ITO,Wd-12(3), Kolkata, Kolkata V. M/s Arpee Builders & Promoters Pvt. Ltd., Kolkata

ITA 303/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1572 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: V N PUROHIT
• Keywords: Unexplained cash credit; Opportunity of being heard; Bad and doubtful debts
• Section: 133(6); 194C; 68

Judgement Text

1 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 , B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 303/KOL/2014 ASSESSMENT YEAR: 2009-10 INCOME-TAX OFFICER, WD-12(3), KOLKATA VS. M/S. ARPE E BUILDERS & PROMOTERS PVT. LTD. (PAN:AACCA6106C) APPELLANT RESPONDENT & C.O. 52/KOL/2014 IN I.T.A. NO. 303/KOL/2014 ASSESSMENT YEAR: 2009-10 M/S. ARPEE BUILDERS & PROMOTERS PVT.LTD. VS. INCOME-TAX OFFICER, WD-12(3), KOLKATA CROSS OBJECTOR RESPONDENT DATE OF HEARING 07.11.2017 DATE OF PRONOUNCEMENT 05.02.2018 FOR THE APPELLANT SHRI SAURABH KUMAR, ADDL. CIT, DR FOR THE RESPONDENT SHRI V. N. PUROHIT, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF LD. CIT(A)-XII, KOLKATA DATED 06.11.2013 FOR AY 2009-10. CROSS OBJECTION IS DELAYED BY 37 DAYS AND NO CONDONATION PETITION HAS BEEN FILED. SINCE THE APPEAL HAS BEEN FILED ON TIME AND THE ISSUES ARE CO RRELATED, IN THE INTEREST OF JUSTICE WE CONDONE THE DELAY AND THE CROSS OBJECTION IS ALSO T AKEN UP FOR HEARING. 2. FIRST WE TAKE UP REVENUES APPEAL. GROUND NO. 1 OF REVENUES APPEAL IS AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO UNDER THE HEAD SALARY AMOUNTING TO RS.7,46,614/- WHEN ASSESSEE WAS UNABLE TO PROVE THE ATTENDANCE OF THE EMPLOYEE THROUGH ATTENDANCE REGISTER. AND GROUND NO. 1(A) OF CROSS OBJECTION IS 2 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 1(A) BY SUSTAINING RS.1,50,459/- AGAINST DISALLOW ANCE BY AO RS.897073/- BEING CLAIM FOR STAFF SALARY. 2.1. THIS GROUND RELATES TO COMMON ISSUE, I.E, DELETION OF ADDITION UNDER THE HEAD SALARY AMOUNTING TO RS.7,46,614/- AND CONFIRMING THE ADDIT ION OF RS 1,50,459/. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY DURING THE RELE VANT ASSESSMENT YEAR DEBITED A SUM OF RS.13,41,079/- UNDER THE HEAD SALARY TO STAFF, WH ICH INCLUDED SALARY FOR TEMPORARY STAFF, TRAINEE STAFF, APPRENTICE STAFF ETC. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED FOR THE DETAILS OF STAFF AND ON VERIFICATIO N HE FOUND THAT THE CLAIM OF SALARY WAS NOT SUPPORTED WITH PROOF OF PAYMENT OF P F, ESI, PROOF OF IDENTITY OR PROOF OF ADDRESS IN RESPECT OF THE STAFF. HE, THEREFORE, DISALLOWED PAYMENT T O THE EXTENT OF RS.8,97,073/- AGAINST THE CLAIM OF RS.13,41,079/-. ON APPEAL, THE LD. CIT (A) GAVE PARTIAL RELIEF TO THE ASSESSEE TO THE TUNE OF RS.7,46,614/- AND CONFIRMED THE ADDITIO N TO THE EXTENT OF RS.1,50,459/- BY OBSERVING THAT THE CLAIM OF THE ASSESSEE COMPANY TO HAVE PAID RS.1,50,459/- TO TEMPORARY EMPLOYEES ARE NOT SUPPORTED BY ANY ACQUAINTANCE ROL E AND THE PROOF IN RESPECT TO IDENTITY OF THE PAYEE TO ESTABLISH THE GENUINENESS OF THE PAYME NT HAVE NOT BEEN SUPPORTED BY ANY EVIDENCE EXCEPT AN AFFIDAVIT OF THE ACCOUNTANT, WHI CH WAS NOT ACCEPTED BY THE LD. CIT(A). AGGRIEVED AGAINST THE SAID RELIEF GIVEN TO THE ASSE SSEE OF RS.7,46,614/- THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION A GAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,50,459/- BEFORE US. 2.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE COMPANY IS CARRYIN G ON BUSINESS OF RETAIL DEALERSHIP OF SCOOTERS MANUFACTURED BY HONDA MOTORS SCOOTERS PVT. LTD. UNDER THE TRADE NAME VIKASH MOTOR CO. WE NOTE THAT THE DEALERSHIP FROM HONDA M OTORS WAS ORIGINALLY TAKEN BY THE PROPRIETORSHIP FIRM OF SHRI OM PRAKASH, WHO IS PRES ENTLY A DIRECTOR OF THE ASSESSEE COMPANY. THE PROPRIETORSHIP WAS CONVERTED INTO A P RIVATE LIMITED COMPANY AND THUS THE ASSESSEE COMPANY BECAME A DEALER OF HONDA SCOOTERS/ BIKES. IT IS ALSO NOTED THAT THE ASSESSEE IS ALSO PROVIDING SERVICE FACILITIES OF SC OOTERS AND MOTOR CYCLES AND ALSO IN THE BUSINESS OF SALES AND SERVICE OF TAXI METERS. THE ASSESSEE HAS SHOWN TO HAVE INCURRED SALARY EXPENSES OF RS.13,41,079/-. THE AO ASKED THE ASSES SEE TO PRODUCE THE ATTENDANCE REGISTER WHICH WAS PRODUCED ON 02.11.2011. CONSIDERING THE A TTENDANCE REGISTER AND THE SUBMISSION OF THE ASSESSEE, THE AO MADE THE DISALLOWANCE OF RS .8,97,073/- BY OBSERVING AS UNDER: 3 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 HOWEVER, EVEN AFTER ISSUANCE OF SUCH LETTER, THE ASSESSEE SUBMITTED ANOTHER ADJOURNMENT PETITION ON 21.09.2011 AT 01.45 P.M. SEEKING TIME T ILL SECOND WEEK OF OCTOBER, 2011. BOOKS OF ACCOUNTS WERE PRODUCED ON 12.10.2011, BUT ATTENDANC