The ACIT2(1), Bhopal V. M/s M.P.State Tourism Development Corporation Ltd., Bhopal

ITA 265/IND/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5778 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESH
• Keywords: Depreciation; Opportunity of being heard; Corroborative evidences; Unabsorbed depreciation

Judgement Text

ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, AM & SHRI O.P.MEENA,AM ITA NO.265/IND/2013 A.Y.2009-10 ASSTT.COMMR. OF INCOMETAX 2(1) BHOPAL ::: APPELLANT VS M.P. STATE TOURISM DEVELOPMENT CORPORATION LIMITED BHOPAL ::: RESPONDENT CO NO.71/IND/2013 ARISING OUT OF ITA NO. 265/IND/2013 M.P. STATE TOURISM DEVELOPMENT CORPORATION LIMITED BHOPAL ::: OBJECTOR VS ASSTT.COMMR. OF INCOMETAX 2(1) BHOPAL ::: RESPONDENT REVENUE BY SHRI MOHD. JAVED RESPONDENT BY SHRI S.S. DESHPANDE DATE OF HEARING 26.7.2016 DATE OF PRONOUNCEMENT 8 . 9 .2016 ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 2 O R D E R PER SHRI D.T. GARASIA, JM THE REVENUE HAS FILED THE APPEAL WHEREAS THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL DATED 14.2.2013. 2. GROUND NO. 1 OF THE APPELLANT IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1,50,00,000/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OUT OF PUBLICITY, PROMOTION & FESTIVAL EXPENSES. 3. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT IN THE ASSESSEES OWN CASE AN IDENTICAL ISSUE HAD COME UP BEFOR E THE ITAT, INDORE BENCH, INDORE, IN ITA NO. 113/IND/ 2011 WHEREIN BY ORDER DATED 2.2.2012 IT WAS HELD AS UNDER :- 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS STATE GOVERNMENT UNDERTAKI NG, ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 3 LOOKING AFTER TOURISM, BOARDING AND LODGING ETC. IN THE STATE. THE ASSESSEE DECLARED NIL INCOME IN ITS RETU RN FILED ON 8.11.2007 AFTER ADJUSTING THE BUSINESS LOSSES OF RS.59,05,915/- AND UNABSORBED DEPRECIATION OF RS.1,37,95,039/-. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE LD. ASSESSING OFFICER THAT THE EXPEN DITURE INCURRED BY THE ASSESSEE ON PUBLICITY, PROMOTION, F ESTIVALS, DISCOUNT AND COMMISSION, REPAIR AND MAINTENANCE WAS NOT SUPPORTED BY VOUCHERS. IN VIEW OF THE NON-VERIF IABILITY OF THE EXPENSES DEBITED UNDER VARIOUS HEADS, THE LD . ASSESSING OFFICER MADE PARTIAL DISALLOWANCES WHICH ARE SUMMARISED AS UNDER: 4 EXPENDITURE HEAD TOTAL EXPEN SES (RS.) DISALLOWANCE MADE (RS.) PUBLICITY, PROMOTION & FESTIVAL 11,01,18,286 1,00,00,000 DISCOUNT & COMMIS SION 1,98,64,406 20,00,000 REPAIRS & MAINTENANCE TRANSPORT 64,14,076 6,00,000 REPAIRS & MAINTT.-OTHE RS 42,50,418 5,00,000 REPAIRS & MAINTT.-GARDEN 5,15,02 7 50,000 TOTAL: 1,31,50,000 THE LD. ASSESSING OFFICER MADE PART DISALLOWANCES OUT OF THE ABOVE EXPENSES A ND ASSESSED THE INCOME OF THE ASSESSEE AS HAS BEEN DET AILED IN THE ASSESSMENT ORDER. THE AGGRIEVED ASSESSEE PRE FERRED APPEAL BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORD ER HELD AS UNDER: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE REASONING GIVEN BY THE A.O. IN THE ASSESSMENT ORDER . THE DISALLOWANCE OF RS.1,00,00,000/- OUT OF PUBLICITY, PROMOTION & FESTIVAL EXPENSES AND RS.6,00,000/- OUT OF REPAIRS & MAINTENANCE TRANSPORT APPEARS TO BE UNJUSTIFIED AND WITHOUT ANY COGENT REASON. NO SUCH DISALLOWANCE WAS MADE BY THE A.O. OUT OF THE ABOVE EXPENSES IN THE PAST AND THE A.O. HAS NOT BROUGHT A NY MATERIAL ON RECORD TO WARRANT SUCH ADDITIONS IN THE CASE OF THE APPELLANT FOR THE CURRENT YEAR. THE DISALLOWANC E OF RS.1,00,00,000/- AND RS.6,00,000/- ARE THEREFORE DE LETED. HOWEVER, OUT OF DISCOUNT & COMMISSION EXPENSES SHOW N AT RS.1,98,64,406/- AMOUNT TOTALLING TO RS.11,10,13 3/- HAS BEEN PAID TO AUTORICKSHAWS. DURING A.Y. 2006-07 THE COMMISSION PAID TO AUTORICKSHAWS WAS RS.7,59,716/- OUT OF WHICH DISALLOWANCE OF RS.3,50,000/- WAS MADE. TH E ASSESSEE IS NOT IN APPEAL FOR THAT YEAR. THEREFORE, OUT OF ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 4 DISALLOWANCE OF RS.20,00,000/- I FIND IT JUSTIFIED TO MAINTAIN THE DISALLOWANCE OF RS.5,11,500/- BEING DU E TO NONMAINTENANCE OF PROPER VOUCHERS FOR COMMISSION 5 PAID TO AUTORICKSHAWS. THE APPELLANT WILL GET TOTAL RELI EF OF RS.1,26,38,500/- (1,00,00,000/- + 14,88,500 + 6,00, 000 + 5,00,000 + 50,000) OUT OF TOTAL DISALLOWANCE OF RS.1,31,50,000/-. GROUND NO.3 IS THEREFORE PARTLY ALLOWED. 4. IF THE FINDING ARRIVED AT IN THE IMPUG NED ORDER IS ANALYSED WITH THE FACTS OF THE PRESENT APPEAL AN D MORE SPECIFICALLY THE FINDING IN THE ASSESSMENT ORDER TH AT THE DISALLOWANCES WERE MADE DUE TO ABSENCE OF SUPPORTED DOCUMENTS, WE FIND THAT SO FAR AS THE DISALLOWANCES MADE OUT OF PUBLICITY, PROMOTION & FESTIVAL EXPENSES ARE CONCERNED, THERE IS NO FINDING IN THE IMPUGNED ORDE R THAT EITHER SUCH SUPPORTING BILLS OR VOUCHERS WERE FURNI SHED BY THE ASSESSEE OR THE SAME WERE EXAMINED BY THE LD. C IT(A). IN THE ABSENCE OF SUCH FINDING/SUPPORTING EVIDENCES , WE FIND NO JUSTIFICATION IN GRANTING RELIEF TO THE ASS ESSEE, THEREFORE, THE ASSESSEE IS DIRECTED TO APPROACH THE LD. ASSESSING OFFICER TO SUBSTANTIATE ITS CLAIM WITH SU PPORTING BILLS/VOUCHERS ETC., IF ANY, FOR WHICH DUE OPPORTUN ITY OF BEING HEARD TO BE PROVIDED TO THE ASSESSEE, CONSEQU ENTLY, THE ISSUES OF PUBLICITY, PROMOTION & FESTIVAL EXPEN SES ARE REMANDED BACK 6 TO THE FILE OF THE LD. ASSESSING OF FICER AND TO THIS EXTENT, THE APPEAL OF THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSES. 4. FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL, WE REST ORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WIT H THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH THE ABO VE DIRECTIONS OF THE TRIBUNAL, AFTER PROVIDING AN OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 5 5. GROUND NO. 2 IS THE LEARNED CIT(A) ERRED IN DELET ING THE ADDITION OF RS.12,70,400/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OUT OF DISCOUNT & COMMISSION EXPENSES. 6. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT IN THE ASSESSEES OWN CASE, AN IDENTICAL ISSUE HAD COME UP BEFO RE ITAT, INDORE BENCH, IN ITA NO. 113/IND/2011 AND VIDE ITS ORDER DATED 2.2.2012 THE TRIBUNAL HAS DECIDED THIS ISS UE AS UNDER :- 5. SO FAR AS DISCOUNT & COMMISSION, REPAIRS AND MAINTENANCE OF TRANSPORT, OTHERS AND GARDEN ETC. ARE CONCERNED, WE FIND THAT PART DELETION BY THE LD. CIT(A) IS JUSTIFIED AND REASONABLE. THEREFORE, ON THESE ISSUES, WE UPHELD THE STAND OF THE LD. CIT(A). FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL IN THE ASSE SSEES OWN CASE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND REJECT THIS GROUND OF APPEAL OF THE REVENUE. ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 6 7. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDIT ION OF RS.35 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DISALLOWANCE OUT OF PACKAGE TOUR EXPENSES. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE EXPENDITUR E DEBITED UNDER THE HEAD PACKAGE TOUR EXPENSES ARE NOT F ULLY SUPPORTED BY VERIFIABLE VOUCHERS. HE, THEREFORE, MADE PARTIAL DISALLOWANCE OF RS.35 LACS UNDER THE HEAD PACKAGE TOUR EXPENSES. ON APPEAL, THE LEARNED CIT(A) DELETED T HE SAME. NOW THE REVENUE IS IN APPEAL. 9. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY ITEM OF EXPE NDITURE WHICH WAS NOT ALLOWABLE AS DEDUCTION. IN EARLIER YEAR S THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE UNDER THE HEAD PACKAGE TOUR EXPENSES. THE EXPENSES ARE FULLY VOUCHED AND ACCOUNTS WERE AUDITED BY THE AUDITORS. WE, ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 7 THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LE ARNED CIT(A) AND UPHOLD THE SAME. THIS GROUND IS, THEREFORE , DISMISSED. 10. GROUND NO. 4 RELATES TO DELETION OF ADDITION OF RS1,50,00,000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OUT OF REPAIR AND MAINTENANCE OF TRANSPOR T EXPENSES. 11. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED EXPENDITURE ON REPAIR AND MAINTENANCE-TRANSPORT OF RS.1,39,59,255/-. THE ASSESSING OFFICER OBSERVE D THAT THESE EXPENSES WERE NOT FULLY SUPPORTED BY VOUCHERS . HE, ACCORDINGLY MADE DISALLOWANCE OF RS. 15 LACS OUT OF THE SE EXPENSES. ON APPEAL, THE LEARNED CIT(A) DELETED THE SAM E. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE DULY AUDI TED. ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 8 THE ASSESSING OFFICER DID NOT POINT OUT ANY ITEM OF EXPENDITURE WHICH WAS NOT VERIFIABLE OR DISALLOWABLE IN NATURE. IN EARLIER YEAR THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE. IN THE ASSESSMENT YEAR 2007-08 A DISALLOWANCE OF RS.6 LACS WAS MADE OUT OF EXPENSES ON REPAIR AND MAINTENANCE OF TRANSPORT WHICH WAS DELETED BY THE LEARNED CIT(A) WHOSE ORDER WAS CONFIRMED BY THE TRIBUNAL ON APPEAL. WE, THEREFORE, FIND NO FLAW IN TH E ORDER OF THE LEARNED CIT(A) AND UPHOLD THE SAME. THIS GROUND IS, THEREFORE, REJECTED. 13. NOW WE SHALL DEAL WITH THE CROSS OBJECTION FILED BY THE ASSESSEE. 14. THE FIRST GROUND TAKEN BY THE ASSESSEE IS THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACT ION OF THE ASSESSING OFFICER THAT THE SUM OF RS.1,31,81,008 /- OUT OF TOTAL EXPENDITURE OF RS.2,36,51,306/- CLAIMED ON ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 9 ACCOUNT OF BUILDING REPAIRS, OTHER REPAIRS & GARDEN MAINTENANCE ARE OF CAPITAL NATURE AND DISALLOWABLE. 15. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE COMPANY HAD CLAIMED EXPENSES ON BUILDINGS REPAIR AND MAINTENANCE AMOUNTING TO RS.1,67,33,389/-.THE ASSESSIN G OFFICER NOTED THAT THE ASSESSEE HAD INCLUDED EXPENSES OF CAPITAL NATURE IN THE REPAIRS AND MAINTENANCE EXPENSES. THESE EXPENSES. HOWEVER, THE ASSESSING OFFICER MADE THE ADDITION. ON APPEAL, THE LEARNED CIT(A) FOLLOWING THE DECISION OF THE CIT(A) FOR THE ASSESSMENT YEAR 2007- 08 THE ASSESSING OFFICER DISALLOWED 48.12% OF THE EXPENDITU RE TREATING THE SAME AS CAPITAL IN NATURE AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LEARNED CIT(A) CONSIDERING THE FACT THAT THE CIT(A) AND THE TRIBUNAL HAD CONFIRMED SIMILAR DISALLOWANCE IN THE EARL IER YEARS, CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS BEFORE US. ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 10 16. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT THE TRIBUNAL HAS CONFIRMED THE SIMILAR DISALLOWANCE IN THE EARLIER YEARS IN THE CASE OF THE ASSESSEE ITSELF. WE, THEREFORE, FIND NO FLAW IN THE ORDER OF THE LEARNED CIT(A) AND CONFIRM THE SAME. THIS GROUND IS, THEREFORE, REJE CTED. 17. THE NEXT GROUND RELATES TO CONFIRMATION OF DEPREC IATION BY THE LEARNED CIT(A) ON RS.1,13,81,008/- IN CASE THE SAID AMOUNT IS TREATED AS AN EXPENDITURE 18. WE HAVE HEARD BOTH THE SIDES. WE FIND THAT WHEN THE LEARNED CIT(A) IS JUSTIFIED IN TREATING THE EXPENDITU RE OF RS.2,36,51,306/- AS BUILDING REPAIRS, OTHER REPAIRS AND GARDEN MAINTENANCE AS CAPITAL IN NATURE, THEREFORE, THE ASSESSEE IS ENTITLED TO DEPRECIATION AS PER LAW. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES B ELOW AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFF ICER TO DECIDE THE SAME AS PER LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 11 19. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROS S OBJECTION OF THE REVENUE STAND PARTLY ALLOWED FOR STATI STICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 8 SEPTEMBER, 2016 SD/- SD/- (O.P. MEENA) (D.T. GAR ASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER 8 SEPTEMBER, 2016 DN/- ACIT VS. MP STATE TOURISM DEV.CORPN ITA NO. 265/IND/2013 & CO NO.71/IND/2013 12