HLL Life Care Ltd, Trivandrum V. ACIT, Trivandrum

ITA 305/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52297 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V DEVARAJAN
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 305/COCH/2009 ASSESSMENT YEAR: 2005-06 HLL LIFECARE LTD., (PREVIOUSLY KNOWN AS HINDUSTAN LATEX LTD.) LATEX BHAVAN, POOJAPPURA, TRIVANDRUM. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI V.DEVARAJAN, CA REVENUE BY MS. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 18/10/2011 DATE OF PRONOUNCEMENT 25/11/2011 O R D E R PER N.R.S.GANESAN;JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER BY THE CIT(A)-I, TRIVANDRUM DATED 6.2.2009 AND PERTAINS TO THE ASSE SSMENT YEAR 2005-06. 2. THE FIRST ISSUE ARISING FOR CONSIDERATION IS THE DISALLOWANCE OF CLUB EXPENSES OF ` 25,152/-. SHRI V. DEVARANJAN, THE LD. CHARTERED AC COUNTANT-REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF ` 25,152/- TOWARDS SUBSCRIPTION FOR CREDIT CARDS PROVIDED TO THE EMPLO YEES AND EXPENDITURE INCURRED IN CLUBS FOR MEETING AND ENTERTAINMENT OF CUSTOMERS. THE LD. CHARTERED ACCOUNTANT- REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS DIRECTLY RELATED TO THE ASSESSEES BUSINESS. I.T.A. NO. 305/COCH/2009 2 3. ON THE CONTRARY, MS. S.VIJAYAPRABHA, THE LD. DE PARTMENTAL REPRESENTARTIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS INCURRED EXPENDITURE OF ` 4,03,342/- WHICH INCLUDES AN AMOUNT OF ` 25,152/- TOWARDS CLUB EXPENSES. ACCORDINGLY, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE TOWARDS MEMBERSHIP SUBSCRIPT ION, HOWEVER THE CLUB EXPENSES TO THE EXTENT OF ` 25,152/- ALONE WAS DISALLOWED. 4. WE HAVE THE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. FROM THE ASSESSMENT ORDER, IT APPEARS THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF ` 4,03,342/- WHICH INCLUDES CLUB EXPENSES OF ` 25,152/- DISALLOWED BY THE ASSESSING OFFICER. THEREFORE, IT APPEARS THAT THE AO HAS ALLOWED THE C LAIM TOWARDS SUBSCRIPTION FOR CREDIT CARDS PROVIDED TO THE EMPLOYEES AND WHAT WAS DISALL OWED WAS THE CLUB EXPENSES FOR THE EMPLOYEES AS IT WAS NOT DIRECTLY RELATABLE TO THE BUSINESS OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AUTHO RITIES BELOW AND THE SAME IS CONFIRMED. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO EXCE SS PROVISION WRITTEN BACK TO THE EXTENT OF ` 7,45,972/-. SHRI DEVARAJAN, LD. CHARTERED ACCOUNT ANT-REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE HAS WRITTEN BACK ` 7,45,972/-.. THE LD. CHARTERED ACCOUNTANT-REPRESEN TATIVE FOR THE ASSESSEE SUBMITTED THAT EVERY YEAR, THE ASSESSEE IDENTIFIE D THE EXCESS PROVISION OF OBSOLETE INVENTORY AND BAD DEBTS AS ON THE DATE OF THE BALAN CE SHEET. THE PROVISION THUS CREATED IS NOT CLAIMED AS DEDUCTION FOR ARRIVING AT THE TAXABL E INCOME. THE LD. CHARTERED ACCOUNTANT-REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE EXCESS PROVISION WRITTEN BACK WAS ALREADY INCLUDED IN THE TAXABLE INCOME IN THE EARLIER ASSESSMENT YEARS AND SUBJECT TO TAX, THEREFORE, IT WAS NOT INCLUDED IN T HE TAXABLE INCOME FOR THE YEAR UNDER CONSIDERATION. ON A QUERY FROM THE BENCH WHETHER T HIS CAN BE VERIFIED IN WHICH YEAR THE ASSESSEE HAS OFFERED THE EXCESS PROVISION FOR TAXA TION, THE LD. CHARTERED ACCOUNTANT- REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IT I S VERY DIFFICULT TO VERIFY IN WHICH YEAR THE ASSESSEE HAS OFFERED FOR TAXATION. HOWEVER, TH E LD. CHARTERED ACCOUNTANT- I.T.A. NO. 305/COCH/2009 3 REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IF T HE ASSESSEE HAS OFFERED FOR TAXATION ANY EXCESS PROVISION WRITTEN BACK, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. ON THE OTHER HAND, MS. S.VIJAYAPRABHA, THE LD.DEPAR TMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED AN YEARWISE DE TAILS IN RESPECT OF THE EXCESS PROVISION NOW CLAIMED WRITTEN BACK, WHICH WAS OFFERED FOR TAX ATION. IN THE ABSENCE OF ANY DETAILS, THE ASSESSING OFFICER COULD NOT VERIFY THE SAME, TH EREFORE, IT WAS DISALLOWED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE EXCESS PROVISION WRITTEN BACK, ACCORDING TO THE CHA RTERED ACCOUNTANT-REPRESENTATIVE FOR THE ASSESSEE WAS OFFERED FOR TAXATION IN THE EARLIE R ASSESSMENT YEAR. HOWEVER, THE ASSESSEE COULD NOT FURNISH ANY DETAILS REGARDING T HE YEAR IN WHICH IT WAS ACTUALLY OFFERED FOR TAXATION. UNLESS IT IS OFFERED FOR TAXATION IN ANY ONE OF THE YEARS, IT CANNOT BE ALLOWED DURING THE YEAR UNDER CONSIDERATION. IN THE ABSENC E OF ANY MATERIAL EVIDENCE TO SUBSTANTIATE THAT IT WAS OFFERED FOR TAXATION, IN O UR OPINION, IT CANNOT BE ALLOWED FOR DEDUCTION. WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE AUTHORITIES BELOW. ACCORDINGLY, THE SAME IS CONFIRMED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. SD/- SD/- (SANJAY ARORA) N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 25 TH NOVEMBER, 2011 GJ COPY TO: 1. HLL LIFECARE LTD., (PREVIOUSLY KNOWN AS HINDUSTA N LATEX LTD.) LATEX BHAVAN, POOJAPPURA, TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(1), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .