ABC India Ltd, Kolkata V. Addl C.I.T Rg - II,Kolkata, Kolkata

ITA 2078/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4873 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ACIT SRDR
• Assessee Lawyers: V N PUROHIT
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2078 / KOL / 2013 ASSESSMENT YEAR :2008-09 ABC INDIA LTD., 40/8 BALLYGUNGE CIRCULAR ROAD, KOLKATA-70019 [ PANAACCA 2035 J ] V/S . ADDL. CIT, RANGE-II, AYAKAR BHAWAN, 6 TH FLOOR, P7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI V.N.PUROHIT, FCA /BY RESPONDENT SHRI SALLONG YADEN, ACIT-SR-DR /DATE OF HEARING 13-04-20016 /DATE OF PRONOUNCEMENT 11-05-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA DATED 12.03.2013. ASSESSMENT WAS FRAMED BY ACIT, RANJE-11, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 30.11.2010 FOR ASSESSMENT YEAR 2008-09. ASSESSEE HAS RAISED FOLLOW ING EFFECTIVE GROUND:- 1) THAT THE LD. C.I.T.(A) HAS ERRED, BOTH IN LAW A ND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN SUSTAINING ENROUTE EX PENSES INCURRED TO THE EXTENT OF RS.2,50,000/- AGAINST ADHOC-DISALLOWANCE OF RS.4,78,730/- AGAINST ASSESSEES CLAIM OF RS.95,74,607/- 2) THAT THE LD. C.I.T.(A) HAS FURTHER ERRED, LIKEWI SE, IN SUSTAINING THE ADDITION OF RS.10,50,000/- MADE TO DISCLOSED RECEIPTS OF RS. 1,95,000/- OF SALE OF SCRAPED/OLD AND DISCARDED LOSSES. ITA NO.2078/KOL/2013 A.Y. 2008-09 ABC INDIA LTD. V. ACIT RNG-II, KOL. PAGE 2 2. FIRST GROUND RAISED BY ASSESSEE IS AS REGARD TO THAT LD. CIT(A) ERRED IN SUSTAINING THE EXPENSES OF 2.50 LAKH ON ACCOUNT OF EN ROUTE EXPENSES. 3. FACTS IN BRIEF ARE THAT ASSESSEE IS A LIMITED CO MPANY AND ENGAGED IN THE BUSINESS OF MULTI-MODEL TRANSPORT ORGANIZATION, FREIGHT FORWARDERS, SHIPPERS AND AIR FREIGHT BOOKERS. DURING THE YEAR A SSESSEE HAS CLAIMED AN EXPENDITURE OF RS.95,74,607/- TOWARDS REPAIRING CHA RGES FOR CULVERT, ROAD PARTITIONS, TREE CUTTING, SHIFTING OF OVERHEAD ELEC TRIC WIRES, ROUTE CHECKING PRIOR TO EMBARKING ON TRIP, EXPENSES ON ACCOMPANYING VEHI CLES, FOODS ETC., DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFF ICER OBSERVED THAT MOST OF THE EXPENSES WERE INCURRED IN CASH AND SELF-MADE VOUCHERS WERE MAINTAINED. THEREFORE, THE AO DOUBTED THE GENUINENE SS OF ALL EXPENSES AND ACCORDINGLY DISALLOWED @ 5% OF SUCH EXPENDITURES FO R RS. 4,78,730/- ON AD HOC BASIS. AN ADDITION OF RS. 4,78,730/- WAS MADE TO T HE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO PARTLY CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FINDING OF THE AO AND THE WR ITTEN SUBMISSION FILED BY THE AR DURING THE APPELLANT PROCEEDING. THERE IS NO DENYING THE FACT THAT WHILE A ACCOMPANYING HEAVY VEHICLES EMPLOYEES HAVE TO EXPEND IN CASH FOR EXPENSES INCURRED. BUT AT THE SAME TIME THE AR SHOU LD HAVE PRODUCED PROPER BILLS FOR REPAIRS AND MAINTENANCES OF HEAVY VEHICLE S THAT ASSESSEE/AR HAS FAILED TO PRODUCE. HOWEVER, I FIND THE DISALLOWANCE OF RS.478730/- A LITTLE HIGHER. THEREFORE, I RESTRICT THE DISALLOWANCE FOR NON-VERIFIABILITY OF BILLS AND VOUCHERS TO RS.2,50,000/-. THUS, ASSESSEES APPEAL ON GROUND NO.1 IS PARTLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. SHRI V.N.PUROHIT, LD. AUTHORIZED REPRESENTATIVE APP EARING ON BEHALF OF ASSESSEE AND SHRI SALLONG YADEN, LD. DEPARTMENTAL R EPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 5. LD. AR BEFORE US SUBMITTED THAT AUTHORITIES BELO W HAVE DISALLOWED THE AFORESAID EXPENSES ONLY ON ESTIMATE BASIS AND WITHO UT MENTIONING THE ITA NO.2078/KOL/2013 A.Y. 2008-09 ABC INDIA LTD. V. ACIT RNG-II, KOL. PAGE 3 RELEVANT VOUCHERS OF THE EXPENSES AS PRODUCED BEFOR E THE AUTHORITIES BELOW. LD. AR ALSO SUBMITTED THAT SUCH EN ROUTE EXPENSES W ERE ALSO CLAIMED IN EARLIER YEARS AND NO SUCH DISALLOWANCES WERE MADE F OR THE SAME. FURTHER, LD. AR SUBMITTED THAT THESE ARE THE EXPENSES WHICH HAVE BEEN INCURRED BY THE EMPLOYEES OF ASSESSEE-COMPANY WHEN THEY ARE CARRYIN G HEAVY PROJECT CARGO AND NORMALLY IT IS DIFFICULT TO GET THE PROPER BILL S FOR THESE EXPENSES. SO THESE EXPENSES ARE CLAIMED ONLY IN TERMS OF CASH AND STAT ED THAT THIS ISSUE MAY BE DECIDED ON MERIT. ON CONTRARY, LD. DR VEHEMENTLY RE LIED ON THE ORDERS OF AO. 6. WE HAVE HEARD BOTH THE RIVAL PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSESSEE HAS CLAIMED CERTAIN EXPENSES WHICH WERE INCURRED IN CAS H AND ONLY SELF-MADE VOUCHERS WERE AVAILABLE IN SUPPORT OF THOSE EXPENSE S. THE AO OPINED THAT GENUINENESS OF SUCH EXPENSES CANNOT BE ESTABLISHED ON THE BASIS OF SELF- MADE VOUCHERS INVOLVING CASH PAYMENTS AND HE DISALL OWED SUCH EXPENSES ON AD HOC BASIS. HOWEVER, LD. AR BEFORE US SUBMITTED THAT SU CH EXPENSES WERE ALSO CLAIMED IN EARLIER YEARS AND IN THIS REGARD NO SUCH DISALLOWANCES WERE MADE BY AUTHORITIES BELOW. WE ALSO FIND THAT THESE EXPENSES ARE COMMENSURATE WITH THE SALES DECLARED BY THE ASSESSE E IN COMPARISON TO EARLIER YEARS. WE ALSO FURTHER FIND THAT AO HAS DIS ALLOWED THE CLAIM ON AD HOC BASIS WITHOUT BRINGING OUT ANY DEFECT AND DEFICIENC Y IN THE SUBMISSION OF ASSESSEE WITH REGARD TO SUCH EXPENSES CLAIMED BY AS SESSEE. WE ALSO CANNOT IGNORE THIS FACT THAT THE ASSESSEE HAS BEEN CLAIMIN G SUCH EXPENSES SINCE THE LAST SEVERAL MANY YEARS AND NO DISALLOWANCE WAS MAD E ON ACCOUNT OF THIS. SO WE ARE OF THE VIEW THAT THE CONSISTENCY SHOULD BE M AINTAINED. IN THIS VIEW OF THIS MATTER, WE ARE INCLINED TO REVERSE THE ORDERS OF AUTHORITIES BELOW ON THE BASIS THAT ASSESSEE HAS BEEN CLAIMING THESE EXPENSE S CONSISTENTLY FOR THE LAST MANY YEARS AND SUCH EXPENSES HAVE NOT BEEN DIS ALLOWED. HENCE, WE ALLOW ASSESSEES GROUND OF THIS APPEAL. 7. NEXT GROUND IS AS REGARDS TO THAT LD. CIT(A) ERR ED IN SUSTAINING THE ADDITION OF 10.50 LAKH ON ACCOUNT OF SALE OF SCRAPED / OLD AND DISCARDED ITA NO.2078/KOL/2013 A.Y. 2008-09 ABC INDIA LTD. V. ACIT RNG-II, KOL. PAGE 4 TRUCKS. DURING THE YEARS ASSESSEE HAS SOLD 30 TRUCK S @ 15,000/- EACH TO 27 PERSONS AT GUWAHATI BUT ASSESSEE FAILED TO PROVIDE THE ADDRESSES OF THE PARTIES TO WHOM TRUCKS WERE SOLD. THEREFORE, AO DOU BTED THE GENUINENESS FOR THE SALE PRICE OF THE TRUCKS I.E. RS. 15,000/- EACH . THE AO ALSO OBSERVED THAT ASSESSEE WAS MAINTAINING CERTAIN TRUCKS HAVING WDV AT NIL OR RS. 1/- IN THE BOOKS OF ACCOUNTS AND THOSE TRUCKS WERE PLYING AND GIVEN INCOME TO ASSESSEE. ACCORDINGLY, AO ESTIMATED THE PRICE PER T RUCK AT 50,000/- AND MADE ADDITION OF 10.50 LAKH [30 TRUCKS X RS. 35,000/- (RS. 50,000- 35,000.00)] TO THE TOTAL INCOME OF ASSESSEE. 8. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF ASSESSEE BY OBSERVING AS UN DER:- I HAVE CONSIDERED THE FINDING OF THE AO AND THE WR ITTEN SUBMISSION FILED BY THE AR. I THINK ALL OLD TRUCKS WITH REGISTRATION NO . HAVE TO BE SOLD EVEN AS A SCRAP AFTER TAKING PERMISSION/AFTER GIVING INTIMATI ON TO THE RTO. THEREFORE, ASSESSEES CLAIM THAT NAMES AND ADDRESSES OF PURCHA SERS OF OLD TRUCKS WERE NOT AVAILABLE/WERE NOT KEPT IS NOT ACCEPTABLE. HENC E, ASSESSING OFFICER'S ACTION OF MAKING ADDITION OF RS.10,50,000/- AS ENHA NCE SCRAP VALUE OF OLD TRUCKS IS JUSTIFIED. ACCORDINGLY, ASSESSEES APPEAL ON GROUND NO. 2 IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 9. BEFORE US LD. AR SUBMITTED THAT SALE PRICE OF TH E TRUCKS HAS BEEN DULY THE REDUCED FROM THE WDV OF THE RELEVANT BLOCK OF A SSETS. THE NECESSARY DETAILS OF THE PARTIES TO WHOM THE TRUCKS WERE SOLD WERE DULY SUBMITTED BEFORE AUTHORITIES BELOW ALONG WITH ADDRESSES. ON THE CONT RARY, LD. DR STATED THAT ALL TRUCKS ARE HAVING REGISTRATION CERTIFICATE ISSU ED FROM THE TRANSPORT AUTHORITY. THE TRANSACTION FOR TRANSFERRING THE OWN ERSHIP FROM THE ASSESSEE TO THE BUYERS SHOULD BE DULY RECORDED WITH THE TRANSPO RT AUTHORITY BUT THE ASSESSEE FAILED TO SUBMIT THE NECESSARY DETAILS IN SUPPORT OF THE TRANSACTIONS FOR SELLING TRUCKS TO THE CONCERNED PARTIES AND HE VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. ITA NO.2078/KOL/2013 A.Y. 2008-09 ABC INDIA LTD. V. ACIT RNG-II, KOL. PAGE 5 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSESSEE HAS SOLD 30 TRUCKS @ 15,000/- EACH BUT AO DISREGARDED THE SALE PRICE OF THE TRUCKS AND ESTIMATED THE SALE PRICE @ 50,000/- EACH ON ACCOUNT OF TWO REASONS (1) THE ADDRESSES AND THE CONFIRMATIONS FROM THE BUYERS WERE NOT PROVIDED AT THE TIME OF ASSESSMENT PROCEEDINGS. (2) THERE WERE CERT AIN TRUCKS WHICH ARE REFLECTING IN THE BOOKS OF ACCOUNT OF ASSESSEE EITH ER AT NIL WDV OR 1/- ONLY AND WHICH ARE PLYING AND GENERATING GOOD INCOME. FR OM THE FACTS OF THE CASE, WE FIND THAT ASSESSEE HAS REDUCED THE WDV OF THE RE LEVANT BLOCK OF VEHICLE FROM THE SALE PRICE OF THE TRUCKS. HOWEVER, AUTHORI TIES BELOW HAS TREATED THE SALE PRICE AS RS. 50,000/- OF THE TRUCK AND THE DIF FERENCE OF RS. 35,000/- HAS BEEN TREATED AS INCOME OF THE ASSESSEE AS INCOME WH ICH IS INCORRECT AS PER THE PROVISION OF INCOME TAX ACT. IN CASE OF ANY SAL E OF THE ASSETS PERTAINING TO THE BLOCK OF ASSETS THEN THE SALE PRICE SHOULD BE R EDUCED FROM THE RELEVANT BLOCK BY THE AMOUNT OF SALE PRICE AND WHEN THE BLOC K CEASED TO EXIST AFTER ADJUSTING THE SALE PRICE THEN THE EXCESS AMOUNT SHA LL BE TREATED AS INCOME UNDER THE HEAD CAPITAL GAINS AND THAT CANNOT BE T AKEN AS BUSINESS INCOME . IN THE INSTANT CASE, THE AUTHORITIES BELOW WITHO UT UNDERSTANDING THE PROVISION OF INCOME TAX HAVE TAKEN A VIEW THAT THE AMOUNT OF 10.50 LAKH AS INCOME FROM ITS BUSINESS WHICH IS INCORRECT. THEREF ORE IN OUR CONSIDERED VIEW, WE ARE INCLINED TO REVERSE THE ORDERS OF AUTHORITIE S BELOW AND ALLOW ASSESSEES GROUND IN THIS REGARD. 11. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 11/ 05/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 11 / 05 /201 6 ITA NO.2078/KOL/2013 A.Y. 2008-09 ABC INDIA LTD. V. ACIT RNG-II, KOL. PAGE 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ABC INDIA LTD., 40/8 BALLYGUNGE CIRCULAR ROAD, KOLKATA-19 2. /RESPONDENT-ACIT, RANGE-II, AYAKAR BHAWAN,6 TH FL, P7, CHOWRINGHEE SQ.KOL-69 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,