Hindustan Coca Cola Marketing Company Pvt. Ltd., Gurgaon V. Deputy Commissioner of Income-tax, New Delhi

ITA 3450/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6745 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 27-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: SA CHI JOLLY
• Keywords: Business expenditure; Opportunity of being heard
• Section: 37(1); 28

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3450/DEL/2015 A.Y. : 20 09 - 1 0 HINDUSTAN COCA COLA MARKETING COMPANY PVT. LTD., 13, ABUL FAZAL ROAD, BEGALI MARKET, NEW DELHI 110 001 (PAN: AABCH1541D) VS. DCIT, CIRCLE 11(2), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : S H. SA CHI JOLLY, ADV. DEPARTMENT BY : SH. F.R. MEENA, SR. DR ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-4), NEW DEL HI DATED 17.4.2015 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL READ AS UNDER:- THE APPELLANT PREFERS FOLLOWING GROUNDS IN APPEAL A GAINST THE ORDER DATED APRIL 17, 2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, NEW DELHI [HEREINAFTER REFERRED TO AS 'CIT(A)'] UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO A S 'ACT']. 2 2.0 MISCELLANEOUS EXPENSES 2.1 THAT THE LD. CIT(A) ERRED IN LAW IN NOT ALLOWI NG APPELLANTS CLAIM FOR THE BALANCE SUM OF RS. 6,67,3 65/- OUT OF TOTAL DISALLOWANCE OF RS. 48,14,171/- THOUGH INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINES S ELIGIBLE FOR DEDUCTION UNDER SECTION 37(1) OF THE A CT. 3.0 RECEIVABLES WRITTEN OFF 3.1 THAT THE LD. CIT(A) ERRED IN CONFIRMING DISALLO WANCE OF OLD RECEIVABLE BALANCE WRITTEN OFF AMOUNTING TO RS. 27,40,250; 3.2 THAT LD. CIT(A) FAILED TO APPRECIATE THAT THE A PPELLANT COMPANY HAS STOPPED ITS TRADING OPERATIONS W.E.F. M AY, 2008 AND PURSUANT TO CLEANING UP ITS BALANCE SHEET HAS WROTE OFF VARIOUS OLD RECEIVABLE BALANCES AS IRRECO VERABLE IN RESPECT OF WHICH PARTIES WERE NOT TRACEABLE. 3.3 THAT LD. CITCA) FAILED TO APPRECIATE THAT WRIT E OFF OF IRRECOVERABLE BALANCES IN ITS BOOKS OF ACCOUNTS WHI CH PERTAINS TO APPELLANT'S OPERATIONS IS ALLOWABLE AS TRADING LOSS U/S 28 OF THE ACT. 4.0 LOSSES AND LEAKAGE INVENTORY 4.1 THAT LD. CITCA) ERRED IN RESTRICTING THE DISALL OWANCE ON ACCOUNT OF EXCESS SHORTAGE / BREAKAGE TO 30% MERELY FOLLOWING THE APPELLANT'S OWN CASE DECIDED BY COMMISSIONER/APPEALS) IN A PREVIOUS YEAR; 4.2 THAT LD. CITCA) FAILED TO APPRECIATE THAT THE E XPENDITURE INCURRED BY THE APPELLANT DUE TO PULLING BACK OF IN VENTORY FROM THE MARKET ON ACCOUNT OF THE EXPIRY OF THE PRO DUCT 3 I.E. BEST BEFORE DATE (BBD') ARE NORMAL BUSINESS EXPENDITURE ALLOWABLE AS DEDUCTION IN ACCORDANCE WI TH THE PROVISIONS OF INCOME- TAX ACT. 5.0 THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY OR DELETE ALL OR ANY OF THE ABOVE GROUNDS AT THE TI ME OF OR BEFORE THE HEARING OF THE APPEAL. 3. THE FACTS NARRATED BY THE REVENUE AUTHORITIES AR E NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF BREVITY. 4. AT THE THRESHOLD, I NOTE THAT THE DURING THE COU RSE OF HEARING, LD. COUNSEL OF THE ASSESSEE HAS NOT PRESSED THE GROUND NOS. 1.0, 2.0- 2.1 AND 4.0-4.2, HENCE, THE SAME ARE DISMISSED AS SUCH. 5. LD. COUNSEL OF THE ASSESSEE WITH REGARD TO GROU ND NO. 3 RELATING TO RECEIVABLES WRITTEN OFF HAS STATED THAT THE ASSESSEE WAS ASKED TO FURNISH INFORMATION IN RESPECT OF RS. 80,59,309/- CLAIMED AS MISCELLANEOUS EXPENSES A ND THE ASSESSEE VIDE HIS LETTER DATED 15.12.2011 HAD PROVIDED THE BREAK-UP OF THE S AME. LD. COUNSEL FURTHER STATED THAT THE AO HAD DISALLOWED AN EXPENSES OF RS. 27,4 0,250/- PERTAINING TO CDL WRITE BACK ALLEGING THAT THE ASSESSEE HAS NOT FURNISHED ANY SUBSEQUENT DETAIL WITHOUT GRANTING SUFFICIENT OPPORTUNITY TO THE ASSESSEE T O PROVIDE THE SAME. LD. COUNSEL OF THE ASSESSEE FURTHER STATED THAT LD. CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE COMPANY HAS STOPPED ITS TRADING OPERATIONS W.E.F. MAY, 2008 AND PURSUANT TO CLEANING UP ITS BALANCE SHEET HAS WROTE OFF VARIOU S OLD RECEIVABLE BALANCES AS IRRECOVERABLE IN RESPECT OF WHICH PARTIES WERE NOT TRACEABLE. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT LD. CIT(A) FAILED TO A PPRECIATE THAT WRITE OFF OF IRRECOVERABLE BALANCES IN ITS BOOKS OF ACCOUNTS WHI CH PERTAINS TO ASSESSEES OPERATIONS 4 IS ALLOWABLE AS TRADING LOSS U/S. 28 OF THE I.T. AC T, 1961. IN VIEW OF THE ABOVE, HE REQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASID E TO THE AO TO DECIDE THE SAME AFRESH, AS PER LAW AFTER CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE AND GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S OF THE LOWER AUTHORITIES AND OPPOSED THE REQUEST OF THE LD. COUNSEL OF THE ASSES SEE. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH ME ESPECIALLY THE IMPUGNED ORDER AS WELL AS THE PAPER BOOK FILED BY THE ASSESSEE. I NOTE THAT IT WAS THE CONTENTION OF THE LD. COUNSEL OF T HE ASSESSEE THAT ON THIS ISSUE THE ASSESSEE WAS ASKED TO FURNISH INFORMATION IN RESPEC T OF RS. 80,59,309/- CLAIMED AS MISCELLANEOUS EXPENSES AND THE ASSESSEE VIDE HIS L ETTER DATED 15.12.2011 HAD PROVIDED THE BREAK-UP OF THE SAME. I FURTHER FIND THAT AO HAD DISALLOWED AN EXPENSES OF RS. 27,40,250/- PERTAINING TO CDL WRITE BACK AL LEGING THAT THE ASSESSEE HAS NOT FURNISHED ANY SUBSEQUENT DETAIL WITHOUT GRANTING SU FFICIENT OPPORTUNITY TO THE ASSESSEE TO PROVIDE THE SAME. I FURTHER NOTE THAT THE ASSESSEE COMPANY HAS STOPPED ITS TRADING OPERATIONS W.E.F. MAY, 2008 AND PURSUANT T O CLEANING UP ITS BALANCE SHEET HAS WROTE OFF VARIOUS OLD RECEIVABLE BALANCES AS IRRECO VERABLE IN RESPECT OF WHICH PARTIES WERE NOT TRACEABLE. IT WAS ALSO THE CONTENTION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT LD. CIT(A) FAILED TO APPRECIATE THAT WRITE OFF OF I RRECOVERABLE BALANCES IN ITS BOOKS OF ACCOUNTS WHICH PERTAINS TO ASSESSEES OPERATIONS IS ALLOWABLE AS TRADING LOSS U/S. 28 OF THE I.T. ACT, 1961 WHICH HAS NOT BEEN CONSIDERED. IN THIS CASE ASSESSEE HAS FILED ALL THE NECESSARY DOCUMENTARY EVIDENCES BEFORE THE AO A S WELL AS BEFORE THE LD. CIT(A) WHICH HAS NOT BEEN CONSIDERED BY THE AO AS WELL AS LD. CIT(A). NOW THE ASSESSEE 5 HAS FILED A PAPER BOOK CONTAINING PAGES 1 TO 61 HAV ING THE COPY OF RETURN OF INCOME FOR AY 2009-10 ALONGWITH COMPUTATION OF INCOME AND COPY OF AUDITED FINANCIAL FOR AY 2009-10 AND ALSO FILED A CERTIFICATE DATED 07.1 0.2016 THAT ALL THE DOCUMENTS IN THE PAPER BOOK HAVE BEEN DRAWN FROM THE RECORDS OF THE LOWER AUTHORITIES AND NO NEW EVIDENCE IS BEING INTRODUCED AT THIS STAGE. AFTER PERUSING THE AFORESAID DOCUMENTS FILED IN THE SHAPE OF PAPER BOOK AND THE CONTENTIO NS RAISED BY THE LD. COUNSEL OF THE ASSESSEE, AS AFORESAID, I AM OF THE CONSIDERED VIE W THAT THE MATTER NEEDS TO BE RE- EXAMINED/ VERIFIED AT THE LEVEL OF THE AO ALONGWITH THE PAPER BOOK FILED BY THE ASSESSEE. THEREFORE, I SET ASIDE THE ISSUE IN DISP UTE TO THE FILE OF THE AO FOR FRESH CONSIDERATION, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02/02/201 7. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 02/02/2017 SRBHATNAGAR COPY FORWARDED TO: - 1.APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES