C. Mohanlal Pvt. Ltd., Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-1(1)(2), Ahmedabad

ITA 3393/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9705 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 16-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 143(3); 37(1); 28; 37

Judgement Text

, CKH CKHCKH CKH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; ,OA OAOA OA EK/ EK/EK/ EK/KQFERK KQFERK KQFERK KQFERK JKW; JKW;JKW; JKW;] U; ] U;] U; ] U;KF KFKF KF;D ;D ;D ;D LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.3393/AHD/2016 ( / ASSESSMENT YEAR : 2013-14) C. MOHANLAL PVT. LTD., 152, NEW CLOTH MARKET, O/S. RAIPUR GATE, RAIPUR, AHMEDABAD. / VS. DCIT, CIRCLE 1(1)(2), AHMEDABAD. ./ ./ PAN/GIR NO. : AAACC 6368 A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. / DATE OF HEARING 28/09/2018 !'# / DATE OF PRONOUNCEMENT 03/12/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)1, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-1 /DCIT, CIRCLE- 1(1)(2)/250/2015-16 DATED 24.10.2016 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 30.11.2015 RELEVANT TO ASSESSMENT YEAR (AY) 2013-14. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- 1. THE LEARNED C.I.T.(APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE IN PART OF THE FOREIGN TRAV ELING EXPENSE OF RS. 1,46,173/- OUT OF TOTAL DISALLOWANC E OF RS. 1,60,908/- U/S 37 OF THE ACT. IT IS SUBMITTED THAT THE COMPLETE DETAILS HAVE BEEN FILED ALONG WITH SUPPORTING EVIDE NCES JUSTIFYING THE ABOVE EXPENDITURES INCURRED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSE OF BUSINESS. THE LEARNED CIT(A) HAS WITHOUT APPRECIATING THE DETAILS AND EVIDENCES FILED BEFORE HIM CONFIRMED THE ADDITION. THUS YOUR APPELLANT PRAYS B EFORE YOUR HONOR THAT THE IMPUGNED ADDITION OF RS. 1,46,173/- IN RESPECT OF TRAVELLING EXPENSES INCURRED WHOLLY & EXCLUSIVELY F OR THE PURPOSE OF BUSINESS BE DELETED. 2. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF RS. 8,11,580/- BEING PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESIC ON THE GROUND THAT THE SAME HAVE BEEN PAID LATE.LT IS SUBMITTED THAT ANY EVENT SUCH EMPLO YEE'S CONTRIBUTION TOWARDS P.F. AND ESIC OF-RS. 8,11,580 /- HAVE BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME PRESCRIBED U/S 139(1) OF THE ACT . IT IS SUBMITTED THAT , AS PER THE EXPLANATIONS AND AFTER THE OMISSION OF SECOND PROVI SO OF SECTION 43B OF THE ACT, THE ACTION OF LD.. CIT(A) CONFIRMIN G THE ABOVE DISALLOWANCE MADE BY THE LD.. AO IS TOTALLY INCORRE CT AND UNJUSTIFIABLE. IT IS THEREFORE SUBMITTED THAT THE I MPUGNED ADDITION MADE OF RS. 8,11,580/- TOWARDS LATE DEPOSIT OF EMPL OYEES CONTRIBUTION TO P.F AND ESIC BE DELETED. IT BE HELD . SO NOW. 3. THE ORDER PASSED BY LEARNED CIT(A) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD. SO NOW 4. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER AND /OR TO AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING. 3. THE FIRST ISSUE RAISED BY THE ASSESSEE IN THIS A PPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTA INING THE ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 3 - DISALLOWANCE OF RS. 1,46,173/- OUT OF THE TOTAL DIS ALLOWANCE OF RS. 1,60,908/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES . 