ITO, Ward-7(2),Kolkata, Kolkata V. M/s Raghu Vinncom Pvt. Ltd, Kolkata

ITA 2346/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7930 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-04-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: S K CHATURVEDI
• Keywords: Principle of natural justice; Additional evidence; Commercial expediency; TDS; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2346/KOL/2016 ( / ASSESSMENT YEAR:2010-11) ITO, WARD-7(2), KOLKATA VS. M/S RAGHU VINCOM PVT. LTD. 207, MAHARSHI DEVENDRA ROAD, ROOM NO. 107, 6 TH FLOOR, KOLKATA- 700007. ./ ./PAN/GIR NO.: AABCR 3990 G (ASSESSEE) .. (REVENUE) ./ITA NO.2330/KOL/2016 ( / ASSESSMENT YEAR:2010-11) M/S RAGHU VINCOM PVT. LTD. 207, MAHARSHI DEVENDRA ROAD, ROOM NO. 107, 6 TH FLOOR, KOLKATA-700007. VS. DCIT, CIRCLE-9, KOLKATA ./ ./PAN/GIR NO.: AABCR 3990 G (ASSESSEE) .. (REVENUE) ASSESSEEBY : SHRI ROBIN CHOUDHURY, ADDL. CIT SR. D R RESPONDENT BY : SHRI S.K. CHATURVEDI, FCA / DATE OF HEARING : 29/04/2019 /DATE OF PRONOUNCEMENT : 19/07/2019 / O R DE R PER DR. A. L. SAINI: THE CAPTIONED CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE, PERTAINING TO ASSESSMENT YEAR2010-11, ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA, W HICH IN TURN ARISE OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/ S 143(3) OF THE INCOME TAX, ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT),DAT ED 30.03.2013. RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 2 22 2 2. FIRST WE SHALL TAKE REVENUES APPEAL IN I.T.A. NO. 2346/KOL/2016, FOR A.Y. 2010-11. GROUNDS OF APPEAL RAISED BY THE REVENUE AR E AS FOLLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN TH E CASE IN CONTRAVENTION TO RULE 45A OF IT RULES WHERE THE CAS E WAS NOT COVERED BY ANY EXCEPTION TO THE SAID RULE. 2. WHETHER THE LD. CIT(A) CONSEQUENT UPON ADMITTING AD DITIONAL EVIDENCE DELETED THE ADDITIONS MADE ON THE GROUNDS OF PAYM ENT TO SUB- CONTRACTOR AND PAYMENT OF LEGAL EXPENSES . 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GIVING SUBSTANTIAL RELIEF TO THE AS SESSEE ON REMAINING GROUND OF ADDITIONS WHERE ASSESSING OFFICER DISALLO WED THE ENTIRE EXPENDITURE ON THOSE GROUNDS IN LACK OF EVIDENCE PR OVIDED BY THE ASSESSEE TO SUBSTANTIATE SUCH CLAIM EXPENDITURE. 4. THAT THE DEPARTMENT CRAVES TO AMEND, ALTER OR DELE TE ANY OF THE GROUNDS MENTIONED ABOVE OR TO ADD A NEW GROUND , IF REQUIRED. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THE DETAILS AS CALLED FOR BY ASSESSING OF FICER, HOWEVER, THE ASSESSING OFFICER HAS DISALLOWED THE VARIOUS EXPENSES AND MAD E THE ADDITION ON ACCOUNT OF REPAIRS AND MAINTENANCE, LEGAL EXPENSES, COMPUTER E XPENSES, MISCELLANEOUS EXPENSES, TRAVELLING AND CONVENIENCE EXPENSES, AND EXPENSES U/S 14A ETC. THE LIST OF DISALLOWANCES MADE BY THE ASSESSING OFFICER IS G IVEN BELOW FOR READY REFERENCE: 4.. AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS PARTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORD ER OF LD CIT(A), THE REVENUE IS IN APPEAL BEFORE US. RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 3 33 3 5. THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERA TED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY.ON THE O THER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER PASSED BY THE L D. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE REASONING AND FINDINGS GIVEN BY TH E LD. CIT(A) IN RESPECT OF EACH AND EVERY EXPENSE, WHICH IS MENTIONED BELOW, D O NOT CONTAIN ANY INFIRMITY. THE DETAILED FINDINGS OF LD CIT(A), FOR EACH EXPENS E, ARE GIVEN BELOW FOR READY REFERENCE: A)REPAIR AND MAINTENANCE EXPENSES RS. 22,23,586/- DURING THE YEAR, THE APPELLANT HAS INCURRED A SUM O F RS. 22,23,586/- AGAINST REPAIR AND MAINTENANCE OF ITS MACHINERIES, VEHICLE, FURNITURE AND OTHER GENERAL REPAIRS AND MAINTENANCE FOR THE PURPOSE OF ITS BUSI NESS. THIS HAS BEEN DISALLOWED ON THE GROUNDS THAT NO PROOF WAS SUBMITTED. THE APP ELLANT HAS SUBMITTED THAT: THE SAME AMOUNT HAS BEEN DULY ACCOUNTED FOR AND DE BITED IN PROFIT AND LOSS ACCOUNT. DURING ASSESSMENT PROCEEDINGS, THE DETAILS OF EXPENSES IN THE LEDGER ACCOUNT OF THE SAME WAS FILED. THE LEDGER ACCOUNT C LEARLY EXPLAINS THE NATURE OF EXPENSES INCURRED. LD AO HAS DISALLOWED THE ENTIRE AMOUNT BY MENTIONING 'ON EXAMINATION OF THE P&L ACCOUNT IT WASFOUND THAT RS. 2223586/- WAS DEBITED TO P&L ACCOUNT OF REPAIR AND MAINTENANCE OF PLANT & MA CHINERY. ON PERUSAL OF SCHEDULE OF FIXED ASSETS, THE ASSESSEE COMPANY HAD WDV OF PLANT AND MACHINERY OF 522462/-. FURTHER ADDITION TO PLANT & MACHINERY ON FIXED ASSETS TO THE EXTENT AT 988197/-WAS MADE. THUS THE EXPENSES ON REPAIR AND M AINTENANCE EXCEEDED THE COST OF MACHINERY.. AND ALSO MENTIONING THAT THE S AME HAVE BEEN INCURRED IN CASH.' RELYING UPON THE CASES OF HON'BLE SUPREME CO URT AND THAT OF HON'BLE MADRAS HIGH COURT, THE ENTIRE EXPENSES WERE DISALLO WED. BY GOING THROUGH THE LEDGER ACCOUNT AND DETAILS OF EXPENSES, IT IS APPARENTLY CLEAR THAT THE REPAIR AND MAINTENANCE DOES NOT RELA TE TO MACHINERY ONLY WHAT LD. AO HAS INTERPRETED IN ASSESSMENT ORDER BY TAKING A CASUAL VIEW. THE OTHER VIEW THAT THE AMOUNT OF REPAIR AND MAINTENANCE CANNOT EX CEED THE AMOUNT OF WDV OF MACHINERY, IS ALSO NOT CORRECT BUT MERELY ON THE BA SIS OF IMAGINATION. THEREFORE, THE DISALLOWANCE OF ENTIRE AMOUNT CANNOT BE JUSTIFI ED. LD AO MUST HAVE APPLIED JUDICIOUS APPROACH BY IDENTIFYING THE SPECIFIC AMOU NT FOR DISALLOWANCE UNDER THE PRINCIPLES OF NATURAL JUSTICE AND THE METHODS PROVI DED IN STATUTE AND THOSE AS PER JUDICIAL PRONOUNCEMENTS.' I HAVE DULY CONSIDERED THE SUBMISSIONS MADE BY A/R AND WHILE GOING THROUGH THE LEDGER ACCOUNT OF REPAIRS AND MAINTENANCE AS SUBMIT TED, I AGREE THAT THE BASIS OF ADDITION OF 'REPAIRS AND MAINTENANCE MADE BY A.O .IS NOT CORRECT AND HAS NO BASIS. THE EXPENSES INCURRED BY ASSESSEE WERE QUITE REASONABLE AND COMMENSURATE WITH THE NATURE AND VOLUME OF THE BUSI NESS. THE AO HAS NOT BROUGHT OUT AS TO WHY THE ENTIRE AMOUNT WAS CONSIDE RED AS NOTGENUINE. HOWEVER, SINCE THERE WERE CASH PAYMENTS AND ALL VOUCHERS WER E MOSTLY SELF MADE BILLS, I CONSIDER IT FAIR TO DISALLOW @ 10% AMOUNTING TO RS. 2,22,359/- WHICH IS CONFIRMED AND THE BALANCE AMOUNT OFRS. 20,01,227/- IS DELETED. RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 4 44 4 B) LEGAL EXPENSES. RS. 13,73,373/- THE AO DISALLOWED THE ENTIRE EXPENSES ON TWO GROUND S THAT FIRST THE DETAILS WERE NOT SUBMITTED AND THAT NO TDS WAS DEDUCTED. THE APP ELLANT HAS SUBMITTED THAT 'DURING ASSESSMENT PROCEEDINGS, THE DETAILS IN THE FORM OF LEDGER ACCOUNT WAS SUBMITTED, THE SAME GIVES THE CLEAR EXPLANATION REG ARDING THE EXPENSES. THE APPELLANT IS IN THE BUSINESS OF CONTRACTOR AND DURI NG THE YEAR UNDER APPEAL HAS EXECUTED CONTRACTS AT MADHYA PRADESH AND TAMILNADU. IT IS TRUE THAT THE SUB- CONTRACTS WERE GIVEN BUT IT IS A FACT THAT THE EXPE NSES IF INCURRED DURING THE DISPUTES BY SUB-CONTRACTORS WAS NOT A PART OF CONTR ACT WITH SUB-CONTRACTORS. IT IS A PRACTICAL SITUATION THAT LOT OF DISPUTES ARISE AT T HE SITE AND IN ORDER TO AVOID THE LITIGATION, THESE ARE GENERALLY SETTLED AT THE SPOT BY MAKING CERTAIN PAYMENTS TO THE PARTIES. FOR THE SAME THE PERSONS MENTIONED IN LEDGER ACCOUNT WERE DISPUTED AND THEY MADE THE PAYMENTS FROM TIME TO TIME ON BEH ALF OF THE APPELLANT TO THE PARTIES AS AND WHEN SOME DISPUTE AROSE. IN THOSE CI RCUMSTANCES, THE PAYMENTS WERE NOT MADE TO THEM FOR THEIR SERVICES BUT FOR SE TTLING THE DISPUTES AT SPOT ON BEHALF OF THE APPELLANT SO THAT THE EXECUTION OF WO RK WAS NOT DELAYED. IN THOSE CIRCUMSTANCES, THE PROVISIONS OF CHAPTER XVIIB REGA RDING TDS DO NOT APPLY. REGARDING THESE EXPENSES, IT WAS ORIGINALLY SUBMITT ED THAT THESE WERE NOT THE PROFESSIONAL FEE PAID TO THE PARTIES BUT THESE WERE THE EXPENSES INCURRED TO SETTLE SMALL DISPUTES AND OBSTRUCTIONS CAUSED BY LOCAL PAR TIES AT THE SITE. THEREFORE, THE PROVISIONS OF SECTION 194J REGARDING DEDUCTION OF T AX AT SOURCE UNDER THE HEAD 'TECHNICAL AND PROFESSIONAL FEE' DO NOT APPLY. LD A O IN HIS REMAND REPORT HAS GIVEN THE FACTS OF ENQUIRIES THAT ALL THE PARTIES H AVE RESPONDED AND HAVE ADMITTED THAT THESE EXPENSES WERE INCURRED THROUGH THEMFOR T HE PURPOSE OF THE BUSINESS OF THE APPELLANT. ' I HAVE GONE THROUGH THE SUBMISSIONS MADE BY A/R AND ALSO THE REMAND REPORT AND THE REPORT OF DDIT (INV) , UNIT -2, AGRA WHERE THE PARTIES HAVE CONFIRMED THAT THEY HAVE RENDERED SERVICES FOR THE COMPANY AN D PRODUCED DOCUMENTS AND EVIDENCES IN THIS REGARD. SINCE PAYMENTS MADE TO AB OVE ADVOCATES WAS ONLY REIMBURSEMENT OF EXPENSES INCURRED BY THEM ON BEHAL F OF COMPANY FOR SETTLING OF DISPUTES AND NOT FOR FEES, HENCE TDS PROVISIONS IS NOT APPLICABLE. KEEPING IN VIEW THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES AND CON SIDERING THE NATURE AND VOLUME OF WORK, THE EXPENSES INCURRED IS CONSIDERED REASONABLEAND THE ADDITION OF TOTAL LEGAL EXPENSES AMOUNTING TO RS. 13,73,373/ - IS DELETED. C) ADVERTISEMENT EXPENSES RS.1991254/- THE AO DISALLOWED THE ENTIRE EXPENSES ON THE GROUND THAT THESE WERE NOT GENUINE. IT IS SEEN THAT THE APPELLANT SUBMITTED THE LEDGER ACCOUNT MENTIONING THE DETAILS OF EXPENSES. THE APPELLANT SUBMITTED:IT WAS BROUGHT T O THE NOTICE OF LD. AO THAT IT IS TRUE THAT THE WORK WASGIVEN TO SUB-CONTRACTS BUT THERE WAS NO CONDITION REGARDING THE EXPENSES FOR ADVERTISEMENT WILL BE ME T BY THE SUB-CONTRACTOR. IT WAS SUBMITTED THAT LOT OF BOARDS, BANNERS ARE TO BE PUR CHASED/PREPARED MENTIONING INSTRUCTIONS LIKE DIVERSION, WORK IN PROGRESS ETC. THIS FACT EVEN BEING TRUE WAS ALSO REJECTED. ' I HAVE DULY CONSIDERED THE SUBMISSIONS MADE BY A/R AND I HAVE SEEN THAT ALL LEDGER ACCOUNTS WERE SUBMITTED AND THERE IS NOTHING ON RECORD WHICH LEADS US TO BELIEVE THAT THE CONTENTION OF THE APPELLANT HAS NO BASIS. AS PER THE APPELLANT, THE PAYMENTS WERE MADE IN CASH TO SMALL PETTY WORKERS M AINLY FOR SMALL EXPENSES SUCH AS WRITING OF WORDS LIKEDIVERSION, WORK IN PRO GRESS ETC. THE AO HAS RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 5 55 5 NOT BROUGHT OUT AS TO WHY THE ENTIRE AMOUNT WAS CON SIDERED AS NOT GENUINE. BUT CONSIDERING THAT PAYMENTS WERE MADE IN CASH AND WER E MOSTLY SELF MADE VOUCHERS, I CONSIDER IT FAIR TO DISALLOW AN AMOUNT EQUAL TO 20% OF RS. 19,91,254/- WHICH AMOUNTS TO RS.3,98,250/- WHICH IS CONFIRMED. D) TRAVELLING EXPENSES RS. 21,11,855/- THE APPELLANT DEBITED A SUM OF RS. 39,65,475/- AGAI NST THE CONVEYANCE AND TRAVELLING EXPENSES. DURING ASSESSMENT, THE DETAILS OF EXPENSES IN THE FORM OF LEDGER ACCOUNT WAS FILED. LD AO ACCEPTED THE AMOUNT OF CONVEYANCE EXPENSES BUT THE AMOUNT OF TRAVELLING EXPENSES AT RS. 2111855/- WAS DISALLOWED ON THE GROUND THAT NO DETAILS WERE FILED. THE APPELLANT HAS SUBMITTED THAT:ON THE BASIS OF T HE FACTS THAT THE CONTRACTS WERE FOR WORK IN MADHYA PRADESH AND TAMILNADU. IT I S TRUE THAT THE WORK WAS GIVEN ON SUB-CONTRACT TO OTHER PARTIES FOR EXECUTIO N OF WORK BUT IT WAS THE SOLE DUTY OF THE APPELLANT TO SUPERVISE THE WORK AT BOTH THE PLACES BECAUSE THE PAYMENT FROM MAIN CONTRACTEE WAS DEPENDING ON THE EXECUTION OF WORK AS PER THEIR SPECIFICATIONS. THEREFORE, IT WAS MANDATORY TO VISI T THE SITES FROM TIME TO TIME. FOR THE SAME LD AO HAS ABRUPTLY REJECTED THE ARGUMENTS AND EVIDENCE AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN SPITE OF THE FACT THAT THE LEDGER ACCOUNT CLEARLY MENTIONS THE DETAILS OF TRAVELLING EXPENSES.' I HAVE DULY CONSIDERED THE SUBMISSIONS MADE BY A/R AND WHILE GOING THROUGH THE LEDGER ACCOUNT OF TRAVELLING EXPENSES AS SUBMITTED, I AGREE THAT THE EXPENSES INCURRED BY ASSESSEE WERE QUITE REASONABLE AND COMM ENSURATE WITH THE NATURE AND VOLUME OF THE BUSINESS. THE AO HAS NOT BROUGHT OUT AS TO WHY THE ENTIRE AMOUNT WAS CONSIDERED AS NOT GENUINE.HOWEVER, SINCE THERE WERE CASH PAYMENTS AND ALL VOUCHERS WERE MOSTLY SELF MADE BILLS, I CON SIDER IT FAIR TO DISALLOW @ 20% OF21,11,855/- THUS AMOUNTING TO RS. 4,22,371/- WHIC H IS CONFIRMED AND THE BALANCE AMOUNT IS DELETED. E) COMPUTER EXPENSES RS.2,69,670/- THE AO DISALLOWED 1/5 TH OF THE EXPENSES ON COMPUTER ON ESTIMATION BASIS D UE TO ABSENCE OF ANY ADVERSE EVIDENCE. THE APPELLANT HAS SUBMITTED THAT IT IS A SETTLED LAW THAT NO DISALLOWANCE ON ESTIMATION BASIS CAN BE MADE. LD AO MUST HAVE TO SPECIFY THE EXPENSES RELATING TO BUSINESS OR ARE NO T IN COMMERCIAL EXPEDIENCY. ' I HAVE GONE THROUGH THE ASSESSMENT ORDER .THE AO HA S NOT BROUGHT OUT AS TO WHY THE ENTIRE AMOUNT WAS CONSIDERED AS NOT GENUINE .CO NSIDERING THE NATURE OF BUSINESS AND OVER ALL CIRCUMSTANCES, DISALLOWANCES @ 1/10 TH AMOUNTING TO RS. 1,34,835 IS CONSIDERED REASONABLE AND CONFIRMED AND THE BALANCE AMOUNT OF RS. 1,34,835/- IS DELETED. F) MISC. EXPENSES. RS. 7,91,296/- THE AO DISALLOWED 1/5 TH OF THE EXPENSES ON ESTIMATION BASIS AND IN THE ABS ENCE OF ANY ADVERSE EVIDENCE. THE APPELLANT HAS SUBMITTED T HAT: IT IS A SETTLED LAW THAT NO DISALLOWANCE ON ESTIMATION BASIS CAN BE MADE. LD . AO MUST HAVE TO SPECIFY THE EXPENSES NOT RELATING TO BUSINESS OR ARE NOT IN COM MERCIAL EXPEDIENCY. IT IS REQUESTED TO ALLOW THE EXPENSES.' RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 6 66 6 I HAVE GONE THROUGH THE ASSESSMENT ORDER .CONSIDERI NG THE NATURE OF BUSINESS AND OVER ALL CIRCUMSTANCES, DISALLOWANCES @ 1/10 TH AMOUNTING TO RS. 3,95,648 IS CONSIDERED REASONABLE AND CONFIRMED AND THE BALANCE AMOUNT OF RS. 3,95,648/- IS DELETED. 4. GROUND NO. 2 PERTAINS TO DISALLOWANCES ON ACCOUN T OF SUB-CONTRACTOR A/C: THE APPELLANT HAS SUBMITTED THAT LD. AO DISALLOWED THE AMOUNT OF SUB CONTRACTOR PAYMENTS AMOUNTING TO RS. 1,03,92,624/- TO DIFFER ENT SUB-CONTRACTORS, WITHOUT APPRECIATING THEFACT THAT HE HIMSELF HAS ADMITTED I N HIS ORDER THAT APPELLANT OUTSOURCED THE JOB CONTRACT TO THE SUB-CONTRACTORS FOR CARRYING OUT THE JOB WORK, THIS ACTION OF LD. A.O. IS UNJUST, ARBITRARY AND AG AINST THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. ASSESSING OFFICER HAS MENTIONED IN ORDER TH AT IT IS FOUND THAT NO PAYMENTS WERE MADE. IN FACT JOURNAL ENTRIES WERE PASSED. NO TAX HAS BEEN DEDUCTED. THE APPELLANT IS A PRIVATE LIMITED COMPANY INCORPOR ATED UNDER THE COMPANIES ACT, 1956 AND UNDER THE PROVISIONS OF SECTION 209 O F THE COMPANIES ACT, 1956, HAS BEEN ADOPTING MERCANTILE METHOD OF ACCOUNTING , AS EVIDENT FROM THE ACCOUNTING POLICIES WITH AUDITED ACCOUNTS. WHILE CA LCULATING ANY INCOME OR EXPENDITURE THE ACCRUAL OF THE INCOME AND EXPENDIT URE IS TO BE SEEN, NOT THE ACTUAL RECEIPT OR PAYMENT OF THE SAME. IN THIS CASE , THE BILLS OF SUB-CONTRACTORS WERE ACCRUED AND ACCORDINGLY TDS WAS DEDUCTED. THER EFORE, THE ACTION OF LD. A.O. THAT THE ACTUAL PAYMENT WAS NOT MADE IS NOT TE NABLE. FURTHER THE FACT THAT NO TDS WAS DEDUCTED IS ALSO BASED UPON WRONG FACTS, TH E TDS WAS DEDUCTED AND THE RETURNS OF TDS WERE FILED, AS AN EVIDENCE, THE ITRS OF SUB-CONTRACTORS AND THAT OF TDS DEDUCTION AND RETURN THEREFORE WERE SUBMITTED. IT IS ALSO VERY PERTINENT TO SUBMIT THAT THE SUB-CONTRACTS ARE DIRECTLY CORRELAT ED WITH THE CONTRACTS RECEIVED BY THE APPELLANT. THAT LD. AO DISALLOWED THE AMOUNT OF SUB CONTRACTOR PAYMENTS AMOUNTING TO RS. 1,03,92,624/- TO DIFFERENT SUB-CONTRACTORS, WITHOUT APPRECIATING THE FACT THAT HE HIMSELF HAS ADMITTED IN HIS ORDER THAT APPELLANT OU TSOURCED THE JOB CONTRACT TO THE SUB-CONTRACTORS FOR CARRYING OUT THE JOB WORK, THIS ACTION OF LD. AO IS UNJUST, ARBITRARY AND AGAINST THE FACTS AND CIRCUMSTANCES O F THE CASE. IN REMAND REPORT LD. AO HAS GIVEN THE FACTS AND RES ULT OF ENQUIRY IN TABULAR FORM. IN ALL THE CASES DY DIT (INV), UNIT-Z, AGRA HAS ISS UED NOTICES AND ALSO RECORDED THE STATEMENTS. IN ALL THE CASES, THE PARTIES HAVE ADMITTED THAT THEY HAVE DONE WORK FOR THE APPELLANT AND HAVE RECEIVED CONTRACT R ECEIPTS. ALL ARE INCOME TAX ASSESSES. IN THESE CIRCUMSTANCES, WHEN THE ONUS OF PROOF EVEN BEYOND THE NORMAL COURSE HAVE BEEN RENDERED BY APPELLANT, THERE CANNO T BE ANY QUESTION OF SUSPICION THAT THE WORK WAS NOT DONE FOR THE APPELL ANT. ONCE THE INVESTIGATION WING AT AGRA HAS ENQUIRED AND HAS NOT INITIATED ANY PROCEEDINGS AGAINST THOSE PARTIES THEN IT IS PROVED THAT THEY WERE SATISFIED WITH THE STATEMENT AND THE DOCUMENTARY EVIDENCES PRODUCED BEFORE THEM. IN THOS E CIRCUMSTANCES, THE SUSPICION OF LD AO THAT ALL THOSE PARTIES WERE ENGA GED IN OTHER ACTIVITIES AND THE INCOME FROM SUB-CONTRACT HAS BEEN SHOWN AS INCOME F ROM OTHER SOURCES IS PURELY ON THE BASIS OF SURMISES AND CONJECTURES. LD AO HAS NOT BROUGHT ANY ADVERSE EVIDENCE AGAINST THE ENQUIRY MADE BY INVESTIGATION WING AT AGRA.' . I HAVE GONE THROUGH THE SUBMISSIONS MADE BY A/R AND ALSO THE REMAND REPORT AND THE REPORT OF DDIT (INV) , UNIT -2, AGRA WHERE THE PARTIES HAVE CONFIRMED THAT THEY HAVE RENDERED SERVICES FOR THE COMPANY AN D PRODUCED DOCUMENTS AND EVIDENCES IN THIS REGARDTDS WAS ALSO DEDUCTED, PAID AND TDS RETURN WAS FILED. RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 7 77 7 NECESSARY DOCUMENTS HAVE BEEN PERUSED AND THUS KEEP ING IN VIEW THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES, THE ADDITION OF TOTAL SUB-CONTRACTORS A/C AMOUNTING TO RS. 1,03,92,624/- IS DELETED. 