E REGISTER WAS PRODUCED ONLY ON 02.11.2011 AFTER MENTIONING ABOUT SUCH NON-PRODUCTI ON DURING HEARING ON 12.10.2011. IT HAS BEEN FOUND FROM THE ATTENDANCE REGISTERS PRODUCED T HAT STAFF VARIES FROM 20 TO 29 DURING F.Y. 2008-09. THE ASSESSEE CLAIMED THAT THESE ARE PERMA NENT STAFF, WHICH DOES NOT TALLY WITH THE SUBMISSION MADE ON 09.08.2011. THE STAFF NUMBERS AR E GIVEN AS UNDER: MONTH NUMBER OF STAFF APRIL,2008 20 JULY, 2008 24 OCTOBER, 2008 22 DECEMBER, 2008 22 JANUARY, 2009 26 FEBRUARY, 2009 28 MARCH,2009 29 TOTAL 171 AVERAGE OF 7 MONTHS = 24.5 NOS. IT IS SEEN FROM THE LIST OF PRESENT STAFF THAT ONLY 43 NOS OF STAFF ARE WORKING AT PRESENT, WHILE THERE MIGHT HAVE BEEN INCREASE OF THE MAGNITU DE OF THE ASSESSEE'S BUSINESS ACTIVITY. THE ASSESSEE COULD FURNISH ADDRESS OF ANOTHER 10 STAFF BUT ON PERUSAL OF THE DETAILS FILED IT IS FOUND THAT ONE SRI JAVED ALI OF 39, FREE SCHOOL STREET, K OLKATA - 16 IS STILL WORKING WHILE IN THE FIRST SUBMISSION HE HAS BEEN SHOWN AS 'LEFT'. THEREFORE, THERE ARE DISCREPANCIES IN THE OWN STATEMENTS FILED BY THE ASSESSEE FROM TIME TO TIME. IT HAS BEEN CLAIMED IN THE SUBMISSION DT. 14.11.2011 THAT THE PAYMENTS TO OTHER STAFF WERE MA DE THROUGH VOUCHERS. IT IS NOT ACCEPTABLE THAT ATTENDANCE REGISTERS HAVE NOT BEEN MAINTAINED FOR ALL STAFF. ON THE CONTRARY, THE AVERAGE NUMBER AS COMPUTED I.E. 24.5 IS THE ACCEPTABLE FIGU RE AS AT PRESENT ONLY 43 NOS. OF STAFF ARE WORKING. IT IS ALSO SURPRISING TO NOTE THAT FOR KEE PING THIS NUMBER OF STAFF THE ASSESSEE CLAIMS THAT PF AND ESI ARE NOT APPLICABLE. IT HAS ALSO BEE N OBSERVED THAT SOME STAFF FOUND IN THE LIST OF ADVANCES GIVEN, ARE NOT FOUND IN THE LIST OF STA FF GIVEN IN THE DETAILS OF SALARY. THE MATTER WAS INFORMED TO THE A/R DURING HEARING ON 16.11.201 1 AND IN RESPONSE, IT WAS SUBMITTED VIDE LETTER DT. 25.11.2011 THAT THESE STAFF HAVE LEFT TH E JOB. IT HAS ALSO BEEN STATED THAT THE ADVANCES HAVE BEEN REALIZED FROM THEM 'MORE OR LESS'. THEREF ORE, THE ASSESSEE IS CLAIMING THAT THE STAFF WHO DID NOT WORK FOR EVEN A SINGLE DAY DURING THE F .Y. 2008-09 HAVE RECEIVED ADVANCES AND THEY HAVE NOT REFUNDED THE ADVANCES AMOUNT TILL 31. 03.2009, WHICH IS AGAIN AN UNREALISTIC SITUATION. IN VIEW OF THE ABOVE FINDINGS, CLAIM OF SALARY, BON US ETC. IS ALLOWED ONLY TO THE FOLLOWING EXTENT APPLYING THE RATIO OF NUMBER OF STAFF FOUND IN THE ATTENDANCE REGISTERS: CLAIM OF RS. 13,41,079/- X (24.5/74) = RS. 4,44,006 /-. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO THE E XTENT OF RS.1,50,459/- AND GAVE RELIEF OF RS.7,46,614/- TO THE ASSESSEE. WE NOTE THAT THE ON E OF MAIN GROUND ON WHICH THE AO MADE THE DISALLOWANCE WAS THAT THE ASSESSEE FAILED TO SH OW THAT THE ASSESSEE HAD REGISTERED WITH THE PF/ESI AUTHORITIES. IT HAS BEEN BROUGHT TO OUR NOTICE THAT IN THE FY 2012-13, THE ASSESSEE COMPANY HAS ITSELF GOT REGISTERED WITH THE PF AUTHORITIES RETROSPECTIVELY FROM FY 2007-08 ONWARDS AND THAT IN THE PRESENT FY I.E. 200 8-09 THE LIABILITY TOWARDS PF HAS BEEN REMITTED AND FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAS PRODUCED 4 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 BEFORE US THE LIST OF 21 EMPLOYEES FOR WHOM THE PF HAS BEEN REMITTED. THIS PARTICULAR FACT THOUGH STATED BEFORE THE LD. CIT(A) HAVE NOT BEEN V ERIFIED BY THE LD. CIT(A), THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THIS FACT OF THE AS SESSEE GETTING THE REGISTRATION UNDER THE PF AUTHORITIES AND THE FACT OF REMITTING THE AMOUNT IN THE NAME OF EMPLOYEES (21 NOS.) NEED TO BE VERIFIED BY THE AO AND THEREAFTER, THE AO HAS TO ADJUDICATE THIS ISSUE AFRESH. THEREFORE, WE SET ASIDE THIS ISSUE BACK TO THE FILE OF THE AO FOR DE NOVO ADJUDICATION. NEEDLESS TO SAY, REASONABLE OPPORTUNITY OF BEING HEARD BE GIVEN TO T HE ASSESSEE AND LIBERTY IS GRANTED THE ASSESSEE TO PRODUCE THE DOCUMENTS TO PROVE THE SALA RY EXPENDITURE. THIS GROUND OF APPEAL OF REVENUE AND CO OF ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 3. GROUND NO. 2 OF REVENUES APPEAL IS AS UNDER: 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION OF DISCREPANCIES IN FIGURES O F BAD DEBTS, COMMISSION AMOUNTING TO RS.3,14,392/-. 3.1. THIS GROUND RELATES TO DELETION OF ADDITION OF DISCREPANCIES IN FIGURES OF BAD DEBTS, COMMISSION AMOUNTING TO RS.3,14,392/-. BRIEFLY STA TED FACTS ARE THAT THE ASSESSEE CLAIMED BAD DEBT WRITTEN OFF AMOUNTING TO RS.3,14,392/-. T HE AO DISALLOWED THE SAME FOR THE REASON THAT ASSESSEE HAD NOT SPECIFICALLY CLAIMED I N THE RETURN THAT IT IS BAD DEBT WRITTEN OFF BUT THE ASSESSEE CLUBBED IT ALONG WITH THE MISC. EX PENSES, AND ALSO THAT NOTICES SENT BY THE AO TO THOSE DEBTORS HAD BEEN RETURNED UNSERVED WITH THE REMARK NOT KNOWN, THEREFORE, ACCORDING TO AO, THE ASSESSEE DID NOT HAVE ANY BUSI NESS RELATION WITH THOSE PARTIES IN THE PAST. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITI ON OF RS.3,14,392/- BY OBSERVING AS UNDER: I HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER, THE SUBMISSIONS OF THE APPELLANT AND PERUSED MATERIAL PLACED ON RECORD. THE FACT THAT T HE CLAIM OF BAD DEBT WAS INCLUDED UNDER THE HEAD 'MISCELLANEOUS EXPENSES' DEBITED IN THE PROFIT AND LOSS ACCOUNT DID NOT MAKE THE CLAIM BY ITSELF INVALID, PARTICULARLY WHEN THE CLAIM IS R EFLECTED IN THE AUDITED STATEMENTS OF ACCOUNT AND THE DETAILS FURNISHED BY THE APPELLANT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. BAD DEBIT IS ALLOWABLE AS DEDUCTION UNDER SECTION 36(1) (VII) ONLY IF IT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF THE ASSESSEE IN THE P REVIOUS YEAR IN WHICH CLAIM FOR DEDUCTION IS MADE. 'WRITING OFF IS A TECHNICAL TERM AND IT SIMP LY MEANS CANCELLATION OF SUM OF MONEY DUE. IN ACCOUNTING PRACTICE, WRITE OFF MEANS THAN AN A CCOUNT WHICH WAS PREVIOUSLY SHOWN AS ASSET MUST BE TRANSFERRED TO THE EXPENSE ACCOUNT OR THE PROFIT AND LOSS ACCOUNT. THE WRITING OFF OF BAD DEBTS, WITHOUT CHARGING THE SAME IN THE PROF IT AND LOSS ACCOUNT IS NOT A WRITE OFF AT ALL - CIT V. HOTEL AMBASSADOR [2002] 121 TAXMAN 437 (KER. ). THOUGH NO PARTICULAR FORM OR MANNER OF WRITING OFF A DEBT IS PRESCRIBED, A DEBT MAY BE WRITTEN OFF AS IRRECOVERABLE IN THE INDIVIDUAL ACCOUNT OF THE DEBTOR. IT IS NOT FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT HAD 5 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 BECOME BAD IN THE PREVIOUS YEAR. IN OTHER WORDS, IT IS NOT OBLIGATORY FOR ASSESSEE TO PLACE DEMONSTRATIVE PROOF FOR ESTABLISHING A DEBT AS BAD - AJITKUMAR C. KAMDAR V. CIT [2005] 1 SOT 183(MUM.). IF IT HAS BEEN WRITTEN OFF AS IRRECO VERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR, IT WILL SUFFICE FOR CLAIMING IT AS BAD DEBT - T.R.F. LTD. V. CIT [2010] 190 TAXMAN 391 (SC). IT IS FOR THE ASSESSEE TO DECIDE W HETHER THE DEBT HAS BECOME BAD OR NOT AND THE ASSESSING OFFICER CAN NEVER INSIST ON PRODUCTIO N OF DEMONSTRATIVE AND INFALLIBLE PROOF THAT THE DEBT HAD BECOME BAD - NEWDEAL FINANCE & INVESTM ENT LTD. V. DEPUTY CIT [2000] 74 ITD, 469/69 TIJ(CHENNAI) 410. IN THE APPELLANT'S CASE, I T IS ESTABLISHED THAT THE APPELLANT HAD WRITTEN OFF THE AMOUNT AS IRRECOVERABLE. IT IS ALSO ESTABLISHED THAT ALL THESE DEBTS WERE INCLUDED IN SALES IN EARLIER YEARS. HAVING REGARD T O THE FACTS END THE PRINCIPLE OF LOW LAID DOWN BY THE HON'BLE SUPREME COURT AND DIFFERENT BEN CHES OF THE) ITAT, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOW ING THE CLAIM OF BED DEBT IN THIS CASE. THEREFORE, THE ADDITION OF RS.3,14,392/- IS HEREBY DELETED. 3.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE IS SELLING ITS VEHI CLES THROUGH DEALERS, BUT IT DID NOT SHOW ITS SALES IN THE DEALERS ACCOUNT BUT IT HAS SHOWN IN T HE NAME OF THE CUSTOMERS AND SUB-DEALERS ONLY. THE ASSESSEE HAD FILED THE LEDGER COPY AND D ETAILS OF BAD DEBTS AND COPIES OF SALE INVOICES RAISED IN THE NAME OF THEIR CUSTOMERS. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT ALL THE DEBTS WRITTEN OFF WERE INCLUDED IN SALES IN EARLIER YEARS. SINCE THESE DEBTS WERE UNREALIZABLE, THE BAD DEBTS IN THE NAME OF SUKANT MOTORS OF RS.33,428/-, MOHIMA MOTORS OF RS.51,489/- AND MOBIKE POINT OF RS .2,29,475/- WHICH WERE SHOWN BY THE ASSESSEE AS SALES IN THE EARLIER YEARS WERE WRI TTEN OFF AS THE ASSESSEE COMPANY FELT THAT THE SAID AMOUNT IS UNREALIZABLE. THE AO HAS MADE T HE DISALLOWANCE MERELY ON THE BASIS THAT THE POSTAL DEPARTMENT HAS RETURNED THE NOTICE ISSUE D TO THEM WITH THE REMARKS THAT NOT KNOWN WHICH ACTION WE DONT COUNTENANCE. WE NOTE THAT THE LD. CIT(A) HAS APPRECIATED THE FACTS IN THE RIGHT PERSPECTIVE AND THEREFORE RI GHTLY DELETED THE ADDITION OF RS.3,14,392/- SINCE THE BAD DEBT IS AN ALLOWABLE DEDUCTION U/S. 36(1)(VII) OF THE ACT. ONCE THE ASSESSEE HAS WRITTEN OFF THE BAD DEBT AS IRRECOVERABLE IN IT S BOOKS IN THE PREVIOUS YEAR IN WHICH CLAIM OF DEDUCTION IS MADE, THEN THE AMOUNT WRITTEN OFF A S IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR IN QUESTION HAS TO BE ALLOWED. WE NOTE THAT THESE DEBTS WERE INCLUDED IN SALES IN EARLIER YEARS AND, THEREFORE, RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 190 TAXMAN 391 (SC), WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE . 4. GROUND NO. 3 OF REVENUES APPEAL IS AS UNDER: 6 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION OF PAYMENT MADE TO M/S. TODI INVESTORS AMOUNTING TO RS.1,91,641/-. THE ASSESSEE WAS UNABLE TO PROVE THE UTILIZATION OF PAYMENT FOR BUSINESS PURPOSE DURING THE COURSE OF ASSESSMENT. 4.1. THIS GROUND RELATES TO DELETION OF ADDITION OF RS.1,91,641/- ON ACCOUNT OF INTEREST PAYMENT. BRIEFLY STATED FACTS ARE THAT THE AO FOUN D THAT THE ASSESSEE HAS ENTERED INTO SEVERAL TRANSACTIONS WITH M/S. TODI INVESTORS. IT HAS BEEN CLAIMED BY THE ASSESSEE THAT IT HAS PAID INTEREST OF RS.1,91,641/- TO THE SAID PARTY. THE AO ASKED THE ASSESSEE TO FURNISH VARIOUS DETAILS FOR TRANSACTION WITH M/S. TODI INVE STOR. IN RESPONSE, THE ASSESSEE FILED DOCUMENTARY EVIDENCE I.E. LOAN CONFIRMATIONS ETC. HOWEVER THE AO NOTED THAT IN RESPECT OF UTILIZATION OF FUNDS IT HAS ONLY BEEN STATED BY THE ASSESSEE THAT FUNDS WERE UTILIZED FOR BUSINESS PURPOSES WITHOUT FURNISHING ANY DETAILS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO ESTABLISH TH E TRANSACTIONS WITH THE SAID PARTY AND TO PROVE WHETHER THE FUND WAS FOR THE PURPOSE OF BUSIN ESS OR NOT. ACCORDING TO AO, THE ASSESSEE SUBMITTED ONLY COPY OF BANK STATEMENT FOR THE MONTH OF MARCH, 2009 ALONG WITH ITS SUBMISSION DT. 25.11.2011. IT WAS CLAIMED BY TH E ASSESSEE THAT ALL FUNDS RECEIVED FROM M/S. TODI INVESTORS WERE DEPOSITED IN AN OVERDRAFT ACCOUNT MAINTAINED BY ASSESSEE. IT HAS BEEN CLAIMED THAT GENERALLY AFTER RECEIPTS OF FUNDS , PAYMENTS WERE MADE FOR PURCHASE OF VEHICLES. THE SAID EXPLANATION WAS NOT FOUND ACCEPT ABLE TO THE AO BECAUSE AO NOTED THAT ON A NUMBER OF OCCASIONS, THE ASSESSEE HAD MADE REP AYMENT TO THE SAID CONCERN AND CURIOUSLY ADVANCED EXCESS MONEY, THE REASONS FOR SU CH A PRACTICE HAVE NOT BEEN EXPLAINED BY THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE SUB MITTED COPY OF BANK STATEMENT ONLY FOR THE MONTH OF MARCH, 2009 TO AVOID EXPLANATION ON TH IS ISSUE. THE AO NOTED THAT THE ASSESSEE MAINTAINS OVERDRAFT FACILITY FROM THE BANK SO THE AO WONDERED AS TO WHY EXCESS AMOUNT WAS ADVANCED FROM ITS SISTER CONCERN? THE AO WONDERED AS TO WHEN THE CREDIT LIMIT OF THE BANK HAS NOT BEEN EXHAUSTED, WHAT WAS THE NE CESSITY FOR THE ASSESSEE TO TAKE LOAN FROM ITS SISTER CONCERN? THE AO ASKED THE ASSESSEE TO EXPLAIN THE AFORESAID QUERIES AND GAVE ANOTHER OPPORTUNITY, BUT ACCORDING TO THE AO, IT CO ULD NOT EXPLAIN TO THE SATISFACTION THE PLAUSIBLE REASON FOR DRAWING LOAN AND THE ASSESSEE FAILED TO GIVE REASONS FOR NOT INCORPORATING THE SAID TRANSACTIONS UNDER CLAUSE 24 (A) AND 18 OF THE TAX AUDIT REPORT. IN VIEW OF THE ABOVE, THE SUBMISSION OF THE ASSESSEE W AS NOT FOUND ACCEPTABLE TO AO AND HE DISALLOWED THE SUM OF RS.1,91,641/- AS NOT RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE 7 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO WHILE DELETING TH E ADDITION HAS OBSERVED AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS AND ALSO PERUS ED THE MATERIAL PLACED ON RECORD. THE GENUINENESS OF THE BORROWING AND INTEREST PAYMENT H AVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER AS HE HAS VERIFIED END CONFIRMED THE SAME F ROM THE ASSESSING OFFICER OF TODI INVESTORS I. E. INCOME TAX OFFICER-WARD 31 (4), KOLKATA. THE ASSESSING OFFICER HAS APPARENTLY MADE THE DISALLOWANCE ON THE GROUND OF FAILURE ON THE PART O F THE APPELLANT TO SPECIFY THE USE OF THE BORROWED CAPITAL. HE HAS NOT FOUND THE INTEREST PAY MENT TO BE EXCESSIVE OR UNREASONABLE. IN CIT V. CORE HEALTH CARE LTD. [2008] 167 TAXMAN 206 (SC), THE HON'BLE SUPREME COURT HAS OBSERVED THAT 'WHAT SECTION 36(1)(III) EMPHASIZES O N ITS USER CAPITAL AND NOT USER OF ASSET WHICH COMES INTO EXISTENCE AS A RESULT OF BORROWED CAPITAL, UNLIKE SECTION 37 (1) WHICH EXPRESSLY EXCLUDES AN EXPENSE OF A CAPITAL NATURE. LEGISLATURE HAS, THEREFORE, MADE NO DISTINCTION IN SECTION 36(1 )(III) BETWEEN 'CAPITAL BORROWED FOR A REVENUE PURPOSE AND CAPITAL BORROWED FOR A CAPITAL PURPOSE AND AN ASSESSEE IS ENTITLED TO CLAIM INTEREST PAID ON BORROWED CAPITAL PROVIDED THAT CAPITAL IS USED FOR BUSINESS PURPOSE IRRESPECTIVE WHAT MAY BE RESULT OF USING SUCH BORROWED CAPITAL. IN THE APPELLANT'S CAS E, AS EXPLAINED BY THE APPELLANT, THERE IS NO DENYING THE FACT THAT THE BORROWED CAPITAL WAS USED IN ITS BUSINESS EITHER IN, THE PURCHASE OR OTHER DAY-TO-DAY FINANCIAL NEEDS. IT IS NOT THE CAS E OF THE ASSESSING OFFICER THAT THE BORROWED CAPITAL WAS USED FOR NON-BUSINESS PURPOSES. THEREFO RE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE D ISALLOWANCE. THE ADDITION OF RS. 1,91,641/- IS, THEREFORE, AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE LD. CIT(A) HAS ALLOWED THE C LAIM OF THE ASSESSEE THAT THE BORROWED CAPITAL WAS USED IN ITS BUSINESS EITHER FOR THE PUR CHASE OR FOR DAY TO DAY FINANCIAL NECESSITY. THE GENUINITY OF THE BORROWING AND INTEREST PAYMENT WERE VERIFIED AND CONFIRMED BY THE AO OF THE ASSESSEE FROM THE AO OF THE TODI INVESTOR I.E. ITO, WARD 31(4), KOLKATA. IN THE LIGHT OF THE AFORESAID FACTS WITHOUT BRINGING ANY M ATERIAL TO SHOW THAT THE ASSESSEE HAD USED THE BORROWED CAPITAL FOR NON-BUSINESS PURPOSE, MERE LY ON SURMISES AND CONJECTURES THE ASSESSEES CLAIM OUGHT NOT TO HAVE BEEN DISALLOWED . THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REV ENUE. 5. GROUND NO. 4 OF REVENUES APPEAL IS AS UNDER: 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION AMOUNTING TO RS.3,54,336/- ON THE GROUND THAT THE INCENTIVE AND DISCOUNT CLAIMED BY THE ASSESSEE WAS NOT ACTUALLY P ASSED TO THE CUSTOMERS. GROUND NO. 1(B) OF CROSS OBJECTION IS AS UNDER: 1(B). BY SUSTAINING RS.129563/- AGAINST CLAIM O F RS.3,54,336/- DISALLOWED BY AO TOWARDS INCENTIVES AND DISCOUNTS. 8 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 5.2. THIS GROUND OF REVENUE RELATES TO DELETION OF ADDITION OF RS.3,54,336/- ON THE GROUND OF INCENTIVE AND DISCOUNT AND THE ASSESSEE HAS CHAL LENGED THE ADDITION OF RS.1,29,563/-. BRIEFLY STATED FACTS ARE THAT THE AO MADE THE DISAL LOWANCE FOR LACK OF MATERIAL EVIDENCE AND FOR FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT T AX AT SOURCE. ACCORDING TO THE AO, THE DISALLOWANCE WAS COMPRISED OF ON TWO COUNTS I.E. TO TAL DISCOUNT DEDUCTED IN BILLS RS.3,44,758/- ON WHICH TDS IS NOT APPLICABLE AND RS .9,578/- BEING INCENTIVE ON WHICH ALSO TDS WAS NOT DEDUCTED. ON APPEAL, THE LD. CIT(A) OB SERVED THAT SINCE ASSESSEES OWN ADMISSION, TDS HAS NOT BEEN MADE ON INCENTIVE PAYME NTS MADE TO DEALERS TO THE EXTENT OF RS.1,29,563/- THIS AMOUNT IS LIABLE TO BE DISALLOWE D AND TAXED U/S. 40(A)(IA) OF THE ACT AND ACCORDINGLY HE DIRECTED THE AO TO ADD BACK THIS AMO UNT AS DISALLOWANCE U/S. 40(A)(IA) OF THE ACT WHILE GIVING EFFECT TO THIS ORDER AND, THEREFOR E, THE ASSESSEE GOT RELIEF OF RS.2,24,773/- ON THIS GROUND. AGGRIEVED, THE REVENUE IS IN APPEA L AGAINST THE RELIEF GRANTED BY THE LD. CIT(A) AND THE ASSESSEE HAS FILED CROSS OBJECTION A GAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,29,563/- BEFORE US. 5.3. AT THE TIME OF HEARING BEFORE US, THE LD. COUN SEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF CROSS OBJECTION AND HENCE, THE SAME IS DI SMISSED AS NOT PRESSED. 5.4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE COMPANY HAD ENGAGED SEVERAL SUB-DEALERS THROUGH WHOM SALES WERE MADE BUT THE FACT WAS THAT THE BILLS WER E DIRECTLY MADE IN THE NAME OF THE CUSTOMERS AS PER THE POLICY OF THE PRINCIPALS IN TH IS CASE I.E. THE HONDA MOTORS WHICH HAVE BEEN FOUND TO BE CORRECT BY THE LD. CIT(A). THE LD . CIT(A) HAS RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F RAVI MARKETING (P) LTD. VS. CIT (2005) 147 TAXMAN 299 (CAL) WHEREIN THE HONBLE HIGH COURT HAS HELD THAT PROMOTION OF SALE IS ALWAYS EXPEDIENT FOR THE PROMOTION OF BUSINESS AND, THEREFORE, IN THIS COMPETITIVE MARKET, SALES PROMOTED BY THE ASSESSEE BY GRANTING INCENTIV E AND DISCOUNT HAS TO BE ALLOWED. THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT ASSESSEE HAS ADMITTED TO HAVE NOT DEDUCTED TDS ON AN AMOUNT OF RS.1,29,563/- INCENTIVE PAYMENT MAD E TO DEALERS AND, THEREFORE, HE RESTRICTED THE DISALLOWANCE TO RS.1,29,563/-. SINC E THE ASSESSEE HAS NOT PRESSED THE DISALLOWANCE RESTRICTED BY THE LD. CIT(A) THE SAME IS CONFIRMED AND THE LD. CIT(A)S ACTION OF DELETING RS.2,24,773/- WHICH IS AN ALLOWA BLE EXPENDITURE AS PER THE RATIO DECIDENDI 9 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 OF THE HONBLE JURISDICTIONAL HIGH COURT IN RAVI MA RKETING (P) LTD. (SUPRA), WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS BOTH THE GROUNDS OF APPEAL AND THE CROSS OBJECTION FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY. 6. GROUND NOS. 5 & 6 OF REVENUES APPEAL ARE AS UND ER: 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADVANCE FROM CUSTOMERS AMOUNTING TO RS .20,50,555/- WHICH WAS ADDED BY THE AO BECAUSE ASSESSEE WAS UNABLE TO SUBMIT THE EVIDEN CE IN SUPPORT OF HIS CLAIM DURING THE COURSE OF ASSESSMENT. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADVANCE FROM CUSTOMERS AMOUNTING TO RS .20,50,555/- ON THE BASIS OF THE FRESH EVIDENCE IN VIOLATION TO RULE 46A OF I. T. ACT. 6.1. THESE GROUNDS RELATE TO DELETION OF ADDITION I N RESPECT OF ADVANCE FROM CUSTOMERS AMOUNTING TO RS.20,50,555/- IN VIOLATION OF RULE 46 A OF THE I. T. RULES. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S THE AO NOTED THAT THE ASSESSEE HAS SHOWN ADVANCE FROM CUSTOMERS TO THE EXTENT OF RS.69 ,67,170/-. THE AO, THEREFORE, REQUIRED THE ASSESSEE TO FURNISH COMPLETE DETAILS OF THE ADV ANCES AND ADDRESSES OF THE PERSONS WHO HAD DEPOSITED THE ADVANCES. IN REPLY THE ASSESSEE FURNISHED COMPLETE LIST OF ADVANCES, BUT COULD NOT FURNISH COMPLETE ADDRESS OF FEW PARTIES. THEREAFTER, THE AO SENT NOTICE U/S. 133(6) OF THE ACT TO FEW CUSTOMERS WHICH WERE RETUR NED UNSERVED. THEREFORE, THE AO MADE ADDITION U/S. 68 OF THE ACT TO THE TUNE OF RS.66,36 ,099/- TO THE TOTAL INCOME OF THE ASSESSEE AND ALLOWED ONLY RS.3,31,071/- IN RESPECT TO WHICH THE ASSESSEE FURNISHED DOCUMENTARY EVIDENCE FOR ADVANCES IT RECEIVED. ON APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION OF ITAT, DELHI BENCH IN THE CASE OF ITO VS. SUPER CHEM ICALS DISTRIBUTORS 1 SOT 102 AND DELETED THE ADDITION OF RS.66,36,099/- AS MADE BY T HE AO ON ACCOUNT OF UNEXPLAINED ADVANCE FROM CUSTOMER U/S. 68 OF THE ACT. AGGRIEVE D, THE REVENUE IS IN APPEAL BEFORE US. 6.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAD RECEIVED ADVAN CES FROM CUSTOMERS AGAINST THE BOOKING OF VEHICLES FROM CUSTOMERS DIRECTLY AND ALSO THROU GH SUB-DEALERS/AGENTS OF THE ASSESSEE COMPANY. ACCORDING TO THE ASSESSEE, THE CUSTOMERS WHO WERE PURCHASING THE VEHICLES DIRECTLY FROM THE ASSESSEES SHOW ROOM KNEW THE ASS ESSEE, BUT THE CUSTOMERS WHO WERE BROUGHT BY THE AGENTS ARE NOT KNOWN TO IT. THE CUS TOMERS BROUGHT BY THE AGENTS ARE MOSTLY 10 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 FROM THE SUBURBS OR RURAL AREAS WHO DID NOT HAD PRO PER ADDRESS EXCEPT THEIR VILLAGE NAME AND, THEREFORE, THOSE CUSTOMERS COULD NOT RECOGNIZE THE ASSESSEE AS THEY KNEW ONLY THE AGENTS WHO HAD INTRODUCED THEM TO THE ASSESSEE COMP ANY AND WHO HAD BOOKED THE VEHICLES ON THEIR BEHALF. IT WAS BROUGHT TO THE NOTICE OF T HE BENCH THAT MANY A TIMES THESE AGENTS ONLY GAVE THEIR ADDRESSES TO THE ASSESSEE IN PLACE OF ACTUAL ADDRESS OF THE BUYERS BECAUSE OF THIS MODUS OPERANDI ADOPTED BY THE AGENTS, THE ASSE SSEE COMPANY COULD NOT FURNISH THE FULL DETAILS OF THE CUSTOMERS BEFORE THE AO. IT WAS BRO UGHT TO THE NOTICE OF THE AUTHORITIES BELOW THAT THE ASSESSEE COMPANY FURNISHED FULL DETAILS OF ADVANCES RECEIVED WITH BREAK-UP OF ADVANCE RECEIVED IN CURRENT YEAR AND THE AMOUNT BRO UGHT FORWARD SEGREGATING THE SAME INTO DIRECT CUSTOMERS ADVANCE AND INDIVIDUAL DEALERS A DVANCE BREAK-UP CUSTOMER-WISE AND THE DETAILED BREAK-UP ALSO REFLECTED AS TO HOW THESE AD VANCES WERE BEING ADJUSTED UNDER VARIOUS ACCOUNTS IN SUBSEQUENT YEARS. IT WAS SUBMITTED THA T TOTAL ADVANCES ADJUSTED AGAINST SALE INVOICE RAISED IN 2009-10 AND 2010-11 AMOUNTING TO RS.66,98,559.44 AND THAT AMOUNT OF RS.18,794/- WAS REFUNDED BACK. IT WAS SUBMITTED TH AT RS.1,50,507.41 HAS BEEN WRITTEN BACK IN SUBSEQUENT YEARS AND AN AMOUNT OF RS.98,309.02 W AS ADJUSTED WITH DEALERS ACCOUNT IN SUBSEQUENT YEARS AND THAT AN AMOUNT OF RS.1000/- IS STILL PENDING TO BE REFUNDED. IT WAS BROUGHT TO OUR NOTICE THAT IN MOST OF THE CASES THE SE DETAILS CONTAIN THE DETAILS OF ADJUSTMENT MADE IN THE SUBSEQUENT YEAR BY WAY OF ISSUE OF SALE INVOICE. THE SAMPLE SETS OF DOCUMENTS WERE PRODUCED BEFORE THE AO WHEREIN BOOKING ADVANCE RECEIVED IN EARLIER YEARS WERE REFLECTED BUT THE ADDRESSES WERE NOT GIVEN. AS PER THE ADVICE OF THE PRINCIPAL HONDA MOTORS AND AS PER THE REGISTRATION REQUIREMENTS OF THE TRA NSPORT DEPARTMENT OF THE GOVT. OF WEST BENGAL, BILLS WERE MADE DIRECTLY IN THE CUSTOMERS NAME OF THOSE WHO COMES DIRECTLY TO THE SHOW ROOM OF THE ASSESSEE WHEREAS IN THE CASE OF CU STOMERS TO WHOM NOTICES WERE ISSUED BY THE AO U/S. 133(6) OF THE ACT NAMELY AGAINST SHRI A BHIJIT GHOSH, SHRI SWAPAN SAMANTA AND SHRI MITHUN GHOSH WERE NOT RETAIL CUSTOMERS BUT WHO WERE INTRODUCED BY M/S. BANIK MOTORS AND SHIVA WHEELS PVT. LTD. WITH RESPECT TO S HRI SWAPAN SAMANTA AND SHRI DURGAPADA HALDER WERE INTRODUCED BY M/S. SUPRAVA AU TO CENTRE. THE ADVANCES APPEARING IN THE NAME OF THESE FOUR PERSONS WERE RS.57,280/-, RS.57,280/-, RS.57,353 AND RS.57,280/- AND IT WAS FURTHER EXPLAINED THAT AS PER THE DETAIL S SUBMITTED ABOUT THE ADVANCE FROM CUSTOMERS LIST, THOSE ADVANCES GOT ADJUSTED AGAINST THE ASSESSEES INVOICE IN THE NEXT YEAR. THESE FACTS HAVE NOT BEEN FOUND TO HAVE BEEN INCORR ECT BY THE AO AND THE LD. CIT(A) HAS 11 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 FOUND THAT THE AMOUNTS IN ADVANCE WERE RECEIVED BY THE ASSESSEE EITHER THROUGH SUB-DEALERS OR THROUGH AGENTS OR DIRECTLY IS SUPPORTED WITH COM PLETE DETAILS. THE LD. CIT(A) HAS MADE A FINDING THAT RS.5,50,689/- WAS THE OPENING BALANC E IN THIS ACCOUNT HAS BEEN DULY EXPLAINED FROM THE LEDGER ACCOUNT AND THAT MAJOR PART OF THE BALANCE OUTSTANDING IN THIS ACCOUNT AS ON 31.03.2009 HAS BEEN ADJUSTED AGAINST THE SALE BILLS IN THE SUBSEQUENT ASSESSMENT YEARS. THE LD. CIT(A) HAS FOUND THAT THE ASSESSEE HAS PLACED E VIDENCE BEFORE THE AO TO ESTABLISH THAT IT FOLLOWED THE SAME METHOD OF ACCOUNTING AS IN THE PRECEDING YEARS AND THAT NONE OF THE ADVANCES RECEIVED AGAINST BOOKING OF VEHICLES COULD BE TREATED AS UNEXPLAINED. THE LD. CIT(A) HAS CLEARLY MADE A FINDING THAT THE ADVANCES GIVEN TO THE ASSESSEE FOR PURCHASE OF VEHICLES IS NOTHING BUT TRADE ADVANCES AND NOT CASH CREDITS. THE LD. CIT(A) HAS FOUND THAT FOR THE ADVANCES GIVEN BY THE CUSTOMERS, THE ASSESS EE HAS SUPPLIED THE GOODS (VEHICLES) AND, THEREFORE, THERE IS NO JUSTIFICATION FOR THE AO TO TREAT THESE CASH ADVANCES AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT AND, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION WHICH DOES NOT REQUIRE ANY INTERFERENCE FROM OUR S IDE AND, THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 7. GROUND NO. 7 OF REVENUES APPEAL IS AS UNDER: 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION AMOUNTING TO RS.4,46,518/- ON THE GROUND OF REGISTRATION EXPENSES CLAIMED BY THE ASSESSEE. THE ASSESSEE WAS UNABLE T O PROVE THE GENUINENESS OF EXPENSES DURING THE COURSE OF ASSESSMENT. THE LD. CIT(A) DE LETED THE ADDITION ON THE BASIS OF FRESH EVIDENCE IN VIOLATION OF RULE 46A OF THE I. T. ACT. GROUND NO. (C) OF CROSS OBJECTION OF ASSESSEE IS AS UNDER: C) BY SUSTAINING RS.89,303/- AGAINST DISALLOWANC E OF RS.4,46,518/- MADE BY AO BEING EXPENSES ON REGISTRATION CHARGES . 7.1. THIS GROUND OF APPEAL OF REVENUE RELATES TO DE LETION OF ADDITION OF RS.4,46,518/- AND THE GROUND OF CROSS OBJECTION OF ASSESSEE RELATES T O SUSTAINING THE ADDITION OF RS.89,303/- ON ACCOUNT OF REGISTRATION EXPENSES OF VEHICLES CLAIME D BY THE ASSESSEE COMPANY. BRIEFLY STATED FACTS ARE THAT THE AO MADE THE DISALLOWANCE AS THE ASSESSEE WAS UNABLE TO PRODUCE EVIDENCE THAT THE EXPENDITURE WAS INCURRED FOR BUSI NESS PURPOSES. ON APPEAL, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 20% OF THE EX PENSES, WHICH WORKS OUT TO RS.89,303/- AND GAVE RELIEF TO THE ASSESS OF RS.3,57,215/- BY O BSERVING AS UNDER: 12 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 I HAVE CONSIDERED THE ARGUMENTS ADVANCED ON BEHA LF OF THE APPELLANT AND THE MATERIAL PLACED ON RECORD. THIS IS A CASE WHERE THE APPELLA NT HAD MADE PAYMENTS MADE THROUGH AGENTS TO GET THE MOTOR CYCLES AND SCOOTERS REGISTE RED WITH THE TRANSPORT AUTHORITIES. THE FACT THAT THE DEALERS ARE CONSTRAINED TO OTHER SOME INCE NTIVES IN THE FORM OF FREE REGISTRATION TO CUSTOMERS TO BOOST THE SALES. HOWEVER, PAYMENT TO AGENTS FOR OTHER SERVICES ARE NOT SUPPORTED WITH PROPER VOUCHERS. HAVING REGARD TO THE FACTS, I CONSIDER IT REASONABLE TO RESTRICT THE DISALLOWANCE TO 20% OF THE EXPENSES, WHICH WORKS OU T TO R.89,303/-. THE APPELLANT GETS A RELIEF OF R.3,57,215/- ON THIS GROUND. AGGRIEVED, REVENUE IS IN APPEAL AGAINST DELETION OF RS.3,57,215/- AND THE ASSESSEE HAS FILED THIS CROSS OBJECTION AGAINST THE SUSTENANCE OF DISA LLOWANCE OF RS.89,303/- BEFORE US. 7.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAD CLAIMED TO HAVE PAID RS.9,2 5,487/- TOWARDS REGISTRATION EXPENSES WHILE IT HAD RECOVERED RS.4,78,969/- ONLY FROM THE CUSTOMERS THEREBY CLAIMING LOSS OF RS.4,46,518/- FROM THE SAID TRANSACTIONS. THE ASSE SSEE CLAIMED TO HAVE REGISTRATION EXPENSES FROM ITS OWN COFFERS AT THE TIME OF SELLIN G OF VEHICLES WHICH ACCORDING TO THE AO, WAS AN EXPENDITURE INCURRED IN EXCESS WHICH WAS DEN IED TO THE ASSESSEE. THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEE COMPANY HAD EMPLOYED ONE OF ITS STAFF SHRI RABINDRA NATH BHATTACHARYA TO GET THE REGISTRATION OF THE VE HICLES SOLD TO CUSTOMERS AS A SERVICE TO THEM FROM THE TRANSPORT DEPARTMENT, GOVT. OF WEST B ENGAL. THE ASSESSEE HAD FILED AN AFFIDAVIT OF THE SAID EMPLOYEE CONFIRMING THIS FACT . THE LD. CIT(A) TOOK NOTE OF THE FACT THAT THE ASSESSEE COMPANY HAS MADE PAYMENTS THROUGH AGENTS TO GET THE MOTOR CYCLES AND SCOOTERS REGISTERED WITH THE TRANSPORT AUTHORITY AN D THE DEALERS LIKE ASSESSEE ARE CONSTRAINED TO OFFER SOME INCENTIVE IN THE FORM OF FREE REGISTRATION TO CUSTOMERS TO BOOST THE SALE AND SINCE THE ASSESSEE COULD NOT PRODUCE PROPE R VOUCHERS IN RESPECT TO THE PAYMENTS MADE TO THE AGENTS, THE LD. CIT(A) RESTRICTED THE D ISALLOWANCE TO 20% OF THE EXPENSES WHICH HE WORKED OUT AS RS.89,303/- AND THE ASSESSEE GOT A RELIEF OF RS.3,57,215/-. WE NOTE THAT THE AMOUNT OF RS.4,46,518/- HAS CLAIMED TO HAV E BEEN EXPENDED BY THE ASSESSEE COMPANY FOR TOUTS/BROKERS WHO MAKES A QUICK BUCK BY LIAISON WORK WITH THE TRANSPORT DEPARTMENT. THE REGISTRATION OF A VEHICLE HAS TO BE DONE AS PER THE PROCEDURE PRESCRIBED BY THE MOTOR VEHICLES ACT GOVERNING THE SUBJECT. THE EXTRA EXPENSES OTHER THAN REGISTRATION FEES APPLICABLE AS PER THE MOTOR VEHICLES ACT OF WE ST BENGAL IS NOT AN ALLOWABLE EXPENDITURE UNLESS THE ASSESSEE IS ABLE TO PROVE WI TH COGENT EVIDENCE AS TO THE GENUINENESS OF THE EXPENDITURE. IN THIS CASE, SINCE THE ASSESS EE HAS BEEN ABLE TO ONLY FILE THE AFFIDAVIT OF AN EMPLOYEE SHRI RABINDRA NATH BHATTACHARYA WHICH I S SELF SERVING AND WITHOUT ANY OTHER 13 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 EVIDENCE TO PROVE THAT THE AMOUNT HAS BEEN SPENT LE GALLY IT CANNOT BE ALLOWED. THEREFORE, WE REVERSE THE ORDER OF LD. CIT(A) AND UPHOLD THE D ISALLOWANCE OF RS.4,46,518/- AS MADE BY THE AO. THIS GROUND OF APPEAL OF REVENUE IS ALL OWED AND THE GROUND OF CROSS OBJECTION OF ASSESSEE IS DISMISSED. 8. GROUND NO. 8 OF REVENUES APPEAL IS AS UNDER: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND AS PER LAW LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO UNDER THE HEAD 40(A)(IA) AMOUNTING TO RS.59,920/- FOR PAYMENT MADE ON ACCOUNT OF REPAIR AND MAINTENANCE. 8.1. THIS GROUND RELATES TO DELETION OF ADDITION OF RS.59,920/- BY INVOKING SEC. 40(A)(IA) OF THE ACT IN RESPECT TO EXPENDITURE CLAIMED BY ASS ESSEE ON ACCOUNT OF REPAIR AND MAINTENANCE. BRIEFLY STATED FACTS ARE THAT, ACCORD ING TO AO, THE ASSESSEE CLAIMED EXPENDITURE TOWARDS REPAIR AND MAINTENANCE TO THE T UNE OF RS.59,920/-. THE AO ASKED TO ASSESSEE TO FILE SUPPORTING DETAILS FOR WHICH THE A SSESSEE FILED A PROFORMA INVOICE ISSUED BY M/S. VINAB MARKETING UDYOG. THE AO TOOK NOTE OF TH E FACT THAT TAX WAS NOT DEDUCTED ON THE PAYMENT OF THE SAID AMOUNT OF RS.59,920/- WHICH , ACCORDING TO HIM, ATTRACTED SECTION 194C OF THE ACT. HENCE, THE AO FOUND THE ASSESSEE IN DEFAULT OF NOT DEDUCTING TDS U/S. 194C OF THE ACT AND DISALLOWED THE AMOUNT OF RS.59, 920/- U/S. 40(A)(IA) OF THE ACT FOR THE SAID DEFAULT. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS PUT FORTH ON BEHALF OF THE APPELLANT. FROM THE COPIES OF LEDGER ACCOUNTS AND MATERIAL PLACED ON RECORD, I FIND THAT THE APPELLANT COMPANY HAD DEBITED PAYMENT OF RS.29, 920/- ONLY DURING THE FINANCIAL YEAR RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. IT WOULD APPEAR THAT THE PROFORMA INVOICE FURNISHED BY THE APPELLANT COMPANY HAD LED TO THE FINDING BY THE ASSESSING OFFICER. HOWEVER, SINCE THE SUMS CREDITED OR PAID OR LIKELY TO BE CREDITED OR PAID TO THE ACCOUNT OF, OR TO, THE CONTRACTOR DID NOT EXCEED RS.50,000/- DURIN G THE FINANCIAL YEAR IN MY VIEW, THE SAID CREDIT OR PAYMENT WAS NOT LIABLE FOR TDS UNDER SEC. 194C OF THE ACT. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF RS.59,920/- UNDER SEC. 40(A)(IA) OF THE ACT. THEREFORE, THE CO NSEQUENT ADDITION OF RS.59,920/- IS HEREBY DELETED. THIS GROUND OF APPEAL IS ACCORDINGLY ALLO WED. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 8.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE LD. CIT(A) HAS FOUND THAT T HE ASSESSEE COMPANY HAD DEBITED PAYMENT OF RS.29,920/- ONLY DURING THE FINANCIAL YE AR RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE WHOLE CONFUSION ACCORDING TO TH E LD. CIT(A) WAS BECAUSE OF THE PROFORMA INVOICE FURNISHED BY THE ASSESSEE COMPANY WHICH LED TO THE DISALLOWANCE BY THE 14 ITA NO.303/KOL/2014 & CO NO.52/CAL/2014 ARPEE BUILDERS & PROMOTERS PVT. LTD., AYS- 2009-10 AO. HOWEVER, SINCE THE SUMS CREDITED OR PAID OR LI KELY TO BE CREDITED OR PAID TO THE ACCOUNT OF THE CONTRACTOR DID NOT EXCEED RS. 50,000/- DURIN G THE ASSESSMENT YEAR, THE AMOUNT CREDITED OR PAID WAS NOT LIABLE FOR TDS U/S. 194C O F THE ACT AND, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF RS.59,920/- MAD E BY THE AO U/S. 40(A)(IA) OF THE ACT. WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED AND THE CROSS OBJECTION OF ASSESSEE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.02.201 8 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5TH FEBRUARY, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WARD-12(3), KOLKATA. . 2 RESPONDENT M/S. ARPEE BUILDERS & PROMOTERS PVT. LTD., 225C, A. J. C. BOSE ROAD, KOLKATA-20. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY