Clover Technologies Private Limited, Pune V. Deputy Commissioner of Income -tax,

ITA 2613/PUN/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5902 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU SHEKHAR
• Keywords: Business income
• Section: 143(3); 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM . / ITA NO.2613/PUN/2016 / ASSESSMENT YEAR : 2011-12 CLOVER TECHNOLOGIES PRIVATE LIMITED, NO.5, GALAXY SOCIETY, 245 BOAT CLUB ROAD, PUNE. PAN : AAACC7231Q . /APPELLANT VS. DCIT, CIRCLE- 1(1), PUNE. . / RESPONDENT / APPELLANT BY : SHRI P. D. KUDVA / RESPONDENT BY : SHRI SUDHANSHU SHEKHAR / DATE OF HEARING : 12.12.2018 / DATE OF PRONOUNCEMENT: 17.12.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-1, PUNE DATED 02.08.2016 FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE HON. CIT(A) ERRED IN SUSTAINING DISALLOWANCE OF ADMINISTRATIVE EXPENSES OF RS.2,00,000/- OUT OF TOTAL ADMINISTRATIVE EXPENSES OF RS.20,48,384/- WHEN THE ASSESSEE HAD ALREADY DISALLOWED RS.14,36,560/- IN COMPUTATION OF BUSINESS INCOME. THE APPELLANT PLEADS THAT ITS CLAIM OF ADMINISTRATIVE EXPENSES WAS LEGITIMATE AND ALLOWABLE U/S 37 OF THE IT ACT. 2. THE APPELLANT PLEADS THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED AND IS NOT VALID. 3. THE APPELLANT PLEADS THAT HIS APPEAL BE ALLOWED AND CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY OR WITHDRAW ANY OR ALL GROUNDS OF APPEAL. 3. THE BACKGROUND FACTS OF THE CASE INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE SHARE TRADING BUSINESS AND FILED THE RETURN OF INCOME ITA NO.2613/PUN/2016 2 DECLARING TOTAL INCOME OF RS.9,40,499/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 07.03.2014. ASSESSING OFFICER DETERMINED THE TOTAL INCOME OF RS.68,40,510/- AFTER MAKING ADDITION OF RS.59,00,0015/- INCLUDES CONFIRMED ADDITION OF RS.6,11,824/- (PARA 4.2 OF THE ORDER OF THE ASSESSING OFFICER). DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) GRANTED RELIEF IN RESPECT OF MAJOR ADDITION CONFIRMED THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES RESTRICTING THE SAME TO RS.2 LAKHS. THIS IS PART OF THE CLAIM ON ACCOUNT OF THE ADMINISTRATIVE EXPENSES OF RS.20,48,384/-. FOR WANT OF EVIDENCES, ON AD-HOC BASIS, THE CIT(A) RESTRICTED THE ADDITION TO RS.2,00,000/-. THE RELEVANT DISCUSSION GIVEN IN PARA 12 OF THE ORDER OF THE CIT(A) IS EXTRACTED HEREUNDER :- 12. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, DISALLOWANCE OF RS.6,11,824/- HAS BEEN MADE ON THE GROUND THAT THESE EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE APPELLANT CONTENDS THAT THESE EXPENSES CONSISTS OF PROFESSIONAL AND LEGAL EXPENSES, PROFESSIONAL TAX, REPAIRS AND MAINTENANCE, AUDIT FEES AND GENERAL OFFICE EXPENSES WHICH ARE INCURRED IN ORDINARY COURSE FOR RUNNING BUSINESS OF THE APPELLANT. CONSIDERING THE TOTALITY OF THE FACTS AND ALSO CONSIDERING THE FACT THAT THE APPELLANT HAS NOT BEEN ABLE TO JUSTIFY THE CLAIM OF RS.6,11,824/- WITH REQUISITE EVIDENCE, THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE OF RS.6,11,824/- TO RS.2,00,000/- AND ACCORDINGLY THE GROUNDS IF PARTLY ALLOWED. 4. AGAINST THE AFORESAID DECISION OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE EXTRACTED GROUNDS. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION IS ON HIGHER SIDE. 6. CONFIRMING THE DISALLOWANCE OF RS.2 LAKHS ON AD-HOC BASIS IS THE ONLY ISSUE FOR ADJUDICATION. ON HEARING BOTH THE SIDES, WE FIND THAT THE ASSESSEE CLAIMED THE EXPENSES ON ACCOUNT OF ADMINISTRATIVE AND MARKETING ACTIVITIES OF RS.20,48,348/-. OUT OF THE SAME, ASSESSING OFFICER SUE MOTTO DISALLOWED ITA NO.2613/PUN/2016 3 THE SUM OF RS.14,36,384/-. RS.6,11,824/- IS THE BALANCE AND THE ASSESSING OFFICER DISALLOWED THE ENTIRE SUM. HOWEVER, THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.2 LAKHS. ON HEARING BOTH THE PARTIES, AS DISCUSSED IN OPEN COURT, WE PROCEED TO RESTRICT THE DISALLOWANCE OF RS.1,00,000/- ONLY. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 17 TH DAY OF DECEMBER, 2018. SD/- SD/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 17 TH DECEMBER, 2018. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, PUNE; 4. THE PR. CCIT, PUNE; 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE