M/s. Sarker Marine Service, Kolkata V. ITO, Ward - 28(3), Kolkata, Kolkata

ITA 330/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54512 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 16-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-02-2011
• Court: TRIBUNAL
• Department Lawyers: S K MALAKAR

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A, KOL KATA [ , . .. . . .. . , , , , !' ] BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SRI C.D. RAO, ACCO UNTANT MEMBER # # # # / ITA NO. 330 (KOL) OF 2011 $% &' / ASSESSMENT YEAR 2006-07 SARKAR MARINE SERVICE, KOLKATA. (PAN-ABFFS2644J) INCOME-TAX OFFICER, WARD-28(3), KOLKATA. (*+ / APPELLANT ) - $ - - VERSUS - (./*+/ RESPONDENT ) *+ 0 1 !/ FOR THE APPELLANT: / SRI SOMNATH GHOSH ./*+ 0 1 ! / FOR THE RESPONDENT: / SRI S.K. MALAKAR !2 / ORDER ( . .. . . .. . ), !' (C.D. RAO), ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. C.I.T.(A)-XIV, KOLKATA DATED 20/9/2010 FOR ASSESSMENT YEAR 2006-07 . THE GROUNDS RAISED IN THIS APPEAL BY THE ASSESSEE READ AS UNDER :- 1) FOR THAT THE APPELLATE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- XIV, KOLKATA CONFIRMING PARTLY THE ORDER OF THE LD. A.O. IS NOT MAINTAINABLE IN LAW UNDER THE FACTS OF THE INSTANT CASE. 2) FOR THAT CONFIRMATION BY THE LD. COMMISSI ONER(APPEALS) LD. A.O.S, OF CAPRICIOUS ORDER OF DISALLOWANCE OF RS.50,750/- OUT OF GENUINE CLAIM OF RS. 1,01,500/- ON ACCOUNT OF NAVIGATION OFFICER HIRE CHARGES OUGHT NOT TO SUSTAIN IN LAW WHEN SUCH CLAIM IS REASONABLE, INEVITABLE AND IS SUPPORTED BY APPROPRIATE EVIDENCES DULY PLACED BEFORE LD. A.O. AND ALSO LD. COMMISSIONER OF INCOME TAX (APPEALS). 3) FOR THAT CONFIRMATION OF THE LD. A.O.S CA PRICIOUS ORDER OF DISALLOWANCE OF RS. 12,000/- OUT OF GENUINE CLAIM OF RS.60,000/- ON ACC OUNT OF TRAVELLING AND CONVEYANCE OUGHT NOT TO STAND TO LAW WHEN SUCH CLAIM IS REASON ABLE AN IS SUPPORTED BY PROPER EVIDENCES DULY PRODUCED TO THE LD. I.T.O AND ALSO L D. COMMISSIONER OF INCOME TAX (APPEALS). 4) FOR THAT LD. COMMISSIONER OF INCOME TAX ( APPEALS) OUGHT TO HAVE RELIED ON TRULY AND FAITHFULLY MAINTAINED BOOKS OF ACCOUNTS, PROPERLY A UDITED BY A COMPETENT CHARTERED ACCOUNTANT. 2 2. GROUNDS NO. 1 & 4 ARE GENERAL IN NATURE AND HEN CE NO SEPARATE ADJUDICATION IS REQUIRED. GROUND NO.3 ABOVE HAS NOT BEEN PRESSED B Y THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING AND HENCE THI S GROUND IS REJECTED AS NOT PRESSED. 3. THE ONLY OTHER GROUND REMAINS FOR ADJUDICATION IS GROUND NO.2, WHICH IS AGAINST DISALLOWANCE OF RS.50,750/- MADE BY THE A.O. ON ACC OUNT OF NAVIGATION OFFICER HIRE CHARGES AND CONFIRMED THE LD. C.I.T.(A). THE FAC TS ON THIS ISSUE ARE THAT THE ASSESSEE, A PARTNERSHIP-FIRM, CARRIES ON ITS ACTIVITIES MAINL Y AT DOCK AREA. AS PER CONTRACT WITH DOCK AUTHORITY, THE EXECUTED WORKS ARE REQUIRED TO BE INSPECTED AND CERTIFIED BY THE EMPANELLED NAVIGATION OFFICERS AND THE CHARGES FOR INSPECTION BY THE NAVIGATION OFFICER ARE TO BE BORNE BY THE ASSESSEE. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE PROVIDED NAVIGATION OFF ICERS ON HIRE TO THE DOCK AUTHORITY UNDER CERTAIN TERMS AND CONDITIONS OF THE CONTRACT. AS THE ASSESSEE DID NOT HAVE/MAINTAIN ANY NAVIGATION OFFICER OUT OF ITS STA FF, IT HAD TO TAKE ON HIRE THEIR SERVICES ON PAYMENT OF REQUISITE FEES AS AND WHEN N ECESSITY AROSE. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AD INCURRED EXPENSES OF RS.1,01,500/- ON THIS ACCOUNT. HOWEVER, THE A.O. D ID NOT ALLOW THE ENTIRE CLAIM OF EXPENDITURE AS, ACCORDING TO HIM, THE ASSESSEE ITSE LF HAS ADMITTED THAT IT HAD NO SUFFICIENT EVIDENCE IN SUPPORT OF SUCH EXPENDITURE AND AS SUCH CONSENTED TO PARTIAL DISALLOWANCE ON ESTIMATE BASIS ON ACCOUNT OF NAVIG ATION OFFICER HIRE CHARGES. THE A.O., ACCORDINGLY, MADE A DISALLOWANCE OF RS.50,750 /- ON THIS ACCOUNT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. ON APPEAL BEFORE THE LD. C.I.T.(A), THE ASSESSE E SUBMITTED THAT IN SPITE OF VOUCHERS IN SUPPORT OF THE EXPENSES WERE PRODUCED B EFORE THE A.O., HE MADE THE DISALLOWANCE WITHOUT APPRECIATING THE SAME. THE AS SESSEE PRODUCED SUCH VOUCHERS BEFORE THE LD. C.I.T.(A). THE LD. C.I.T.(A), HOWEV ER, DID NOT ACCEPT PART VOUCHERS FILED BEFORE HIM AND HE CONFIRMED THE DISALLOWANCE OF RS. 50,750/-. HENCE THIS APPEAL BY THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT IT WAS NOT DISPUTED THAT THE ASSESSEE HAD TO OBTAIN THE REQUIS ITE NUMBER OF NAVIGATION OFFICERS WITH PROPER QUALIFICATIONS IN ORDER TO SUPPLY THEM TO THE CONTTRACTEES AND, THEREFORE, 3 THERE IS NO DENYING THE FACT THAT PAYMENT WAS MADE FOR SERVICES TAKEN FROM SUCH HIRED OFFICERS. HE, THEREFORE, SUBMITTED THAT IT WAS AN ABSURD PROPOSITION TO ASSUME THAT HIRE CHARGES FOR DEPLOYMENT OF HIGHLY SKILLED NAVIG ATION OFFICERS AT THE GOING MARKET RATE WERE REALIZED FROM THE CONTRACTEES AT A RATE, 50% OF WHICH WAS ENOUGH TO PROCURE THEIR SPECIALIZED SERVICES FROM THE MARKET. HE FURT HER SUBMITTED THAT IN EARLIER YEARS NO ADVERSE INFERENCE WAS DRAWN BY THE DEPARTMENT AS TO THE NAVIGATION OFFICERS HIRE CHARGES BEING REALIZED AT A RATE OF WHICH 50% WOULD BE PAID TO THOSE WHOSE SERVICES WERE SECURED FROM THE MARKET, RATHER SUCH EXPENSES CLAIMED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, I.E. A.Y. 2005-06, WERE ALLOWED BY THE A.O. HE, THEREFORE, SUBMITTED THAT THE A.O. SHOULD HAVE CONSIDERED THE REALITY BEHIND PAYMENTS MADE TO SUCH NAVIGATION OFFICERS INSTEAD OF ENTIRELY GOING BY THE VOUCHERS FILED BY THE ASSESSEE. IN SUPPORT OF HIS SUBMITTED, THE LEARNED COUNSEL RELIED ON RADHASOAMI SATSANG VS. C.I.T. [193 ITR 321 (SC)]. IT WAS, THE REFORE, SUBMITTED THAT THE DISALLOWANCE MADE BY THE A.O. AND SUSTAINED BY THE LD. C.I.T.(A) SHOULD BE DELETED. 5. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THA T DESPITE SEVERAL OPPORTUNITIES PROVIDED, THE ASSESSEE COULD NOT ADDUCE PROPER EVID ENCE IN SUPPORT OF SUCH INCURRING THE EXPENDITURE. THEREFORE, THE DISALLOWANCE ESTIM ATED AT 50% OF THE TOTAL EXPENDITURE WAS FAIR AND THE SAME SHOULD BE UPHELD. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. AT PAGES- 10 TO 19 OF THE PAPER BOOK, THE ASSESSEE HAS FILED THE COPY OF LEDGER ACCOUNT OF NAVIGATING OFFICER HIRE CHARGES MENTIONING THEREIN THE NAMES OF SUCH NAVIGATION OFFICERS AND DATE-WISE PAYMENTS TO THEM ALONG WITH DEBIT VOUCHERS DULY SIGNED BY THE RESPECTIVE NAVIGATION OFFICERS. THE NATURE OF WORK OF THE ASSESSEE AND REQUIREMENT OF DEPLOYMENT OF NAVIGATION OFFICERS AS PER STIPULA TION OF THE DOCK AUTHORITY IN CONNECTION WITH THE CONTRACTED WORK ARE NOT IN DISP UTE. WE OBSERVE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE TO CARRY ON ITS CONTRACTUAL WORK HIRED OUT SERVICES OF NAVIGATION OFFICERS, WHO WERE HAVING SPECIALIZED KNOWLEDGE OF THE WORK UNDERTAKEN AND CLAIMED TO HAVE PAID THEM CHARG ES IN A TOTAL SUM OF RS.1,01,500/-. THE AUTHORITIES BELOW ON THE ALLEGATION OF ABSENCE OF FULL EVIDENCE IN SUPPORT OF SUCH 4 INCURRING THE EXPENDITURE DISALLOWED ON ESTIMATE BA SIS 50% OF THE TOTAL EXPENDITURE. IT WAS THE CLAIM OF THE ASSESSEE THAT IT HAD FURNISHED REQUISITE DETAILS IN SUPPORT OF THE SAID EXPENDITURE. HOWEVER, CONSIDERING THE TOTALIT Y OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS STATED ABOVE, I.E. NATURE OF WORK, NEC ESSITY OF DEPLOYMENT OF SKILLED AND EXPERT OFFICERS TO MEET THE SATISFACTION OF THE CON TRACTEE AND ACCEPTANCE OF EXPENDITURE IN EARLIER YEARS BY THE DEPARTMENT, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE FAIR AND REASONABLE TO RESTRICT THE DISALL OWANCE TO 50% OUT OF THE TOTAL DISALLOWANCE MADE OF RS.50,750/-. WE, THEREFORE, R ESTRICT THE DISALLOWANCE TO RS.25,375/- AND THE ASSESSEE WILL GET RELIEF OF SIM ILAR AMOUNT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. !2 '3! 4 3$ 5 6 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 26.8. 2011. SD/- SD/- ( ) ( . .. . . .. . ) !' (MAHAVIR SINGH) JUDICIAL MEMBER (C.D. RA O), ACCOUNTANT MEMBER ( (( ( ' ' ' ') )) ) DATE: 26 -08-2011 !2 0 .7 8!7&9- COPY OF THE ORDER FORWARDED TO: 1. *+ / THE APPELLANT : SARKAR MARINE SERVICE, 77/25, BECHARAM CHATTERJE E ROAD, KOLKA TA-700 034. 2 ./*+ / THE RESPONDENT : I.T.O., WARD-28(3), KOLKATA. 3. 2$ () : THE CIT(A) XIV, KOLKATA. 4. 2$/ THE C.I.T., KOL - 5 =5 .$ / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . /7 ./ TRUE COPY, !2$3/ BY ORDER, (DKP) > ? / DY/ASSTT. REGISTRAR .