J.M.ENVIRONET PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 267/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5154 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 26-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: G M MEHTA
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 267/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 J.M. ENVIRONMENT PVT. LTD., 7-CH, 10, JAWAHAR NAGAR, JAIPUR-4 CUKE VS. A.C.I.T. CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 0947 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.M. MEHTA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/08/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/08/2016 VKNS'K@ ORDER PER: KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 27/01/2016 PASSED BY THE LD CIT(A)-2, JAIPUR FOR TH E A.Y. 2011-12. THE GROUNDS TAKEN BY THE ASSESSEE IN APPEAL ARE AS UNDE R:- 1 LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTA INING ADDITION OF RS. 1,72,975/- MADE UNDER SECTION 40(A)(IA) OF IT ACT ON ACCOUNT OF INTEREST ALREADY P AID TO NBFCS DURING THE RELEVANT PREVIOUS YEAR FOR WHICH FORM 26A WERE ALSO SUBMITTED. 2. LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING DISALLO WANCE OF EXPENSES OF RS. 20,000/- OUT OF BUSINESS PROMOTI ON ITA 267/JP/2016_ JM ENVIRONMENT PVT. LTD. VS ACIT 2 EXPENSE, TOUR AND TRAVELLING EXPENSE AND TELEPHONE EXPENSES WITHOUT NOTICING OR POINTING OUT ANY UNVOIC ED OR INADMISSIBLE EXPENSE IN NATURE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF ENVIRONMENT CONSULTANCY. THE ASSESSEE HAS FILED ITS RETURN OF I NCOME FOR THE YEAR UNDER CONSIDERATION ON 28/9/2011 DECLARING TOTAL IN COME OF RS. 1,33,16,810/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) AND ASS ESSMENT ORDER WAS PASSED BY THE LD ASSESSING OFFICER VIDE ORDER DATED 28/02/2014. WHILE FRAMING THE ASSESSMENT, THE LD ASSESSING OFFICER NO TICED THAT THE ASSESSEE PAID INTEREST AMOUNTING TO RS. 1,72,975/- TO VARIOUS NON- BANKING FINANCE COMPANY (NBFC). THE ASSESSEE WAS REQU IRED TO DEDUCT TAX ON THE INTEREST AMOUNT BUT THE ASSESSEE HAS NOT DEDUCTED THE TAX. THEREFORE, THE LD ASSESSING OFFICER INVOKED THE PROV ISIONS OF SECTION 40(A)(IA) OF THE ACT AND MADE ADDITION OF RS. 1,72, 975/-. THE LD ASSESSING OFFICER HAD ALSO MADE DISALLOWANCE ON AD HOC EXPENSE S OF RS. 1,00,000/- ON ACCOUNT OF BUSINESS PROMOTION, TOURS AND TRAVELL ING AND TELEPHONE EXPENSES AND ADDED THE SAME IN THE INCOME OF THE AS SESSEE. 3. BEING AGGRIEVED BY THE ORDER PASSED BY THE LD A SSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A ), WHO AFTER ITA 267/JP/2016_ JM ENVIRONMENT PVT. LTD. VS ACIT 3 CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES, PA RTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPEAL, THE LD. CIT(A) SUSTAINED T HE ADDITION MADE ON ACCOUNT OF DISALLOWANCE MADE U/S 40(A)(IA) OF THE AC T AND REDUCE THE AD HOC DISALLOWANCE OF RS. 1,00,000/- TO RS. 20,000/-. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD CO UNSEL FOR THE ASSESSEE REGARDING GROUND NO. 1 HAS REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. HE HAS SUBMITTED THAT TH E SPECIAL BENCH OF HONBLE VISHAKHAPATNAM TRIBUNAL IN THE CASE OF MERIL YN SHIPPING AND TRANSPORT VS. ADDL.CIT (2012) 16 ITR (TRIB) 1 (VISHAKHA PATNAM) HAS HELD THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD APPLY ONLY TO THE AMOUNT WHICH REMAINED PAYABLE AT THE END OF THE REL EVANT FINANCIAL YEAR AND COULD NOT BE INVOKED TO DISALLOW THE AMOUNT WHIC H HAD ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR WITHOUT DEDUCTION OF T AX AT SOURCE. THIS VIEW OF THE SPECIAL BENCH HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. (2013) 357 ITR 642 (ALL). FURTHER THE APPEAL TO THE HON'BLE SUPREM E COURT HAS BEEN DISMISSED. HE HAS SUBMITTED THAT THE ISSUE HAS ATTE ND ITS FINALITY, SO FAR DISALLOWANCE U/S 40(A)(IA) IS CONCERNED, THE LD COUN SEL OF THE ASSESSEE HAS SUBMITTED THAT THE DEDUCTEE HAVE DISCLOSED THE AMOUNT IN THEIR RETURN OF INCOME, THEREFORE, THIS ADDITION CANNOT B E SUSTAINED. ITA 267/JP/2016_ JM ENVIRONMENT PVT. LTD. VS ACIT 4 5. ON THE CONTRARY, THE LD SR. DR HAS RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO PERUS ED THE ORDERS PASSED BY THE AUTHORITIES BELOW. IT IS THE CONTENTION OF TH E ASSESSEE THAT THE DECISION OF THE SPECIAL BENCH OF VISHAKHAPATNAM TRIB UNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORT VS. ADDL.CIT (SUPRA) IS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE FIN D THAT THE ASSESSEE HAS SUBMITTED REQUISITE DETAILS IN FORM NO. 26A SUG GESTING THAT THE INCOME WAS DECLARED BY THE RECIPIENT, THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP P. LTD. (2015) 377 ITR 635 (DEL), WE DIRECT TH E LD ASSESSING OFFICER TO DELETE THE ADDITION. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 7. APROPOS GROUND NO. 2 OF THE ASSESSEES APPEAL, T HE LD COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT OUT OF DISALLOWANCE OF RS. 1,00,000/- MADE BY THE LD A.O. IN RESPECT OF BUSINESS PROMOTIO N EXPENSES, TOUR AND TRAVELLING AND TELEPHONE EXPENSES WITHOUT POINTING O UT ANY DISALLOWABLE AND UNVOUCHED NATURE OF EXPENSES INCURRED BY THE EM PLOYEES OF THE ASSESSEE COMPANY. HE FURTHER SUBMITTED THAT THE AD HOC DISALLOWANCE ITA 267/JP/2016_ JM ENVIRONMENT PVT. LTD. VS ACIT 5 SUSTAINED BY THE LD CIT(A) IS WITHOUT POINTING OUT AN Y SPECIFIC DEFECTS. THE LD ASSESSING OFFICER AS WELL AS THE LD CIT(A) HAD NOT APPLIED THE PROVISIONS OF SECTION 145(3) OF THE ACT. THEREFORE, HE PRAYED TO DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 8. THE LD SR.DR HAS SUPPORTED THE ORDERS OF THE AUTH ORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE FI ND MERIT IN THE CONTENTION OF THE LD COUNSEL OF THE ASSESSEE THAT T HE LD CIT(A) SUSTAINED THE DISALLOWANCE IGNORING THE FACT THAT NO DISALLOWAB LE NATURE OF EXPENSES WAS POINTED OUT BY THE LD ASSESSING OFFICER. IN VIEW, THEREOF, WE DELETE THE ADDITION SUSTAINED BY THE LD CIT(A). 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/08/2016. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH AUGUST, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- J.M. ENVIRONMENT PVT. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-6, JAIPUR. ITA 267/JP/2016_ JM ENVIRONMENT PVT. LTD. VS ACIT 6 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 267/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR