Linus Consultants Private Limited, Hyderabad, Hyderabad V. ITO, Ward-16(1), Hyderabad, Hyderabad

ITA 263/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8646 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 17-02-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Depreciation
• Section: 69C; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 263/HYD/2017 ASSESSMENT YEAR: 2012-13 M/S.LINUS CONSULTANTS PVT. LTD., HYDERABAD [PAN: AAACL7034N] VS ITO, WARD-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO, AR FOR REVENUE : SHRI ROHIT MUJUMDAR, DR DATE OF HEARING : 17-02-2021 DATE OF PRONOUNCEMENT : 24-03-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2012-13 ARISES FROM TH E CIT(A)-4, HYDERABADS ORDER DATED 21-11-2016 PASSED IN APPEAL NO.0137/ITO,W-16(1)/15-16/CIT(A)-4/HYD/2016- 17 IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [I N SHORT, THE ACT]. HEARD BOTH PARTIES. CASE FILE PERUSED. 2. WE COME TO THE FORMER TWIN ISSUES OF UNEXPLAINED C ASH DEPOSITS AND UN-EXPLAINED EXPENDITURE U/S.68 AND 69C OF THE ACT TO THE TUNE OF RS.4,18,963/- AND RS.7,90,712/-; RESPECTIVELY. THE ASSESSEES ONLY CASE IS THAT ITS CA SH BALANCES AS PER PG.49 OF THE PAPER BOOK ARE RS.52,174.20 ALON G WITH UNSECURED LOANS AND ADVANCES EXCEEDING BOTH THESE SUM S ITA NO. 263/HYD/2017 :- 2 -: WHEREAS THE ASSESSING OFFICERS ASSESSMENT ORDER DT.31 -03- 2015 HAS MADE BOTH THE IMPUGNED ADDITIONS ON THE BASIS OF THE STRAY ENTRIES IN ISOLATION WITHOUT EXAMINING ALL THES E CORRESPONDING DETAILS. WE NOTICE THAT THE REVENUE IS AL SO UNABLE TO REBUT THE CLINCHING FACT THAT THE ASSESSING OFF ICER HAS NOT DISCUSSED AT ALL THE CASH BALANCES IN THE RELE VANT ACCOUNTING PERIOD FROM 01-04-2011 TO 31-03-2012 BEFOR E MAKING THE IMPUGNED ADDITIONS. WE THEREFORE DEEM IT APPROPRIATE TO RESTORE BOTH THESE ISSUES BACK TO THE ASSES SING OFFICER FOR THE PURPOSE OF FINALISING AFRESH RECONCI LIATION OF THE ASSESSEES CASH IN HAND AND BALANCES VIZ-A-VIZ IMPU GNED NEGATIVE BALANCE AS WELL AS INVESTMENTS TO THE TUNE OF RS.4,18,963/- AND RS.7,90,712/- RESPECTIVELY. THESE TWO GROUNDS ARE TAKEN AS ACCEPTED FOR STATISTICAL PURPOSES THEREFORE. 3. NEXT COMES THE THIRD ISSUE OF DISALLOWANCE DEPRECIA TION ON MOTOR VEHICLES TO THE TUNE OF RS.10,82,922/-. SUFFI CE TO SAY, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE DISA LLOWED THE ASSESSEES CLAIM TO THE TUNE OF 50% THEREBY ALLEGING PERSONAL USAGE ELEMENT OF THE CORRESPONDING ASSETS. AND ALSO T HAT THE VEHICLES FORM THE RELEVANT BLOCK OF ASSETS ARE HIGH EN D LUXURY VEHICLES PROVIDED TO THE TWO DIRECTORS. WE FIND NO REA SON TO SUSTAIN THE IMPUGNED REASONING IN PRINCIPLE. MORE SO WHEN THE ASSESSEE HAS NOT ADDED ANY NEW ASSET IN THE CORRESPONDING BLOCK IN THE RELEVANT PREVIOUS YEAR. T HE FACT ALSO REMAINS THAT PERSONAL USAGE PER SE OF THE OFFICE VEHICLES CANNOT BE ALTOGETHER RULED OUT. FACED WITH THIS SITUATION, WE DEEM IT APPROPRIATE TO RESTRICT THE IMPUGNED DEPRECIATION DISALLOWANCE OF ITA NO. 263/HYD/2017 :- 3 -: RS.10,82,922/- TO LUMPSUM AMOUNT OF RS.1.5 LAKHS ONLY WITH A RIDER THAT THE SAME SHALL NOT BE TAKEN AS A PRECEDENT. THE ASSESSEES THIRD SUBSTANTIVE GRIEVANCE IS PARTLY ACCEPTE D IN ASSESSEES FAVOUR. 4. LASTLY COMES ASSESSEES DIRECTORS REMUNERATION CL AIM DISALLOWANCE OF RS.7,20,000/- IN CASE OF MS.SAMIA A LI KHAN. RELEVANT DISCUSSION IN ASSESSMENT ORDER DT.31-03-2015 IN PGS. 12 TO 13 TAKE NOTE OF HER CLARIFICATION THAT SHE WAS NOT PLAYING ANY KEY ROLE. ALL THIS MADE THE ASSESSING OFFICER TO INVOKE THE SECTION 40A(2) OF THE ACT TERMING THE IMPUGNED PAYMENT AS EXCESSIVE AND UNREASONABLE. WE ARE UNABLE TO AGREE WITH THE IMPUGNED AMOUNT DISALLOWANCE AS WELL SINCE THE SAID CLARIFICATION HAD COME ON 16-01-2015 WHEREAS WE ARE IN AY.2012-13 ONLY. IT WAS MADE CLEAR TO THE ASSESSING O FFICER THAT THE SAID DIRECTOR HAD TRANSFORMED THE COMPANIES FOR TUNES IN DESIGNING AND INTERNAL LOGISTICS WHICH IN TURN HE LPED IT TO SECURE IN BULK CORPORATE ORDERS IN REGULAR COURSE OF BUSINESS. WE THUS ARE OF THE OPINION THAT BOTH THE LOWER AUTHORITIE S HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING THE IMP UGNED DIRECTORS REMUNERATION CLAIM OF RS.7,20,000/-. THE SAME IS DIRECTED TO BE DELETED. NECESSARY COMPUTATION TO FOLLOW AS PER LAW. 5. THIS ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWE D IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 24-03-2021 TNMM ITA NO. 263/HYD/2017 :- 4 -: COPY TO : 1.M/S.LINUS CONSULTANTS PVT. LTD., C/O.P.MURALI & C O., CHARTERED ACCOUNTANTS,6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2.THE ITO, WARD-16(1), HYDERABAD. 3.CIT(APPEALS)-4, HYDERABAD. 4.PR.CIT-4, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.