TUSHAR MARU, LEGAL HEIR OF LATE SHRI VASANJI MARU, MUMBAI V. ITO - 21(3)(5), MUMBAI

ITA 3207/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5640 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 14-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI , ! BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 3207 / /201 9 ((. . 2013-14 ) ITA NO. 3207/MUM/2019 (A.Y.2013-14) TUSHAR MARU, LEGAL HEIR OF LATE SHRI VASANJI MARU, C-602, BUTTERFLY CHS, BHAVANI SHANKAR ROAD, DADAR, MUMBAI 400 028 PAN: AADPM 8824H / VS. : / APPELLANT THE INCOME TAX OFFICER- 21(3)(5), PIRAMAL CHAMBER, JEEJEEBHOY LN, PAREL, MUMBAI 400 012 / RESPONDENT ASSESSEE BY : NONE REVENUE BY : MS KAVITA P. KAUSHIK / DATE OF HEARING : 16/09/2020 / DATE OF PRONOUNCEMENT : 30/09/2020 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-48, MUMBAI (IN SHORT THE CIT( A)) DATED 15/02/2019 FOR THE ASSESSMENT YEAR 2013-14. 2. THE BRIEF FACTS OF THE CASE ASSESSEE AS EMANATIN G FROM THE RECORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADING OF KITCHEN ITEMS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE A DDITIONS/DISALLOWANCES ON FOLLOWING COUNTS:- 2 ITA NO.3207/MUM/2019 (A.Y.2013-14) S.NO. NATURE OF EXPENDITURE EXPENDITURE DISALLOWED @ 20% 1. SALES PROMOTION EXPENSES RS. 54,446/- 2. SALES SCHEME EXPENSES RS. 4,91, 545/- 3. PACKING MATERIAL RS. 2,41,087/- 4. TRAVELLING EXPENSES RS. 52,3 58/- TOTAL RS. 8,39,436/- THE ASSESSING OFFICER HELD THAT THE ASSESSEE MERELY FURNISHED LEDGER ACCOUNTS AND SOME SAMPLE COPY OF BILLS. THE ASSESSEE HAS FAILED TO SU BSTANTIATE GENUINENESS OF THE ABOVE EXPENDITURE. THE ASSESSING OFFICER MADE ADHOC DISAL LOWANCE OF 20% OF THE EXPENDITURE CLAIMED UNDER THE ABOVE HEADS BY THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31/03/2016 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), T HE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) UPHELD THE FINDINGS OF ASSESSING OFFICER AND DISMISSED THE APPEAL OF ASSESSEE IN TOTO. HENCE, THE PRESENT APPEAL BY THE ASSESSEE 3. MS. KAVITA P. KAUSHIK REPRESENTING THE DEPARTME NT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAIL ED TO SUBSTANTIATE FULLY THE EXPENDITURE CLAIMED UNDER VARIOUS HEADS. THE ASSESSING OFFICER AND CIT (A) HAVE BEEN QUITE CONSIDERATE IN RESTRICTING THE DISALLOWANCE TO 20% OF THE EXPEN DITURE CLAIMED. 4. SUBMISSIONS MADE BY LD. DEPARTMENTAL REPRESENTAT IVE HEARD AND ORDERS OF THE AUTHORITIES BELOW EXAMINED. THE ASSESSEE HAS CLAIME D BUSINESS EXPENDITURE UNDER VARIOUS HEADS VIZ. SALES PROMOTION EXPENSES, SALES SCHEME E XPENSES, PACKING MATERIAL EXPENSES, TRAVELLING EXPENSES, ETC. A PERUSAL OF THE SUBMISSI ONS MADE BY ASSESSEE BEFORE THE ASSESSING OFFICER REVEAL, THAT SALES PROMOTION EXPE NSES ARE TOWARDS PURCHASE OF DISPLAY STANDS THAT ARE GIVEN TO THE DEALERS FOR DISPLAY OF THE PRODUCTS OF ASSESSEE AT A PROMINENT PLACE IN THE STORE. TO SUBSTANTIATE THE EXPENDITURE , THE ASSESSEE HAS FURNISHED COPIES OF PURCHASE BILLS BEFORE THE ASSESSING OFFICER. APART FROM ABOVE, UNDER THE HEAD SALES PROMOTION EXPENSES, THE ASSESSEE HAS CLAIMED EXPEND ITURE ON DEALERS CONFERENCE HELD AT DELHI. THE ASSESSEE FURNISHED COPY OF THE BILL FROM KNS HOSPITALITY PVT. LTD. TO CORROBORATE 3 ITA NO.3207/MUM/2019 (A.Y.2013-14) THE EXPENDITURE. THE ASSESSING OFFICER HAS NOT DIS PUTED THE EXPENDITURE BUT HAS RAISED DOUBTS ON THE QUANTUM OF EXPENDITURE. THE ASSESSEE HAS FURNISHED DOCUMENTARY EVIDENCE TO PROVE GENUINENESS OF THE EXPENDITURE. APPARENTLY NO EFFORT WAS MADE BY THE ASSESSING OFFICER TO CROSS VERIFY GENUINENESS OF THE EXPENDIT URE, HENCE, I FIND NO REASON TO SUSTAIN ADHOC DISALLOWANCE IN RESPECT OF THE EXPENDITURE CL AIMED UNDER THE HEAD SALES PROMOTION EXPENSES. THE ADDITION OF RS.54,446/- IS DELETED AND GROUND N O.1 OF THE APPEAL IS ALLOWED . 5. IN GROUND NO.2 OF THE APPEAL, THE ASSESSEE HAS A SSAILED ADDITION IN RESPECT OF SALES SCHEME EXPENSES . UNDER SALES SCHEME EXPENDITURE THE ASSESSEE HAS INCURRED EXPENDITURE ON TRAVEL AND HOTEL BOOKINGS OF THE DEALERS/DISTRIB UTORS. THE REVENUE HAS NOT DISPUTED THE EXPENDITURE BEING RELATED TO THE BUSINESS. IT IS O NLY THE QUANTUM OF EXPENDITURE ON WHICH ADHOC DISALLOWANCE HAS BEEN MADE. TO SUBSTANTIATE C LAIM BEFORE THE ASSESSING OFFICER, THE ASSESSEE FURNISHED COPIES OF THE PASSPORT, VISA, TI CKETS AND HOTEL BILLS OF THE DEALERS/DISTRIBUTORS WHO WERE ELIGIBLE FOR TOUR UND ER SALES PROMOTION SCHEME. THE EXPENDITURE CLAIMED BY THE ASSESSEE IS IN CONNECTIO N WITH PROMOTION OF BUSINESS. THE ASSESSING OFFICER HAS NOT COMMENTED ON THE DOCUMENT S FURNISHED BY THE ASSESSEE AND HAS PROCEEDED ON TO MAKE ADHOC DISALLOWANCE WITHOUT SUB STANTIVE REASON. I SEE NO REASON TO DISALLOW ASSESSEES CLAIM. ACCORDINGLY, ADHOC DISALLOWANCE OF RS.4,91,545/- IS DELETED AND GROUND NO.2 OF THE APPEAL IS ALLOWED. 6. IN GROUND NO.3 OF THE APPEAL, THE ASSESSEE HAS A SSAILED ADHOC DISALLOWANCE OF EXPENDITURE RS.2,41,087/- ON ACCOUNT OF PACKING MAT ERIAL . THE EXPENDITURE HAS PRIMARILY BEEN INCURRED ON CLIPS, CARTON BOX PACK, STRAPS, ET C. THESE ARE BASIC BUSINESS EXPENDITURE. THE ASSESSEE HAD FURNISHED BILLS FOR THE EXPENDITUR E AND THE LEDGER ACCOUNTS. I SEE NO GOOD REASON TO DISBELIEVE THE DOCUMENTS FURNISHED BY THE ASSESSEE TO SUBSTANTIATE HIS CLAIM. THE ADDITION OF RS.2,41,087/- IS DELETED AND GROUND NO. 3 OF THE APPEAL IS ALLOWED. 7. IN GROUND OF APPEAL NO.4, THE ASSESSEE HAS ASSAI LED ADHOC DISALLOWANCE OF RS.52,358/- IN RESPECT OF TRAVELLING EXPENDITURE . THE ASSESSEE HAS CLAIMED EXPENDITURE IN RESPECT OF LOCAL CONVEYANCE, TRAIN/AIR FARE AND BOA RDING AND LODGING FOR TRAVELLING TO VARIOUS CITIES IN CONNECTION WITH THE BUSINESS. TO SUBSTANT IATE ITS CLAIM, THE ASSESSEE HAS FURNISHED COPIES OF BILLS, TRAIN/AIR TICKETS, HOTEL BILLS, ET C. BEFORE THE ASSESSING OFFICER. APPARENTLY, THE 4 ITA NO.3207/MUM/2019 (A.Y.2013-14) NATURE OF EXPENDITURE CLAIMED IS IN CONNECTION WITH BUSINESS. THE ASSESSING OFFICER HAS ACCEPTED THE EXPENDITURE TO BE ALLOWABLE, HOWEVER, THE ASSESSING OFFICER MADE ADHOC DISALLOWANCE WITHOUT ASSIGNING ANY COGENT REASON. I DO NOT FIND ANY MERIT IN MAKING ADHOC DISALLOWANCE ON THE EXPENDITURE WHICH IS DULY SUPPO RTED BY VALID EVIDENCE. CONSEQUENTLY, THE ADDITION OF RS.52,358/- IS DELETED AND GROUND N O.4 OF THE APPEAL IS ALLOWED . 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON WEDNESDAYTHE 30 TH DAY OF SEPTEMBER, 2020. SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, +(/ DATED: 30 /09/2020 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT , 2. -. / THE RESPONDENT. 3. /. ( )/ THE CIT(A)- 4. /. CIT 5. 01-.( , . . . , / DR, ITAT, MUMBAI 6. 12345 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI