Maneklal Agarwal (HUF), Secunderabad V. Income Tax Officer, Ward-10(1), Hyderabad

ITA 265/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1612 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-06-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V APARNA
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 265/HYD/2018 ASSESSMENT YEAR: 2007-08 MANEKLAL AGARWAL (HUF), SECUNDERABAD [PAN: AAEHM1006N] VS INCOME TAX OFFICER, WARD-10(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : MS. V. APARNA, DR DATE OF HEARING : 04-06-2019 DATE OF PRONOUNCEMENT : 12-06-2019 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY.2007-08, AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, HYDERABAD, DATED 30-11-2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-HUF FIL ED ITS RETURN OF INCOME FOR THE AY.2007-08 ON 31-10-2007, AD MITTING TOTAL INCOME OF RS.2,94,970/-. DURING THE ASSESSMENT PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT [ACT], AS SESSEE WAS REQUIRED TO FILE BILLS/VOUCHERS IN SUPPORT OF ITS CLAIM WITH REGARD TO EXPENSES DEBITED TO THE P&L A/C. THE ASSESSE E PRODUCED THE SAME, BUT HE DID NOT FILE THE BILLS/VOUCHE RS TO FULL EXTENT, WHICH WERE DEBITED IN P&L A/C. WHEN THE ASSE SSEE WAS CONFRONTED, THE ASSESSEE AGREED FOR THE DISALLOWANCE O F THE EXPENDITURE TO THE TUNE OF 15% OF RS.70,29,200/- AND I.T.A. NO. 265/HYD/2018 :- 2 -: ACCORDINGLY, AN AMOUNT OF RS.10,54,380/- WAS DISALLO WED AND BROUGHT TO TAX U/S.69C OF THE ACT. 2.1. HOWEVER, ASSESSEE PREFERRED AN APPEAL BEFORE TH E CIT(A), WHO CONFIRMED THE ORDER OF ASSESSING OFFICER ON THE G ROUND THAT THE ASSESSEE HIMSELF HAS AGREED FOR THE ADDITION. 2.2. AGAINST THE SAID ORDER OF THE CIT(A), ASSESSEE I S IN SECOND APPEAL BEFORE US, BY RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 10,54,380 MADE B Y THE ASSESSING OFFICER AS REPRESENTING 15% OF THE GROSS EXPENDITUR E DEBITED TO THE PROFIT AND LOSS ACCOUNT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT MAINTAINED P ROPER BOOKS OF ACCOUNT AND MAINTAINED PROPER VOUCHERS FOR ALL THE EXPENDITURE INCURRED AND THAT THEREFORE, NO DISALLOWANCE CAN BE MADE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER MADE THE ADDITION U NDER SEC. 69C OF THE ACT, WHICH SECTION IS NOT APPLICABLE TO THE FAC TS OF THE CASE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE FURTHER SEEN THAT THE EXPENDITURE IS FOR THE PURPOS E OF BUSINESS AND NO PART OF THE EXPENDITURE CAN BE SAID TO BE PERSON AL IN NATURE. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT THE ASSESSEE HAD AGREED FOR THE ADDITION DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT HE PRAYED F OR A DIRECTION TO ASSESSING OFFICER, NOT TO MAKE DISALLOWAN CE OUT OF THE PAYMENTS SUCH AS PROPERTY TAX, RENT FOR THE PREMISE S, TELEPHONE BILLS, SALARY AND DEPRECIATION ETC., ON THE GROUND THAT I.T.A. NO. 265/HYD/2018 :- 3 -: THESE ARE PAYMENTS WHICH ARE TO BE MADE COMPULSORILY A ND THERE CANNOT BE ANY PERSONAL ELEMENT OR NON-GENUINENES S OF THE SAME. 4. LD.DR, HOWEVER, OPPOSED THIS CONTENTION OF THE ASSES SEE. 5. HAVING REGARD TO THE RIVAL CONTENTIONS, I FIND THAT TH E STATUTORY PAYMENTS TO THE GOVERNMENT SUCH AS - PROPERTY TA X, RENT FOR THE PREMISES TAKEN, TELEPHONE BILLS AND DEPRE CIATION HAVE TO BE ALLOWED IN FULL, BECAUSE THERE CANNOT BE A NY DOUBT WITH REGARD TO THE SAID PAYMENTS. HOWEVER, WITH REGARD TO SALARIES AND OTHER EXPENSES, THERE IS A CHANCE OF INF LATING THE EXPENDITURE. IN THE VIEW OF THE SAME, I DIRECT THE ASS ESSING OFFICER TO DISALLOW 15% OF THE EXPENDITURE, EXCLUDING THE PROPERTY TAX, RENT PAID TO THE PREMISES AND DEPRECIATI ON. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS PARTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2019 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 12 TH JUNE, 2019 TNMM/PVV COPY TO : 1. MANEKLAL AGARWAL, H.NO.1-8-167 TO 179, S.D. ROAD , SECUNDERABAD. 2. INCOME TAX OFFICER, WARD-10(1), HYDERABAD. 3. CIT (APPEALS)-6, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.