Appeal details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 1109 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-03-2019
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2015-2016
Appeal Filed On
16-08-2018
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , # BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NO.2365/CHNY/2018 '' /ASSESSMENT YEAR : 2015-16 M/S . CONDUIT WORLDWIDE TRADING (INDIA) PVT. LTD. 40-42, WOOD PECKER BUILDING, 7 TH AVENUE, BESANT NAGAR, CHENNAI-600 090. VS THE ASSISTANT COMMISSIONER OF INCOME TAX(OSD), CORPORATE RANGE-1, CHENNAI-600 034 PAN: AAACC3671R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SAROJ KUMAR PARIDA, ADVOCATE /RESPONDENT BY : MR.S.BHARATH, CIT /DATE OF HEARING : 19.03.2019 /DATE OF PRONOUNCEMENT : 20.03.2019 / O R D E R PER S.JAYARAMAN, AM: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, IN ITA NO. 91/C IT(A)-1/2017-18 DATED 18.05.2018 FOR ASSESSMENT YEAR 2015-16. 2. M/S. CONDUIT WORLDWIDE TRADING (INDIA) PVT. LTD ., THE ASSESSEE, IS ENGAGED IN THE BUSINESS OF TRADING AND FURNITURE. W HILE MAKING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2015-16, THE ASS ESSING OFFICER, INTER-ALIA, DISALLOWED 16,43,865/- U/S.40A(IA) AND 30% OF 20,73,136/- AT 6,24,641/- CLAIMED UNDER THE HEAD BUSINESS PROMOT ION AS 2 ITA NO.2365/CHNY/2018 PERSONAL IN NATURE U/S.37(1). AGGRIEVED, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE LD.CIT(A) DISMISSED THE APP EAL. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED THIS APPEA L. 2. THE LD.AR SUBMITTED THAT THE ASSESSEE PAID RS.59 .60 LAKHS AS INTEREST AND OTHER CHARGES TO M/S.BAJAJ FINANCE LTD. TOWARDS THE MONEY BORROWED FROM THEM. OUT OF WHICH, THE ASSESS ING OFFICER DISALLOWED 30% AT 16,43,865/- U/S.40A(IA). IT WAS PLEADED BEFORE THE LD.CIT(A) THAT THE RECIPIENT HAS INCLUDED THE ABOVE AMOUNT IN ITS RETURN AND PAID TAXES ACCORDINGLY. ANNEXURE A TO FORM 26A OF BAJAJ FINANCE LTD., WAS FILED BEFORE THE LD.CIT(A) AND THE ASS ESSEE RELIED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CI T VS.ANSAL LAND MARK TOWNSHIP P.LTD. (377 ITR 635 (DEL)). HOWEVER, THE LD CIT(A) DISMISSED THIS GROUND. SINCE THE RECIPIENT HAS INCL UDED THE ABOVE AMOUNT IN ITS RETURN AND PAID TAXES ACCORDINGLY, THE LD.AR PLEADED THAT THIS GROUND MAY BE ALLOWED IN ACCORDANCE WITH THE SECOND PROVISO TO SECTION 40A(IA). PER CONTRA, THE LD.DR SUPPORTE D THE ORDERS OF THE LOWER AUTHORITIES. 3. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIALS. SINCE THE ASSESSEE HAS CLAIMED THAT T HE IMPUGNED AMOUNT WAS INCLUDED IN THE RETURN OF THE RECIPIENT AND THE RECIPIENT HAD PAID 3 ITA NO.2365/CHNY/2018 TAXES ACCORDINGLY, WE DEEM IT FIT TO REMIT THIS IS SUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION. THE ASSES SEE SHALL LAY ALL MATERIALS IN SUPPORT OF ITS CONTENTIONS BEFORE TH E ASSESSING OFFICER AND COMPLY TO THE REQUIREMENTS OF A.O. IN ACCORDANCE WI TH LAW. THE A.O. AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSES SEE SHALL DECIDE THIS ISSUE IN ACCORDANCE WITH LAW. THIS GROUND IS ALLOWE D FOR STATISTICAL PURPOSES. 