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF PROCESSING OF TEXTILE GOODS. 4.1 THE ASSESSEE DURING THE YEAR HAS CLAIMED FOREIG N TRAVEL EXPENSES OF RS. 4,69,920/-. THE AO DURING THE ASSESSMENT PRO CEEDINGS AFTER CONSIDERING THE REPLY OF THE ASSESSEE HELD THAT A S UM OF RS. 1,60,908/- INCURRED ON FOREIGN TRAVELING BY AAYUSH AGARWAL, DI RECTOR, HAS NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS. THE VIEW OF T HE AO WAS BASED ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH TH E EXPENSES INCURRED BY IT WAS IN CONNECTION WITH ITS BUSINESS. THEREFORE, THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT IT HA D FILED ALL THE INVOICES AND OTHER RELEVANT DETAILS IN SUPPORT OF FOREIGN TR AVELING EXPENSES. 5.1 THE ASSESSEE ALSO CLAIMED TO HAVE FILED THE COP IES OF BROCHURES, TEMPLATES, ETC. OF THE PARTIES BASED OUTSIDE INDIA FOR JUSTIFYING THE CLAIM OF FOREIGN TRAVELING EXPENSES. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 4 - 5.2 THE ASSESSEE ALSO CLAIMED THAT IT HAD INCURRED SIMILAR EXPENSES IN THE A.Y. 2012-13, BUT NO DISALLOWANCE WAS MADE. 5.3 THE ASSESSEE ALSO SUBMITTED THAT ITS BOOKS OF A CCOUNTS WERE DULY AUDITED WHICH WERE MAINTAINED ON A REGULAR BASIS. T HERE WAS NO DEFECT POINTED OUT BY THE AO IN THE VOUCHERS FILED IN SUPP ORT OF FOREIGN TRAVELING EXPENSES. 5.4 THE ASSESSEE ALSO SUBMITTED THAT THERE WAS NO P ERSONAL ELEMENT IN THE FOREIGN TRAVELING EXPENSES AS IT WAS INCURRED E XCLUSIVELY AND WHOLLY FOR THE PURPOSE OF THE BUSINESS. 5.5 THE AO HAS MADE THE DISALLOWANCE FOR PART OF TH E EXPENSES WITHOUT POINTING OUT ANY DEFECT TO THE CLAIM OF THE ASSESSEE. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENTION OF THE AS SESSEE AND CONFIRMED THE ORDER OF AO IN PART BY OBSERVING AS UNDER: 2.4 AFTER GOING THROUGH THE DETAILS OF THE CASE, I T IS SEEN THAT THE APPELLANT HAS NOT PROVIDED THE FULL DETAILS BEFORE THE AO. THE APPELLANT STATED THAT ENTIRE EXPENDITURE TOWARDS TRAVELLING I S FOR BUSINESS PURPOSE AND THE SAME MAY BE ALLOWED. ON CAREFUL PERUSAL OF THE STATEMENT OF THE FOREIGN TRAVEL EXPENDITURE PROVIDED BY THE APPELLAN T BEFORE ME, IT IS SEEN THAT THERE ARE CERTAIN EXPENDITURES WHICH ARE IN THE NATURE OF PERSONAL EXPENSES. THE SAME ARE TABULATED AS UNDER: - 3. 2202927 AAYUSH AGARWAL PURCHASE US DOLLER 13.02.2013 38548.00 4004750 AAYUSH AGARWAL THAILAND THAILAND VISA CHARGES 14.02.2013 2822.00 ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 5 - 4004789 AAYUSH AGARWAL OVESEAS MEDICAL POLICY 15.02.2013 1084.00 4004820 AAYUSH AGARWAL PHUKET HOTEL BOOKING - SEA PEARL VILLAS RESORT 17.2.13 TO 19.2.13 39055.00 HOTEL LEELAWADI BOUTIQUE HOTEL 19.2.13 TO 21.2.13 4004770 AAYUSH AGARWAL BANGKOK TICKET CHARGES 17.2.13 7875.00 4004505 AAYUSH AGARWAL BANGKOK TICKET CHARGES 17.2.13 28392.00 4004501- AAYUSH AGARWAL BANGKOK HOTEL BOOKING OF BANGKOK HOTEL NOVOTEL BANGKOK FENIX SILOM 21.2.13 TO 27.2.13 28397.00 IT IS SEEN FROM THE DETAILED MENTIONED ABOVE IN THE CHART THAT HOW THESE EXPENSES OF RS. 1,46,173/- CAN BE SAID TO BE FOR BU SINESS PURPOSE. IT IS SEEN THAT THE ABOVE EXPENSES ARE INCURRED FOR THE PERSON AL VISIT OF MR. AAYUSH AGARWAL IN THAILAND. NO PAPERS RELATED TO THE BUSIN ESS MEETINGS OR ANY SEMINARS RELATED TO THE BUSINESS ARE SUBMITTED BEFO RE ME. IT IS ALSO SEEN BY THE A.O. THAT THERE IS NO EXPORT TO THE ABOVE COUNTRY. THE APPELLANT WAS ALSO NOT ABLE TO PROVE THE EXPENSES INCURRED ON THE VISIT OF THE DIRECTOR AS TO HOW THESE EXPENSES CAN BE SAID TO BE FOR BUSINESS PURPOSE. TH E CASE LAW CITED BY THE APPELLANT IN THE CASE OF DCIT VS. ALIDHARA TEXPRO E NGINEERS PVT. LTD. (2011) 43 SOT 1 (AHD) IS ON DIFFERENT FOOTINGS WHEREAS THE FACTS OF THE CASE IS QUITE DIFFERENT AS DISCUSSED ABOVE. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS. 1,46,173/-(AS ABOVE) IS CONFIRMED AND BALANCE AMOUN T OF RS. 14,735/- IS DELETED. THE GROUND OF THE APPELLANT IS PARTLY ALLO WED. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 6 - BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1-81 AND SUBMITTED THAT THE FOREIGN TRAVELING EXPENSES W ERE INCURRED EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. THE LD . AR IN SUPPORT OF HIS CLAIM FILED THE FOLLOWING DETAILS: I. COPIES OF THE LEDGER ALONG WITH THE INVOICES AND OTHER EVIDENCE. II. STATEMENT SHOWING THE DETAILS OF THE PERSONS TRAVELED TO THE FOREIGN COUNTRY AND THE EXPENSES INCURRED. III. COPIES OF THE BROCHURES, TEMPLATES, ETC. OF THE PARTIES BASED OUTSIDE INDIA TO JUSTIFY THE TRAVELING EXPENSES OF THE BUSINESS. ALL THE DETAILS IN SUPPORT OF THE CLAIM OF THE ASSE SSEE ARE PLACED ON PAGES 4-43 OF THE PAPER BOOK. 6.1 THE LD. AR ALSO CLAIMED THAT THE BOOKS OF ACCOU NTS WERE DULY AUDITED AND NO DEFECT WAS POINTED OUT BY THE AO DUR ING THE ASSESSMENT PROCEEDINGS. 6.2 THE FOREIGN TRAVELING EXPENSES CLAIMED IN THE A .Y. 2012-13 WERE NOT DISALLOWED BY THE AO IN THE ASSESSMENT FRAMED U /S 143(3) OF THE ACT. THE LD. AR IN SUPPORT OF HIS CLAIM RELIED ON THE JU DGMENT OF HONBLE ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 7 - GAUHATI HIGH COURT IN THE CASE OF CIT VS. WILIAMSON TEA LTD. REPORTED IN 38 TAXMANN.COM 154. 7. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE ASS ESSEE FAILED TO PROVE THE BUSINESS IN RELATION TO THE EXPENSES INCU RRED BY THE ASSESSEE AMOUNTING TO RS. 1,46,173/-. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSES SEE HAS CLAIMED FOREIGN TRAVEL EXPENSES AMOUNTING TO RS. 4,69,917/- ONLY. T HE FOREIGN TRAVELING EXPENSES CONSIST ALL THE VISITS OF THE DIRECTORS TO VARIOUS COUNTRIES SUCH AS CHINA, BANGKOK, THAILAND, ZIMBABWE, AND DUBAI. THE FOREIGN TRAVEL EXPENSES WERE INCURRED BY THREE DIRECTORS OF THE CO MPANY NAMELY SHRI SUSHIL AGARWAL, MOHANLAL AGARWAL AND AAYUSH AGARWAL . THE RELIEF GIVEN BY THE AUTHORITIES BELOW FOR ALL THE TRAVELLI NG EXPENSES INCURRED BY SUSHIL AGARWAL AND MOHANLAL AGARWAL EXCEPT THE TRAV ELLING EXPENSES OF SHRI AAYUSH AGARWAL. 8.1 THE TRAVELING EXPENSES WERE NOT ALLOWED ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THE BUSINESS NEXUS/CON NECTION OF THE EXPENDITURE INCURRED ON THE VISIT TO FOREIGN COUNTR IES. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 8 - 8.2 THE LD. AR BEFORE US HAS RELIED ON THE JUDGMENT OF HONBLE GAUHATI HIGH COURT IN THE CASE OF WILLIAMSON TEA (SURPA) WHEREIN IT WAS HELD AS UNDER: 16 . BEFORE DECIDING THE ISSUES, IN QUESTION, WE DEEM IT APPOSITE TO HAVE A LOOK AT THE SCOPE OF SECTION 37 OF THE ACT. SECTION 37 OF THE ACT PROVIDES THAT AN EXPENDITURE TO BE COVERED BY THE A MBIT OF SECTION 37 OF THE ACT, THE EXPENDITURE SHOULD BE WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF BUSINESS. THE TRUE TEST FOR AN EXPENDITU RE, LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, IS THA T IT IS INCURRED BY THE ASSESSEE AS INCIDENTAL TO ITS TRADE FOR THE PURPOSE OF KEEPING ITS TRADE GOING ON AND THAT THE EXPENDITURE MUST BE INCURRED BY THE ASSESSEE AS A TRADER AND NOT IN ANY OTHER CAPACITY. THE WORD 'WHO LLY' REFERS TO THE QUANTUM OF EXPENDITURE AND THE WORD 'EXCLUSIVELY' R EFERS TO THE MOTIVE, OBJECTIVE AND PURPOSE OF THE EXPENDITURE. THE EXPRE SSION 'WHOLLY AND EXCLUSIVELY', APPEARING IN SECTION 37, DOES NOT MEA N NECESSARILY. IT IS IMPORTANT TO NOTE, IN THIS REGARD, THAT THE WORD, ' NECESSARILY', FOUND PLACE IN THE INCOME-TAX BILL, 1961, BUT IT WAS DROP PED AT THE LEGISLATIVE ANVIL. IT MAY BE NOTED HERE THAT VISCOUNT CAVE L.C. , IN ATHERTON (H. M. INSPECTOR OF TAXES) V. BRITISH INSULATED AND HELSBY CABLES, LTD. [1925] 10 TC 155, 191 (HL), OBSERVED ' . . . A SUM OF MONE Y EXPENDED, NOT OF NECESSITY AND WITH A VIEW TO DIRECT AND IMMEDIATE B ENEFIT TO THE TRADE, BUT VOLUNTARILY AND ON THE GROUND OF COMMERCIAL EXP EDIENCY AND IN ORDER INDIRECTLY TO FACILITATE THE CARRYING ON OF T HE BUSINESS, MAY YET BE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF TRADE'. THE SAME TEST WAS APPLIED IN COOKE (H. M. INSPECTOR OF TAXES ) V. QUICK SHOE REPAIR SERVICE [1949] 30 TC 460 (KB). 17. WHAT NECESSARILY FOLLOWS FROM THE ABOVE DISCUSSION IS THAT WHEN AN EXPENDITURE IS CLAIMED TO HAVE BEEN INCURRED BY AN ASSESSEE FOR PROMOTION OF HIS BUSINESS, THERE IS NO LEGAL OBLIGA TION IMPOSED ON THE ASSESSEE TO PROVE THAT THE EXPENDITURE WAS NECESSAR Y FOR PROMOTION OF HIS BUSINESS. SO LONG AS THE EXPENDITURE IS INCURRE D BY AN ASSESSEE FOR PROMOTION OF SALE OF PRODUCT, THE ASSESSEE IS ENTIT LED, UNDER SECTION 37(1) OF THE ACT, TO CLAIM EXEMPTION FROM TAX ON SU CH AMOUNT OF EXPENDITURE. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 9 - 8.3 THE FACTS OF THE ABOVE CASE WERE THAT THE ASSES SEE HAD INCURRED FOREIGN TRAVELING EXPENSES ON THE VISIT TO UK AND K ENYA. THE ASSESSEE WAS ALREADY EXPORTING ITS GOODS TO UK AND KENYA. TH EREFORE, THE EXPENSES INCURRED BY THE ASSESSEE WERE ALLOWED. HOW EVER, IN THE CASE BEFORE US, THERE IS NO EVIDENCE SUGGESTING THAT THE ASSESSEE HAS MADE ANY EXPORT TO THE FOREIGN COUNTRIES AS DISCUSSED ABOVE EITHER IN THE EARLIER YEARS OR THE SUBSEQUENT YEARS. BESIDES THIS, THE L D. AR BEFORE US HAS NOT BROUGHT ANY IOTA OF EVIDENCE JUSTIFYING THAT THE EX PENDITURE INCURRED WAS FOR THE PURPOSE OF THE BUSINESS. IF THE ASSESSEE HA D GONE FOR BUSINESS PURPOSE, THEN THERE WOULD HAVE BEEN SOME DOCUMENTAR Y EVIDENCE SUCH AS INVITATION FROM THE FOREIGN PARTY, THE AGENCY FOR T HE MEETING WITH THE FOREIGN PARTY BUT THERE IS NO DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE IN SUPPORT OF HIS ARGUMENT. 8.4 WE ALSO NOTE THAT THE ONUS IS ON THE ASSESSEE F OR CLAIMING THE EXPENSES U/S 37(1) OF THE ACT BUT THE ASSESSEE IN T HE INSTANT CASE FAILED TO DISCHARGE THE ONUS AS PROVIDED U/S 37(1) OF THE ACT . IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF ANDH RA PRADESH HIGH COURT IN THE CASE OF CIT VS. TRANSPORT CORPORATION INDIA LTD. REPORTED IN 256 ITR 701 WHEREIN IT WAS HELD AS UNDER: 7. THE BURDEN OF PROVING THAT A PARTICULAR EXPENDITUR E HAS BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURP OSES OF BUSINESS SO THAT THE ASSESSEE MAY BE ENTITLED TO CLAIM DEDUCTIO N IS ON THE ASSESSEE. THE POSITION IS WELL-SETTLED BY THE JUDGMENTS OF TH E APEX COURT IN CIT V. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 AND CIT V. IMPERIAL CHEMICAL INDUSTRIES (I) (P.) LTD. [1969] 74 ITR 17 . THE MERE OBJECT OF ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 10 - INCURRING EXPENDITURE IS NOT DECISIVE WHETHER IT IS OF A CAPITAL NATURE OR REVENUE NATURE. THEREFORE, THE ONUS IS ON THE ASSES SEE TO PROVE INTER ALIA, THAT THE ITEM OF EXPENDITURE IN QUESTION FOR ADMISSIBILITY TO DEDUCTION IS NOT IN THE NATURE OF CAPITAL EXPENDITU RE. FURTHER, MERE PAYMENT BY ITSELF WOULD NOT ENTITLE THE ASSESSEE TO DEDUCTION OF THE SAID EXPENDITURE UNLESS THE SAME WAS PROVED TO BE PAID F OR COMMERCIAL CONSIDERATION. THE ONUS OF PROOF IS ALWAYS UPON THE ASSESSEE. IT CANNOT BE SAID THAT EVEN IF THE TAXPAYER DOES NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM FOR DEDUCTION, THE ASSESSING O FFICER HIMSELF INDEPENDENTLY IS TO COLLECT EVIDENCE AND DECIDE THA T THE DEDUCTION CLAIMED IS BASELESS (ALLOWABLE) HAVING REGARD TO TH E LEGITIMATE BUSINESS NEEDS OF THE ASSESSEE, AS THE TRIBUNAL SEEMS TO THI NK IN THE PRESENT CASE. IT IS FOR THE TAXPAYER TO ESTABLISH BY EVIDENCE THA T A PARTICULAR ALLOWANCE IS JUSTIFIED. BUT AS HELD BY THE SUPREME COURT IN CIT V. C. PARAKH & COM. (INDIA) LTD.[1956] 29 ITR 661 WHETHER AN ASSESSEE IS ENTITLED TO A PARTICULAR DEDUCTION OR NOT WILL DEPE ND ON THE PROVISION OF LAW RELATING THERETO, AND NOT ON THE VIEW WHICH HE MIGHT TAKE OF HIS RIGHTS. AT THE SAME TIME, THE ONUS IS ON THE ASSESS EE TO ESTABLISH THAT THERE ARE FACTS IN EXISTENCE WHICH ENTITLE IT TO A DEDUCTION AND IT IS FOR THE ASSESSEE TO ADDUCE NECESSARY EVIDENCE IN THIS R EGARD. THEREFORE, IF THE ASSESSEE FAILS TO PLACE SUFFICIENT MATERIALS, H E IS NOT ENTITLED TO CLAIM ALLOWANCE UNDER SECTION 37(1). IN CIT V. CHANDRAVIL AS HOTEL [1987] 164 ITR 102 1 (GUJ.) IT IS HELD THAT IF THE EXPENDITURE IS DOUBT ED BY THE ASSESSING AUTHORITY, IT IS THE DUTY OF THE ASSESSEE TO PROVE BY LEADING EVIDENCE THAT THE EXPENDITURE WAS IN FACT, INCURRED . 8.5 IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS AS SPECIFIED U/S 37(1) OF THE AC T. THUS, IN THE ABSENCE OF DOCUMENTARY EVIDENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 11 - 9. THE NEXT ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 8,11 ,580/- ON ACCOUNT OF LATE DEPOSIT OF EMPLOYEES CONTRIBUTION TO PF & ESIC . 10. THE AO DURING ASSESSMENT PROCEEDINGS OBSERVED T HAT THE ASSESSEE FAILED TO DEPOSIT THE EMPLOYEE'S CONTRIBUTION TO PF /ESI WITHIN THE DUE DATE AS SPECIFIED UNDER THE RELEVANT ACT, RULE OR N OTIFICATION ISSUED THEREUNDER. THEREFORE, THE AO DISALLOWED THE SAME A FTER HAVING A RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH CO URT, IN THE CASE OF CIT VS. GSRTC REPORTED IN 41 TAXMANN.COM 100 AND AD DED TO THE TOTAL INCOME OF THE ASSESSEE. 11. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. CIT(A) WHO CONFIRMED THE ORDER OF AO. BEING AGGRIEVED BY ORDER OF LD. CIT(A) ASSESSEE IS IN THE SECOND APPEAL BEFORE US. 12. THE LD. AR BEFORE US CONCEDED THE FACT THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. GSTRC REPORTED IN 41 TAXMANN.COM 100. ON T HE OTHER HAND THE LD. DR RELIED ON THE ORDER OF AUTHORITIES BELOW. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 12 - 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSES SEE HAS DELAYED IN THE PAYMENT OF EMPLOYEES CONTRIBUTION OF PF/ ESI AS SP ECIFIED UNDER THE RELEVANT ACT. THEREFORE, THE DISALLOWANCE WAS MADE BY THE AO U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT. THE LD CIT-A SUBSEQUENTLY CONFIRMED THE VIEW TAKEN BY THE AO. THE LD. AR BEFO RE US HAS NOT CHALLENGED THE PROPOSITION LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GSRTC (SUPRA), WHEREIN IT WA S HELD AS UNDER: IN VIEW OF THE ABOVE AND FOR THE REASONS STATED AB OVE, AND CONSIDERING SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961 READ WITH SUB-CLAUSE (X) OF CLAUSE 24 OF SECTION 2, IT IS HELD THAT WITH RES PECT TO THE SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH PROVISIONS OF SUB- CLAUSE (X) OF CLAUSE (24) OF SECTION (2) APPLIES, T HE ASSESSEE SHALL BE ENTITLED TO DEDUCTION IN COMPUTING THE INCOME REFER RED TO IN SECTION 28 WITH RESPECT TO SUCH SUM CREDITED BY THE ASSESSEE T O THE EMPLOYEES' ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE' MENTIONED IN EXPLANATION TO SECTION 36(1)(VA). CONS EQUENTLY, IT IS HELD THAT THE LEARNED TRIBUNAL HAS ERRED IN DELETING RES PECTIVE DISALLOWANCES BEING EMPLOYEES' CONTRIBUTION TO PF ACCOUNT / ESI A CCOUNT MADE BY THE AO AS, AS SUCH, SUCH SUMS WERE NOT CREDITED BY THE RESPECTIVE ASSESSEE TO THE EMPLOYEES' ACCOUNTS IN THE RELEVANT FUND OR FUNDS (IN THE PRESENT CASE PROVIDENT FUND AND/OR ESI FUND ON OR BEFORE TH E DUE DATE AS PER THE EXPLANATION TO SECTION 36(1)(VA) OF THE ACT I.E . DATE BY WHICH THE CONCERNED ASSESSEE WAS REQUIRED AS AN EMPLOYER TO C REDIT EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES' ACCOUNT IN THE PROVI DENT FUND UNDER THE PROVIDENT FUND ACT AND/OR IN THE ESI FUND UNDER THE ESI ACT. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFER E IN THE ORDER OF LOWER AUTHORITIES. HENCE, THE GROUND OF APPEAL OF THE ASS ESSEE IS DISMISSED. ITA NO.3393/AHD/2016 C. MOHANALAL PVT. LTD. VS.DCIT A.Y. 2013-14 - 13 - 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/12/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/12/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-1, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 15/10/2018 (PAGE-6) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 12/11/2018 3. OTHER MEMBER.. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S15/11/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT.. 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 10. DATE OF DESPATCH OF THE ORDER