SUBHASHCHANDRA PUNJA, MUMBAI V. ITO 10(3)(4), MUMBAI

ITA 2989/MUM/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3632 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH SHETTY
• Keywords: Commercial expediency
• Section: 143(3)

Judgement Text

, , , , INCOME TAX APPELLATE TRIBUNAL,MUMBAI- E,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.2989/MUM/2012 /ASSESSMENT YEAR-2009-10 SUBHASH CHANDRA PUNJA, 1501, 15 TH FLOOR, AMBROSIA ORCHARD AVENUE, A.S. MARG, HIRANANDANI GARDENS, POWAI, MUMBAI-400 076. PAN:AADPP 0457 B VS. INCOME TAX OFFICER-10(3)(4), ROOM NO.452, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( / ASSESSEE ) ( / RESPONDENT) /ASSESSEE BY : SHRI SUBHASH SHETTY / REVENUE BY : SHRI AARSI PRASAD, DR / DATE OF HEARING : 15.01.2016 /DATE OF PRONOUNCEMENT : 15.01.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.27.2.2012 OF CIT(A)-20,MUM BAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL. DURING THE COURSE OF HEARING THE AUTHORISED REPRESENTATIVE (AR), DID NOT PRESS GROUND NO.3 AND 4.HENCE, SAME STAND DISMISSED AS NO T PRESSED. 2. ASSESSEE,AN INDIVIDUAL FILED HIS RETURN OF INCOME O N 31.3.2009 DECLARING TOTAL INCOME OF RS. 8,53,600/-.THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT ON 21.12.2012, U/S. 143(3) OF THE ACT, DETERMINING THE INCOME OF THE ASSESSEE AT RS.37,62,380/-. 3 .FIRST EFFECTIVE GROUND OF APPEAL (GOA-1 AND 2) IS ABOUT FOREIGN TRAVEL EXPENSES.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE AS SESSEE HAD SPENT A SUM OF RS.13.26 LAKHS THROUGH VARIOUS CREDIT CARDS, THAT THE EXPENSES INC URRED HAS BEEN PAID BY HIS EMPLOYER I.E. ROBONIK (INDIA) P. LTD.(RIPL), THAT THE TOTAL PAYME NT MADE BY THE EMPLOYEE TO THE ASSESSEE WAS OF RS.22.51 LACS.THE AO ISSUED A SHOW CAUSE NOT ICE IN THAT REGARD AND ASKED THE ASSESSEE AS TO WHY THE PAYMENT IN QUESTION (RS.22,51,208/-) MADE TO HIM BY HIS EMPLOYER SHOULD NOT BE TREATED AS PERQUISITIE U/S. 17(2)(III) OF THE AC T.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,DATED 8.11.2011,THE AO REFERRED TO THE SEC TION17(2)(III)SPECIALLY THE TERM PERQUISITE. HE HELD THAT THE ASSESSEE WAS A DIRECTOR OF RIPL, THAT HE HAD UTILISED HIS OWN CREDIT CARD FOR INCURRING PERSONAL EXPENSES SUCH AS TRAVELLING, BOA RDING, LODGING AND PURCHASE OF SPACE, THAT HE HAD SPENT RS.22.51 LACS, THAT THE BILL PAYMENT W AS EFFECTED BY THE EMPLOYER BY WAY OF ADJUSTMENT OF HIS LOAN GIVEN TO THE EMPLOYER COMPAN Y, THAT THE ASSESSEE HAD RECEIVED VARIOUS AMENITIES/BENEFITS FREE OF COST FROM THE EMPLOYER, THAT THE EXPLANATION GIVEN BY THE ASSESSEE ABOUT ADJUSTMENT AGAINST THE LOAN WAS AN AFTERTHOUG HT, THAT IT DID NOT MATCH WITH THE DETAILS ON RECORD, THAT HE HAD FAILED TO PROVE NEXUS OF SAI D EXPENDITURE AND TO OFFER SATISFACTORY EXPLANATION FOR INCURRING THE CREDIT CARD EXPENSES, THAT HE HAD NOT FILED CONFIRMATION LETTER FROM THE COMPANY, THAT THE AMOUNT SPENT BY THE ASSE SSEE AND REIMBURSED BY THE COMPANY WAS SQUARELY COVERED WITHIN THE MEANING OF PERQUISI TE. FINALLY,THE AO ADDED IT BACK TO THE INCOME OF THE ASSESSEE. ITA/ 2989/M/2012-SUBHASH AY-09-10. 2 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM, IT WAS STATED THAT THE ASSESSEE HAD ADVANCED LOAN TO THE COMPANY, THAT HE HAD SUBMITTED ALL LOAN CONFIRM ATION LETTERS, THAT AS ON 31.3.2009 LOAN, AMOUNTING TO RS.2.20CR., WAS OUTSTANDING, THAT THE AO HAD CONFUSED THE DIFFERENCE IN THE LOAN AMOUNT AS ADJUSTMENTS OF THE CREDIT CARD EXPENSES, THAT THE ASSESSEE HAD PURCHASED MATERIAL WORTH RS.9.29 LAKHS, THAT EXPENSES WERE INCURRED FO R COMMERCIAL EXPEDIENCY OF THE BUSINESS OF THE COMPANY, THAT THE EXPENSES INCURRED THROUGH CREDIT CARDS WERE RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY, THAT THE COMPANY HAD PAID F RINGE BENEFIT TAXES ON THE EXPENSES INCURRED THROUGH THE CREDIT CARD OF THE ASSESSEE, T HAT THE EXPENSES WERE NOT IN THE NATURE OF PERQUISITES. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, T HE FAA HELD THAT THE DIFFERENCE OF RS.19.85 LAKHS WAS ON ACCOUNT OF OUTSTANDING INTERE ST PAYABLE, THAT OUT OF RS.22.5 LAKHS, RS.10.78 LAKHS WERE INCURRED UNDER THE HEAD FOREIGN TRAVELLING EXPENSES, THAT RS.9.92 LAKHS WERE SPENT FOR PURCHASING RAW MATERIAL, THAT THE DE TAILS PRODUCED BY THE ASSESSEE WITH REGARD TO FOREIGN TRAVEL EXPENSE DID NOT CONCLUSIVELY PROV E THAT THE ENTIRE EXPENSES WERE INCURRED FOR THE COMPANYS BUSINESS EXCLUSIVELY, THAT THE PERSON AL ELEMENT COULD NOT BE RULED OUT, ACCORDINGLY HE HELD THAT 50% OF THE EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL WAS TO BE TREATED AS PERQUISITE IN THE HANDS OF THE ASSESSEE. 5. BEFORE US,THE AR STATED THAT THE ASSESSEE HIMSELF H AD DISALLOWED 10% OF THE TRAVELLING EXPENDITURE, THAT THE FOREIGN TOURS WERE UNDERTAKEN FOR BUSINESS PURPOSES,THAT THE DISALLOWANCE MADE BY THE FAA WAS ON HIGHER SIDE.DEP ARTMENTAL REPRESENTATIVE(DR)LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA HAD HELD THAT THE PERSONAL ELEMENT IN THE TRAVE LLING EXPENSES COULD NOT BE RULED OUT CONSIDERING THE FOREIGN TOURS UNDERTAKEN BY THE ASS ESSEE, THAT THE ASSESSEE HAD CLAIMED THAT HE HIMSELF HAD DISALLOWED 10% OF THE TRAVELLING EXP ENSES,THAT THE FAA HAD DISALLOWED 50% OF THE EXPENSES,THAT THE ASSESSEE WAS THE DIRECTOR OF THE COMPANY WHO WAS SINGLE HANDEDLY HANDLING ITS AFFAIRS.IN OUR OPINION,BY DISALLOWING 10% OF THE EXPENSES THE ASSESSEE HAD HIMSELF INDIRECTLY ADMITTED EXISTENCE OF PERSONAL E LEMENT WITH REGARD TO THE TRAVELLING EXPENDITURE.HOWEVER,IN OUR OPINION DISALLOWANCE OF 50% WAS ON HIGHER SIDE.WE ARE OF THE OPINION THAT TO MEET THE END OF JUSTICE DISALLOWANC E SHOULD BE RESTRICTED TO 25%.GROUND NO.1- 2 ARE ALLOWED IN FAVOUR OF THE ASSESSEE, IN PART. AS A RESULT, AP PEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY, 2016. 15 , 2016 SD/- SD/- ( /SANDEEP GOSAIN ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI, DATE: 15.01.2016 . . . JV.SR.PS. ITA/ 2989/M/2012-SUBHASH AY-09-10. 3 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.