Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 4506 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-05-2017
Appeal Filed By
Department
Bench Allotted
B
Assessment Year
2012-2013
Appeal Filed On
06-02-2017
Judgement Text
, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 332 /MDS/201 7 / ASSESSMENT YEAR :20 1 2 - 1 3 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4 ( 1 ) , CHENNAI . VS. M/S. LOOKMAN ELECTROPLAST INDUST R IES LTD., NO. 9, 2 ND STREET EXTN., 3 RD MAIN RO AD, CIT NAGAR, NANDANAM, CHENNAI 600 03 5 . [PAN: AA A C L1033H ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL , JCIT / RESPONDENT BY : NONE / DATE OF HEARING : 0 9 . 0 5 .201 7 / DATE OF P RONOUNCEMENT : 30 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8 , C HENN AI DATED 3 0 . 11 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 . THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS VIZ., (I) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BELATED REMITTANCE OF EMPLOYEE S CONTRIBUTION TO PF & ESI AND (II) THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF 20% OF REPAIR AND MAINTENANCE EXPENSES . I.T.A. NO . 332 /M/ 1 7 2 2. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED TRADING IN SECURITY SYSTEMS FILED ITS RETURN OF INCOME ON 18 . 12 .201 2 ADMITTING ITS INCOME AT . 2,31,50,300 / - AND MAT UNDER SECTION 115JB OF THE ACT AT .2,64,91,032/ - . THE ASSESSMENT U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] ACT WAS COMPLETED ON 17 . 0 3 .201 5 , BY ASSESSING TOTAL I N COME OF THE ASSES SEE AT . 3,07,29,235 / - BY MA KING VARIOUS ADDITIONS. 3. WITH REGARD TO FIRST ISSUE, T HE ASSESSEE WAS IN DEFAULT IN REMITTING EMPLOYEE S CONTRIBUTION TOWARDS PF AND ESI TO THE EXTENT OF . 22,39,991 / - [ . 19,95,256/ - + 2,44,735/ - ] BELATEDLY AND THUS, THE ASSESSING OFFICER HAS HELD T HAT THE ASSESSEE IS NOT QUALIFIED FOR CLAIMING DEDUCTION UNDER SECTION 36(1)(VA) OF THE ACT TO AVAIL THE BENEFIT UNDER SECTION 43B OF THE ACT . THEREFORE, THE ASSESSING OFFICER HAS DEEMED THE IMPUGNED AMOUNT AS THE INCOME OF THE ASSESSEE. 4 . ON APPEAL, A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TCA NOS. 585 & 586 OF 2015 & M.P. NO. 1 OF 2015 DATED 24.07.2015, THE LD. CIT(A) DELETED THE ADDITI ON MADE ON THIS ACCOUNT. 5 . ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE MAIN CONTENTION OF THE LD. DR IS THAT THE DEPARTMENT HAS NOT ACCEPTED I.T.A. NO . 332 /M/ 1 7 3 THE DECISION IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD . (SUPRA) AND A REVIEW PETITION HAS BEEN FILED BEFORE THE HON BLE HIGH COURT AND THEREFORE, PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERTED AND RESTORED THAT OF THE ASSESSING OFFICER. DESPITE SERVICE OF NOTICE [AD ON RECORD], NONE APPEARED ON B EHALF OF THE ASSESSEE AND HENCE, WE PROCEEDED TO DECIDE THE APPEAL ON MERITS AFTER HEARING THE LD. DR . 6 . WE HAVE HEARD THE LD. DR , PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. SINCE THE ASSESSEE HAS NOT REMITTED THE CONTRIBUTION OF EMPLOYEES TOWARDS PF AND ESI BEFORE DUE DATE, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE DOES NOT QUALIFY FOR CLAIMING DEDUCTION UNDER SECTION 36(1)(VA) OF THE ACT TO AVAIL THE BENEFIT UNDER SECTION 43B OF THE ACT. BY FOLLOWING THE DECISION IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TCA NOS. 585 & 586 OF 2015 & M.P. NO. 1 OF 2015, THE LD. CIT(A) DELETED THE ADDITION MADE ON THIS ACCOUNT. IN THIS CASE, I T IS NOT DISPUTED BY THE REVENUE THAT THE ASSES SEE HAS NOT PAID THE EMPLOYEES CONTRIBUTION RECEIVED BY IT BEFORE THE DUE DATE OF FILING OF THE RETURN. VARIOUS COURTS INCLUDING THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. (SUPRA) HAS HE LD THAT THERE CAN BE NO DEEMED ADDITION UNDER SECTION 36(12)(VA) R.W.S. 2(24)(X) OF THE ACT, IF THE IMPUGNED AMOUNT HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. THUS, RESPECTFULLY FOLLOWING THE I.T.A. NO . 332 /M/ 1 7 4 ABOVE DECISION, THE LD. CIT(A) HAS DELETED THE A DDITION MADE BY THE ASSESSING OFFICER. THE TRIBUNAL HAS ALSO FOLLOWED THE ABOVE DECISION OF THE HON BLE MADRAS HIGH COURT IN DECIDING SIMILAR ISSUE. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7 . WITH REGARD TO THE DISALLOWANCE OF 20% OF THE REPAIRS AND MAINTENANCE EXPENSES, THE ASSESSEE HAS CLAIMED THE SAID EXPENSES AT .79,89,719/ - . THE ASSESSEE OWNS A PROPERTY WHICH WAS LET OUT AND HA S RENTAL INCOME. DETAILS OF REPAIRS AND MAINTENANCE EXPENSES INCURRED HAVE NOT BEEN PROVIDED AND THE AMOUNT OF EXPENSES INCURRED ON THE PROPERTY HAS NOT BEEN SHOWN SEPARATELY. SINCE THE BREAK UP FOR REPAIRS AND MAINTENANCE HAVE NOT BEEN PROVIDED, A SUM OF .15,97,944/ - BEING 20% OF THE EXPENSES WAS TREATED AS EXPENSES INCURRED IN THE RESIDENTIAL PROPERTY AND THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , THE LD. CIT(A ) HAS DELETED THE DISALLOWANCE MADE ON THIS ACCOUNT. 9. WE HAVE HEARD THE LD. DR, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CLAIMED REPAIR AND MAINTENANCE EXPENSES AT .79,89,719/ - . HOWEV ER, THE DETAILS OF REPAIR AND MAINTENANCE EXPENSES HAVE NOT BEEN FURNISHED BEFORE THE I.T.A. NO . 332 /M/ 1 7 5 ASSESSING OFFICER. MOREOVER, THE ASSESSEE HAS NOT SHOWN THE EXPENSES INCURRED ON THE PROPERTY OWNED AND LET OUT AND HAS RENTAL INCOME. THEREFORE, THE ASSESSING OFFICER TR EATED 20% OF EXPENSES, THE ASSESSEE WOULD HAVE INCURRED IN THE RESIDENTIAL PROPERTY AND DISALLOWED THE SAME. BEFORE THE LD. CIT(A) , THE ASSESSEE HAS FURNISHED DETAILED SUBMISSIONS WITH REGARD TO THE REPAIR AND MAINTENANCE EXPENSES INCURRED BY THE ASSESSEE. IT WAS THE SUBMISSIONS OF THE ASSESSEE THAT THE REPAIR AND MAINTENANCE EXPENSES CLAIMED PERTAIN TO PLANT AND MACHINERY AND BUILDINGS AT THEIR CHENNAI OFFICER AND VARIOUS BRANCHES LOCATED ACROSS THE COUNTRY. IT WAS ALSO SUBMITTED THAT THE ABOVE EXPENSES AR E CLAIMED UNDER SECTION 30 OF THE ACT AND THAT NO EXPENSES PERTAINING TO LET OUT PROPERTY WAS CLAIMED UNDER THE HEAD REPAIRS AND MAINTENANCE EXPENSES. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT IT WAS NOT EVEN THE C ASE OF THE ASSESSING OFFICER THAT THESE EXPENSES ARE EXCESSIVE OR UNREASONABLE. HE ALSO OBSERVED THAT WITHOUT PROVIDING THE BASIS, THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE. IT WAS THE OPINION OF THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS NOT POINT ED OUT ANY DEFECTS IN THE ACCOUNTS OF THE ASSESSEE. HENCE, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. I.T.A. NO . 332 /M/ 1 7 6 10. THE LAST GROUND IS WITH REGARD TO DISALLOWANCE OF .37,41,000/ - AS EXCESS CLAIM OF EXPENSES. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT INCREASE OF EXPENDITURE INCURRED TOWARDS TRAVELLING, PROJECT EXPENSES, ADVERTIS EMENT AND MISCELLANEOUS EXPENSES ARE EXCESSIVE AS COMPARED WITH THE INCREASE IN SALES OF THE ASSESSEE IN THE FINANCIAL YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT THE EXCESS EXPENSES AND DISALLOWED .37,41,000/ - . 11. BEFORE T HE LD. CIT(A), THE ASSESSEE HAS SUBMITTED THAT THESE EXPENSES DO NOT BEAR ANY FIXED PERCENTAGE EITHER TO THE TOTAL EXPENSES ARE TO SALES, THAT THE TOTAL EXPENSES INCREASED BY 7.88 TIMES, WHEREAS, THE PROJECT INCOME INCREASED 11.15 TIMES, AND THUS THE MERE FACT OF EXPENSES HAVING INCREASED, THE ASSESSING OFFICER MADE THE ABOVE DISALLOWANCES AND PLEADED TO DELETE THE SAME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCES WIT HOUT GIVING ANY CLEAR AND COGENT REASONS. THE ASSESSING OFFICER CONCLUDES THAT THESE EXPENSES ARE EXCESSIVE BY COMPARING THE INCREASE IN EXPENSES WITH THAT OF SALES. THUS, THE LD. CIT(A) HAS OBSERVED THAT IN ANY GIVEN SITUATION, IT IS IMPOSSIBLE THAT THE R ATE OF GROWTH OF SALES WOULD BE EXACTLY SAME AS THAT OF THE RATE OF INCREASE IN EXPENSES, ALTHOUGH SOME CORRELATION MAY EXIST. THE COMPUTATION OF EXPENSES IS PURELY A MATHEMATICAL FORMULA AND HAS NO BASIS. ACCORDINGLY, I.T.A. NO . 332 /M/ 1 7 7 THE LD. CIT(A) DELETED THE DISALLOWAN CE MADE BY THE ASSESSING OFFICER. WE ARE OF THE CONSIDERED OPINION THAT MERE CALCULATION OF EXPENSES BASED ON THE MATHEMATICAL FORMULA CANNOT SUSTAIN BEFORE THE EYES OF LAW. WITH REGARD TO THE ABOVE EXPENSES, THE ASSESSING OFFICER HAS NOT DISCUSSED ANY FLA W THAT EMANATES FROM THE BOOKS OF ACCOUNT MAINTAINED AND PRODUCED BEFORE THE ASSESSING OFFICER. MOREOVER, THE ASSESSING OFFICER HAS NOT DOUBTED THE EXPENSES STATED TO HAVE INCURRED BY THE ASSESSEE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 12 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 30 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.
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