEE A RE AGAINST THE ORDER OF CIT(A)-XVI, AHMEDABAD, DATED JUNE 28, 2011 FOR A.Y. 2008-09. 2. IN ITA NO.2011/AHD/2011, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. LD. CIT(A) ERRED IN LAW AND ON FACTS IN RESTRIC TING /DELETING THE ALLOWANCES AS UNDER:- ELECTRIC REPAIRING EXP. (I) THE ADDITION OF RS.3,64,194/- MADE ON ACCOUNT OF SELF MADE VOUCHERS HAVE BEEN RESTRICTED AT 10% RS.36,500/- BY THE LD.CIT(A) STATED THAT CERTAIN EXPENSES ARE ONLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS. OFFICE REPAIRING EXP. (II) THE ADDITION OF RS.L,75,000/- MADE U/S.40(A)(IA) ON ACCOUNT OF OFFICE REPAIRS EXPENSES IN RESPECT OF PAYMENT MADE FOR COLOR WORK AND LABOR CHARGES TO CONTRACTOR WITHOUT DEDUCTING TDS REQUIRED TO BE ITA NO. 2011/AHD/11 & C.O. NO.225/A/11 A.Y. 08-09 (ACIT VS. NAVNITLAL & CO.) PAGE 3 DEDUCTED U/S.194C OF THE ACT, THE LD.CIT(A) HAS DELETED THE ADDITION OF RS.L,75,000/- IN VIEW OF THAT THE ASSESSEE HAS NO SUCH CONTRACT ORAL OR WRITTEN WAS ENTERED INTO WITH THE PAYEE BUT ONLY FOR THE SAKE OF KEEPING TRACK OF THE ACTUAL LABORERS, HENCE THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE IN ABSENCE OF ANY WRITTEN OR ORAL AGREEMENT WITH THE PAYEE. COMPUTER STATIONARY EXP. (III) THE ADDITION OF RS.71,993/- MADE ON ACCOUNT OF SELF MADE VOUCHERS HAVE BEEN RESTRICTED TO RS.20,000/- BY THE LD.CIT(A) STATED THAT CERTAIN EXPENSES ARE ONLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS. MISC. EXP (IV) THE ADDITION OF RS.L,81,400/- MADE ON ACCOUNT OF SELF MADE VOUCHERS HAVE BEEN RESTRICTED TO RS.20,000/- BY THE LD.CIT(A) STATED THAT CERTAIN EXPENSES ARE ONLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND LOOKING TO THE LEGITIMATE NEED OF THE BUSINESS HAVE TO BE LOOKED INTO AND CONSIDERING THE CLAIM IN PRECEDING AND SUBSEQUENT YEAR. OUTSOURCING STAFF EXP. (V) THE ADDITION OF RS.9,80,575/- MADE ON ACCOUNT OF SELF MADE VOUCHERS HAVE BEEN RESTRICTED AT 10% RS.98,000/- BY THE LD.CIT(A) STATED THAT CERTAIN EXPENSES ARE ONLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND LOOKING TO THE LEGITIMATE NEED OF THE BUSINESS HAVE TO BE LOOKED INTO AND CONSIDERING THE CLAIM IN PRECEDING AND SUBSEQUENT YEAR. ITA NO. 2011/AHD/11 & C.O. NO.225/A/11 A.Y. 08-09 (ACIT VS. NAVNITLAL & CO.) PAGE 4 COMMISSION PAID TO HUF RS.L,02,887/- (VI) THIS ADDITION WAS MADE ON ACCOUNT OF COMMISSION PAID TO HUF IN VIEW OF THAT THE HUF WAS NOT BEING LIVING ENTITY AND SAID HUF DOES NOT HAVING ANY CAPACITY TO RENDER THE SERVICES IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE. THE LD.CIT(A),HAS DELETED RS. 1,02,887/- OBSERVED THAT THE AO HAD NOT DENIED ABOUT THE SERVICES RENDERED BY THE KARTA OF HUF AND ALSO NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE PAYMENT WAS NOT LADE TOWARDS ACTUAL SERVICES WHICH IS THE BASIC REQUIREMENT FOR CALMING EXPENDITURE. (VII) SALES PROMOTION EXP. THE ADDITION OF RS.5,62,922/-WAS MADE ON ACCOUNT OF SALES PROMOTION EXPENSES THE AO NOTICED THAT THE MAJORITY VOUCHERS ARE OF FOR THE AMOUNT OF RS. 5000 OR MORE, AND RELATED TO PURCHASES' GIFT ARTICLES AND ARE NOT SUPPORTED BY ANY BILLS OF PURCHASE OF GOODS. THE PAYMENTS ARE MADE TO SOME OF EMPLOYEES. THE LD.CIT(A),HAS DELETED RS 5,62,922/- LOOKING TO THE LEGITIMATE NEED OF THE BUSINESS HAVE TO BE LOOKED INTO AND CONSIDERING THE CLAIM IN PRECEDING AND SUBSEQUENT YEAR. (VIII) CONVEYANCE EXP. THE ADDITION OF RS.2,67,907/- MADE ON ACCOUNT OF SELF MADE VOUCHERS HAVE BEEN RESTRICTED AT 10% RS.27,000/- BY THE LD.CIT(A) STATED THAT CERTAIN EXPENSES ARE ONLY CLAIMED ON THE BASIS OF SELF MADE VOUCHERS AND LOOKING TO THE LEGITIMATE NEED OF THE BUSINESS HAVE TO BE LOOKED INTO AND CONSIDERING THE CLAIM IN PRECEDING AND SUBSEQUENT YEAR. 3. BEFORE US, AT THE OUTSET, LD. AUTHORIZED REPRESE NTATIVE SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE NE EDS TO BE ITA NO. 2011/AHD/11 & C.O. NO.225/A/11 A.Y. 08-09 (ACIT VS. NAVNITLAL & CO.) PAGE 5 DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF T HE CBDT CIRCULAR NO.21 OF 2015 DATED 10.12.2015. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT TH E TAX EFFECT IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 4. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE GR OUNDS OF APPEAL RAISED BY THE REVENUE, WE PRIMA-FACIE FIND T HAT THE TAX EFFECT IN THIS APPEAL IS BELOW RS.10 LACS. AS PER T HE ANNOUNCEMENT OF CENTRAL BOARD OF DIRECT TAXES (CBDT ) DATED 10.12.2015 (CIRCULAR NO.21 OF 2015), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY LD. CIT(A) BEFORE THE INCOME TAX APPELLATE TRIBUNAL UNLESS THE TAX EFFECT , EXCLUDING INTEREST, EXCEEDS RS.10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO THE PEND ING APPEALS. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (8) OF THE INSTRUCTIONS WHEREIN IT HAS BEEN PROVIDED THAT THES E INSTRUCTIONS WILL NOT BE APPLICABLE, IF VIRES OF AN Y PROVISIONS HAS BEEN QUASHED BY IMPUGNED ORDER OR ADDITION WAS MADE ON SOME AUDIT OBJECTIONS OR THE ADDITION RELATES TO UN DISCLOSED FOREIGN ASSETS/BANK ACCOUNTS, ETC. WE PRIMA-FACIE F IND THAT THE PRESENT CASE DOES NOT FALL WITHIN THE EXEMPTION CLA USE AND THE TAX EFFECT OF THIS IS BELOW RS. 10 LAKHS. IT IS FU RTHER OBSERVED THAT SINCE, WHILE HEARING THE APPEAL, SUCH FACTORS WERE NOT CONSIDERED, THEREFORE, IN CASE, ON RE-VERIFICATION AT THE END OF THE ASSESSING OFFICER, IT CAME TO THE NOTICE THAT T HE TAX EFFECT IS MORE OR IT FALLS WITHIN THE AMBIT OF EXCEPTIONS PRO VIDED IN THE ITA NO. 2011/AHD/11 & C.O. NO.225/A/11 A.Y. 08-09 (ACIT VS. NAVNITLAL & CO.) PAGE 6 INSTRUCTION, THEN THE DEPARTMENT WILL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RECALL OF THIS ORDER. SUCH APPLIC ATION SHOULD BE FILED WITHIN FOUR YEARS OF THIS ORDER. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. C.O. NO.225/AHD/2011 6. LD. A.R. HAS NOT PRESSED THE CROSS OBJECTION. T HUS, THE C.O. FILED BY ASSESSEE IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE REVENUES APPEAL AND ASSESSEE S C.O. BOTH ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF MAY, 2016. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMA R YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD: DATED 20/05/2016 TRUE COPY / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0