M/s. Disha Eye Hospital & Research Centre (P) Ltd., Kolkata V. ITO, Ward - 10(1), Kolkata, Kolkata

ITA 2079/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7978 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 08-12-2009
• Court: TRIBUNAL
• Department Lawyers: M HUSSAIN
• Assessee Lawyers: V N PUROHIT

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : KOLKATA [ BEFORE SHRI B.R.MITTAL, J.M. & SHRI B.C. MEENA, A.M. ] I.T.A.NO. 2079 (KOL) OF 2009 ASSESSMENT YEAR 2004-05 DISHA EYE HOSPITAL & RESEARCH -VS- INCOME-TAX OFFICER, WARD-10(1), CENTRE (P) LTD. (PAN-AABCD4082F) KOLKATA. ( APPELLANT ) ( RESPONDEN T ) APPELLANT BY : SRI V.N.PUROHIT RESPONDENT BY : SRI M. HUSSAIN O R D E R PER SRI B.C.MEENA, A.M. : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 06.07.2009 OF C.I.T.(A)-XXXII, KOLK ATA, PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE FIRST GROUND IS AGAINST CONFIRMING THE FOLL OWING ADDITIONS BY THE C.I.T.(A) : (A) TELEPHONE CHARGES RS.38,400/- (B) MOTOR CAR EXPENSES RS.62,000/- WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD. A /R SUBMITTED THAT THE ASSESSEE MAINTAINS THE BOOKS OF ACCOUNTS, WHICH ARE DULY AUDITED. NO DISCREPANCY WAS POINTED OUT BY THE REVENUE AUTHORIT IES IN THESE BOOKS OF ACCOUNT, FOR WHICH AD HOC ADDITION COULD BE MADE AN D SUSTAINED BY THE C.I.T.(A) IN RESPECT OF THE AFORESAID BUSINESS EXPE NDITURE. HE VEHEMENTLY SUBMITTED THAT THE DISALLOWANCE WAS EXCESSIVE. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE USE OF THE TELEPHONE AS WELL AS MOTOR CAR FOR PERSONAL PURPOSES OF THE DIRE CTORS OF THE COMPANY HAS NOT BEEN RULED OUT. NO LOG BOOK IS MAINTAINED IN THIS REGARD. THEREFORE, THE A.O. HAS RIGHTLY DISALLOWED 10% OF T HE SAID EXPENDITURE AND THE C.I.T.(A) HAS JUSTIFIABLY UPHELD THE SAME. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED BEFORE US. THE ASSESSEE IS A PRIVATE LIMITED COMPANY HAVIN G ITS SEPARATE CORPORATE 2 EXISTENCE. THEREFORE, THERE CANNOT BE ANY QUESTION OF PERSONAL USER OF THE MOTOR CARS AND TELEPHONE BY THE COMPANY. THE PERS ONAL USER OF CAR AND TELEPHONE BY THE DIRECTORS OF THE COMPANY CANNOT BE SAID TO BE PERSONAL USER BY THE ASSESSEE, I.E. THE COMPANY. ON THE OTH ER HAND, THIS WOULD AMOUNT TO PERQUISITE IN THE HANDS OF THE DIRECTORS AND IS TO BE CONSIDERED IN THEIR HANDS ACCORDINGLY. IN THIS CONNECTION WE MAY REFER TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OS SAYAJI IRON & ENGG. CO. VS. CIT [253 ITR 749]. IN THIS VIEW OF THE MATTER, SUCH AD HOC DISALLOWANCES ON ACCOUNT OF USE OF TELEPHONE AND MOTOR CAR FOR PERSO NAL USE IN THE HANDS OF THE ASSESSEE-COMPANY CANNOT BE SUSTAINED, WHICH ARE DIRECTED TO BE DELETED. 4. THE OTHER ISSUE IN THIS APPEAL IS AGAINST CONFI RMING THE DISALLOWANCE OF RS.1,43,764/- BY THE C.I.T.(A) ON ACCOUNT OF FOR EIGN TOUR EXPENSES OF MRS. P. BHATTACHARYA, DIRECTOR OF THE COMPANY, WHO HAPPENS TO BE WIFE OF DR. D. BHATTACHARYA, ANOTHER DIRECTOR. THE LD. A/R SUBMITTED THAT MRS. P. BHATTACHARYA IS THE DIRECTOR OF THE COMPANY AND SHE ACCOMPANIED HER HUSBAND IN THE FOREIGN TOUR, BECAUSE PRESENCE OF TH E SPOUSE IS REQUIRED WHILE MEETING WITH DIFFERENT CLIENTS AND DIGNITARIE S ABROAD AND, THEREFORE, THE SAID TRIP WAS FOR COMPANYS BUSINESS PURPOSES. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT T HE ASSESSEE HAS FAILED TO PROVE THAT THIS EXPENDITURE ON FOREIGN TOUR WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS. EXPENSES I NCURRED FOR ACCOMPANYING THE HUSBAND IN FOREIGN TOUR WITHOUT AN Y WORK MEANT FOR BUSINESS PURPOSES OF THE COMPANY CANNOT BE SAID TO BE THE EXPENDITURE INCURRED FOR THE PURPOSES OF COMPANYS BUSINESS. HE , THEREFORE, SUBMITTED THAT THE C.I.T.(A) HAS RIGHTLY CONFIRMED THE DISALL OWANCE MADE ON THIS ACCOUNT AND THE SAME SHOULD BE SUSTAINED. 5. AFTER HEARING BOTH THE SIDES ON THE ISSUE, WE F IND THAT THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO ESTABLISH THA T THE FOREIGN TRAVELLING OF MRS. P. BHATTACHARYA WAS FOR ANY BUSINESS PURPOSES OF THE COMPANY. SIMPLY BECAUSE SHE WAS A DIRECTOR OF THE COMPANY AN D TRAVELLING ABROAD 3 WITH HER HUSBAND WITHOUT ANY BUSINESS PURPOSES CANN OT BY ITSELF GO TO PROVE THAT THE EXPENDITURE INCURRED FOR SUCH FOREIG N TRAVELLING WAS FOR THE COMPANYS BUSINESS PURPOSES. AS WE HAVE ALREADY HEL D THAT THE SAID FOREIGN TOUR BY MRS. P. BHATTACHARYA WAS NOT FOR CO MPANYS BUSINESS PURPOSES, THE EXPENDITURE INCURRED ON SUCH TRAVELLI NG WAS IN THE NATURE OF PERSONAL EXPENDITURE AND THUS THIS EXPENDITURE CANN OT BE ALLOWED IN THE HANDS OF THE ASSESSEE-COMPANY. THE ORDERS OF THE AU THORITIES BELOW ON THIS ISSUE ARE, THEREFORE, UPHELD. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE COURT ON 19.03.2010 SD/- SD/- [B.R. MITTAL] [B.C. ME ENA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 19-03-2010 COPY FORWARDED TO : 1. M/S. DISHA EYE HOSPITAL & RESEARCH CENTRE (P) LTD., C/O. V.N.PUROHIT & CO., 32-B, GANESH CH. AVENUE, 2 ND FLOOR, KOLKATA-700 013. 2. I.T.O., WARD-10(1), KOLKATA. 3. C.I.T.(A)-XXXII, KOLKATA. 4. THE C.I.T., KOL- 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, KOL KATA. TRUE COPY, BY OR DER [DKP] DY. REGISTRAR.