Frontline Corporation Ltd., Ahmedabad V. The ACIT.,Circle-4, Ahmedabad

ITA 293/AHD/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5420 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ./ I.T.A. NO. 293/AHD/2014 ( / ASSESSMENT YEAR : 2009-10) M/S. FRONTLINE CORPORATION LTD., 4 TH FLOOR, NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD 380 009 / VS. ACIT, CIRCLE 4, AHMEDABAD. ./ I.T.A. NO. 999/AHD/2015 ( / ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 2(1)(1), AHMEDABAD. / VS. M/S. FRONTLINE CORPORATION LTD., 4 TH FLOOR, SHALIN BUILDING, ASHRAM ROAD, AHMEDABAD. ./ ./ PAN/GIR NO. : AAACF 2403 M ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI P. F. JAIN, A.R. REVENUE BY: SHRI S. K. DEV, SR. D.R. / DATE OF HEARING 07/08/2018 / DATE OF PRONOUNCEMENT 15/10/2018 ! / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AND REVENUE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEAL)-VIII & 2, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO. CIT(A)-VIII/DCIT/CIR.4/311/11-12 & CIT(A)-2/DCIT/CIR. 4/89/13-14 DATED 13.11.2013 & 27.01.2015 ARISING IN THE MATTER OF ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 2 - ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 12.12.2011 & 22.03.2013 RELEVANT TO ASSESSMENT YEARS (AYS) 2009- 10 & 2010-11. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 293/AHD/2014 PERTAINING TO THE A.Y. 2009-10: 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THE DISALLOWANCE OF RS.95,00,179/- FROM THE EXPENSE RELATING TO FREIGHT, TRIP BHATTHA & DIESEL WITHOUT PROPERLY APP RECIATING THE FACTS, SUBMISSION OF THE APPELLANT HAVING BEARING F OR THIS YEAR. 2. ON THE FACTS NO SUCH DISALLOWANCE OUGHT TO HAVE BEEN MADE. 3. THE APPELLANT CRAVES LEAVE TO ADD/ TO ALTER AND/ OR MODIFY AND GROUND OF APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT LD CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 95,00,179/- ON A D-HOC BASIS FOR THE EXPENSES RELATING TO FREIGHT, TRIP BHATTA AND DIESE L EXPENSES. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF TRANSPORTATION, GENERATI ON OF POWER, TRADING OF AUTO COMPONENTS AND COAL, MANUFACTURING OF REFECTOR IES BRICKS. THE ASSESSEE DURING THE YEAR HAS CLAIMED FOLLOWING EXPE NSES: DIESEL EXPENDITURE RS. 7,81,14,791/- TRIP BHATTA RS. 3,69,10,602/- FREIGHT PAYMENT RS. 17,62,65,264/- ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 3 - 4.1 THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERV ED THAT IN EARLIER YEARS THE ITAT HAS CONFIRMED THE DISALLOWANCE OF TH E ABOVE EXPENDITURE @3.33% AMOUNTING TO RS. 95,00,179/- ONLY. ACCORDING LY, THE AO PROPOSED TO MAKE THE DISALLOWANCE OF EXPENDITURE @3 .33% IN THE YEAR UNDER CONSIDERATION FOR THE EXPENSES AS DISCUSSED A BOVE. 4.2 THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED THAT ITS BOOKS OF ACCOUNTS WERE DULY AUDITED BY THE BRANCH AUDITOR/ST ATUTORY AUDITOR AND TAX AUDITORS. THERE WAS NO DISALLOWANCE MADE ON ACC OUNT OF SUCH EXPENSES. 4.3 THE ASSESSEE ALSO CLAIMED TO HAVE FILED THAT TH E COPY OF ACCOUNT OF DIESEL EXPENSES AND TRIP BHATTA EXPENSES FOR THE VE RIFICATION ALONG WITH SAMPLE COPIES OF THE SUPPORTING VOUCHERS. 4.4 THE ASSESSEE ALSO SUBMITTED THAT THE EXPENSE IN CURRED ON DIESEL HAS BEEN INCREASED MAINLY ON ACCOUNT OF HIKE IN THE RAT ES BY THE GOVERNMENT. THEREFORE THE DIESEL EXPENSES WERE INCREASED DUE TO HIKE IN THE GOVERNMENT RATE. 4.5 THE EXPENSES INCURRED ON TRIPS BHATTA AND FREIG HTS WERE INCREASED ON ACCOUNT OF TWO REASONS, FIRSTLY HIKE IN DIESEL PRICE AND SECONDLY , THERE WAS NO ESCALATION CLAUSE IN THE AGREEMENT MADE WITH THE PARTIES. ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 4 - 4.6 THE ASSESSEE FURTHER SUBMITTED THAT THERE IS A DECLINE IN FREIGHT AND TRIP BHATTA EXPENSES IN TERMS OF THE RATIO TO THE T OTAL TRANSPORT OPERATION INCOME. THE ASSESSEE IN SUPPORT OF HIS CLAIM PRODUC ED A CHART DEPICTING THE FREIGHT/ TRIP EXPENSES IN RELATION TO TRANSPORT OPERATION INCOME WHICH IS REPRODUCED AS UNDER: F.Y. TRANSPORT OPERATION INCOME FREIGHT PAYMENT TRIP BHATTA TOTAL EXPENSES RATIO OF EXPENSE TO TRANSPORT INCOME (% AGE) 2006-07 26,98,00,595 15,88,70,955 96,82,227 16,85,53,182 62.47 2007-08 20,40,75,260 11,11,67,564 1,14,80,023 12,26,47,587 60.10 2008-09 37,84,62,082 17,62,65,264 3,69,10,602 21,31,75,866 56.33 4.7 THE ASSESSEE ALSO SUBMITTED THAT THE DECLINE IN THE FREIGHT/ TRIP BHATTA EXPENSES IN RELATION TO TRANSPORT OPERATION INCOME HAS RESULTED HIGHER GP RATIO. ACCORDINGLY, THE ASSESSEE CONTENDE D THAT DISALLOWANCE OF RS. 68,98,956/- (WRITTEN IN THE ASSESSMENT ORDER RS. 70,98,756/-) WILL BE ON A VERY MUCH HIGHER SIDE. 4.8 HOWEVER, THE AO DISREGARDED THE CONTENTION OF T HE ASSESSEE BY OBSERVING AS UNDER: I. THERE WERE ONLY SELF GENERATED VOUCHERS SIGNED BY T HE DRIVER, CLEANERS ETC. THERE WAS NO CORROBORATIVE INDEPENDEN T EVIDENCE IN SUPPORT OF THE EXPENSES AS DISCUSSED ABOVE. IN M OST OF THE CASES THE EXPENSES WERE INCURRED IN CASH. II. THE VOUCHERS MADE FOR THE DIESEL EXPENSES DID NOT C ONTAIN THE DETAILS OF THE NUMBER OF KILOMETERS TRAVELLED OUT O F SUCH DIESEL EXPENSES. ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 5 - III. IN THE YEAR UNDER CONSIDERATION THERE IS LESS NUMBE R OF TRIPS IN COMPARISON TO THE EARLIER YEAR. ACCORDINGLY, THE EX PENSES ON TRIP BHATTA SHOULD HAVE COME DOWN SUBSTANTIALLY RAT HER IT HAS INCREASED. IV. THERE WAS A GREAT FALL IN THE TRANSPORTATION INCOME OF THE ASSESSEE. ACCORDINGLY THE DIESEL EXPENSES SHOULD HA VE DECREASED. IN VIEW OF ABOVE, THE AO MADE THE DISALLOWANCE @3.3 3% OF FREIGHT/ TRIP BHATTA EXPENSES AND DIESEL EXPENSES AMOUNTING TO RS . 95,00,179/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED AS UNDER: I. THE AO HAS MADE THE DISALLOWANCE ON AD-HOC BASIS FO R THE EXPENSES AS DISCUSSED ABOVE. THE AFORESAID EXPENSES WERE ESSENTIAL FOR THE BUSINESS OF TRANSPORT. THEREFORE NO DISALLOWANCE OF SUCH EXPENSES CAN BE MADE WITHOUT A NY REASONABLE FINDING OR COGENT MATERIAL. II. THERE WAS NOT PROVIDED REASONABLE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE BEFORE MAKING THE DISALLOWANCE OF T HE EXPENSES AS DISCUSSED ABOVE. THEREFORE, THESE EXPENSES HAVE BEEN DISALLOWED WITHOUT ANY BASE, COGENT MATERIAL AND FI NDING. AS SUCH, ALL THESE EXPENSES WERE INCURRED EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. III. IT IS A FACT ON RECORD THAT SIMILAR EXPENSES WERE D ISALLOWED IN THE EARLIER YEARS BUT THAT CANNOT BE A BASIS TO MAK E THE DISALLOWANCE IN EACH AND EVERY YEAR. THE SITUATIONS OF THE BUSINESS CHANGES EVERY YEAR. THEREFORE, THE SAME AM OUNT OF PERCENTAGE CANNOT BE APPLIED ON BLANKET BASIS EVERY YEAR. THE ASSESSEE IN THIS REGARD FURTHER SUBMITTED THAT THE EXPENSES ON ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 6 - FREIGHT/ BHATTA AND DIESEL HAS COMEDOWN DRASTICALLY AND THESE FACTORS HAVE NOT BEEN CONSIDERED BY THE AO DURING T HE ASSESSMENT PROCEEDINGS. IV. IT IS SETTLED LAW THAT ONCE, THE DIRECT EXPENSES RE DUCE THEN THE GROSS PROFIT RATIO INCREASES IN COMPARISON TO THE G ROSS RECEIPTS. AS THE GP RATION HAS IMPROVED IN THE YEAR UNDER CON SIDERATION ON ACCOUNT OF THE DECLINE IN THE EXPENSES, THEN THE RE IS REASON TO MAKE THE FURTHER DISALLOWANCE OF THE SIMILAR EXP ENSES. HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENTION O F THE ASSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. IT IS NOTE D THAT THE AO HAS MADE A DISALLOWANCE OF 3.33% OF THE TRIP BHATTA AND DIESEL EXPENSES AS IT WAS NOTED BY HIM THAT THE EXPENSES WERE INCURRED IN CAS H AND THE VOUCHERS PREPARED HAVE NO DOCUMENTARY EVIDENCE. IT WAS ALSO NOTED BY THE AO THAT SIMILAR DISALLOWANCE MADE IN EARLIER YEARS WERE UPH ELD BY HONOURABLE ITAT AT THE RATE OF 3.33%. DURING THE COURSE OF APP ELLATE PROCEEDINGS, THE APPELLANT HAS GIVEN SIMILAR SUBMISSION THAT HAS BEE N GIVEN BEFORE THE AO BY MENTIONING THAT THE RATIO OF DIESEL EXPENSES AND TRIP BHATTA EXPENSES HAVE GONE DOWN. THE AO HAS CONSIDERED THE SUBMISSIO N OF THE APPELLANT BUT SINCE THERE WAS NO PROPER DOCUMENTARY EVIDENCE IN SUPPORT OF THOSE EXPENSES THE DISALLOWANCE WAS MADE. AFTER CAREFULLY CONSIDERING ALL THE ASPECTS AND FAC TS IT IS NOTED THAT THE FACTS REMAIN THE SAME AS THE NATURE OF EXPENSES AND THE E VIDENCE IN SUPPORT OF THE EXPENSES ARE ALSO SIMILAR IN NATURE. THE APPELL ANT COULD NOT PUT FORWARD ANY RELIABLE CORROBORATIVE EVIDENCE TO SUBS TANTIATE THE EXPENSES AND TO SHOW THAT THE VOUCHERS PREPARED WERE GENUINE . MOST OF THE PAYMENTS WERE CASH PAYMENTS AND DIESEL EXPENSES ARE ALSO NOT SUPPORTED BY LINKING IT WITH THE KILOMETERS TRAVELLED. IN EAR LIER YEARS THE DISALLOWANCES WERE MADE ON SIMILAR LINES AND THE HO NORABLE ITAT, AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES, RESTRI CTED THE DISALLOWANCE TO 3.33% OF THE EXPENSES. THE AO HAS MADE A DISALLOWAN CE OF 3.33% WHICH IS JUDICIAL AND IN ACCORDANCE WITH THE DIRECTION OF HO NORABLE ITAT. THE DISALLOWANCE MADE BY THE AO IS THEREFORE, UPHELD. ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 7 - THE GROUND OF APPEAL IS ACCORDINGLY, DISMISSED. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD AR BEFORE US FILED A PAPER BOOK WHICH IS RUNNING FROM PAGES 1-82 AND SUBMITTED AS UNDER: THIS ISSUE HAS ARISEN IN EARLIER YEARS AND EVERY T IME THE FINDINGS OF CIT(APPEALS) HAS BEEN UPHELD AND APPEAL OF THE ASSE SSEE AND OF DEPARTMENT HAS BEEN DISMISSED . IN A.Y. 2010-11 THE CIT(APPEALS) HAS MODIFIED THE DISALLOWANCE FROM 3.3% TO 1.11%. THE F INDING OF THE ITAT FOR VARIOUS YEARS IS SUMMARIZED BELOW: AY.2001-02 AND 2004-05 - ITA NO. 109 1/AND/2005 AND ITA NO.4258/AHD/2007:- IN AY.2001-02 THERE WAS DISALLOWANCE OF RS.2,00,000 /- OUT OF DIESEL EXPENSES OUT OF RS.9,44,717/- OUT OF TRIP AN D BHATTA UPHELD BY THE CIT(A) RESTRICTED DISALLOWANCE TO RS.2,00,000/- OUT OF TOTAL OF 4,00,044/-AND DISALLOWANCE OF RS.9,44,717/- @10% OF TOTAL EXPENDITURE WAS UPHELD BY THE CIT(A) WHICH WAS UPHELD BY THE IT AT. (RELEVANT PAPER BOOK PAGE NO.15TO 17) FOR AY.2004-05 THE CIT(A) RESTRICTED THE DISALLOWAN CE TO 1/3 (3.33%) OF THE TOTAL DISALLOWANCE TOWARDS DIESEL, TRIP AND BHATTA EXPENSES AS AGAINST 10% DISALLOWED BY THE AO. THE FINDING OF THE CIT(A) UPHELD AND APPEALS OF ASSESSEE AND REVENUE D ISMISSED BY THE ITAT. REFER TO PAGE NO. 17,18 AND FINDING ON PAGE 20 (PAR A 22 OF ORDER OF ITAT). THE AY.2003-04 : THERE WAS DISALLOWANCE OF RS.29,68 ,000/- OUT OF DIESEL EXPENSES AND TRIP, BHATTA EXPENSES WHICH WAS RESTRICTED TO RS. 10,00,0007- BY THE CIT(A) (2.70%). BOTH THE ASSESSEE AND DEPARTMENT FILED APPEAL. THE DISALLOWANCE BY THE AO WAS 8% OF THE TOTAL EXPENSES AND THE ORDER OF CIT(A) UPHOLDING DISALLOWANCE TO T HE EXTENT OF 2.70% WAS CONFIRMED BY THE ITAT AND BOTH THE APPEALS DISM ISSED, (REFER TO PAPER BOOK PAGE NO.37, PARA 7 OF ORDER OF ITAT FOR AY.2003-04) ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 8 - AY.2006-07 : APPEAL BY DEPARTMENT AGAINST ORDER OF CIT(A) RESTRICTING ADDITION TO @3.33% AS AGAINST 10% MADE BY THE AO. THE APPEAL OF THE DEPARTMENT DISMISSED AND FINDING OF CIT(A) CONFIRME D. AY.2008-09 : THE APPEAL BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) RESTRICTING THE DISALLOWANCE @3.33% AS AGAINST 10% MADE BY THE AO WAS DISMISSED, DISTINGUISHING THE DISALLOWANCE OF 1 .11% SUSTAINED IN AY.2010-11 BY THE CIT(A). (REFER TO PAPER BOOK PAGE NO.54 & 55) AY.2010-11 : CIT(A) MODIFIED THE DISALLOWANCE 1.11% AGAINST WHICH APPEAL HAS BEEN FILED BY THE DEPARTMENT. FINDING OF THE CIT(A) RECORDED IN PARA 5.3-PAGE NO.10 TO 12 OF THE ORDER OF CIT(A). 7. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT SIM ILAR DISALLOWANCE WAS MADE IN THE EARLIER YEARS BY THE AUTHORITIES BE LOW AND THE SAME WAS CONFIRMED BY THE HONBLE ITAT. THEREFORE THE SAME D ISALLOWANCE SHOULD BE SUSTAINED. THE LD DR VEHEMENTLY SUPPORTED THE OR DERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE DISAL LOWANCE WAS MADE BY THE AO OF THE EXPENSES AS DISCUSSED ABOVE @3.33% ON THE GROUND THAT SIMILAR DISALLOWANCE WAS MADE IN THE EARLIER YEARS WHICH WAS SUBSEQUENTLY CONFIRMED BY THE HONBLE ITAT. THE VIE W TAKEN BY THE AO WAS ALSO CONFIRMED BY THE LD CIT(A). FROM THE DETAILS FILED BY THE ASSESSEE WE NOTE THAT THERE IS DECLINE IN THE EXPENSES INCURRED ON FREIGHT/ TRIP BHATTA EXPENSES IN RELATION TO THE TRANSPORT INCOME AS EVIDENT FROM THE CHART DISCUSSE D ABOVE. IT IS BEYOND ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 9 - DOUBT THAT THE DIRECT EXPENSES IN RELATION TO TRANS PORT INCOME IN TERMS OF THE RATIO ARE DECREASING ON YEAR TO YEAR BASIS RESU LTING THE BETTER GP RATIO TO THE ASSESSEE. 8.1 THERE IS NO STATUTORY PROVISION UNDER THE STATU TE TO MAKE THE DISALLOWANCE OF THE EXPENSES IF THESE WERE DISALLOW ED IN THE EARLIER YEARS. IN THE CASE BEFORE US THE DISALLOWANCE HAS BEEN MAD E DUE TO FOLLOWING REASONS. I. ITAT HAS CONFIRMED THE DISALLOWANCE IN THE EARLIER YEAR. II. THERE WAS NO EXTERNAL SUPPORTING VOUCHERS/ EVIDENCE S IN SUPPORT OF FREIGHT/ TRIP BHATTA EXPENSES. III. THERE WAS NO DETAILED MENTION ON THE VOUCHER OF DIE SEL EXPENSES WITH REGARD TO THE NUMBER OF KILOMETER TRA VELLED/ COVERED OUT OF SUCH DIESEL EXPENSES. IV. THE EXPENSES WERE INCURRED IN CASH. V. IN THE GIVEN FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT ON MANY OCCASION THE CORROBORATIVE EXPENSES IN SUPPORT OF THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE NOT AVAILAB LE, SPECIALLY IN THE CASE OF FREIGHT/ TRIP BHATTA EXPENSES. IT IS BECAUSE THESE EXPENSES INCLUDE THE PAYMENT MADE TO THE DRIVERS FO R THEIR FOODS AND LODGING EXPENSES WHICH ARE SUPPOSED TO BE INCURRED DURING THE JOURNEY. IN SUCH KIND OF CASES, THE EXTE RNAL SUPPORTING EXPENSES MIGHT NOT BE AVAILABLE. THEREFO RE, THERE CANNOT BE A PERMANENT PARAMETER FOR MAKING THE DISA LLOWANCE OF SUCH EXPENSES. 8.2 IT IS UNDISPUTED FACT THAT THE GP RATION OF THE ASSESSEE HAS INCREASED/ IMPROVED IN COMPARISON TO THE EARLIER YE ARS WHICH IMPLIES THAT THE DIRECT EXPENSES OF THE ASSESSEE HAVE COME DOWN. THEREFORE IF FURTHER ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 10 - DISALLOWANCE IS MADE FOR THE AFORESAID EXPENSES WIL L CERTAINLY RESULT LOSS TO THE ASSESSEE. 8.3 MOREOVER, THERE IS NO STATUTORY PROVISION PRESC RIBED UNDER THE ACT TO MAKE THE DISALLOWANCE OF THE EXPENSES AT THE SAM E RATE AT WHICH THESE WERE DISALLOWED IN THE PRECEDING ASSESSMENT YEARS O N YEAR TO YEAR BASIS. AS IN THE CASE BEFORE US THE SITUATION HAS CHANGED I.E. THE GROSS PROFIT OF RATIO OF THE ASSESSEE HAS INCREASED ON ACCOUNT OF D ECLINED IN THE COST OF THE DIRECT EXPENSES. THEREFORE WE ARE RELUCTANT TO APPLY THE SAME RATE OF DISALLOWANCE MADE IN THE EARLIER YEARS WHICH WAS SU BSEQUENTLY CONFIRMED BY THE LD CIT(A). CONSIDERING THE FACT IN TOTALITY, WE ARE ALSO OF THE VIEW THAT THE POSSIBILITY OF LEAKAGE FROM TH E EXPENSES AS DISCUSSED ABOVE IN THE ABSENCE OF DOCUMENTARY EVIDENCE CANNOT BE RULED OUT. THUS IN THE INTEREST OF THE JUSTICE WE ARE OF THE VIEW T HAT THE DISALLOWANCES @1.11% OF THE AFORESAID EXPENDITURE WILL BE JUST AN D REASONABLE IN THE GIVEN FACTS AND CIRCUMSTANCES. ACCORDINGLY WE DIREC T THE AUTHORITIES BELOW TO MAKE THE DISALLOWANCE @1.11% OF THE EXPENS E AS DISCUSSED ABOVE. HENCE THE GROUND OF APPEAL OF THE ASSESSEE I S PARTLY ALLOWED . NOW WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO. 999/AHD/2015 PERTAINING TO THE A.Y. 2010-11: 9. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 11 - 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS IN RESTRICTING THE DISALLOWANCE (ON DIESEL, FREIGHT, TRIP AND BHAT TA CHARGES) TO 1-11% OF TOTAL EXPENSES INSTEAD OF THE 3.33% MADE B Y THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) OUGHT TO HAVE UPHELD THE ORDER THE AO. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD CIT(A) MAY BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED TO THE ABO VE EXTENT. 10. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS AP PEAL IS THAT LD CIT(A) ERRED IN REDUCING THE DISALLOWANCE MADE BY T HE AO FROM 3.33% TO 1.11% OF THE EXPENSES NAMELY DIESEL, FREIGHT/ TR IP BHATTA CHARGES. 11. AT THE OUTSET, WE NOTE THAT IN THE IDENTICAL FA CTS AND CIRCUMSTANCES WE HAVE CONFIRMED THE DISALLOWANCES MADE BY THE AO @1.11% IN ITA NO.293/AHD/2014 VIDE PARA NO. 8-8.3 OF THIS ORDER. RESPECTFULLY, FOLLOWING THE SAME WE DO NOT WANT TO DISTURB THE FI NDING OF THE LD CIT(A). HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND FILED BY THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 15/10/2018 SD/- SD/- (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 15/10/2018 PRITI YADAV, SR.PS ITA NOS.293/AHD/2014 & ITA NOS.999/AHD/2015 A. YS 2009-10 & 2010-11 FRONTINE CORPORATION LTD. - 12 - ! '#$ %$ /COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. &'( ) / CONCERNED CIT 4. ) ( ) / THE CIT(A)-VIII & 2, AHMEDABAD. 5. $* + '''( , '( / DR, ITAT, 6. + ,- . / GUARD FILE. ! / BY ORDER , TRUE COPY / / 0 (DY./ASSTT.REGISTRAR) '( , 01 & / ITAT, AHMEDABAD 1. DATE OF DICTATION 03/10/2018 (PAGE-7) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 11/10/2018 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 15/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 10. DATE OF DESPATCH OF THE ORDER