M.P. AGGARWAL, MUMBAI V. ADDL CIT 18(3), MUMBAI

ITA 2124/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2220 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2012
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI SANDEEP GOSAIN , J M ./ ITA NO . 2124 / MUM/20 1 2 ( / ASSESSMENT YEAR : 20 0 6 - 200 7 ) M.P .AGGARWAL, C/O.SHA NKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265, PRINCESS STREET, MUMBAI - 400002 VS. ADCIT - 18(3) , MUMBAI ./ ./ PAN/GIR NO. : A A BPA 6137 H ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SATISH JAIN /REVENUE BY : SHRI VIVEK BATRA / DATE OF HEARING : 08 / 09 / 2015 / DATE OF PRONOUNCEMENT 08/12/2 015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 18 - 1 - 2012 FOR THE ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER P ASSED U/S.143(3) OF THE I.T.ACT, WHEREIN THE ASSESSEE IS AGGRIEVED FOR ADHOC DISALLOWANCE ON ACCOUNT OF TELEPHONE EXPENSES AN D SALES PROMOTION EXPENSES. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN EXPORTING OF DYES AND DYE INTERMEDIATES & WIND POWER GENERATION. DURING THE YEAR UNDER CONSIDERATION ASSESSEES EXPORT TURNOVER INCREASED FROM RS.8.5 CRORES TO ITA NO. 2124 /M/1 2 2 16.8 CRORES. HOWEVER, POSTAGE AND TELEPHONE EXPENSES WAS INCURRED RS.6 LAKHS IN THE EARLI E R YEAR AND RS.6.10 LAKHS FOR THE YEAR UNDER CONSIDERATION . THE AO DISALLOWED 1/5 TH OF THE SAME ON THE GROUND THAT THERE IS NO CONTROLLING MECHANISM TO MONITOR THE USE OF TELEPHONES. BY THE IMPUGNED ORDER THE CIT(A) REDUCED THE DISALLOWANCE TO 50% . 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE IS IN THE BUSINESS OF INTERNATIONAL TRADE, MOST OF THE TELEPHONE CALL S HAVE TO BE MADE AT ODD HOURS FROM THE RESIDENTS. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF THE EXPENSES INCURRED ON ACCOUNT OF PERSONAL USE. 4. THE ASSESSEE HAS CLAIMED SA LES PROMOTION EXPENSES OF RS. 9.45 LAKHS. THE AO DISALLOWED 1/5 TH OF THE SAME ON ADHOC BASIS. BY THE IMPUGNED ORDER THE CIT(A) RESTRICTED THE DISALLOWAWNCE TO 20% OF AMOUNT OF RS. 9,38,757/ - . 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT MAJOR EXPEN SES WAS PERTAINING TO THE EXPENSES FOR PARTICIPATION IN AN EXHIBITION IN SPAIN. THE ASSESSEE HAS PRODUCED THE DETAILS OF EXPENDITURE INCURRED, GENUINENESS OF THE EXPENDITURE WAS NOT IN DOUBT. DURING THE YEAR ASSESSEE HAS INCURRED LOSS OF RS. 2.44 CRORES, TH EREFORE, THERE DOES NOT APPEAR ANY REASON TO CLAIM BOGUS EXPENSES. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTRICT THE DISALLOWANCE TO 5% OF THE EXPENDITURE OF RS. 9,38,757/ - . WE DIRECT ACCORDINGLY. ITA NO. 2124 /M/1 2 3 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 08/12 / 201 5 . SD/ - SD/ - ( SANDEEP GOSAIN ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMB ER MUMBAI ; DATED 08/12 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//