MANGALAM SHIPPING & LOGISTICS P.LTD, MUMBAI V. JCIT (OSD) CIR 2(2), MUMBAI

ITA 2354/MUM/2013

• Counselvise Citation: 235419914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: TASNEEM VARAWALA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.2354/MUM/2013 (A.Y.2009-10) MANGALAM SHIPPING & LOGISTICS (I) PVT. LTD., 1 ST FLOOR, MANGALAM HOUSE, WALCHAND HIACHAND MARG, MUMBAI 400 038 PAN :AACCM 3997M (APPELLANT ) VS. THE JCIT (OSD), CIR. 2(2), 545, AAYKAR BHAVAN, MK ROAD, MUMBAI. (RESPONDENT) APPELLANT BY : MS. TASNEEM VARAWALA RESPONDENT BY : SHRI VI VEK BATRA DATE OF HEARING : 05/01/2015 DATE OF PRONOUNCEMENT : 05 /01/2015 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-5, MUMBAI DATED 08.01.20 13 FOR ASSESSMENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF 20% (RS. 12,42,868) OF THE TOTAL TRIP EXPENSES (RS.62,39,342) 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE DISALLOWANCE OF RTO EXPE NSES (GROSS RS.8,88,500) AND TOLL CHARGES (GROSS RS.13,013) FROM RS.1,80,303 (BEING 20% OF THE EXPENSES) RS.9,01,513 BEING 100% OF THE SAID EXPENS ES WITHOUT GIVING ANY NOTICE TO YOUR APPELLANT ABOUT ANY ENHANCEMENT OF T HE DISALLOWANCE AND, HENCE, THE TOTAL INCOME OF YOUR APPELLANT. ITA NO.2354/MUM/2013 (A.Y.2009-10) 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN DISALLOWING RS.1,80,303 BEING 20% OF T HE GROSS EXPENSES OF RS.9,01,513 INCURRED ON ACCOUNT OF RTO EXPENSES AND TOLL CHARGES. 2. THE A.O MADE 20% DISALLOWANCE OF TRIP CHARGES AG GREGATING TO RS.71,40,855/- AND DISALLOWANCE WAS MADE OF A SUM OF RS.14,28,171/-. THE DISALLOWANCE HAS BEEN UPHELD BY LD. CIT(A). 3. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT T HIS ISSUE IS COVERED BY THE EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEE AND REFERENCE WAS MADE TO THE ORDER DATED 12/09/2014 IN ITA NO.5009/M UM/2010 AND ITA NO.8562/MUM/2001 IN RESPECT OF ASSESSMENT YEARS 200 6-07 AND 2008-09 AND REFERENCE WAS MADE TO THE FOLLOWING OBSERVATION S OF THE TRIBUNAL. 20. IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED TH E AD-HOC DISALLOWANCE OF 20% ON ACCOUNT OF TRIP EXPENSES AMOUNTING TO RS.12, 47,538/- 21. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AS INCURRED THE EXPENDITURE OF RS.58,75,702, UNDER THE HEAD TRIP AL LOWANCE AND MOST OF SUCH EXPENSES HAVE BEEN INCURRED IN CASH. THE ASSESSING OFFICER HELD THAT IN THE ABSENCE OF ANY PRIMARY EVIDENCE, TO PROVE THE IDENT ITY OF THE PAYEE, THE ENTIRE EXPENSES CANNOT BE ACCEPTED. ACCORDINGLY, HE DISALL OWED RS. 12,47,538 BEING 20% OF THE ENTIRE CASH EXPENSES OF RS.62,37,691/-, THE BREAK-UP OF WHICH HAVE BEEN GIVING PARA- 6.2 OF THE ASSESSMENT ORDER. THE LEARNED COMMISSIONER (APPEALS) TOO CONFIRMED THE SAID DISALLOWANCE ON TH E GROUND THAT THE ASSESSEE HA FAILED TO PRODUCE ANY ADDITIONAL OR COGENT EVIDE NCE TO PROVE THE EXPENDITURES WERE INCURRED WHOLLY AND EXCLUSIVELY F OR THE BUSINESS PURPOSES. 22. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT T HE ENTIRE DETAILS OF EXPENDITURES ALONG WITH THE VOUCHERS WERE GIVEN BEF ORE THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). THE VOUCHER WISE DETAILS HAVE BEEN GIVEN AS TO WHAT WAS THE AMOUNT GIVEN TO THE DRIVER S FOR THE TRIP FOR THE EXPENSES WHICH ARE INCURRED DURING THE GIVEN TRIP. HE DREW OUR ATTENTION TO THE SAMPLE VOUCHERS AND THE DETAILS OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK PAGE 110 TO 117. HE SUBMITTED THAT APPROXIMATELY 1, 115 TRIPS WERE DONE ONLY WITHIN AN AVERAGE PAYMENT TO DRIVER AND CLEANER AT 1,500 PER TRIP. ALL THESE DETAILS ARE AVAILABLE IN THE VOUCHERS PREPARED. MAI NLY BECAUSE THE EXPENSES HAVE BEEN INCURRED IN CASH, THE DISALLOWANCE CANNOT BE MADE. HE FURTHER SUBMITTED THAT IN THE EARLIER YEARS AND SPECIFICALL Y IN THE ASSESSMENT YEAR 2007-08, THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER UNDER THE SAME HEAD IS 5% AND, THEREFORE, IF ANY DISALLOWANCE IS C ALLED FOR, THEN SAME SHOULD BE RESTRICTED TO 5%. ITA NO.2354/MUM/2013 (A.Y.2009-10) 3 23. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON TH E OTHER HAND, RELIED ON THE ORDER OF THE LEARNED COMMISSION (APPEALS). 24. AFTER CAREFULLY CONSIDERING THE RIVAL CONTENTIO NS AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE TRIP EXPENSES HAVE BEEN INCURRED MOSTLY IN CASH WHICH ARE GIVEN TO THE DRIVERS AS A TRIP ALLOW ANCE WHICH ARE REQUIRED TO BE INCURRED DURING THE TRIPS. THE DETAILS OF EACH A ND EVERY PAYMENT MADE IN CASH HAVE BEEN GIVEN. THUS, SUCH A HUGE AD- HOC DIS ALLOWANCE 20% IS NOT CALLED FOR LOOKING TO THE NATURE OF EXPENSES INCURR ED. HOWEVER, LOOKING TO THE FACT THAT IN THE ASSESSMENT YEAR 2007-08, THE ASSES SING OFFICER HAS DISALLOWED 5% OF SUCH EXPENSES, THEREFORE, IN THIS YEAR ALSO, CONSISTENT WITH THE SAME, WE DIRECT THE ASSESSING OFFICER TO DISALL OW 5% WHICH WILL COVER ANY POSSIBLE LEAKAGE. GROUND NO.2, IS PARTLY ALLOWED. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S PASSED BY A.O AND LD. CIT(A). 5. AFTER HEARING BOTH THE PARTIES, WE FOUND THAT TH E ISSUE IS COVERED BY THE AFOREMENTIONED DECISION OF THE TRIBUNAL. RELEV ANT PORTION HAS ALREADY BEEN REPRODUCED. ACCORDINGLY, DISALLOWANCE IS RES TRICTED TO 5%. THE AO WILL RECALCULATE THE DISALLOWANCE @ 5%. THE APPEAL IS C ONSIDERED TO PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 05/01/2015 ! '#$ % &' 05/01/2014 # ! ( SD/- SD/- ( . . /B.R.BASKARAN ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; & DATED 5.01.2015 ITA NO.2354/MUM/2013 (A.Y.2009-10) 4 ! !! ! )*+ )*+ )*+ )*+ ,+$* ,+$* ,+$* ,+$* / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. )/-. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. +( )* , , / DR, ITAT, MUMBAI 6. (1 2 / GUARD FILE. / BY ORDER, /+* )* //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS