Deputy Commissioner of Income tax, V. Rasiklal Manikchand Dhariwal (HUF), Pune

ITA 35/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8008 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Depreciation; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 3 5 /P U N/20 1 7 / ASSESSMENT YEAR : 20 0 4 - 0 5 THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), PUNE . / APPELLANT VS. RASIKLAL MANIKCHAND DHARIWAL (HUF), MANIKCHAND HOUSE, PLOT NO.100/101, D KENNEDY ROA D, BEHIND HOTEL LE MERIDIAN, PUNE 411001 . / RESPONDENT PAN: AABHD5583L / APPELLANT BY : SHRI SANJEEV GHEI / RESPONDENT BY : NONE / DATE OF HEARING : 11 . 04 .201 9 / DATE OF PRONOUNCEMENT: 22 . 04 .201 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY REVENUE IS AGAINST THE ORDER OF CIT (A) , PUNE - 11, PUNE , DATED 2 7 . 1 0.20 1 6 RELATING TO ASSESSMENT YEAR 20 0 4 - 0 5 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO RS.2 LACS ON ACCOUNT OF DISALLOWANCE MADE U/S 14A ITA NO. 3 5 /P U N/20 1 7 RASIK LAL M. DHARIWAL 2 WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING ESTIMATED DIVIDEND @ 5% RELYING ON THE DECISION FOR A.YS. 2006 - 07 & 2007 - 08 IN THE A SSESSEES RELATED CASE, I.E. DHARIWAL INDUSTRIES LTD WITHOUT DISTINCTION OF THE FACTS? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL RESTRICTING THE DISALLOWANCE OF DEPRECIATION @ 5% RELYING ON THE DECISION OF THE HONBLE ITAT IN AY 2006 - 07 EVENTHOUGH THE ASSESSEE ITSELF ACCEPTED THE DISALLOWANCE @ 10% IN AY 2011 - 12? 3. THE ORDER OF CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. DESPITE SERV ICE OF NOTICE, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. HOWEVER, BECAUSE OF THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE PROCEED TO ADJUDICATE THE SAME AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN MANUFACTURING OF PAN MASALA & GUTKHA. THE ASSESSING OFFICER VIDE ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT HAD MADE CERTAIN DISALLOWANCES IN THE HANDS OF ASSESSEE I NCLUDING DISALLOWANCE UNDER SECTION 14A OF THE ACT AND DEPRECIATION ON LUXURY CARS . 5. THE CIT(A) IN TURN RELYING ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE HAS RESTRICTED THE DISALLOWANCE UNDER SECTION 14A OF THE ACT TO 2 LAKHS VIDE PARA 5. 2 , WHICH READS AS UNDER: - 5. 2 THE DISALLOWANCE MADE BY THE AO IN ASST YEAR 2004 - 05 IS ON AN AD HOC BASIS BECAUSE RULE 8D WAS NOT APPLICABLE IN THIS ASST YEAR. FOLLOWING THE ITAT ORDER IN ASST YEAR 2006 - 07 CITED ABOVE, THE DISALLOWANCE U/S 14A IS RESTRICTED TO 2 LAKHS ONLY. THE GROUND OF APPEAL IS ALLOWED PARTLY. 6. FURTHER, IN RESPECT OF DISALLOWANCE OF DEPRECIATION CLAIMED ON VEHICLES, THE CIT(A) IN TURN, RELYING ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE HAS RESTRICTED TO 5% OF THE DEPRECIATI ON CLAIMED BY THE ASSESSEE. THE RELEVANT FINDINGS OF CIT(A) VIDE PARA 6.2 READ AS UNDER: - ITA NO. 3 5 /P U N/20 1 7 RASIK LAL M. DHARIWAL 3 6.2 FOLLOWING THE TRIBUNALS DECISION THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 5% OF THE DEPRECIATION CLAIMED BY THE APPELLANT. HOWEVER, IN ASST YEAR 201 1 - 12 THE AO HAS ALSO DISALLOWED 10% OF THE EXPENDITURE INCURRED ON VEHICLE AND FUEL. IT IS SEEN THAT SUCH A DISALLOWANCE WAS ACCEPTED BY THE APPELLANT IN 2006 - 07 BEFORE THE TRIBUNAL. THE DISALLOWANCE IS THEREFORE CONFIRMED IN ASST YEAR 2011 - 12 AS WELL. THE G ROUND OF APPEAL IS THUS ALLOWED PARTLY. 7. THE REVENUE IS IN APPEAL AGAINST THE FINDINGS OF CIT(A). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FAILED TO CONTROVERT THE FINDINGS OF CIT(A) ON BOTH THE ISSUES . HENCE, UPHOLD ING THE ORDE R OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY REVENUE. 9 . IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 22 ND DAY OF APRIL , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 22 ND APRIL , 201 9 . G G C C V V S S R R / COPY OF THE OR DER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A), PUNE - 11, PUNE ; 4. THE PR.CIT (CENTRAL), PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE