ITO, New Delhi V. M/s Bramini Coal Carrier (P) Ltd., New Delhi

ITA 2920/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6565 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Keywords: Corroborative evidences; Revenue expenditure; TDS; Set aside
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 2920/DEL/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, WARD 2(4), ROOM NO. 381, C.R. BLDG., NEW DELHI. VS. M/S BRAMINI COAL CARRIER (P) LTD., 148, MANDAKINI ENCLAVE, ALAKNANDA, NEW DELHI. AACCB3072E (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. ANUSHA KHURANA, SR. DR RESPONDENT BY : NONE O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 15.3.10 FOR AY 2006-07. GROUNDS OF AP PEAL READ AS UNDER: - 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS. 5,36,049/- (I.E. @ 5 0%) OUT OF TRANSPORTATION EXPENSES AND RS. 3,64,499/- (I.E. @ 10%) OUT OF REPAIR AND MAINTENANCE IGNORING THE FACT THAT ASS ESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS AND OTHER SUPPORTING EVIDENCE AS REQUIRED DURING THE ASSESSMENT PROCEEDING AND FAILE D TO EXPLAIN THE ABNORMALLY HIGH INCREASE EXPENSES UNDER THESE HEADS DESPITE THE FACT THAT THERE WAS NO INCREASE IN THE FIXED ASSETS DU RING THE YEAR. 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY T IME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2 ITA NO. 2920/DEL/2010 2. NOTICE OF HEARING WAS SENT TO ASSESSEE. HOWEVER , ON THE FIXED DATE OF HEARING, NONE WAS PRESENT ON BEHALF OF ASSESSEE. W E, THEREFORE, PROCEED TO DECIDE THE APPEAL EX-PARTE QUA THE ASSESSEE AFTER H EARING LD. DR AND AFTER CONSIDERING THE MATERIAL AVAILABLE ON OUR RECORD. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANS PORTATION OF COAL. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSE SSEE WAS REQUIRED TO EXPLAIN THE INCREASE IN EXPENSES VIZ-A-VIZ INCRE ASE IN GROSS INCOME. IT WAS NOTICED BY THE AO THAT INCOME OF THE ASSESSEE H AD INCREASED BY 17% AND AS AGAINST THAT IN OPERATING OVERHEADS THERE WA S AN INCREASE OF 23% AND IN TRANSPORTATION EXPENSES THERE WAS AN INCREAS E OF 36%. IT WAS SUBMITTED THAT ASSESSEE COMPANYS ACTIVITY IS IN CO AL MINING, TRANSPORTATION, LOADING OF COALS ETC. THE WORKING CONDITIONS IN THE COAL FIELD WERE VERY ADVERSE, THE ROADS WERE TEMPORARY A ND IN A BAD CONDITION, THE MACHINE WORKED UNDER VERY ADVERSE CLIMATE OF MO RE THAN 48 DEGREE CELSIUS WHICH RESULTED IN INCREASE IN MAINTE NANCE AND RUNNING COST AND WEAR AND TEAR OF TYRES AND TUBES. IT WAS SUBMITTED THAT IT WAS SECOND YEAR OF OPERATION AND THE MINE ALLOTTED TO T HE COMPANY BECAME DEEPER DAY BY DAY RESULTING IN INCREASE IN HEIGHT A ND DISTANCE TO BE TRAVELED. WITH THE INCREASE OF THE HEIGHT OF MINE, THE CONSUMPTION OF DIESEL AND LOAD ON ENGINE INCREASED WHICH RESULTED IN MORE CONSUMPTION OF DIESEL AND SPARES AND THAT ULTIMATELY RESULTED I N MORE REPAIR AND MAINTENANCE COST AND ALSO EXPENSES RELATING TO OPER ATION OVERHEAD. THE COMPANY HAD LIMITED NUMBER OF MACHINES TO INCREASE THE PRODUCTIVITY AND TO MEET THE TARGETS ASSIGNED TO THEM, THEREFORE, TH E COMPANY HAD TO EMPLOY OTHER SUBCONTRACTORS FOR TRANSPORTATION WHIC H ALSO RESULTED IN THE 3 ITA NO. 2920/DEL/2010 INCREASE IN TRANSPORTATION CHARGES AND OTHER EXPENS ES. THUS, IT WAS CLAIMED THAT THE EXPENSES SHOWN BY THE ASSESSEE ARE JUSTIFIED. THE AO DID NOT ACCEPT SUCH SUBMISSION OF THE ASSESSEE ON T HE GROUND THAT WHEN MINES GET DEEPER THE TRANSPORTATION IS NOT DONE BY THE TRUCKS INSIDE THE MINES AS THE SAME WAS TO BE DONE BY RAIL TRACKS SPE CIALLY BUILT FOR THAT PURPOSE AND THE TRUCKS WERE TO BE USED ONLY FROM TH E POINT OF EXIT OF THE MINE. SO AS IT RELATES TO THE CONTENTION OF THE AS SESSEE THAT THE RELEVANT YEAR IS THE SECOND YEAR, HE REJECTED THE CONTENTION OF THE ASSESSEE THAT MINE HAD GOT DEEPER ONLY IN SECOND YEAR OF