Anil Kumar Kyal, Cuttack V. ITO Ward-2(4), Cuttack

ITA 216/CTK/2023

AI Insights

The case involves Anil Kumar Kyal, the proprietor of Om Distributors, who appealed against the order of the CIT(A), Cuttack, which confirmed the disallowance of Rs.2,98,600/- in expenses incurred while earning commission income from West Coast Paper Mills. The expenses included unloading of materials, local taxi fares, meals and snacks, tips, and miscellaneous expenses. The tribunal found that while some expenses were justifiable and related to the business activities of supplying paper to government agencies, others like tips and unspecified miscellaneous expenses lacked sufficient justification and were thus disallowed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127117 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकर अऩीऱीय अधधकरण, “एस.एम.सी” न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER आयकर अऩीऱ सं/ITA No.216/C TK/2023 (ननधाारण वषा / Asses s m ent Year :2012-2013) Anil Kumar Kyal, Prop. Om Distributors, Baimundi Marg, Hanuman Ghat, Cuttack Vs ITO, Ward-2(4), Cuttack PAN No. :ABXPK 7662 G (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri Mohit Sheth, Advocate राजस्व की ओर से /Revenue by : Shri S.C.Mohanty, Sr. DR स ु नवाई की तारीख / Date of Hearing : 07/08/2023 घोषणा की तारीख/Date of Pronouncement : 07/08/2023 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld. CIT(A), Cuttack, dated 18/07/2016, passed in I.T.Appeal No.648/2014-15 for the assessment year 2012-2013. 2. The appeal filed by the assessee is delayed by 711 days. For the delay, the assessee has filed an affidavit, wherein he mentioned that the delay was on account of demise of earlier counsel of the assessee and the subsequent search and retrieval of the records. The affidavit filed by the assessee is not been found to be false. Consequently, the delay in filing the appeal is condoned and the appeal is disposed off on merits. 3. It was submitted by the ld.AR that the only issue in this appeal of the assessee is against the confirmation of disallowance of Rs.2,98,600/- representing the expenses incurred on the earning of the commission income from West Coast Paper Mills to an extent of Rs.5,42,994/-. It was ITA No.216/CTK/2023 2 submitted by the ld. AR of the assessee that the assessee is running an agency for supplying paper to the government organisations. It was the submission that the assessee gets the papers supplied from West Cost Paper Mills to the various government organisations. It was the submission that the assessee has consequently incurred expenditure under the head unloading of material to an extent of Rs.1,62,900/-, local taxi expenses of Rs.60,600/-, meals and snacks expenses to an extent of Rs.31,000/-, tips expenses to an extent of Rs.25,200/- and miscellaneous expenses of Rs.19,294/-, totalling to Rs.2,98,994/-. It was specifically queried to the ld. AR as to why, when the assessee is supplying papers to the various Government agencies and expenditure under the head, tips is required, in this regard, ld. AR submitted that many-a-times tips have been given to the local people for getting the labour, who are faster. In regard to miscellaneous expenses, when the ld.AR was questioned about its nature, he was unable to give detailed break-up. 4. In reply, ld. Sr. DR submitted that the break-up of these expenditures have not been shown to the ld. CIT(A). It was the submission that the assessee is in the business of earning of commission only and from commission business clearly no expenditure is required. It was the prayer that the disallowance as made by the AO and as confirmed by the ld. CIT(A) is liable to be upheld. 5. I have considered the rival submissions. Admittedly, the assessee is in the business of organising supply of paper to the various government agencies. It is also an accepted fact that when supplying material ITA No.216/CTK/2023 3 expenditures relating to loading and unloading are incurred, consequently the expenses in respect of unloading of material to the extent of Rs.1,62,900/- is acceptable and the AO directed to allow the same. 6. Coming to the issue of local taxi expenses, it is an accepted fact that the assessee would have to travel to various locations where the supply of materials are made, consequently, the AO is directed to allow this expenditure of Rs.60,600/-. 7. It is also an admitted fact that there would be expenditure incurred in respect of food for the assessee as also the assessee’s staff in relation to the various locations at which the material is being supplied. Consequently, the expenses of Rs.31,000/- in respect of meals and snacks, is also allowed. 8. Coming to the issue of tips, admittedly, the same is not allowable expenditure as it is not expected from an assessee to incur the expenses. Thus, the expenditure claimed under this head stands disallowed. 9. In regard to the expenditure claimed under the head miscellaneous expenses as the assessee has not been able to point out the nature of this expenditure, the disallowance of the same stands upheld. 10. In the result, appeal of the assessee is partly allowed. Order dictated and pronounced in the open court on 07/08/2023. Sd/- (जाजज माथन) (GEORGE MATHAN) न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 07/08/2023 Prakash Kumar Mishra, Sr.P.S. ITA No.216/CTK/2023 4 आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Anil Kumar Kyal, Prop. Om Distributors, Baimundi Marg, Hanuman Ghat, Cuttack 2. प्रत्यथी / The Respondent- ITO, Ward-2(4), Cuttack 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यावऩत प्रयत //True Copy//