4. THE NEXT ISSUE IS THAT THE ASSESSEE CLAIMED 20,73,136/- UNDER THE HEAD BUSINESS PROMOTION EXPENSES. WHEN THE A. O CALLED FOR DETAILS, THE ASSESSEE PRODUCED LEDGER ACCOUNT. ON P ERUSAL OF IT, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED PERSONAL EXPE NDITURE OF THE DIRECTOR UNDER THE HEAD BUSINESS PROMOTION EXPENS ES ON CERTAIN INSTANCES. SINCE, THE ASSESSEE HAS DEBITED THE PE RSONAL EXPENSES OF THE DIRECTOR, THE A.O. ESTIMATED 30% OF 20,73,136/- AMOUNTING TO 6,24,641/- AND DISALLOWED IT HOLDING THAT IS BEING PERSONAL IN NATURE. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED AP PEAL BEFORE THE CIT(A). ON DUE CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE, THE LD.CIT(A) HELD AS UNDER:- 13. THE APPELLANTS CONTENTIONS ARE CONSIDERED. TH E APPELLANT DID NOT PRODUCE THE BILLS AND SUPPORTING DOCUMENTS TO JUSTI FY THE BUSINESS PURPOSE OF THE EXPENSES. ONLY THE LEDGER EXTRACT FO R THE EXPENSES IS PLACED ON RECORD. ON PERUSAL OF THE NATURE OF THE E XPENSES CLAIMED IT IS FOUND THAT MAJOR PART OF THE CLAIM IS TOWARDS THE C REDIT CARD EXPENSE OF THE DIRECTOR OF THE COMPANY. THE NATURE OF EXPENSES IS CLEARLY PERSONAL 4 ITA NO.2365/CHNY/2018 IN NATURE. FOR INSTANCE, THERE IS A CLAIM OF RS.31, 500/- BEING COST OF TIRUPATHI DARSHAN TICKETS, R.9000/-BEING COST OF PE RSONAL TRAINER, HOTEL BILLS, RESTAURANT BILLS ETC. FROM A PERUSAL OF THE LEDGER, THE ACTUAL PERSONAL COMPONENT OF THE TOTAL CLAIM IS DEFINITELY MORE THAN THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER ON ESTIM ATE BASIS OF RS.6,24,641/-. IN VIEW OF THE SAME, THIS GROUND OF APPEAL IS DISMISSED. THE LD.AR SUBMITTED THAT THE LD.CIT(A) OUGHT TO HAV E FOUND THAT THESE EXPENSES WERE PAID USING THE PERSONAL CREDIT CARD O F THE DIRECTOR MR.S.SWAMINATHAN. HOWEVER, WHILE ENTERING NARRATION , THE ACCOUNTANT HAD INADVERTENTLY USED THE TERM PERSONAL EXPENSES . ALL THE EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT HAVE BEEN PROPERLY VOUCHED. THEREFORE, THESE BUSINESS PROMOTION EXPEND ITURE WERE INCURRED IN THE NORMAL COURSE OF BUSINESS AND HENCE PLEADED THAT DISALLOWANCE MADE BY THE A.O., CONFIRMED BY THE LD .CIT(A) BE DELETED. PER CONTRA, THE LD.DR SUBMITTED THAT THE ASSESSEE H AVING NOT BEEN PROVED THAT THE IMPUGNED EXPENDITURE WERE INCURRE D FOR BUSINESS PURPOSES, THE DISALLOWANCE MADE BY THE A.O. AND SUS TAINED BY THE LD.CIT(A) BE UPHELD. 5. WE HEARD THE RIVAL SUBMISSIONS. IT IS CLEAR FRO M THE ORDER OF THE LD CIT(A), EXTRACTED ABOVE, THAT THE ASSESSEE HAS NOT PLACED RELEVANT MATERIAL IN ITS SUPPORT AND HENCE, THE CIT(A) HAS RIGHTLY DISMISSED THE GROUND. BEFORE US ALSO, THE ASSESSEE HAS NOT PLAC ED RELEVANT MATERIAL IN ITS SUPPORT. THEREFORE, WE DO NOT FIND ANY REASO N TO INTERFERE WITH THE 5 ITA NO.2365/CHNY/2018 ORDER OF THE LD.CIT(A) ON THIS ISSUE. CORRESPONDING GROUNDS OF THE ASSESSEE FAIL. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 TH MARCH, 2019 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) (S.JAYARAMAN) ( ! / JUDICIAL MEMBER) ( ! / ACCOUNTANT MEMBER) /CHENNAI, $ /DATED 20 TH MARCH, 2019 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) / /DR 6. 2 /GF
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