OPERATIO N. THE AO OBSERVED THAT ASSESSEE COMPANY DID NOT SUBMIT THE BILLS AND VOUCHERS BUT HAS SUBMITTED ONLY PHOTOCOPIES OF SOME BILLS OF REPAIR TO JUSTIFY THE INCREASE IN THE EXPENSES WHICH ARE ABNORMALLY HIGH. WITH REGAR D TO THE CONTENTION OF THE ASSESSEE THE TEMPERATURE WAS HIGH THE AO RECORD ED A FINDING THAT THE ASSESSEE ITSELF IS NOT SURE OF THE TEMPERATURE AS I N ONE SUBMISSION THE SAME HAS SHOWN TEMPERATURE AT 52 DEGREE AND IN OTHE R SUBMISSION IT WAS SHOWN AS 48 DEGREES. RELYING UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF JAIPUR ELECTRO PVT. LTD. VS. CIT 134 CTR (RAJ.) 237, THE AO OBSERVED THAT HE HAS THE RIGHT AND DUTY TO ENQUIRE INTO THE PURPOSES OF EXPENDITURE AND HE ALSO RELIED UPON THE BOMBAY HIGH COURT IN THE CASE OF RAMANAND SAGAR VS. DCIT 255 ITR 134 TO HOLD THAT AO ONLY DECIDE THAT WHETHER THE EXPENDITURE IS REAL WH ETHER IT RELATES TO THE BUSINESS AND IS WHOLLY SPEND FOR THAT PURPOSE. REF ERRING TO SEC. 37 THE AO OBSERVED THAT EXPENDITURE CAN ONLY BE ALLOWED IF IT IS IN THE NATURE OF REVENUE EXPENDITURE AND IT MUST BE LAID OUT OR EXPA NDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE CI RCUMSTANCES THE AO PROCEED TO DISALLOW TRANSPORTATION AND REPAIR EXPEN SES TO THE TUNE OF 5% 4 ITA NO. 2920/DEL/2010 AND REPAIR AND MAINTENANCE EXPENSES TO THE TUNE OF 10% BOTH AGGREGATING A SUM OF RS. 9,00,548/-. 4. THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE AO W ERE REITERATED BEFORE CIT(A). RELIANCE WAS ALSO PLACED ON VARIOUS JUDICIAL PRONOUNCEMENTS TO CONTEND THAT THE DISALLOWANCE MADE BY THE AO WAS NO T JUSTIFIED. LD. CIT(A) HAS RETURNED A FINDING THAT DURING APPELLATE PROCEE DING ASSESSEE HAS PRODUCED ALL ORIGINAL BILLS ALONGWITH VOUCHERS, BANK STATEME NTS AND CONFIRMATIONS OF THE PARTIES FOR VERIFICATION TO JUSTIFY BONAFIDE CLAIM OF THE EXPENSES. SUCH FINDINGS ARE RECORDED IN PARA 11.4 OF HIS ORDER. HE HAS ALS O FORWARDED ALL THE SUBMISSIONS OF THE ASSESSEE TO THE AO AS RECORDED I N PARA 11.5 OF HIS ORDER. HE FOUND THAT ALL THE PAYMENTS MADE BY THE ASSESSEE REGARDING TRANSPORT BILLS ETC. WAS SUPPORTED BY THE TDS RETURNS, BANK STATEME NTS, CONFIRMATIONS, VOUCHERS AND BILLS ETC. AND AFTER HAVING VERIFIED T HOSE EVIDENCES, LD. CIT(A) HAS RETURNED A FINDING IN PARA 11.5 THAT HE SATISFIED A BOUT THE TWO EXPENDITURES WHICH ARE TO BE ALLOWED TO THE ASSESSEE U/S 31 AND 37 OF THE ACT. 5. LD. DR AFTER NARRATING THE FACTS RELYING UPON TH E ORDER OF AO PLEADED THAT THE DISALLOWANCE DELETED BY LD. CIT(A) IS NOT JUSTIFIED, HENCE, THE ORDER OF AO SHOULD BE CONFIRMED AND ORDER OF CIT(A) SHOULD B E SET ASIDE. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF L D. DR AND WE HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT(A). IT HAS ALREADY BEEN POINTED OUT THAT LD. C IT(A) HAS RETURNED A FINDING THAT BEFORE HIM ALL THE ORIGINAL BILLS AND VOUCHERS WERE PRODUCED WHICH HAVE BEEN VERIFIED BY HIM AND ACCORDING TO THE VERIFICAT ION MADE BY LD. CIT(A) THE 5 ITA NO. 2920/DEL/2010 CLAIM OF THE EXPENDITURE MADE BY THE ASSESSEE ARE B ONAFIDE. NOT ONLY HE HAS SENT ALL THE DETAILS FURNISHED BY THE ASSESSEE TO T HE AO BUT HE HAS ALSO CALLED FOR HIS COMMENTS. LD. CIT(A) HAS ALSO RECORDED A F INDING THAT AFTER VERIFICATION THE BOOKS OF ACCOUNT AND THE ORDER DETAILS HE IS SA TISFIED THAT THE EXPENDITURE IN THEIR ENTIRETY WERE TO BE ALLOWED. LD. DR COULD NO T SHOW US ANY INFIRMITY IN SUCH FINDINGS RECORDED BY LD. CIT(A). THEREFORE, W E FIND NO JUSTIFICATION IN ANY INFERENCE TO BE MADE IN THE ORDER OF LD. CIT(A). T HERE IS NO FORCE IN THE APPEAL FILED BY THE REVENUE AND THE SAME IS DISMISSED BEIN G DEVOID OF MERITS. ACCORDINGLY THE APPEAL FILED BY THE REVENUE IS DISM ISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.10 (A.K. GARODIA) (I.P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR