M/s. Dhir & Dhir Associates, New Delhi V. ACIT, New Delhi

ITA 2169/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2863 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH GOEL
• Section: 37(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCHES: B NEW DELHI ] BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER ITA. NO.2169/DEL/2014 ASSESSMENT YEAR : 2010-11. DHIR & DHIR ASSOCIATES, ASSTT. COMMISSIONER D 55, DEFENCE COLONY, VS. OF INCOME TAX, NEW DELHI 110 024. CIRCLE : 37 (1), NEW DELHI. PAN : AAAFD 2462 K (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. RANO JAIN, C. A.; & SHRI ASHISH GOEL, C. A.; DEPARTMENT BY : SHRI ANIL KUMAR SHARMA, SR. D. R.; DATE OF HEARING : 11.05.2017 DATE OF PRONOUNCEMENT : 16.06.2017 O R D E R . PER I. C. SUDHIR, J. M. : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.01.2014 PASSED BY THE LEARNED CIT (APPEALS). THE ASSESSEE IS A LAW FIRM (ADVOCATES & SOLICITORS). IT HAS FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,86,96,900/-. THE ASSESSMENT WAS COMPUTED BY THE 2 ASSESSING OFFICER AT AN INCOME OF RS.4,96,50,012/- AFTER MAKING THE FOLLOWING ADDITIONS :- (I) INTEREST ON LOAN EXPENDITURE : RS.5,11,832/- (II) TELEPHONE EXPENSES, VEHICLE MAINTENANCE EXPENDITURE : RS.2,47,906/- (III) BUSINESS PROMOTION EXPENSES : RS. 93,374/- 2. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS), THE ASSESSEE CAME IN APPEAL BEFORE THE LEARNED CIT (APPEALS). THE LEARNED CIT (APPEALS) IN ITS ORDER DATED 29.01.2014 DELETED ADDITION OF RS.5,11,832/- IN RESPECT OF INTEREST ON LOAN EXPENDITURE. HOWEVER, SHE CONFIRMED THE OTHER TWO DISALLOWANCES. 3. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. IT WAS CONTENTED BY THE LEARNED AR THAT THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCES. ALL THESE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNTS. THESE BOOKS OF ACCOUNT HAVE BEEN AUDITED AND TAX AUDIT REPORT HAS ALSO BEEN FILED. THE AUDITOR HAS ALSO CERTIFIED THAT 3 THERE IS NO PERSONAL ELEMENT IN ANY OF THE EXPENDITURE RECORDED IN THE BOOKS OF ACCOUNT. 3.1 IT WAS FURTHER CONTENTED THAT THE LEARNED ASSESSING OFFICER HAS DISALLOWED THE EXPENDITURE BY INDULGING INTO SURMISES AND CONJECTURE AND MERELY ON ESTIMATION. THE APPELLANT IS A LAW FIRM WHICH HAS ENGAGED A NUMBER OF LAWYERS AND PERSONNEL TO PROVIDE THE SERVICES IN THE AREA OF CORPORATE LITIGATION AND THESE EXPENSES HAVE BEEN INCURRED WHILE PERFORMING ITS SERVICES AND HENCE NO DISALLOWANCE IS CALLED FOR. THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS :- (I) ACIT VS. AMTEK AUTO LIMITED (2005) 112 TTJ 455; (II) SHRI DEVENDER KUMAR VS. ITO IN ITA. NO. 3239/DEL/2014 [ORDER DATED 30.08.2016]; (III) SHRI GAGAN GOYAL VS. JCIT IN ITA. NO. 1514/DEL/2015 [ORDER DATED 2.08.2016]; (IV) DCIT VS. FCB ULKA ADVERTISING PVT. LTD. IN ITA. NO. 5404/MUM/2007 [ORDER DATED 21.05.2014]. 4 3.2 IN REPLY, THE LEARNED SR. DR RELIED UPON THE ORDERS PASSED BY THE LOWER AUTHORITIES. 3.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. ON GOING THROUGH THE SAME WE NOTE THAT THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON ESTIMATE BASIS. THE LEARNED CIT (APPEALS) HAS ALSO CONFIRMED THE SAME HOLDING THAT THE ENTIRE EXPENSES ARE NOT ADMISSIBLE AS PER THE PROVISIONS OF SECTION 37(1) OF THE ACT. THE DISALLOWANCE HAS BEEN MADE MERELY BY INDULGING INTO SURMISES. THE APPELLANT HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS. THESE BOOKS OF ACCOUNTS HAVE BEEN AUDITED. NONE OF THE AUTHORITIES BELOW HAVE GIVEN ANY INSTANCE OF THE PERSONAL EXPENDITURE HAVING BEEN RECORDED OR ANY EXPENDITURE NOT BEING ALLOWABLE UNDER SECTION 37(1) OF THE INCOME TAX ACT. IN THE ABSENCE OF ANY SPECIFIC FINDING, WE ARE OF THE VIEW THAT THE LEARNED CIT (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 3.4 ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCES OF RS.2,47,906/- ON TELEPHONE AND VEHICLE MAINTENANCE AND RS.93,374/- ON ACCOUNT OF THE BUSINESS PROMOTION EXPENSES. 5 4. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON : 16 TH JUNE, 2017 . SD/- SD/- ( L. P. SAHU ) ( I. C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : THE 16 TH JUNE, 2017 . *MEHTA* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT; 2. RESPONDENT; 3. CIT; 4. CIT (APPEALS); 5. DR, ITAT, ND. BY ORDER ASSISTANT REGISTRAR 6 DATE DRAFT DICTATED ON 16.06.2017 DRAFT PLACED BEFORE AUTHOR 16.06.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. 7