The DCIT, Mehsana Circle, Mehsana V. Kamalnayan Specific Family Trust, Mehsana

ITA 3452/AHD/2010

• Counselvise Citation: 345220514 RSA 2010
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMON Y, AM. DY. CIT, MEHSANA CIRCLE, MEHSANA. VS. KAMALNAYAN SPECIFIC FAMILY TRUST, PROP. OF RADHE PACKAGING, BLOCK NO.1075, CHHATRAL KADI ROAD, CHHATRAL. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SAMIR TEKRIWAL, SR.DR RESPONDENT BY:- SHRI HIMANSHU SHAH, AR DATE OF HEARING : 21/10/2011 DATE OF PRONOUNCEMENT : 31.10.2011. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THE APPEAL HAS BEEN FILED BY THE REVENUE AND THE C ROSS OBJECTION HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) 21/10/2010 FOR ASST. YEAR 2007-08. 2. THE REVENUE HAS RAISED FOLLOWING GROUND :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO TREAT THE STATUS OF THE ASSESSEE AS INDIVIDUAL AS AGAINST AOP, CONSIDERED BY THE AO. ITA NO.3452AHD/2010 ALONG WITH C.O. NO.23/AHD/2011 ASST. YEAR :2007-08 ITA NO.3452/AHD/2010 ALONG WITH C.O. NO.23/AHD/2011 ASST. YEAR 2007-08 2 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CROSS OBJECTION :- (1) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RE SPONDENTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN POINTS OF LAW AND FACTS. (2) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RE SPONDENTS CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMIN G DISALLOWANCE OF RS.20,000/- OUT OF VEHICLE REPAIRIN G EXPENSES AND CONVEYANCE EXPENSES. 4. THE FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS FILED ON 31/10/2007 DECLARING LOSS OF RS.50,66,749/-. BUT TH E AO FRAMED THE ASSESSMENT ORDER U/S 143(3) OF THE IT ACT ON 24.12. 2009 ASSESSING LOSS WAS AT RS.33,63,054/-. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN IT WAS SUBMITTED THAT T HE AO HAD PASSED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT IN THE STATU S OF AOP. THE ASSESSEE TRUST IS A SPECIFIC FAMILY TRUST. THE CORR ECT STATUS OF THE ASSESSEE IS THAT OF INDIVIDUAL. THE ASSESSEE RELI ED ON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTION :- (I) DEEPAK FAMILY TRUST 211 ITR 575 (GUJ) (II) HARSIDDH SPECIFIC FAMILY TRUST 258 ITR 785 (GU J) LD. CIT(A) CONSIDERING THE FACTS OF THE CASE AND SU BMISSIONS OF THE ASSESSEE DECIDED THE ISSUE BY OBSERVING AS UNDER: SIMILAR ISSUE HAD COME UP IN APPEAL FOR ASST. YEAR 2006-07 AND THE IS SUE WAS DECIDED AS UNDER :- SIMILAR ISSUE HAD COME IN THE APPEAL FOR PRECEDING ASSESSMENT YEAR ALSO. THERE, THE APPELLANTS STAND WAS TREATED AS ACADEMIC ONLY, BEC AUSE OTHERWISE IN ITS RETURN OF INCOME, IT HAD ITSELF CLAIMED THE STATUS AS THAT OF TRUST. NOW THAT THIS YEAR THE APPELLANT HAD ITSELF CLAIMED ITS STATUS AS THAT OF INDIVIDUAL IN ITS RETURN OF INCOME AND SUCH A CLAIM IS SUPPORTED BY THE DECISION OF THE JU RISDICTIONAL HIGH COURT IN THE CASE OF DEEPAK FAMILY TRUST (SUPRA) THE OBJECTIONS OF TH E AO ARE NOT CONVINCING ENOUGH TO REBUT THE SAME. IN THE RESULT, THE GROUND IS ACC EPTED. ITA NO.3452/AHD/2010 ALONG WITH C.O. NO.23/AHD/2011 ASST. YEAR 2007-08 3 IN VIEW OF THE ABOVE, THIS GROUND OF APPEAL IS ALLO WED. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOIN G THROUGH THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED OPINIO N THAT SINCE WHILE GIVING RELIEF TO THE ASSESSEE, THE LD. CIT(A) HAS P LACED RELIANCE ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DEEPAK FAMILY TRUST (SUPRA) AND HARSIDDH SPECIFIC FAMILY TRUST (S UPRA) WHICH HAS BEEN AFFIRMED BY HONBLE SUPREME COURT, THERE IS NO INFI RMITY IN THE ORDER OF LD. CIT(A). WE CONFIRM THE SAME. THE GROUND RAISED BY THE REVENUE IS DISMISSED. HENCE THE APPEAL FILED BY THE REVENUE IS DISMISSED. 8. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IS THAT LD. CIT(A) HAS ERRED IN CONFIRMIN G DISALLOWANCE OF RS.20,000/- OUT OF VEHICLE REPAIRING EXPENSES AND C ONVEYANCE EXPENSES. ON VERIFICATION OF PROFIT AND LOSS ACCOUNT, AO NOTI CED THAT THE ASSESSEE HAD DEBITED RS.1,90,821/- UNDER THE HEAD VEHICLE EX PENSES AS UNDER :- (1) VEHICLE EXPENSES RS.32,257/- (2) CONVEYANCE EXPENSES RS.63,627/- (3) DIESEL EXPENSES RS.92,338/- (4) PETROL EXPENSES RS.2,599/- - -------------- TOTAL RS.1,90,821/- THE AO OBSERVED THAT PERSONAL ELEMENT OF ABOVE VEHI CLE EXPENSES BY THE STAFF AND OTHER MEMBERS COULD NOT BE ASCERTAINED. T HEREFORE, A 1/10 TH ITA NO.3452/AHD/2010 ALONG WITH C.O. NO.23/AHD/2011 ASST. YEAR 2007-08 4 EXPENSES CLAIMED WAS DISALLOWED AND ADDED TO THE TO TAL INCOME OF THE ASSESSEE WHICH CAME TO RS.20,000/-. 9. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APP EAL WHEREIN THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDER :- 7.3 I HAVE CONSIDERED THE CONTENTION OF THE APPELL ANT AS WELL AS THE ASSESSING OFFICER. THE DISALLOWANCE OF RS.20,000/- IN RESPECT OF 1/10 TH I.E. 10% OF THE TOTAL EXPENSES OUT OF VEHICLE REPAIRING EXPENSES AND CONV EYANCE EXPENSES IS HELD TO BE REASONABLE LOOKING TO THE FACT THAT THE ASSESSEE IS A TRUST WHICH IS CONSTITUTED SOLELY FOR THE BENEFIT OF FAMILY AND USE OF VEHICLES ETC. TO THE EXTENT OF 10% IS HELD TO BE REASONABLE ESTIMATE ON PREPONDERANCE OF PROBABILITY . 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT IT W ILL MEET THE ENDS OF JUSTICE IF THE DISALLOWANCE IS RESTRICTED TO 1/5 TH INSTEAD OF 1/10 TH . WE ORDER ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IN I TS CROSS OBJECTION IS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED WHEREAS THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 31.10.2011. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- ITA NO.3452/AHD/2010 ALONG WITH C.O. NO.23/AHD/2011 ASST. YEAR 2007-08 5 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 21/10/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 24/10/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..