ACIT Circle 20 (1), V. Vishesh Overseas,

ITA 29/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9920 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR SANJAY
• Assessee Lawyers: ARUN BHATIA
• Keywords: TDS
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI A.D.JAIN, JM AND SHRI R.C.SHARMA, AM ITA NO.29/DEL/2008 ASSESSMENT YEAR : 2003-04 ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-20(1), NEW DELHI. VS. M/S VISHESH OVERSEAS, C-68/1, OKHLA INDUSTRIAL AREA, PHASE-II, NEW DELHI. PAN NO.AAAFY4792J. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KUMAR SANJAY, SR.DR. RESPONDENT BY : SHRI ARUN BHATIA, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 13.8.2007 FOR THE AY 2003-04, 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT DURING THE YEAR, THE ASSESSEE COMPANY WAS ENGA GED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF GARMENTS TO VARIOUS COU NTRIES. FOR THIS PURPOSE, THE ASSESSEE INCURRED EXPENDITURE ON CONSUMABLES, SAMPL ING, FABRICATION AND EMBROIDERY, DYEING AND PACKING ETC. THE AO DISALLO WED EXPENDITURE OF RS.22.36 LAKHS OUT OF THE FABRICATION EXPENSES IN RESPECT OF SEVEN PARTIES, ON THE PLEA THAT NO REPLY WAS RECEIVED IN RESPONSE TO NOTICE U/S 133(6) . IT WAS EXPLAINED THAT THESE PARTIES TO WHOM STITCHING AND EMBROIDERY CHARGES WE RE PAID WERE SMALL PARTIES AND THEY MIGHT HAVE CLOSED OR LEFT THE BUSINESS PRE MISES, AND IT WAS VERY DIFFICULT TO LOCATE THESE PARTIES AFTER A GAP OF 2-3 YEARS. BEING NOT SATISFIED, OUT OF EXPENDITURE OF RS.1.01 CRORES, THE AO DISALLOWED A SUM OF RS.22.36 LAKHS. BY THE IMPUGNED ORDER, THE CIT(A) ALLOWED WHOLE EXPENDITUR E BY OBSERVING THAT ASSESSEE ITA-29/D/2008 2 HAS FURNISHED ALL THE RELEVANT DETAILS INCLUDING CO PY OF LEDGER ACCOUNTS WITH PARTICULARS, CERTIFICATES FROM BANK, DETAILS OF PAY MENT MADE TO THESE PARTIES, COPIES OF BILLS RAISED BY THE PARTIES, RELEVANT EXPORT INV OICES SHOWING THE PURCHASE ORDER OF THE FOREIGN BUYERS, DETAILS OF TDS ETC. WHICH FO RMED SUFFICIENT EVIDENCE IN THIS REGARD. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT THE PARTIES TO WHOM STITCHING AND EMBROIDERY CHARGE S WERE PAID WERE SMALL PARTIES AND THEY MIGHT HAVE CLOSED OR LEFT THE PREMISES, FO R THE ASSESSEE IT WAS VERY DIFFICULT TO LOCATE THE SAME. PAYMENTS TO THESE PA RTIES HAVE BEEN MADE BY CHEQUES THROUGH THEIR BANK ACCOUNTS AND TDS HAS ALSO BEEN D EDUCTED THEREON. THE CERTIFICATE FROM THE BANK WAS ALSO FURNISHED BEFORE THE AO WHICH INDICATED THAT THE CHEQUES ISSUED TO THESE PARTIES WERE ALL CLEARE D AND DEBITED TO THE CURRENT ACCOUNT OF THE ASSESSEE. THE DETAILED FINDING RECO RDED BY THE CIT(A) WITH REGARD TO GENUINENESS OF THE EXPENSES AND THE PARTIES CONC ERNED WERE NOT CONTROVERTED BY THE LEARNED DR. WE, THEREFORE, DO NOT FIND ANY REA SON TO INTERFERE WITH THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF FABRICATION EXPENSES. 4. THE AO HAS ALSO DISALLOWED RS.2,62,495/- OUT OF FOREIGN TRAVEL EXPENSES, WHICH WAS DELETED BY THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THE AO HAS DISALLOWED THE FOREIGN TRAVEL EXPENSES OF THE PARTN ERS. THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS INCLUDING COPY OF LEDGER A CCOUNT WITH PARTICULARS AND DETAILS OF FOREIGN TRAVEL OF THE PARTNERS ALONG WIT H NECESSARY DOCUMENTARY EVIDENCE. WE FOUND THAT SHRI RAJIV PREM, MD OF THE COMPANY VISITED VARIOUS COUNTRIES TO PARTICIPATE IN TRADE FAIRS ORGANIZED B Y THE APPAREL EXPORT PROMOTION COUNCIL TO PROMOTE THE GARMENT EXPORT FROM INDIA. COPIES OF BILLS AND CREDIT CARD STATEMENTS IN RESPECT OF EXPENDITURE SO INCURRED WE RE FURNISHED. THE ASSESSEE HAS ALSO PROCURED EXPORT ORDER WORTH RS.29.43 LAKHS DUE TO THESE VISITS. DETAILED ITA-29/D/2008 3 FINDING HAS BEEN RECORDED BY THE CIT(A) JUSTIFYING THE CLAIM OF EXPENDITURE AT PARA 8 OF HIS APPELLATE ORDER, WHICH HAS NOT BEEN C ONTROVERTED BY THE LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCOR DINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR INTERFERING IN THE ORDER OF CIT(A ), DELETING THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EXPORT BUSINESS, ON ACCOUNT OF FOREIGN TRAVELING. 6. NEXT GRIEVANCE OF THE REVENUE RELATES TO DELETIN G DISALLOWANCE OF RS.18.33 LAKHS MADE ON ACCOUNT OF INTEREST PAID. DURING THE COURSE OF ASSESSMENT, THE AO FOUND THAT ASSESSEE HAS TAKEN LOAN WHICH WAS INTERE ST BEARING AND IT ALSO GAVE LOANS AND ADVANCES ON WHICH NO INTEREST WAS CHARGED . BY THE IMPUGNED ORDER, CIT(A) DELETED THE DISALLOWANCE BY OBSERVING THAT A SSESSEE COMPANY HAD SUFFICIENT INTEREST BEARING FUNDS TO THE TUNE OF RS .10.08 CRORES, WHICH WAS UTILIZED FOR ADVANCING INTEREST FREE FUNDS TO THE EXTENT OF RS.1.22 CRORES. IT WAS ALSO OBSERVED THAT ASSESSEE COMPANY WAS ALSO HAVING ITS OWN INTEREST FREE FUNDS OF RS.10.04 CRORES. UNDER THESE CIRCUMSTANCES THE CIT (A) FOUND THAT AO SHOULD NOT HAVE STEPPED INTO THE SHOES OF A BUSINESSMAN FOR AD VANCING A SUM OF RS.1.22 CRORES ON WHICH NO INTEREST WAS CHARGED. THE FINDI NG RECORDED BY THE CIT(A) WITH REGARD TO AVAILABILITY OF THE INTEREST FREE FU NDS OUT OF WHICH LOANS WERE GIVEN HAVE NOT BEEN CONTROVERTED BY THE LEARNED DR, WE, T HEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING SO RECORDED BY THE CIT(A). 7. LAST GRIEVANCE OF THE REVENUE RELATES TO DELETIN G DISALLOWANCE OF RS.1,76,689/- OUT OF DIWALI EXPENSES, BUSINESS PROM OTION EXPENSES AND TELEPHONE EXPENSES. 8. THE AO FOUND THAT IN THESE EXPENSES, THERE IS AL WAYS AN ELEMENT OF PERSONAL USE. SO FAR AS EXPENSES INCURRED ON DIWAL I AND BUSINESS PROMOTION ARE CONCERNED, THE CIT(A) FOUND THAT SOME OF THE EXPENS ES WERE NOT VERIFIABLE AND THE SAME WERE SUPPORTED BY SELF MADE VOUCHERS AND PAYME NTS WERE MADE IN CASH. ITA-29/D/2008 4 ACCORDINGLY, OUT OF DISALLOWANCE OF RS.2,76,698/-, HE RESTRICTED DISALLOWANCE TO THE EXTENT OF RS.1 LAKH. NO INTERFERENCE IS REQUIR ED IN THE ORDER OF CIT(A) FOR RESTRICTING THE DISALLOWANCE TO THE EXTENT OF RS.1 LAKH. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2009. SD/- SD/- (A.D.JAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.08.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR