M/s Viscus Infotech Limited, Indore V. THE ITO 3(2), Indore

ITA 217/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5954 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: SHRIANIL KHANDELWAL
• Keywords: Business expenditure

Judgement Text

VISCUS INFOTECH LTD. ITA NO. 217/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO. 217/IND/2016 A.Y. 2011-12 VISCUS INFOTECH LIMITED INDORE :: APPELLANT VS INCOME TAX OFFICER 3(2) INDORE :: RESPONDENT ASSESSEE BY SHRIANIL KHANDELWAL RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 08.6.2016 DATE OF PRONOUNCEMENT 20.6.2016 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E ORDER OF LD. CIT(A)-BHOPAL, DATED 08.12.2015 ON THE GROUND THAT LD. CIT(A)-22, NEW DELHI, HAVING COUNCURRENT JURISDICTION OF CIT(A)-2, INDORE. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 107500/- OUT OF BOOKS & PERIODICALS. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.18,16,512/- OUT OF SALARIES. VISCUS INFOTECH LTD. ITA NO. 217/IND/2016 2 (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.3,45,707/- OUT OF WEB DESIGNING EXPENSES. (IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.30,000/- OUT OF DI WALI EXPENSES. (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 99,391/- OUT OF S TAFF WELFARE EXPENSES. (VI) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN NOT DECIDING THE GROUND OF AN ADDITION OF RS.15, 400/- ON THE WRONG PRETEXT THAT THE INCOME TAX HAS BEEN DEBITED TO P&L ACCOUNT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE DERIVES INCOME FROM SOFTWARE DEVELOPMENT/WEB DESIGNING, ETC. DURIN G THE YEAR THE ASSESSEE HAS SHOWN RECEIPTS FROM OPERATIONS AT RS. 24460670/- . BESIDES THIS THE ASSESSEE HAS ALSO EARNED INTEREST INCOME OF RS.98915/- TOTALING TO RS. 25449821/-. THE ASSESSI NG OFFICER FOUND THAT THE ASSESSEE HAS INCREASED THE EXPENDITURE ON MONTH LY SUBSCRIPTION TO TIMES OF MONEY MAGAZINE FOR WHICH COST IS RS.1075 00/- WHICH WAS NOT A BUSINESS EXPENDITURE. AS SUCH, THE ASSESSING OFFI CER ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. MOREOVER, THE ASSESSEE HAS SPENT ON BOOKS RELATING TO SOFTWARE. THE ASSESSEE HAS MAD E PAYMENT THROUGH ONLINE BANK ACCOUNT. THE ASSESSING OFFICER DISALLOW ED THE EXPENDITURE INCURRED ON TIMES OF MONEY MAGAZINE OF RS. 107500 /-. SIMILARLY, THE ASSESSING OFFICER DISALLOWED THE INCREASE IN SALARY AND ALLOWANCES FROM RS. 121.54 LACS TO RS.181.65 LACS. THE ASSESSING OF FICER ALSO VISCUS INFOTECH LTD. ITA NO. 217/IND/2016 3 DISALLOWED WEB DESIGNING EXPENSES OF RS.3,45,707/-. SIMILARLY, DIWALI EXPENSES OF RS. 30,000/- , STAFF WELFARE EXPENSES O F RS.99,391/- AND INCOME TAX DEBITED TO PROFIT AND LOSS ACCOUNT RS.15 ,400/- WERE DISALLOWED. 3. BEING AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEF ORE THE CIT(A) BUT THE ASSESSEE DID NOT GET ANY RELIEF. NOW THE AS SESSEE IS BEFORE ME. 4. I HAVE HEARD BOTH THE SIDES. SO FAR AS DISALLOWA NCE OF RS.107500/- OUT OF BOOKS AND PERIODICALS IS CONCERNED, I AM OF THE VIEW THAT THE ASSESSEES BUSINESS IS OF 100% EXPORT AND AS SUCH B USINESS FROM FOREIGN COUNTRIES CAN BE GENERATED THROUGH ADVERTIS EMENT ONLY. THE ASS HAS MADE THE SUBSCRIPTION FOR DISPLAYING MARKETING ADVERTISEMENT ON THE WEB SITES WHEREFROM THE ASSESSEE COULD GET IN TOUCH WITH PROSPECTIVE CUSTOMERS. CONSIDERING THIS ASPECT, I ALLOW THIS GR OUND OF APPEAL. 5. SO FAR AS GROUND NO. 2 RELATING TO DISALLOWANCE OUT OF SALARIES IS CONCERNED, I FIND THAT THE ASSESSEE HAS INCREASED T HE SALARY. IT IS A WELL KNOWN FACT THAT THERE HAS BEEN ABNORMAL INCREASE IN EXPENSES AND AS SUCH IN SALARIES OF ALL THE EMPLOYEES HAVE BEEN INC REASED BECAUSE OF THIS FACTOR. ON THIS ACCOUNT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE SALARY EXPENSES. I, THEREFORE, ALLO W THIS GROUND OF APPEAL. VISCUS INFOTECH LTD. ITA NO. 217/IND/2016 4 6. SO FAR AS GROUND NO. 3 RELATING TO DISALLOWANC E OUT OF WEB DESIGNING EXPENSES IS CONCERNED, I FIND FROM THE RE CORD THAT THE PAYMENT DOES NOT CONSTITUTE PROFESSIONAL FEE NOR CA N THIS BE COVERED UNDER THE DEFINITION OF TECHNICAL FEES. PAYMENT IS MADE FOR PURCHASING PLUG IN, THEME PURCHASE OR CERTIFICATION PURCHASE FOR CLIENTS OR SECURING A WEB NAME. WHOLE OF THE PAYMENT HAS BEEN MADE ABR OAD INUS THROUGH CREDIT CARD, STATEMENTS OF WHICH WERE SUBMI TTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. AS THE RELA TED INCOME IS BOOKED UNDER THE HEAD WEB DESIGNING INCOME, SUCH PURCHAS ES ARE DEBITED TO WEB DESIGNING EXPENSES. IN THIS VIEW OF THE MATTER, THIS GROUND OF APPEAL IS ALLOWED. 7. SO FAR AS GROUND NO. 4 RELATING TO DIWALI EXPENS ES IS CONCERNED, I FIND THAT THE ASSESSEE HAS CLAIMED RS.98,464/- TOWA RDS DIWALI EXPENSES OUT OF WHICH THE ASSESSING OFFICER HAS DISALLOWED R S. 30,000/- BECAUSE OF PERSONAL NATURE INVOLVED THEREIN. IN MY VIEW, T HE DISALLOWANCE IS JUSTIFIED. THIS GROUND OF APPEAL IS DISMISSED. 8. SO FAR AS GROUND NO. 5 RELATING TO STAFF WELFARE EXPENSES OF RS.99,391/- IS CONCERNED, I FIND THAT THE ASSESSEE HAS CLAIMED STAFF WELFARE EXPENSES OF RS. 4,96,956/- WHEREAS IN LAST YEAR THESE WERE CLAIMED AT RS. 1,66,036/- AND AS SUCH THERE WAS ABN ORMAL HIKE. ON BEING ASKED, THE ASSESSEE EXPLAINED THAT THE HIKE W AS ON ACCOUNT OF VISCUS INFOTECH LTD. ITA NO. 217/IND/2016 5 STARTING LUNCH FACILITY AT CONCESSIONAL RATES AS AL SO BECAUSE THE ASSESSEE HAD ARRANGED AS TOUR TO MULUND-JANJIRA FOR ALL THE EMPLOYEES WHICH ACCOUNTED FOR ADDITIONAL EXPENDITURE. IN MY VIEW, THIS EXPLANATION OF THE ASSESSEE WAS RIGHTLY REJECTED BY THE AUTHORI TIES BELOW. THIS GROUND IS THEREFORE DISMISSED. 9. SO FAR AS GROUND NO. 6 RELATING TO NON-DECIDING THE GROUND OF AN ADDITION OF RS. 15,400/- ON THE WRONG PRETEXT THAT THE INCOME HAS BEEN DEBITED TO P&L ACCOUNT, I FIND NO FLAW IN THE ORDER OF THE CIT(A) AND CONFIRM THE SAME. THIS GROUND IS, THEREFORE, DISMIS SED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2016. SD/- ( D.T. GARASIA) JUDICIAL MEMBER 20 TH JUNE, 2016