Jalan Carbon & Chemicals Pvt. Ltd. (Erstwhile Pari Projects Pvt. Ltd.), Kolkata V. I.T.O., Ward-8(3), Kolkata, Kolkata

ITA 34/KOL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99843 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K TIBREWAL
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

I.T.A. NO. 34/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA SMC BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 34/KOL/ 2015 ASSESSMENT YEAR : 2006-2007 JALAN CARBON & CHEMICALS PVT. LIMITED,............. .....................APPELLANT (ERSTWHILE PARI PROJECTS PVT. LIMITED) 16G, EVEREST HOUSE, 46C, CHOWRINGHEE ROAD, KOLKATA-700 071 [PAN : AADCP 3071 A] -VS.- INCOME TAX OFFICER,................................ .........................RESPONDENT WARD-8(3), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI A.K. TIBREWAL, FCA, FOR THE ASSESSEE SHRI DEBASISH LAHIRI, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : SEPTEMBER 17, 201 5 DATE OF PRONOUNCING THE ORDER : OCTOBER 09, 2015 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 08.10.2014 FOR THE ASSESSMENT YEAR 2006-07 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER AND SUSTAINED BY THE LD. CIT(APPEALS) ON ACCOUNT OF THE FOLLOWING EXPENSES:- (A) CONVEYANCE CHARGES RS. 2,638/- (B) GENERAL EXPENSES RS. 12,974/- (C) PRINTING & STATIONERY RS. 4,780/- (D) SALARY & BONUS RS.3,63,057/- (E) STAFF WELFARE RS. 2,635/- I.T.A. NO. 34/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 4 (F) LEGAL EXPENSES RS.1,01,200/- (G) ELECTRIC CHARGES RS. 30,240/- (H) TELEPHONE EXPENSES RS. 12,653/- (I) INTEREST RS. 12,800/- (J) PRELIMINARY EXPENSES WRITTEN OFF U/S 35D RS. 13,080/- 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 11.11.2006 DECLARING TOTAL INCOME OF RS.7,13,640/-. IN THE SAI D RETURN, INCOME FROM HOUSE PROPERTY WAS DECLARED BY THE ASSESSEE AT RS.1 2,71,828/-, WHILE LOSS WAS DECLARED UNDER THE HEAD INCOME FROM BUSINESS TO THE TUNE OF RS.5,58,187/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS FOUND BY THE ASSESSING OFFICER THAT THERE WAS NO BUSINESS ACTIVITY ACTUALLY CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION. IN THE ABSENCE OF ANY BUSINESS CARRIED ON BY THE ASSESSEE- COMPANY, VARIOUS EXPENSES CLAIMED BY THE ASSESSEE AS BUSINESS EXPENS ES UNDER THE VARIOUS HEADS WERE HELD TO BE NOT ALLOWABLE BY THE ASSESSIN G OFFICER. HE ALSO NOTED THAT THERE WAS A FAILURE ON THE PART OF THE A SSESSEE TO PRODUCE THE RELEVANT DOCUMENTS AND VOUCHERS TO ESTABLISH THE GE NUINENESS OF THE SAID EXPENSES. HE, HOWEVER, ALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE ONLY TO THE EXTENT OF RS.9,142/-, AS THE SAME, ACCO RDING TO THE ASSESSING OFFICER, WERE IN THE NATURE OF STATUTORY EXPENSES R EQUIRED TO BE INCURRED BY THE ASSESSEE TO RUN A COMPANY. ACCORDINGLY, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.12,80,380/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 22.12.2008. 3. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF VARIOUS EXPENSE S ON THE GROUND THAT IN THE ABSENCE OF ANY BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE, ITS CLAIM FOR DEDUCTION ON ACCOUNT OF BUSINESS EXPENSES WAS NOT ALLOWABLE. I.T.A. NO. 34/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 4 AGGRIEVED BY THE ORDER OF LD. CIT(APPEALS), THE ASS ESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING BEFORE ME, LD. COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO E STABLISH ON EVIDENCE THAT ANY BUSINESS ACTIVITY WAS ACTUALLY CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. HE, HOWEVER, HAS RAIS ED AN ALTERNATIVE CONTENTION BY RELYING ON THE DECISION OF THE HONBL E CALCUTTA HIGH COURT IN THE CASE OF CIT VS.- GANGA PROPERTIES LIMITED [ 62 TAXMAN 285 (CAL)] THAT A LIMITED COMPANY THAT EVEN IF IT DOES NOT CAR RY ON BUSINESS, IT HAS TO MAINTAIN ITS ESTABLISHMENT FOR COMPLYING WITH ST ATUTORY OBLIGATION SO LONG AS IT IS IN OPERATION. HE HAS CONTENDED THAT A LTHOUGH THE ASSESSING OFFICER HAS ALLOWED A SUM OF RS.9,142/- ONLY ON ACC OUNT OF STATUTORY EXPENSES INCURRED BY THE ASSESSEE TO RUN A COMPANY, THERE ARE VARIOUS OTHER EXPENSES WHICH ARE ALSO INCURRED BY THE ASSES SEE TO MAINTAIN ITS ESTABLISHMENT FOR COMPLYING WITH STATUTORY OBLIGATI ON. ALTHOUGH THE LD. D.R. HAS VEHEMENTLY OPPOSED THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BY POINTING OUT THAT THE GENUINENESS OF VA RIOUS EXPENSES AS CLAIMED BY THE ASSESSEE WAS NOT ESTABLISHED BY THE ASSESSEE BY PRODUCING THE RELEVANT DOCUMENTARY EVIDENCE, HE HAS SUBMITTED THAT IF AT ALL THE TRIBUNAL IS INCLINED TO ACCEPT AN ALTERNATIVE CONTE NTION OF THE LD. COUNSEL FOR THE ASSESSEE, AN OPPORTUNITY MAY BE GIVEN TO T HE ASSESSING OFFICER TO VERIFY THAT THE EXPENSES CLAIMED BY THE ASSESSEE TO CERTAIN EXTENT WERE INCURRED IN ORDER TO MAINTAIN ITS ESTABLISHMENT FOR COMPLYING WITH STATUTORY OBLIGATION. I FIND MERIT IN THIS CONTENTI ON OF THE LD. D.R. AND SINCE THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO NOT RAISED ANY OBJECTION IN THIS REGARD, I RESTORE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER FOR THE LIMITED PURPOSE OF GIVING THE ASSESSEE AN OPPORTUNI TY TO ESTABLISH THAT THE EXPENSES IN QUESTION TO SOME EXTENT WERE INCURR ED IN ORDER TO MAINTAIN ITS ESTABLISHMENT FOR COMPLYING WITH STATU TORY OBLIGATION. ASSESSING OFFICER SHALL CONSIDER AND VERIFY THE CLA IM OF THE ASSESSEE IN THE I.T.A. NO. 34/KOL./2015 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 4 LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GANGA PROPERTIES LIMITED (SUPRA). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 9 TH , 2015. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 9 TH DAY OF OCTOBER, 2015 COPIES TO : (1) JALAN CARBON & CHEMICALS PVT. LIMITED (ERSTWHILE PARI PROJECTS PVT. LIMITED), 16G, EVEREST HOUSE, 46C, CHOWRINGHEE ROAD, KOLKATA-700 071 (2) INCOME TAX OFFICER, WARD-8(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, KO LKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.