DCIT, Circle - 6(1), Kolkata, Kolkata V. M/s. Orient Cement Ltd., , Kolkata

ITA 2274/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7608 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE
• Assessee Lawyers: ASHIM CHOUDHURY; RO
• Keywords: Business expenditure; Set aside

Judgement Text

I.T.A. NO. 2274/KOL/2017 [ASSESSMENT YEAR: 2014-15] PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B: KOLKATA BEFORE SHRI A. T. VARKEY, JM & SHRI A.L.SAINI, AM I.T.A. NO. 2274/KOL/2017 [ASSESSMENT YEAR: 2014-15] DCIT, CIRCLE-6(1), P-7, CHOWRINGHEE SQUARE, KOLKATA-110069. VS. M/S. ORIENT CEMENT LTD., 9/1, R.N.MUKHERJEE ROAD, BIRLA BUILDING, KOLKATA-700001. PAN-AABCO5420A APPELLANT RESPONDENT DATE OF HEARING 26.12.2018 DATE OF PRONOUNCEMENT 09.01.2019 FOR THE APPELLANT SHRI PINAKI MUKHERJEE, ADDL. CIT SR.DR FOR THE RESPONDENT SHRI ASHIM CHOUDHURY, ADVOCATE & SHRI ROHAN PODDAR, ADVOCATE PER A.T.VARKEY, JUDICIAL MEMBER THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE O RDER OF THE LD. CIT(A)-2, KOLKATA DATED 08.08.2017 FOR AY 2014- 15. 2. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE A CTION OF LD.CIT(A) IN DELETING THE ADDITION OF RS.1,15,21,683/ - AS CLAIMED BY THE ASSESSEE SHOWN AS MISCELLANEOUS EXPENSES WHICH WAS LATER EXPLAINED BEFORE THE AO THAT IT WAS THE AMOUNT/FUND MISAPPROPRIATE D BY SOME EMPLOYEES OF THE COMPANY. 3. BRIEF FACTS OF THE CASE ARE THAT THE AO ON SCRUTINY O F DOCUMENTS NOTED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.1,15 ,21,683/- ON ACCOUNT OF MISAPPROPRIATION OF FUNDS BY THE EMPLOYEES WHICH WAS CHARGED TO REVENUE DURING THE YEAR BY DEBITING AS MISC ELLANEOUS EXPENSES UNDER THE HEAD OTHER EXPENSES. ON BEING A SKED BY THE AO, THE ASSESSEE SUBMITTED THAT THE LOSS WAS DUE TO MISAPPROPR IATION OF I.T.A. NO. 2274/KOL/2017 [ASSESSMENT YEAR: 2014-15] PAGE | 2 FUNDS BY THE EMPLOYEES WHO WERE EMPLOYED IN THE NORM AL COURSE OF BUSINESS. ACCORDING TO THE ASSESSEE, THE ENTRUSTMENT O F THE DUTY TO THE EMPLOYEES WAS IN THE NORMAL COURSE OF THE CONDUCT OF TH E BUSINESS AND THE LOSS HAVING BEEN INCIDENTAL TO SUCH EMPLOYMENT NEE D TO BE ALLOWED AS BUSINESS EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED BY THE AO AND THE AO MADE AN ADDITION OF RS.1,15,21,683/-, WHICH D ECISION WAS CHALLENGED BEFORE THE LD.CIT(A) WHO WAS PLEASED TO DE LETE THE SAME. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. LD.DR ASSAILED THE DECISION OF THE LD.CIT(A) AND DREW OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAD BEEN CLAIMING SUCH IDENTICAL CLAIM OF EXPENDITURE/LOSS ON ACCOUNT OF MISAPPROPRIATION OF FUNDS/PILFERAGE CONSECUTIVELY YEA R AFTER YEAR AND WONDERED AS TO HOW A COMPANY CAN CLAIM EXPENDITURE/L OSS FOR MISAPPROPRIATION OF FUNDS/PILFERAGE EVERY YEAR. ACC ORDING TO THE LD.DR, THOUGH THE ASSESSEE HAD LODGED AN FIR WITH PO LICE, IT HAD CLAIMED MISAPPROPRIATION OF FUNDS ONLY TO THE TUNE OF R S.71,60,495/- AND HAS NOT LODGED ANY CRIMINAL COMPLAINT/FIR FOR THE BALANCE AMOUNT OF RS.43,61,188/- WE NOTE THAT THOUGH THE LD.AR DOES NOT WANT US TO INTERFERE WITH THE ACTION OF LD.CIT(A), HOWEV ER COULD NOT POINT OUT THE BREAKUP OF THE MISCELLANEOUS EXPENSES CLA IMED INTER-ALIA AS TO WHETHER IT IS ON ACCOUNT OF MISAPPROPRIATION OF FU NDS/PILFERAGE OF FUEL, RAW MATERIAL CONSUMED, TRADE PAYABLES ETC. WHIC H WERE THE SPECIFIC ITEMS ON WHICH IN EARLIER YEARS THE ASSESSEE COMPANY WAS CLAIMING LOSS DUE TO MISAPPROPRIATION/PILFERAGE. WE NOTE THAT LD.CIT(A) HAS NOT GIVEN THE BREAKUP OF THE MISAPPROPRIATION OF FU NDS/PILFERAGE AND ALSO HAS NOT GIVEN ANY FACTUAL FINDING IN RESPECT TO THE GENUINENESS OF THE LOSS/CLAIM MADE BY THE ASSESSEE AND THEREAFTER THE QUESTION ARISES AS TO WHETHER THE EXPENDITURE/LOSS HAS NEXUS TO BUSINESS. IN THE LIGHT OF THE ABOVE, WE ARE OF THE CONSIDERED OPINIO N THAT LD.CIT(A) I.T.A. NO. 2274/KOL/2017 [ASSESSMENT YEAR: 2014-15] PAGE | 3 HAS NOT APPLIED HIS MIND WHILE DECIDING THE ISSUE WHI CH WAS A MIXED QUESTION OF FACT AND LAW WHILE ALLOWING THE EXPENDITUR E CLAIMED BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF LD.CI T(A) AND REMAND IT BACK TO THE LD.CIT(A) TO ADJUDICATE DENOVO ON THIS ISSU E AND TO PASS A SPEAKING ORDER UNTRAMMELED BY ANY OBSERVATION MADE S UPRA BY US. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 9TH JANUAR Y, 2019. SD/- SD/- (A.L.SAINI) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9TH JANUARY, 2019 *AMIT KUMAR* COPY OF THE ORDER FORWARDED TO: 1 APPELLANT DCIT, CIRCLE-6(1), P-7, CHOWRINGHEE SQUA RE, KOLKATA- 110069. 2 RESPONDENT M/S. ORIENT CEMENT LTD., 9/1, R.N.MUKHERJE E ROAD, BIRLA BUILDING, KOLKATA-700001. 3 4 5 CIT(A), KOLKATA. CIT, KOLKATA DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSISTANT REGISTRAR