UNI DESIGN JEWELLERY INDIA PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE 1(2), MUMBAI

ITA 2423/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9448 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR PODDAR
• Assessee Lawyers: KARAN LALA
• Keywords: Earning of tax free income
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 2423 /MUM/20 18 ( ASSESSMENT YEAR : 2007 - 08 ) ITA NO. 2421 /MUM/20 18 ( ASSESSMENT YEAR : 2010 - 11 ) & ITA NO. 2420 / MUM/20 1 8 ( ASSESSMENT YE AR : 2011 - 12 ) M/S. UNI DESIGN JEWELLERY INDIA PVT.LTD. PLOT NO.3, UNI DESIGN HOUSE CEPZ WICEL,OPP. SEEPZ MAIN GATE, ANDHERI(E) MUMBAI 400 093 VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1(2) MUMBAI, 904, 9 TH FLOOR OLD CGO BLDG. MK ROAD, M UMBAI - 400020 PAN/GIR NO. AAACU3940J ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI KARAN LALA REVENUE BY SHRI SUSHILKUMAR PODDAR DATE OF HEARING 25 / 06 /201 9 DATE OF PRONOUNCEMENT 26 / 06 /201 9 / O R D E R PER BENCH: THESE AR E THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 48, MUMBAI DATED 28/02/2018 FOR A.Y.2007 - 08, 2010 - 11 AND ITA NO. 2420/MUM/2018 AND OTHER APPEALS M/S. UNI D ESIGN JEWELLERY INDIA PVT.LTD. 2 2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961. ITA NO.2423/MUM/2018 (A.Y.2007 - 08) 2. IN THE A.Y.2007 - 08, ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF RS.43,634/ - U/S.14A. 3. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE WAS NOT H AVING ANY EXEMPT INCOME, THEREFORE, IN VIEW OF THE DECISION OF DELHI HIGH COURT IN THE CASE OF CHEM INVEST LTD., REPORTED IN 278 ITR 33, NO DISALLOWANCE U/S.14A CAN BE MADE. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR THE DISALLOWANCE SO MADE BY AO W HEN THER E IS NO EXEMPT INCOME . A CCORDINGLY, WE DIRECT THE AO TO DELETE THE DISALLOWANCE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.2423/MUM/2018 IS ALLOWED. ITA NO.2421/MUM/2018 & 2420/MUM/2018 (A.Y.2010 - 11 & 2011 - 12) 5. IN THE A.Y.2010 - 11 AND 2011 - 12, THE ASSESSEE IS AGGRIEVED FOR ADHOC DISALLOWANCE OF 15% OUT OF MISCELLANEOUS EXPENSES AND TRAVELLING EXPENSES. IT WAS ARGUED BY LD. AR THAT AO HAS MADE ADHOC DISALLOWANCE WITHOUT POINTING OUT AS TO WHETHER THESE EXPENDITURE WERE NON - GENUINE OR WERE INCURRED F OR THE PERSONAL PURPOSES. HE PLACED ON RECORD THE ORDER ITA NO. 2420/MUM/2018 AND OTHER APPEALS M/S. UNI D ESIGN JEWELLERY INDIA PVT.LTD. 3 OF THE CO - ORDINATE BENCH IN THE CASE OF SISTER CONCERN M/S. KANKSHA MANUFACTURING LLP IN ITA NO.6931/MUM/2016 DATED 28/09/2018 AND CONTENDED THAT NO DISALLOWANCE IS WARRANTED ON ADHOC BASIS, WITHOUT P OINTING OUT UNVERIFIABLE EXPENSES. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT MUMBAI BENCH IN CASE OF S.B.BILLIMORIA & CO., 125 ITD 122 (MUM). 6. ON THE OTHER HAND, LD. DR CONTENDED THAT SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THE EXPENDITURE SO IN CURRED, THE AO WAS PERFECTLY JUSTIFIED IN DISALLOWING 15% OF SUCH EXPENSES. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT ASSESSEE M/S. UNI DESIGN JEWELLERY INDIA PVT.LTD. IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF DIAMOND STUDDED GOLD AND PLATINUM JEWELLERY. FOR THE AY 2011 - 12 UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME ON 05 / 08 / 2011 DECLARING TOTAL INCOME OF RS.3,94,56,830/ - UNDER NORMAL PRO VISIONS OF THE INCOME TAX ACT, 1961. DURING THE COURSE OF ASSESSMENT, THE AO HAS MADE DISALLOWANCE OF ADHOC EXPENDITURE TO THE TUNE OF 15% BY ALLEGING THAT SOME OF THE EXPENDITURE ARE UNVERIFIABLE, HOWEVER, THE AO HAS NOT BEEN POINTED OUT AS TO WHICH THE E XPENSES WERE UNVERIFIABLE. UNDER SIMILAR FACTS AND CIRCUMSTANCES, TRIBUNAL IN THE CASE OF GROUP CONCERN NAMELY KANKSHA MANUFACTURING LLP ITA NO. 2420/MUM/2018 AND OTHER APPEALS M/S. UNI D ESIGN JEWELLERY INDIA PVT.LTD. 4 IN ITA NO.6931/MUM/2016 DATED 28/09/2018 DELETED THE ADHOC DISALLOWANCE OF 15% BY OBSERVING AS UNDER: - 6. WE HAVE HEA RD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND FROM THE FACTS OF THE CASE THAT THIS IS ADHOC DISALLOWANCE MADE BY AO AND FURTHER ESTIMATION ON ADHOC BASIS BY CIT(A). THERE IS NO DEFECT POINTED OUT IN THE BOOKS OF ACCOUNTS OR IN PARTICULAR VOUCHER AS WAS MENTIONED BY THE ASSESSING OFFICER. HENCE, BY MAKING GENERAL OBSERVATION NO ADHOC DISALLOWANCE CAN BE MADE. WE FIND MERIT IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND IN THE GIVEN PARTICULAR FACTS A ND CIRCUMSTANCES AS NOTED ABOVE, WE DELETE THE DISALLOWANCE AND ALLOW THE APPEAL OF THE ASSESSEE. 7.1. AS THE FACTS AND CIRCUMSTANCES DURING THE RELEVANT A.Y.2010 - 11 AND 2011 - 12 ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF TRIBUNAL IN CASE OF GROUP CONC ERN, WE DO NOT FIND ANY MERIT IN THE ADHOC DISALLOWANCE OF 15% OF EXPENSES. 8. IN THE RESULT, APPEALS OF THE ASSESSEE FOR A.Y. 2010 - 11 AND 2011 - 12 ARE ALLOWED. 9. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN CO URT ON THIS 26 / 06 /201 9 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 06 /201 9 KARUNA SR. PS ITA NO. 2420/MUM/2018 AND OTHER APPEALS M/S. UNI D ESIGN JEWELLERY INDIA PVT.LTD. 5 COPY OF THE ORDER F ORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//