5. GROUND NO. 3 RELATES TO THE DISALLOWANCEU/S 14A R.W. RULE 8D RS. 2,00,328/- . THE APPELLANT HAS SUBMITTED THAT LD. AO DISALLOWED A SUM OF RS. 200328/- UNDER RULE 8D(III) BY CALCULATING @0.5% OF AVERAGE INVEST MENTS. DURING ASSESSMENT, IT WAS SUBMITTED THAT NO BORROWED FUNDS WERE INVESTED IN SHARES, AS EVIDENT FROM BALANCE SHEET AND NO EXPENDITURE WAS INCURREDFOR EA RNING DIVIDEND INCOME AT RS. 107438/-. LD. AO REJECTED THIS CLAIM. THE APPELLANT HAS NOT SUBMITTED ANY DOCUMENTS TO RE FUTE THE FINDINGS OF THE AO . IT IS CLEAR THAT EXPENDITURE IN FORM OF ADMINISTRAT IVE AND OTHER FINANCIAL ARE REQUIRED TO BE INCURRED FOR MAINTAINING THE INVESTM ENT. IN THE ABSENCE OF ANY CONCRETE PROOF, I AM UNABLE TO FIND ANY FORCE IN TH E APPELLANTS CONTENTION. HENCE THE A.O. WAS JUSTIFIED IN DISALLOWING A SUM OF RS. 2,00,328/-. THE ADDITION OF RS. 2,00,328/- IS CONFIRMED. HAVING GONE THROUGH THE ORDER OF LD CIT(A) ON EACH DISALLOWANCE, AS MENTIONED ABOVE, WE NOTE THAT LD CIT(A) HAS CONSIDERED THE NA TURE OF BUSINESS AND OVER ALL CIRCUMSTANCES OF THE ASSESSEE COMPANY. THE CONCLUSIONS ARRIVED AT BY THE CIT(A) ARE, THEREFORE, CORRECT AND ADMIT NO INTERFERENCE B Y US. WE, APPROVE AND CONFIRM THE ORDER OF THE CIT(A). 7. NOW WE SHALL TAKE THE ASSESSEES APPEAL IN I.T.A . NO. 2330/KOL/2016, FOR ASSESSMENT YEAR 2010-11. THE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE ARE AS FOLLOWS: 1. THE LD. CIT(A)-12, KOLKATA HAS ERRED BY CONFIRMI NG THE FOLLOWING EXPENSES DISALLOWED BY A.O ON ESTIMATE BASIS: THIS ACTION OF LD. CIT(A) IS ARBITRARY, NON-JUDICIO US AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. RAGHU VINCOM (P) LTD. ITA NOS.2346 & 2330/KOL/2016 ASSESSMENT YEAR:2010-11 P PP PA AA AG GG GE EE E | || | 8 88 8 2. THE LD. CIT(A) HAS ERRED BY CONFIRMING THE DISAL LOWANCE U/S 14A AT RS. 2,00,328/- IN SPITE OF THE FACTS AND SETTLED MATTER THAT THE DISALLOWANCE CANNOT EXCEED THE EXEMPTED INCOME WHICH WAS AT RS. 1,07,438/-, THIS ACTION IS ARBITRARY, ILLEGAL AND AGAINST THE DECISION OF J UDICIAL PRONOUNCEMENTS. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE, MODIFY AND ALTER ANY GROUND OF APPEAL. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. WE HAVE ADJUDICATED THE IDENTICAL GROUNDS OF APPEAL IN REVENUE`S APPEAL IN ITA NO.2346/KOL/2016, FOR A.Y. 2010-11, WHEREIN WE HAV E APPROVED THE ORDER PASSED BY LD CIT(A). THAT IS, WE HAVE CONFIRMED THE ORDER OF LD CIT(A) ON EACH DISALLOWANCE, AND WE NOTE THAT ASSESSEE HAS RAISED THE IDENTICAL GROUNDS IN HIS CROSS APPEAL WHICH WE HAVE ALREADY ADJUDICATED IN R EVENUE`S APPEAL IN ITA NO.2346/KOL/2016 (SUPRA) THEREFORE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITS CROSS APPEAL BECOME INFRUCTUOUS AND DO NOT R EQUIRE ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS APPEAL FILED BY THE ASSESSEE IS ALSO DISMISSED BEING INFRU CTUOUS. ORDER PRONOUNCED IN THE COURT ON 19.07.2019 SD/- ( S. S. GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE:19 /07/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-7(2), KOLKATA& DCIT, CIRCLE-9, KOLKATA 2. RAGHU VINCOM (P) LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES