ACIT, New Delhi V. M/s. Vipul Medicorp TPA Pvt. Ltd., New Delhi

ITA 2506/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7084 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 18-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH ARORA
• Keywords: Depreciation; Additional evidence
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 2506 /DEL/ 2012 ASSESSMENT YEAR: 2006 - 07 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 17(1), ROOM NO. 221, 2 ND FLOOR, C.R. BUILDING, NEW DELHI VS. M/S. VIPUL MEDICORP TPA PVT. LTD., B - 416, ANSAL CHAMBER - I, BHIKAJI CAMA PLACE, NEW DELHI GIR/PAN : AABCV8668F (APPELLANT) (RESPONDENT) APPELLANT BY SH. AMIT JAIN, SR. DR RESPONDENT BY SH. RAJESH ARORA, CA DATE OF HEARING 18.05.2016 DATE OF PRONOUNCEMENT 30.06.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSING OFFICER (I.E. ACIT, CIRCLE - 17 (1), NEW DELHI) IS DIRECTED AGAINST ORDER DATED 28/03/2012 OF THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) - XIX, NEW DELHI FOR ASSESSMENT YEAR 2006 - 07 , RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING AN ADDITION OF RS. 1955754/ - MADE OUT OF SALA RY EXPENSES DEBITED TO P&L ACCOUNT AND ADMITTING ADDITIONAL EVIDENCE WHICH HAD NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER DURING THE ASSESSEE PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) ERRED IN DELETING AN ADDITION OF RS. 912922/ - MADE OUT OF PRINTING AND STATIONERY EXPENSES ON ACCOUNT OF THE FACT THAT TAX AT SOURCE HAS NOT BEEN DEDUCTED EVEN THOUGH PAYMENT TO FOUR PARTIES EXCEEDED RS. 50,000/ - AND HENCE TAX AT SOURCE WAS REQ UIRED TO BE DEDUCTED U/S. 194C OF THE I.T. ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN GIVING A RELIEF OF RS. 63,450/ - HOLDING THAT THE ASSET ACQUIRED BY THE ASSESSEE COMP ANY IN THE NAME OF A SISTER CONCERN IS ALSO ENTITLED FOR DEPRECIATION IN THE HANDS OF THE ASSESSEE. 2 ITA NO. 2506/DEL/2012 AY: 2006 - 07 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING AN ADDITION OF RS. 598833/ - O UT OF MISC. EXPENSES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING AN ADDITION OF RS. 249588/ - ON ACCOUNT OF PREOPERATIVE EXPENSES. 6. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 2. T HE FACTS IN BRIEF OF THE CASE AS CULLED OUT FROM THE ORDERS OF THE AUTHORITIES BELOW ARE THAT THE ASSESSEE COMPANY WAS LICENSED BY THE INSURANCE REGULATORY DEVELOP MENT AUTHORITY (IRDA) TO ACT AS THIRD - PARTY ADMINISTRATOR (TPA). THE ASSESSEE COMPANY WAS PROVIDING SERVICES TO INSURANCE COMPANIES. THE SERVICES RENDERED BY THE ASSESSEE INCLUDED PROCESSING OF CLAIMS ON BEHALF O F INSURANCE COMPANIES AND CASHLESS MEDICAL SERVICE FACILITATION A T NETWORK HOSPITALS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 29/11/2 006 DECLARING INCOME OF RS. 23,90, 500/ - . IN THE SCRUTINY ASSESSM ENT COMPLETED UNDER SECTIO N 143(3) OF THE INCOME - TAX ACT, 1 961 (IN SHORT THE ACT ), THE ASSESSING OFFICER MADE FOLLOWING DISALLOWANCES: S. NO. PARTICULARS AMOUNT (IN RS.) 1. DISALLOWANCE OF 25% OF SALARY EXPENDITURE ON AN ESTIMATE BASIS 19,55,754/ - 2. DISALLOWANCE OF PRINTING AND STATIONERY EXPENDITURE ON ACCOUNT OF ALLEGED NON DEDUCTION OF TDS U/S 194C 9,12,922/ - 3. DISALLOWANCE OF DEPRECIATION ON ACCOUNT OF: ALLEGED NON PRODUCTION OF PURCHASE BILLS ALLEGING THAT CERTAIN BILLS PRODUCED ARE NOT IN THE NAME OF THE ASSESSEE COMPANY 3,78,141/ - 4. DISALLOWANCE OF 50%OF MISCELLANEOUS EXPENDITURE ON AN ESTIMATE BASIS 5,98,833/ - 5. DISALLOWANCE OF PRE - OPERATIVE EXPENSES ALLEGING THAT THERE ARE NO PROVISIONS FOR SUCH EXPENSES IN THE ACT 2,49,588/ - 3. BEFORE THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS), THE ASSESSEE FILED ADDITIONAL EVIDENCES AND A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING 3 ITA NO. 2506/DEL/2012 AY: 2006 - 07 OFFICER. HOWEVER , THE ASSESSEE DID NOT FILE THE EVIDENCE AS CALLED FOR BY THE LD . ASSESSING O FFICER IN REMAND PROCEEDINGS. A FTER CONSIDERING THE REMAND REPORT AND S UBMISSION OF THE ASSESSEE, THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) ALLOWED PART RELIEF TO THE ASSESSEE. AGGRIEVED, THE ASSESSING OFFICER IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS REPRODUCED ABOVE. 4. IN GROUND NO. 1 , THE ASSESSING O FFICER HAS CHALLENGED THE DELE TION OF THE ADDITION OF RS. 19,55, 754/ - IN RESPECT OF SALARY EXPENSES AND ADMITTING THE ADDITIONAL EVIDENCES , WHICH HAD NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER. 4.1 FACT IN RESPECT OF T HE ISSUE IN DISPUTE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER F OUND SALARY EXPENSES OF RS. 78,23, 015/ - AS COMPARED TO EXPENSES OF RS. 34,47, 000/ - IN THE IMMEDIATELY PRECEDING YEAR AND, THEREFORE , CALLED FOR DETAILS ABOUT THE EMPLO YEES INCLUDING THEIR NAME, RESIDENTIAL ADDRESS, QUALIFICATION, DUTY PERFORMED, PLACE OF POSTING, TOTAL SALARY PAID AND MODE OF PAYMENT OF SALARY. THE REPLY FILED IN RESPONSE BY THE ASSESSEE WAS NOT FOUND TO BE COMPLETE BY THE ASSESSING OFFICER AS THE DETAI L S OF RESIDENTIAL ADDRESS OF THE EMPLOYEES WERE NOT AVAILABLE, WHICH ACCORDING TO THE ASSESSING OFFICER WAS A CRUCIAL FOR VERIFICATION OF THE EXPENSES. IN VIEW OF THE FACTS, THE ASSESSING OFFICER DISALLOWED ONE FOURTH OF THE SALARY EXPENSES CLA IMED, WHICH AMOUNTED TO RS. 19,55, 754/ - . THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF SALARY DETAILS OF THE EMPLOYEES AND THE REMAND R EPORT WAS CALLED FOR BY THE LD. CIT (A). THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) OBSERVED THAT MOST OF THE PERSONNEL WERE STATIONED AT GURGAON AND DELHI AND THE ASSESSING OFFICER SIMPLY BRUSHED ASIDE THE EXPLANATION OF THE ASSESSEE WITHOUT POINTING OUT ANY IRREGULARITY. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FURTHER OBSERVED THAT PERCENTAGE EXPENDITURE ON THE S ALARY HAS REDUCED FROM 5 7% IN IMMEDIATELY PRECEDING YEAR TO 30% IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY, HE DELETED THE ADDITION. 4.2 BEFORE US, THE LD. SENIOR DEPARTMENTAL R EPRESENTATIVE REFERRING TO THE REMAND REPORT OF THE ASSESSING OFFICER , WHIC H IS AVAILABLE AT PAGES 368 AND 369 4 ITA NO. 2506/DEL/2012 AY: 2006 - 07 OF ASSESSEE S PAPER BOOK AND SUBMITTED THAT CERTAIN DETAILS IN RESPECT OF THE EMPLOYEES WERE NOT FILED BEFORE THE ASSESSING OFFICER EVEN DURING THE REMAND PROCEEDING AND , THEREFORE , THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE EXPENSES WITHOUT PROPER VERIFICATION, AND THUS REQUESTED THAT THE ISSUE MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF THE DETAILS IN RESPECT OF THE EMPLOYEES. 4.3 ON THE CONTRARY, THE LD. AUTHORIZ ED R EPRESENTATIVE OF THE ASSESSEE RELYING ON THE FINDING S OF THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) SUBMITTED THAT ALL THE DETAILS WERE MADE AVAILABLE TO THE ASSESSING OFFICER AND EXPENSES INCURRED ON SALARY WERE DULY JUSTIFIED. 4.4 WE HAVE HEARD T HE RIVAL SUBMISSIONS ON THE ISSUE IN DISPUTE AND PERUSED THE MATERIAL ON RECORD INCLUDING THE ORDERS OF THE AUTHORITIES BELOW AND THE PAPER BOOK OF THE ASSESSEE. WE FIND FROM THE REMAND REPORT OF THE ASSESSING OFFICER AVAILABLE AT PAGE 368 AND 369 OF THE A SSESSEE S PAPER BOOK THAT THE A SSESSING O FFICER OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCES, HOWEVER , WHILE VERIFYING, HE FOUND THAT CERTAIN DETAILS WHICH WERE CALLED FOR , WERE NOT MADE AVAILABLE TO HIM BY THE ASSESSEE . THE RELEVANT PART OF THE R EMAND REPORT IS REPRODUCED AS UNDER: .. 1. DISALLOWANCE ON ACCOUNT OF SALARY PAYMENTS: THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 16.12.2008 THE FOLLOWING DETAILS REGARDING THE SALARY PAID TO EMPLOYEES I.E. NAME, RESIDENTIAL ADDRESS, QUALIFICATION, DUTY PERFORMED, PLACE OF POSTING, SALARY PAID/MODE OF PAYMENT. THE ASSESSEE DID NOT FIELD THE SAME AND ACCORDINGLY, 1/4 TH OF THE EXPENSES AMOUNTING TO RS. 19,55,754/ - WAS MADE. EVEN NOW THE ASSESSEE HAS JUST FURNISHED THE DESIGNATION, ADDRESS AND THE SALARY PAID IN RESPECT OF THE EMPLOYEES. EVEN NOW THE QUALIFICATION AND THE MODE OF PAYME NT ALONGWITH NECESSARY DOCUMENTARY EVIDENCE HAS NOT BEEN FURNISHED. IN THE LIGHT OF THE SAME, IT IS REQUESTED THE 1/4 TH DISALLOWANCE MADE BY THE ASSESSING OFFICER IS QUITE REASONABLE AND MAY KINDLY BE CONFIRMED. .. 5 ITA NO. 2506/DEL/2012 AY: 2006 - 07 4.5 IN ABSENCE OF ANY COMPLETE INFORMATION IN REPORT OF THE EMPLOYEES, THE ASSESSING OFFICER COULD NOT VERIFY THE GENUINENESS OF THE EXPENSES ON SALAR Y CLAIMED BY THE ASSESSEE. THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT EXPENSES IN PERCENTAGE TERMS DURING THE YEAR UNDER CONSIDERATION WERE LOWER AS COMPARED TO THE EXPENSES IN PERCENTAGE TERMS IN THE IMMEDIATELY PRECEDING YEAR. BUT , IN OUR VIEW , THAT CANNOT BE THE ONLY CONCLUSIVE PROOF THAT THE EXPEN SES INCURRED DURING THE YEAR WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. IT IS THE DUTY OF THE ASSESSEE TO PRODUCE THE RELEVANT DETAIL S SO THAT THE ASSESSING OFFICER CAN VERIFY THE GENUINENESS OF THE EXPENSES. IN SUCH CIRCUMSTANCES, WE FEE L IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE ALL THE RELEVANT DETAILS SO THAT THE ASSESSING OFFICER CAN VERIFY THE GENUINENESS OF THE EXPENSES AND PASS ORDER ON THE ISSUE IN DISPUTE IN ACCORDANCE WITH LAW. WE DIRECT ACCORDINGLY. THUS, G ROUND NO. 1 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE GROUND NO. 2, THE R EVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS. 9,12, 922/ - MADE OUT OF PRINTING AND A STATI ONARY EXPENSES UNDER SECTION 40(A) (IA) OF THE ACT FOR NON - DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER OBSERVED THAT TAX WAS NOT DEDUCTED AT SOURCE BY THE ASSESSEE IN RESPECT OF PAYMENTS MADE TO FOLLOWING PARTIES (PAYMENTS MORE THAN RS. 50,000 DURING THE YEAR) ON ACCOUNT OF PRINTING JOB WORK: S.NO. NAME OF THE PARTY AMOUNT 1 M/S AMORPHOUS PACKING PRIVATE LIMITED RS. 1,30, 410/ - 2 M/S DEEP ENTERPRISE RS. 2,05, 841/ - 3 M/S UNIQUE COMPUTER FORMS RS. 5,76, 671 TOTAL RS. 9,12, 922/ - 5.1 IN VIEW OF NON - DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS TO THE PARTIES , IN THE ABOVE CHART , THE ASSESSING OFFICER DISALLOWED THE EXPENSES IN TERMS OF SECTION 40(A)(IA) OF THE ACT. BEFORE THE L D. COMMISSIONER OF INCOME - TAX 6 ITA NO. 2506/DEL/2012 AY: 2006 - 07 ( APPEALS) THE ASSESSEE PRODUCED BILLS IN RE SPECT OF M/S . UNIQUE COMPUTER F ORMS AS ADDITIONAL EVIDENCES AND THE SAME WERE FORWARDED TO THE ASSESSING OFFICER FOR REMAND REPORT. THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) OBSERVED THAT THE EXPENSES UNDER REFERENCE WERE INCURRED IN THE COURSE OF BUS INESS AND PURCHASES WERE OF F THE SELF AND SUBJECTED TO SALES TAX/VAT AND , THEREFORE , HE HELD THAT TDS WAS NOT LIABLE TO BE DEDUCTED ON THESE EXPENSES AND HE DELETED THE DISALLOWANCE ACCORDINGLY. 5.2 BEFORE US, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE RE FERRING TO THE REMAND REPORT WHICH IS AVAILABLE AT PAGES 368 TO 369 OF THE ASSESSES S PAPER BOOK, SUBMITTED THAT DETAIL S OF THE EXPENSES OF RS. 3,39, 380/ - WERE ONLY PRODUCED BEFORE THE ASSESSING OFFICER IN REMAND PROCEEDING AND THUS THE DETAIL S IN RESPECT OF THE BALANCE EXPENSES AS THE SAME WERE IN THE NATURE OF JOB WORK OR PURCHASE COULD NOT BE ASCERTAINED AND THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IGNORING THE COMMENTS OF THE ASSESSING OFFICER DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH W AS NOT JUSTIFIED AND REQUESTED THAT THE ASSESSEE MAY BE DIRECTED TO PRODUCE ALL THE INFORMATION IN RESPECT OF THE EXPENSES BEFORE THE ASSESSING OFFICER AND ISSUE MAY BE RESTORED BACK TO THE ASSESSING OFFICER. 5.3 ON THE CONTRARY, THE LD. AUTHORIZED R EPRESENTATIVE OF THE ASSESSE E RELIED ON THE FINDING OF THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS). 5.4 HAVING HEARD THE RIVAL SUBMISSIONS ON THE ISSUE IN DISPUTE AND THE PERUSAL OF THE MATERIAL ON RECORD, WE FIND THAT IN REMAND PROCEEDINGS , ONLY DETAILS I N RESPECT OF EXPENSES OF RS. 3,39, 380/ - , WAS PRODUCED BEFORE THE ASSESSING OFFICER AND ON THE BASIS OF THAT THE LD . COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ARRIVED AT A CONCLUSION THAT ALL THE EXPENSES WERE IN THE NATURE OF PURCHASES SUBJECTED TO SALES TAX/VAT. WE FIND THAT, ABOVE CONC LUSION WAS BASED ON THE PERUSAL OF THE PART OF THE EXPENSES ONLY. THE RELEVANT PART OF THE REMAND REPORT IS REPRODUCED AS UNDER: 3. PRINTING & STATIONERY : AN ADDITION OF RS. 9,12,922/ - WAS DISALLOWED ON ACCOUNT OF TWIN REASONS WITH REGARD TO THE ABNORMAL INCREASE IN EXPENSES FROM THE 7 ITA NO. 2506/DEL/2012 AY: 2006 - 07 PRECEDING YEAR WHERE THE SAME WAS RS. 2,07,000/ - AS COMPARED TO THIS YEAR EXPENSE OF RS. 12,90,123/ - AND FURTHER, NO TDS HAS BEEN DEDUCTED. NOW THE ASSESSEE HAS SUBMITTED THAT THE BILLS AND VOUCHERS OF M/S. UNIQUE COMPUTERS ARE BEING ENCLOSED. A PERUSAL OF THE SAME SHOWS THAT PAYMENT OF RS. 3 ,39,380/ - HAS BEEN MADE AS PER THE LEDGER ACCOUNT FILED WHEREAS THE TOTAL EXPENDITURE WAS RS. 12,90,123/ - . EVEN NOW THE ASSESSEE HAS NOT BEEN ABLE TO SUB MIT THE EVIDENCE OF BALANCE PURCHASES ALONGWITH JUSTIFICATION OF THE SAME AND DEDUCTION OF TAX IN RESPECT OF THE PAYMENTS MADE TO PRINTING & STATIONERY. HENCE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE SAME. 5.5 POSSIBILITY OF EXPENSES IN THE NA TURE OF JOB WORK IN BALANCE EXPENSES CANNOT BE RULED OUT WITHOUT VERIFYING THE SAME BY THE ASSESSING OFFICER. IN THE CIRCUMSTANCES , WE FEEL IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE EXPENSES ARE IN THE NATURE OF JOB WORK LIABLE FOR TAX DEDUCTION AT SOURCE AND DECIDE T HE ISSUE IN ACCORDANCE WITH LAW . NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE PROVIDED SU FFICIENT OPPORTUNITY OF HEARING . THE ASSESSEE IS ALSO DIRECTED TO PRODUCE THE DETAIL S OF ALL THE EXPENSES INVOLVED IN ISSUE IN DISPUTE. THUS, G ROUND NO. 2 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 6. IN GROUND NO. 3, THE R EVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF DE PRECIATION AMOUNTING TO RS. 63, 450/ - . THE ASSESSING OFFICER HELD THAT PURCHASE BILLS IN RESPECT OF THE COMPUTER PURCHASED WERE NOT IN THE NAME OF THE ASSESSEE COMPANY, ACCORDINGLY DISALLO WED THE DEPRECIATION OF RS. 63, 450/ - . 6.1 6.1 BEFORE THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) , THE ASSESSEE CONTENDED THAT BY MISTAKE BILLS WERE ISSUED IN THE NAME OF SISTER CONCERN M/S VIPUL INSURANCE BROKERS PRIVATE L IMITED BY THE SUPPLIER OF COMPUTERS DUE TO SIMILARITY OF NAME AND COMMON MANAGEMENT AND THE SAID SISTER CONCERN DID NOT CLAIM DEPRECIAT ION ON TH OSE FIXED ASSETS. THE LD. COMMISSIONER OF INCOME T AX ( A PPEALS), ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE FACT THAT NO DEPRECIATION WAS CLAIMED BY THE SISTER CONCERN ON THE ASSETS IN REFERENCE. 8 ITA NO. 2506/DEL/2012 AY: 2006 - 07 6.2 BEFORE US , LD. SENIOR DEPARTMENTAL R EPRESENTATIVE RELYING ON THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT CLAIM OF THE DEPRECIATION SHOULD NOT BE ALLOWED TO THE ASSESSEE AS ASSETS WERE NOT OWNED BY THE ASSESSEE. 6.3 ON THE OTHER HAND, THE LD. A UTHORIZED R EPRESENTATIVE OF THE ASSES SEE RELIED ON THE ORDER OF THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS). 6.4 HAVING HEARD THE RIVAL SUBMISSIONS ON THE ISSUE IN DISPUTE, WE ARE OF THE VIEW THAT THE ONLY ISSUE IN VOLVED IS WHETHER THE ASSETS IN REFERENCE WERE OWNED BY THE ASSESSEE AND PUT TO USE. IN THE REMAND REPORT OF THE ASSESSING OFFICER, WHICH IS AVAILABLE AT PAGES 368 TO 369 OF THE ASSESSEE S PAPER BOOK, IT IS REPORTED THAT NO EVIDENCE WHETHER THE ASSE TS IN REFERENCE WERE PUT TO USE , WAS FURNISHED. THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) HAS OVERLOOKED THIS OBJECTION OF THE ASSESSING OFFICER. IN VIEW OF THE ABOVE FACTS, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER, WITH THE DIRECTIONS TO PROVIDE OPPORTUNITY O F HEARING TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ALL THE RELEVANT EVIDENCES IN SUPPORT OF ITS CLAIM OF THE DEPRECIATION. ACCORDINGLY , GROUND NO. 3 OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN GROUND NO. 4, THE R EVENUE CHALLENGED THE DE LETION OF AN ADDITION OF RS. 5,98, 833/ - OUT OF MISCELLANEOUS EXPENSES. THE ASSESSING OFFICER IN VIEW OF THE INCREASE IN THE EXPENSES UNDER THE HEAD AS COMPARED TO THE PRECEDING YEAR AND NON - PRODUCTION OF SU PPORTING BILLS AND VOUCHERS, DISALLOWED 50% OF THE EXPENSES UND ER THE HEAD AMOUNTING TO RS. 5,98, 833/ - . 7.1 BEFORE THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) , THE ASSESSEE SUBMITTED THAT THESE EXPENSES WERE SUBJECTED TO FRINGE BENEFIT TAX (FBT) AND QUA NTUM OF THE EXPENDITURE WAS NOT HIGH IN VIEW OF THE INCREASED TURNOVER OVER THE LAST YEAR. IN VIEW OF THE SUBMISSION OF THE ASSESSEE, THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS) DELETED THE ADDITION. 7.2 HAVING HEARD THE RIVAL SUBMISSIONS ON THE ISSUE IN DISPUTE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HA S DISALLOWED THE EXPENSES ON AD - HOC BASIS 9 ITA NO. 2506/DEL/2012 AY: 2006 - 07 MAINLY DUE TO NON - PRODUCTION OF SUPPORT ING BILLS AND VOUCHERS, WHEREAS L D. COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT ALL THESE EXPENSES WERE SUBJECTED TO FRINGE BENEFIT TAX. WE FIND THAT IN THE CASE OF OM INTERNATIONAL VS. ASSTT. COMMISSIONER OF INCOME TAX, IN ITA NO. 2310 & 2311/MUM./2012, FOR AYS 2006 - 07 AND 2007 - 08, THE TRIBUNAL HAS HELD THAT ONCE THE EX PENSES ARE SUBJECTED TO FRINGE BENEFIT TAX, NO FURTHER DISALLOWANCE IN RESPECT OF THOSE EXPENSES IS WARRANTED. RESPECTFULLY FOLLOWING THE ABOVE FINDING, WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING WHETHER THE EXPENSES IN DISPUT E WERE SUBJECTED TO THE FRINGE BENEFIT TAX AND IF SO THEN NO ADDITION IS CALLED FOR ON THE ISSUE IN DISPUTE. THUS, GROUND NO. 4 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN GROUND NO. 5 , THE R EVENUE CHALLENGED THE DELET ION OF AN ADD ITION OF RS. 2,49, 588/ - ON ACCOUNT OF PRE - OPERATIVE EXPENSES. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE OF RS. 2,49, 588/ - ON THE GROUND THAT THERE WAS NO PROVISION IN THE INCOME T AX ACT FOR ALLOWABILITY OF THE PREOPERATIVE EXPENSES. 8.1 BEFORE THE L D. COMMISSIONER OF INCOME - TAX ( APPEALS), THE ASSESSEE PLEAD ED THAT THE EXPENSES OF RS. 12,47, 944 / - WERE INCURRED BEFORE THE COMMENCEMENT OF THE BUSINESS AND THE ASSESSEE CHOSEN TO WRITE OFF THE SAID EXPENDITURE OVER A PERIOD OF FIVE YEARS COMME NCING FROM THE YEAR UNDER CONSIDERATION, ACCORDINGLY THE ASSESSEE CLAIMED 1/5 TH OF THE EXPENSES OF RS. 12,47,944/ - WHICH AMOUNTED TO RS. 2, 49, 588/ - . THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) HELD THAT THE WHOLE OF THE EXPENSES WERE ALLOWABLE IN THE YEA R UNDER CONSIDERATION, HOWEVER , THE ASSESSEE HAD CHOSEN TO WRITE O F F OVER A PERIOD OF TIME AND IN VIEW OF THE FACT THERE WAS NO LOSS TO THE REVENUE AND, THEREFORE , HE ALLOWED THE CLAIM OF THE ASSESSEE. 8.2 HAVING HEARD THE RIVAL SUBMISSIONS OF THE PARTIES ON THE ISSUE IN DISPUTE, WE ARE OF THE OPINION THAT IF THE EXPENSES ARE INCURRED BEFORE COMMENCEMENT OF THE BUSINESS THAN THE ASSESSEE IS ENTITLED TO AMORTIZE THE EXPENSES AND CLAIM 10 ITA NO. 2506/DEL/2012 AY: 2006 - 07 1/5 TH OF THE EXPENSES OVER A PERIOD OF FIVE YEARS IN TERMS OF SECTION 3 5D OF THE ACT SUBJECT TO THE CONDITION THAT THE EXPENSES INCURRED ARE IN THE NATURE OF EXPENSES SPECIFIED UNDER SECTION 35D(2) OF THE ACT. SINCE THE DETAILS OF THE EXPENSES INCURRED HAS NOT BEEN PROVIDED, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER BACK T O THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE NATURE OF EXPENSES AND DECIDE THE ISSUE OF ALLOWABILITY IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE PROVIDED SUFFICIENT OPPORTUNITY OF HEARING. THUS, GROUND NO. 5 OF THE APPEAL I S ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT , APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSE S . THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE , 2016 . SD/ - SD/ - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JUNE , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI