ASSOCIATED CONTAINER LINE P. LTD, MUMBAI V. DCIT 5(1), MUMBAI

ITA 3489/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6202 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3489/MUM/2009 (ASSESSMENT YEAR: 2005-06) ASSOCIATED CONTAINER LINE P. LTD. DCIT 5(1) 901, PENINSULA TOWERS, LOWER PAREL AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400013 VS. MUMBAI 400020 PAN - AAACA 9239 L APPELLANT RESPONDENT APPELLANT BY: SHRI PRAKASH PANDIT RESPONDENT BY: SHRI VIJAY SHANKAR O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-V, MUMBAI DATED 26.03.2009. 2. ASSESSEE HAS RAISED FOUR GROUNDS ON TWO ISSUES. FIR ST ISSUE IS WITH REFERENCE TO DISALLOWANCE MADE UNDER SECTION 14A AN D SECOND ISSUE IS WITH REFERENCE TO DISALLOWANCE MADE OUT OF TRAVELLING AN D VEHICLE EXPENSES. 3. ISSUE UNDER SECTION 14A: ASSESSEE RECEIVED DIVIDEND INCOME OF ` 15,29,239/- AND CLAIMED EXEMPTION. THE A.O. DISALLO WED AN AMOUNT OF ` 50,000/- AS ATTRIBUTABLE TO EARNING OF SUCH INCOME UNDER SECTION 14A. 4. AT THE OUTSET THE LEARNED COUNSEL SUBMITTED THAT TH E CIT(A) HAS FOLLOWED THE JUDGMENT OF ITAT IN THE CASE OF DAGA C APITAL MANAGEMENT P. LTD. 26 SOT 693 AND THIS ORDER WAS CONSIDERED BY TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE LTD. 328 ITR 81. ACCORDINGLY THE MATTER HAS TO GO BACK TO THE FILE OF THE A.O. FOR A RRIVING AT THE REASONABLE AMOUNT FOR DISALLOWANCE. HE HAS NO OBJECTION TO REM IT THE MATTER BACK TO THE FILE OF THE ASSESSMENT PROCEEDINGS FOR WHICH TH E LEARNED D.R. ALSO HAS NO OBJECTION. ACCORDINGLY THE ISSUE COVERED BY GROU ND NOS. 1 & 2 PERTAINING TO THE DISALLOWANCE UNDER SECTION 14A WAS RESTORED TO THE FILE OF THE A.O. FOR FRESH CONSIDERATION. GROUNDS CONSIDERED ALLOWED. ITA NO. 3489/MUM/2009 ASSOCIATED CONTAINER LINE P. LTD. 2 5. GROUND NOS. 3 & 4 PERTAIN TO DISALLOWANCE OF ` 1,75,000/- OUT OF TRAVELLING EXPENSES AND ` 25,000/- OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES STATING THAT TO BE PERSONAL IN NATURE OF T HE DIRECTORS. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE DIRECTORS HAVE TO TRAVEL VARIOUS FOREIGN COUNTRIES AS ASSESSEES LINE OF BUSINESS WAS FREIGH T FORWARDING SERVICES TO SHIPPERS AND EXPORTS TO VARIOUS INTERNATIONAL DESTI NATIONS AND AS PART BUSINESS ONLY THE DIRECTORS TRAVELLED ABROAD AND SO THE EXPENDITURE CANNOT BE TREATED AS PERSONAL IN NATURE. WITH REFERENCE TO THE VEHICLE RUNNING EXPENSES IT WAS SUBMITTED THAT THE VEHICLES ARE USE D BY THE DIRECTORS AND THIS EXPENDITURE IS FOR THE PURPOSE OF BUSINESS. CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) HAS REDUCED THE DISALLOW ANCE TO ` 50,000/- IN LUMP SUM. IT WAS THE CONTENTION OF THE LEARNED COUNSEL T HAT THERE CANNOT BE ANY ADHOC DISALLOWANCE OUT OF TRAVELLING AND VEHICLE MA INTENANCE EXPENSES IN A COMPANY WHERE THE RECEIPTS ARE TO THE TUNE OF ` 21.65 CRORES AND INCOME DECLARED WAS MORE THAN ` 1.24 CRORES. THE EXPENDITURE CLAIMED IS VERY REASONABLE COMPARED TO THE TURNOVER AND NO ADHOC DI SALLOWANCE CAN BE MADE. THE LEARNED D.R. RELIED ON THE ORDER OF THE A .O. 6. WE HAVE CONSIDERED THE ISSUE AND FOUND THAT THERE I S NO REASON FOR DISALLOWING THE AMOUNTS ON ADHOC BASIS. AS SEEN FRO M THE DETAILS THE ASSESSEES TURNOVER IS TO THE TUNE OF ` 21.65 CRORES AND THE TRAVEL EXPENSES WERE ` 10.28 LAKHS FOR TRAVELLING TO VARIOUS DESTINATIONS. IT IS NOT THE CASE OF THE A.O. THAT THE DIRECTORS HAVE VISITED FOREIGN CO UNTRIES ON PERSONAL WORK. THE ASSESSEE ALSO FILED AN AFFIDAVIT BEFORE THE CIT (A) STATING THAT THE ENTIRE EXPENDITURE WAS INCURRED FOR THE PURPOSE OF BUSINES S AND NEITHER DIRECTORS WIVES NOR CHILDREN HAVE ACCOMPANIED THEM ON THE BUS INESS TRIPS. IN VIEW OF THIS IT CANNOT BE STATED THAT THERE CAN BE ANY PERS ONAL ELEMENT WHEN THE TRIPS WERE UNDERTAKEN FOR THE PURPOSE OF BUSINESS. EVEN WITH REFERENCE TO VEHICLE MAINTENANCE ALSO THE CARS ARE PROVIDED TO T HE DIRECTORS WHICH ARE TO BE CONSIDERED FOR THE PURPOSE OF BUSINESS. THE EXPE NDITURE WAS A SUM OF ` 5.67 LAKHS ONLY. ON THE PRINCIPLES ESTABLISHED BY T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG. CO. VS. CIT 253 ITR 749 THE EXPENDITURE IS TO BE CONSIDERED AS BUSINESS EXPENDI TURE AND NO PART OF IT CAN BE DISALLOWED. IN OUR VIEW THERE IS NO NEED FOR DISALLOWING THE AMOUNTS ITA NO. 3489/MUM/2009 ASSOCIATED CONTAINER LINE P. LTD. 3 ON ADHOC BASIS AND WE ARE FURTHER OF THE VIEW THAT THE CIT(A)S SUSTAINING AN AMOUNT OF ` 50,000/- ALSO IS NOT JUSTIFIED. ACCORDINGLY WE DELE TE THE ADDITION SO MADE. ASSESSEES GROUNDS ARE CONSIDERED ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30 TH NOVEMBER 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) V, MUMBAI 4. THE CIT V, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.