DCIT 8(3), MUMBAI V. S.M. DYECHEM LTD, MUMBAI

ITA 3787/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93289 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-01-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 29-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Section: 147

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, A M .. , . . , ./ I.T.A. NO. 3787 /MUM/2012 ( / ASSESSMENT YEAR : 2002-03 A .C.I.T. 8 ( 3 ) , ROOM NO. 217, AAYAKAR BHAVAN, M.K.MARG, MUMBAI 400 020. / VS. S.M. DYECHEM LTD., S.M. CENTRE, ANDHERI KURLA ROAD, MAROL NAKA, ANDHEWRI (EAST), MUMBAI 400 059. ./ PAN : AAACS7371K ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) A PPELLANT BY SHRI C.W. ANGOLKAR (D.R) R E SPONDENT BY : SHRI S.A. KANJI $ % & ' ( ) / DATE OF HEARING : 13-07-2015 *+,- ' ( ) / DATE OF PRONOUNCEMENT : 22-07-2015 [ . / O R D E R PER A.D. JAIN, J.M . : .. , THIS IS DEPARTMENTS APPEAL FOR A.Y. 2002-03, CHALL ENGING THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS. 51,14,916/- MADE BY THE A.O., BEING GENERAL EXPENSES. 2. THE FACTS RELATING TO THE ABOVE ISSUE ARE THAT THE A.O. MADE THE FOLLOWING ADHOC DISALLOWANCES AMOUNTING TO RS. 51,1 4,916/-:- ITA 3787/M/12 2 SR.NO DISALLOWANCES TOTAL EXPENSES(RS) PERCENTAGE OF EXPENSES DISALLOWED AMOUNT DISALLOWED (RS.) 1 GUEST HOUSE EXPENSES 1,89,789 50% 94,895 2 AGM EXPENSES 1,50,619 50% 75,310 3 BOOKS AND PERIODICAL EXPENSES 3,36,856 20% 67,371 4 NURSERY EXPENSES 2,32,427 20% 46,485 5 SERVICE CHARGES 6,37,573 20% 1,27,515 6 A.C. HIRE CHARGES 2,52,000 50% 1,26,000 7 GENERAL EXPENSES 7,06,922 50% 3,53,461 8 MEMBERSHIP FEE 1,46,406 100% 1,46,406 9 SALES TAX ASSESSMENT DUES 8,90,360 100% 8,90,360 10 EDP EXPENSES 8,30,776 100% 8,30,776 11 PRODUCT DEVELOPMENT EXPENSES 23,56,337 100% 23,56,337 3. THE LD. CIT(A) WAS OF THE OPINION THAT THE MATTE R REQUIRED VERIFICATION, SINCE THE ASSESSEE HAD SUBMITTED THE DETAILS. THE M ATTER WAS REMANDED TO THE A.O. AND THE A.O., VIDE HIS REMAND REPORT DATED 11-01-2012, STATED THAT THE A.R. OF THE ASSESSEE DID NOT FILE THE RELEVANT DETAILS. ON BEING CONFRONTED WITH THIS, THE ASSESSEE CONTENDED THAT ALL THE RELE VANT DETAILS HAD BEEN FILED BEFORE THE A.O; AND THAT ALL THE EXPENSES WERE INCU RRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, SUCH DETAILS HAVIN G BEEN SUBMITTED TO THE A.O. VIDE LETTER DATED 17-3-2009. THE LD. CIT(A) HE LD THAT, IN VIEW OF THE CLARIFICATION OF THE ASSESSEE, ALL THE EXPENSES WER E FULLY VOUCHED FOR AND STOOD INCURRED WHOLLY AND EXCLUSIVELY FOR THE ASSESSEES BUSINESS PURPOSES. 4. THE LD. D.R. CONTENDED THAT THE LD. CIT(A) FAILE D TO APPRECIATE THAT NEITHER DURING THE ASSESSMENT PROCEEDINGS NOR DURIN G THE REMAND PROCEEDINGS, DID THE ASSESSEE FURNISH ANY DOCUMENTA RY EVIDENCE IN SUPPORT OF ITS CLAIM THAT THE EXPENDITURE WAS INCURRED FOR BUS INESS PURPOSES ONLY. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, PLACED STRONG RELIANCE ON THE IMPUGNED ORDER AND CONTENDED THAT A S NOTED BY THE LD. CIT(A) ITA 3787/M/12 3 ALL THE NECESSARY DETAILS WERE SUBMITTED BEFORE THE A.O. VIDE ITS LETTER DATED 17-3-2009; AND THAT ALL THESE DETAILS WERE AGAIN SU BMITTED AND THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION ON THE BASIS THE REOF. 6. IN THIS REGARD, IT IS SEEN THAT THE ASSESSEE, VI DE LETTER DATED 17-3-2009, SUBMITTED ALL THE DETAILS, AS MENTIONED IN PARA 4.2 OF THE IMPUGNED ORDER. FURTHER, THE ASSESSEE FILED WRITTEN SUBMISSIONS BEF ORE THE LD. CIT(A) ON 5-3-2012 (ASSESSEES PAPER BOOK PAGES 23-36) AND VI DE SSESSEES LETTER DATED 17-3-2009 (ASSESSEES PAPER BOOK PAGES 37 TO 102). IT IS SEEN THAT IT IS THE WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A) WHIC H THE LD. CIT(A) IS MAKING MENTION OF IN PARA 4.2 OF HIS ORDER. IT IS THE WRI TTEN SUBMISSIONS WHICH WERE FORWARDED TO THE A.O. BY WAY OF REMAND, FOR THE PUR POSE OF VERIFICATION. IN PARA 4.1 OF THE IMPUGNED ORDER, THE LD. CIT(A) MAKE S A REFERENCE OF THE A.O.S REMAND REPORT DATED 11-1-2012, WHEREIN, THE A.O. SU BMITTED THAT SINCE THE ASSESSEE DID NOT FILE THE RELEVANT DETAILS, THE DIS ALLOWANCE DESERVED TO BE CONFIRMED. THE CLARIFICATION OFFERED BY THE ASSESS EE, AS REPRODUCED IN PARA 4.3 OF THE IMPUGNED ORDER, IS AS FOLLOWS:- 1. THE LEARNED OFFICER HAS FAILED TO APPRECIATE TH AT COMPLETE DETAILS HAVE BEEN PROVIDED DURING ASSESSMENT AS WELL AS DUR ING THE PROCEEDINGS U/ S. 147 FROM TIME TO TIME. 2. ALL THE INFORMATION ARE AVAILABLE IN THE FILE AN D WHATEVER ADDITIONAL INFORMATION CALLED FOR HAVE ALSO BEEN FU RNISHED FROM TIME TO TIME AND THEY ARE ON RECORD. 3. WITH PARTICULAR REFERENCE TO THE ADDITIONS MADE, THE COMPLETE AND DETAILS ARE AGAIN FURNISHED FOR YOUR INFORMATIO N TO SHOW THAT ALL DETAILS ARE AVAILABLE AND OPEN TO VERIFICATION - AN D WHICH WERE ALL BEFORE THE AG.- EVEN DURING THE COURSE OF REMAND PROCEEDIN GS. 4. GENERAL EXPENSES - THIS AMOUNT HAS BEEN WRONGLY TITLED AS GENERAL EXPENSES BY THE OFFICER. IT REPRESENTS GUEST HOUSE EXPENSES OF STAFF QUARTERS AT VIDISHA WHERE THE COMPANY WAS OPERATING ITS SOYA PLANT. THE TOWN OF VIDISHA DID NOT HAVE ANY PROPER LODGING FACILITIES FOR THE SALES STAFF AND THE COMPANY HAD TO SPARE PART OF IT S LABOUR QUARTERS FOR ACCOMMODATING THE SALES STAFF. THIS EXPENDITURE IS ACTUALLY IN THE NATURE OF STAFF WELFARE. ITA 3787/M/12 4 5. AGM EXPENSES - ENCLOSED VIDE A-I (ALSO PRODUCED BEFORE AO; DURING REMAND PROCEEDINGS) 6. BOOKS & PERIODICALS - ENCLOSED VIDE A-II (ALSO P RODUCED BEFORE A O. DURING REMAND PROCEEDINGS) 7. NURSERY EXPENSES - THESE EXPENDITURE HAVE BEEN I NCURRED TO KEEP THE PREMISES NEAT AND CLEAR AND TO ABSORB THE CARBON DIOXIDE BEING EMITTED FROM THE FACTORY OPERATIONS. 8. CREDIT BALANCE - THIS REPRESENTS THE AMOUNT CRED ITED TO THE P & L ACCOUNT AFTER ADJUSTMENT OF DEBIT BALANCES WRITTEN OF.' 7. FROM THE ABOVE, IT IS EVIDENT THAT THE MATTER RE GARDING THE ADHOC DISALLOWANCE MADE BY THE A.O. REMAINS HITHERTO UNEX AMINED. THAT BEING SO, IN THE INTEREST OF JUSTICE, WE REMAND THIS MATTER T O THE FILE OF THE A.O., TO DECIDE THE ISSUE AFRESH, IN ACCORDANCE WITH LAW, BY TAKING INTO CONSIDERATION THE AFORESAID MATERIAL FILED BY THE ASSESSEE. THE A SSESSEE SHALL BE GRANTED ADEQUATE OPPORTUNITY OF HEARING TO REPRESENT ITS CA SE. THE ASSESSEE SHALL CO- OPERATE IN THE REMAND PROCEEDINGS. WE ORDER ACCORD INGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2015. . ' *+,- $ /0 1 2 22-07-2015 + ' 3& SD/- SD/- (N.K. BILLAIYA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER / $ & MUMBAI ; 1 DATED 22-07-2015 [ %.../ R.K. R.K. R.K. R.K. , SR. PS ITA 3787/M/12 5 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $ E( () / THE CIT(A)- 18, MUMBAI 4. $ E( / CIT- 8, MUMBAI 5. H%I 3 '(JK , ) JK- , / $ & / DR, ITAT, MUMBAI G BENCH 6. 3 L M & / GUARD FILE. ! ( / BY ORDER, # H( '( //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , / $ & / ITAT, MUMBAI