M/s. Vijay Industries., V. Joint Commissioner of Income Tax, Range-1, Belgaum., Bangalore

ITA 243/PAN/2014

• Counselvise Citation: 24324114 RSA 2014
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2014
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINAY SINGH RAWAT LD
• Assessee Lawyers: A S PATIL ITP
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 243/PNJ/2014 : (ASST. YEAR : 2011 - 12) M/S. VIJAY INDUSTRIES BELGAUM, BAILHONGAL 591102. PAN : AAEFV4660P (APPELLANT) VS. JT. COMMISSIONER OF INCOME TAX, RANGE - 1, BELGAUM (RESPONDENT) ASSESSEE BY : A.S. PATIL, ITP REVENUE BY : VINAY SINGH RAWAT, LD. DR DATE OF HEARING : 27/11/2014 DATE OF PRONOUNCEMENT : 27 /1 1 /2014 O R D E R PER P.K. BANSAL 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), BELGAUM DT. 1.7.2014 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1) LEARNED COMMISSIONER (APPEALS) NOT JUSTIFIED IN CONFIRMING ADDITIONS OF RS.972000/ - ON ACCOUNT OF SALARY PAID TO ADDITIONAL STAFF WITHOUT CONSIDERING THE PRIME FACT THAT APPELLANTS PURCHASES INCREASED BY RS.231341833/ - AND NET INCOME INCREASED BY RS.36067188/ - . HENCE, ADDITION SUSTAINED REQUIRES TO BE DELETED. 2) LEARNED COM MISSIONER (APPEALS) NOT JUSTIFIED IN CONFIRMING 50% ADHOC ADDITIONS OF RS.925388/ - OUT OF TRANSPORT CHARGES OF RS.1850777/ - PAID IN CASH WITHOUT CONSIDERING THE PRIME FACT THAT THERE IS NO VIOLATION OF SECTION 40A(3) OR 40(A)(IA). HENCE, ADDITION SUSTAINE D REQUIRES TO BE DELETED OR IN THE ALTERNATIVE BE EQUITABLY REDUCED. 2. GROUND NO. 1 RELATES TO DISALLOWANCE OF RS.9,72,000/ - ON ACCOUNT OF SALARY PAID TO STAFF. THE AO NOTED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.9,72,000/ - TOWARDS SALARY FOR KAPPA P URCHASE. SINCE THE ASSESSEE DOES NOT 2 ITA NO. 243/PNJ/2014 (A.Y 2011 - 12) HAVE THE DETAILS OF ATTENDANCE AND OTHER STATUTORY REGISTERS, THE AO THEREFORE DISALLOWED THE SAME. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A). BEFORE CIT(A) THE ASSESSEE CONTENDED THAT DURING THE IMPUGNED ASSESSMENT YEAR THE PURCHASES HAS INCREASED FROM RS.22,26,56,029/ - TO RS.45,39,97,862/ - . CORRESPONDINGLY THERE IS AN INCREASE IN THE SALARY FROM RS.9,45,102/ - TO RS.19,07,892/ - AS COMPARED TO THE EARLIER YEAR. IF THE RATIO OF THE SALARY TO PURCHASE IS TAKEN, THE RA TIO IN THE EARLIER YEAR WAS 0.42, IN THE IMPUGNED ASSESSMENT YEAR ALSO IT IS 0.42 WHILE IN A.Y 2009 - 10 IT WAS 0.84. IN THE EARLIER YEAR NO SUCH SALARY WAS DISALLOWED. CIT(A) CONFIRMED THE ADDITION. 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDE RED THE SAME. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS THE PAPER BOOK PG. 6 - 9 WHICH CONSISTS OF SALARY AND SALARY LEDGER EXTRACT. FROM THE SAID DETAILS WE FIND THAT THE COMPARATIVE SALARY PAID BY THE ASSESSEE IN THE EA RLIER YEAR WAS AS UNDER : ASST. YEAR SALARY URD PURCHASES RATIO ASSESSMENT ADDITION ON ACCOUNT OF SALARY 2009 - 2010 7,72,191 9,11,63,090 0.84 143[3] NIL 2010 - 2011 9,45,102 22,26,56,029 0.42 143[3] NIL 2011 - 2012 19,07,892 45,39,97,862 0.42 143[3] 9,72,000 36,25,185 76,78,16,981 0.47 IN A.YS 2009 - 10 AND 2010 - 11 NO SUCH DISALLOWANCE WAS MADE BY THE AO IN RESPECT OF SALARY. THIS IS A FACT THAT THE PURCHASES DURING THE YEAR HAS MORE THAN DOUBLED AS COMPARED TO A.Y 2010 - 11. THE RATIO OF EXPENDITURE TO SALARY COMES TO 0.42 AS COMPARED TO T HE EARLIER YEAR. WE ALSO NOTED THAT THE ASSESSEE HAS GIVEN NAME OF THE PARTIES TO WHOM SALARY HAS BEEN PAID AS WELL AS COPY OF THE LEDGER. IN OUR OPINION, ONCE THE QUANTUM OF PURCHASES HAS INCREASED, THERE IS BOUND TO BE INCREASE IN THE WORK TO BE HANDLE D BY THE EMPLOYEES. THEREFORE, THE ASSESSEE WOULD HAVE EMPLOYED ADDITIONAL STAFF. WE, THEREFORE, SET ASIDE THE 3 ITA NO. 243/PNJ/2014 (A.Y 2011 - 12) ORDER OF CIT(A) AND DELETE THE DISALLOWANCE OF RS. 9,72,000/ - . THUS, THIS GROUND STANDS ALLOWED. 4. GROUND NO. 2 RELATES TO DISALLOWANCE OF R S. 9,25,388/ - SUSTAINED BY CIT(A). AFTER HEARING THE RIVAL SUBMISSIONS WE NOTED THAT THE DISALLOWANCE OF RS. 9,25,388/ - WAS MADE OUT OF TOTAL PAYMENT MADE TOWARDS THE TRANSPORTATION CHARGES AMOUNTING TO RS.43,68,217/ - . THE DETAILS OF THE EXPENDITURE WERE FILED BEFORE US AS IS APPEARING IN THE PAPER BOOK FROM PG. 13 TO 22. WE ALSO NOTED THAT OUT OF THE SAID SUM OF RS.43,68,217/ - , A SUM OF RS. 18,50,777/ - HAS BEEN PAID BY THE ASSESSEE IN CASH. FROM THE DETAILS FURNISHED AT PG. 20 - 22 WE NOTED THAT IN RESPE CT OF THE FOLLOWING TRUCKS, THE PAYMENT IN EXCESS OF RS. 20,000/ - WAS MADE : TRUCK NO. AMOUNT CTW 4834 25,750 KA 289011 24,160 KA22A4235 33,000 KA254095 24,900 KA25A3524 30,190 CTW 4834 20,500 KA28B8111 45,920 KA25A6289 28,844 KA289011 34,380 KA289516 31,030 MQ09Q6155 27,584 KA25C8985 47,520 KA023546 32,980 KA118303 23,860 KA095929 24,090 TOTAL 4,54,708 THUS, THE ASSESSEE HAS COMMITTED DEFAULT BY NOT DEDUCTING TDS IN RESPECT OF THE SUM OF RS.4,54,708/ - AND THE SAID SUM IS DISALLOWABLE U/S 40(A)(IA). WE, 4 ITA NO. 243/PNJ/2014 (A.Y 2011 - 12) ACCORDINGLY, SUSTAIN THE DISALLOWANCE AT RS. 4,54,708/ - IN PLACE OF RS.9,25,388/ - . THUS, THIS GROUND IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 27.11.2014. S D / - S D / - (D.T.GARASIA) JUDICIAL MEMBER (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 2 7 / 1 1 /2014 SSL COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER