Kesona Polymats Pvt.Ltd, Aurangabad V. Assistant Commissioner of Income-tax, Circle - 1, Aurangabad

ITA 296/PUN/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7620 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . ., . / ITA NO. 296/PUN/2019 / ASSESSMENT YEAR : 2014-15 KESONA POLYMATS PVT. LTD., C/O. SHRI JAYDATTA KSHIRSAGAR, PLOT NO.7A, TOWN CENTER, C-1, NEAR CIDCO BUS STAND, CIDCO, AURANGABAD 431 001 PAN : AABCK4678A VS. ACIT, CIRCLE-1, AURANGABAD (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, AURANGABA D ON 19-11-2018 IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE AMOUNTING TO RS.40,89,500/- UND ER SECTION 40A(2)(A) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT). APPELLANT BY SHRI S.N. PURANIK RESPONDENT BY SHRI VISHWAS MUNDE DATE OF HEARING 24-07-2019 DATE OF PRONOUNCEMENT 25-07-2019 ITA NO.296PUN/2019 KESONA POLYMATS PVT. LTD. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING AND SALE O F POLY PROPYLENE MATS. DURING THE COURSE OF LIMITED SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSE RVED THAT THE ASSESSEE PAID REMUNERATION OF RS.47,10,500/- TO ITS THREE DIRECTORS, NAMELY, SHRI RAM GOLHAR RS.3,10,500/-; SHRI RO HIT KSHIRSASGAR RS.22.00 LAKH AND SMT. PRATIBHA KSHIRSAGAR RS.22.00 LAKH. THE ASSESSEE WAS ASKED TO JUSTIFY THE AM OUNT PAID AS SALARY TO THE DIRECTORS FOR WHICH THE ASSESSEE TEND ERED SOME EXPLANATION, WHICH HAS BEEN RECORDED IN THE ASSESSME NT ORDER. THE AO RECORDED STATEMENTS OF THE TWO DIRECTORS TO W HOM SALARY AT THE RATE OF RS.22.00 LAC EACH WAS PAID. CONSIDE RING THE ENTIRE FACTUAL MATRIX OF THE CASE, THE AO TREATED SALARY PAID TO SHRI RAM GOLHAR AS REASONABLE. OUT OF SALARY OF RS.22.0 0 PAID TO SHRI ROHIT J. KSHIRSAGAR, THE AO RESTRICTED THE DEDUCTIBILITY TO RS.3,10,500/-, BEING, THE EQUAL AMOUNT PAID TO SHRI ROHIT J. KSHIRSAGAR AND ADDED THE REMAINING AMOUNT OF RS.18,89,50 0/-. NO AMOUNT WAS HELD TO BE REASONABLY PAID TO SMT. PRATIBHA, WHICH WAS ADDED IN ENTIRETY. THE LD. CIT(A) SUSTAINED THE ADDITION. ITA NO.296PUN/2019 KESONA POLYMATS PVT. LTD. 3 4. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. IN SOFARAS SALARY OF RS.22.00 LAKH TO SHRI ROJIT J. KSHIRSAGAR IS CONCERNED, IT IS SEEN RECORDED IN PA RA NO.4.8 OF THE ASSESSMENT ORDER THAT SHRI ROHIT J. KSHIRSAGA R COMPLETED HIS BACHELOR OF PRODUCTION ENGINEERING IN 2004 FROM MIT COLLEGE, AURANGABAD AND THE MASTERS IN MANUFACTURING ENGINEERING IN THE YEAR 2005 FROM ROYAL MELBOURNE INSTITUTE O F TECHNOLOGY, MELBOURNE, AUSTRALIA. HIS STATEMENT WAS ALSO RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FROM WHICH IT IS GATHERED THAT HE WORKED FOR 18 MONTHS IN ARCELOR MITTAL STEEL GMBH, HEMBURG, GERMANY AND GOT SALARY OF 4000 EUROS PER MONTH, WHICH IS EQUIVALENT TO RS.2.00 LAKH PER MO NTH. CONSIDERING THE QUALIFICATION, EXPERIENCE AND HIS PAST SALARY, I AM SATISFIED THAT REMUNERATION OF RS.22.00 LAKH PAID TO SHR I ROHIT J. KSHIRSAGAR IS REASONABLE. IT IS FURTHER OBSERVED THAT THE ASSESSEE PAID REMUNERATION OF RS.24.00 LAKH TO SHRI ROHIT J . KSHIRSAGAR DURING THE IMMEDIATELY PRECEDING YEAR, WHICH WA S UNCONTROVERTEDLY STATED TO HAVE BEEN ALLOWED. I, THEREFORE, ORDER TO DELETE THE ADDITION OF RS.18,89,500/- MADE IN RESPECT OF SALARY PAID TO SHRI ROHIT J. KSHIRSAGAR. ITA NO.296PUN/2019 KESONA POLYMATS PVT. LTD. 4 5. AS REGARDS THE SALARY OF RS.22.00 PAID TO SMT. PRATIBHA KSHIRSAGAR, IT IS SEEN THAT THE AO RECORDED HER STATEMENT D URING THE ASSESSMENT PROCEEDINGS. SHE IS A FOUNDER DIRECTOR OF THE ASSESSEE-COMPANY. AS PER THE STATEMENT, SHE WAS ENGAGE D IN AREAS LIKE PRODUCTION, DESPATCH AND FEEDBACK. IT IS FURTHER NOTICED THAT SHE WAS PAID REMUNERATION OF RS.24.00 LAKH DU RING THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WHICH WAS STATED TO HAVE BEEN ALLOWED IN ENTIRETY. SUCH A CONTENTION OF THE ASSES SEE HAS NOT BEEN DISPUTED BY THE LD. DR. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES PREVAILING IN THE INSTANT CASE, I AM SATISFIED THAT THE REMUNERATION PAID TO SMT. PRATIBHA KSHIRSAGAR IS ALSO REASONABLE AND DOES NOT CALL FOR ANY DISALLOWANCE U/S.40A(2 )(A) OF THE ACT. I, THEREFORE, ORDER TO DELETE THE ENTIRE ADDITION OF RS.40,89,500/-. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 25 TH JULY, 2019 ITA NO.296PUN/2019 KESONA POLYMATS PVT. LTD. 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-I, AURANGABAD 4. THE PR.CIT- I, AURANGABAD 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 24-07-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 24-07-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *