ACIT 15(1), MUMBAI V. CHETAN EXPORTS, MUMBAI

ITA 2296/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84572 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPSR

Judgement Text

, ( ), IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI . . , , . . , ! ' BEFORE SHRI H L KARWA, PRESIDENT, & SHRI B R BASKAR AN, AM ./ITA NO.2075/MUM/2013 ( # $ / ASSESSMENT YEAR : 2008-09) CHETAN EXPORTS 31/33, MIRZA STREET LALWANI HOUSE, 4 TH FLOOR MUMBAI-400 003. PA NO.AABFC 9786 E VS. ACIT 15(1) MUMBAI. ( %& /APPELLANT) ( '(%& / RESPONDENT) ./ITA NO.2296/MUM/2013 ( # $ / ASSESSMENT YEAR : 2008-09) ACIT - 15(1) MUMBAI. VS. CHETAN EXPORTS 31/33, MIRZA STREET LALWANI HOUSE, 4 TH FLOOR MUMBAI-400 003. PA NO.AABFC 9786 E ( %& /APPELLANT) ( '(%& / RESPONDENT) ASSESSEE BY SHRI MANDAR VAIDYA REVENUE BY SHRI NEIL PHILIP(SR. AR) DATE OF HEARING : 29.12.2014 DATE OF PRONOUNCEME NT : 31.12.2014 ' ) / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER : THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 14/01/2013 PASSED BY THE LD. CIT(A)-26, MUMBAI, RELATING TO THE ASSES SMENT YEAR 2008-09. BOTH THE 2 ITA NO.2075 & 2296/MUM/2013 AY:2008-09 PARTIES HAVE FILED THIS APPEAL CHALLENGING THE ORDE RS OF LD. CIT(A) ON THE POINTS DECIDED AGAINST EACH OF THEM. 2. FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING AND EXPORT OF DIAMOND, GOLD JEWELLERY AND PRECIOUS AND SEMI-PRECIOUS STONES. THE AO COMPLETED THE ASSESSME NT BY MAKING DISALLOWANCES OUT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. TH E AO, INTERALIA DISALLOWED RS.7,92,000/- OUT OF LABOUR CHARGES AND 20% FOREIGN TRAVEL EXPENSES CLAIMED BY THE ASSESSEE . THE LABOUR CHARGES WERE DISALLOWED ON TH E REASONING THAT THE NOTICE ISSUED TO SOME OF THE PERSONS WERE RETURNED UNSERVE D. THE DISALLOWANCE OUT OF FOREIGN TRAVEL ASSESSMENT WERE MADE ON THE REASONIN G THAT THE ASSESSEE HAS FAILED TO SUPPORT THE CLAIM WITH NECESSARY SUPPORTING DOCU MENTS. 3. IN THE APPEAL FILED BY THE ASSESSEE, THE LD. CIT (A) RESTRICTED THE DISALLOWANCE TO 10% OF LABOUR CHARGES AND FOREIGN TRAVEL EXPENSE S. 3.1 THE REVENUE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN GRANTING RELIEF IN RESPECT OF LABOUR CHARGES. THE ASSESSEE IS AGGRIEVE D BY THE DECISION OF THE LD. CIT(A) IN PARTLY CONFIRMING BOTH THE DISALLOWANCES. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . WE NOTICE THAT BOTH THE DISALLOWANCES HAVE BEEN MADE ON ESTIMATED BASIS DUE TO FAILURE OF THE ASSESSEE TO FURNISH NECESSARY DETAILS IN ORDER TO SUBSTANTIATE THE CLAIM. THE LD. COUNSEL FOR THE ASSESSEE, POINTED OUT THAT, THE PERCENTAGE OF LABOU R CHARGES CLAIMED BY THE ASSESSEE TO THE TOTAL EXPENSES, HAS ACTUALLY COME D OWN DURING THE YEAR UNDER CONSIDERATION. SIMILARLY, HE SUBMITTED THAT FOREIGN TRAVEL WERE UNDERTAKEN BY THE MANAGING PARTNER OF THE FIRM FOR BUSINESS PURPOSES ONLY. HOWEVER, THE LD. DR POINTED OUT THAT THE IMPUGNED DISALLOWANCES HAD TO BE MADE DUE TO FAILURE OF THE ASSESSEE TO SUBSTANTIATE THE CLAIMS. ACCORDINGLY, W E ARE OF THE VIEW THAT THE DISALLOWANCE HAS TO BE MADE TO COVER UP THE DEFICIE NCIES. HOWEVER, WE ARE OF THE VIEW THAT THE DISALLOWANCE SUSTAINED BY THE LD. CIT (A) IS ON HIGHER SIDE. CONSIDERING THE EXPLANATION OF THE ASSESSEE, AND AL SO, BY CONSIDERING THE FACT, THAT THE ASSESSEE FAILED TO FURNISH RELEVANT DETAILS, WE ARE OF THE VIEW THAT BOTH THE ISSUES WOULD MEET ENDS OF JUSTICE, IF THE DISALLOWA NCE IS RESTRICTED TO 7% OF BOTH THE 3 ITA NO.2075 & 2296/MUM/2013 AY:2008-09 EXPENSES CLAIMED BY THE ASSESSEE. ACCORDINGLY, WE M ODIFY THE ORDER OF LD. CIT(A), AND DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 7% OF BOTH I.E., LABOUR CHARGES AND FOREIGN TRAVEL EXPENSES CLAIMED BY THE ASSESSEE. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE, IS PARTLY ALLOWED AND APPEAL FILED BY THE REVENUE, IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF DECEMBER, 2014. SD/- SD/- (H L KARWA ) (B.R. BASKARAN) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT : 31/12/2014. JV. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, CONCERNED 4. THE CIT (A)-CONCERNED 5. THE DR, MUMBAI D BENCH BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI