Auchlite Chemical Private Limited, Kanpur V. Dy. Commissioner of Income Tax-V, Kanpur

ITA 386/LKW/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4309 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.385 & 386/LKW/2015 ASSESSMENT YEARS 2008-09 & 2009-10 THE ASSTT. COMMISSIONER OF INCOME TAX-TDS, KANPUR VS AUCHILITE CHEMICAL PVT. LTD., 3/64 VISHNU PURI, KANPUR 208 002 TAN KNPAO 1902 F (RESPONDENT) (APPELLANT) NONE APPELLANT BY S HRI RANJAN SRIVASTAVA, DR RESPONDENT BY 17 /0 9 /2015 DATE OF HEARING 09/10/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE DIRECT ED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A)-II, KANPUR BOTH DATED 31.03.2015 FOR THE AYS 2008-09 & 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR AY 2008-0 9 ARE AS UNDER: 1. BECAUSE THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) II, KANPUR HAS WRONGLY STATED IN THE APPELLATE ORDER TH AT NONE OF HIS NOTICES HAVE BEEN COMPLIED WITH AND THEREFORE HE WR ONGLY CONCLUDED THAT THE APPELLANT HAD NOTHING TO SUBMIT AND IS NOT INTERESTED IN PURSUING THE APPEAL. 2. BECAUSE THE APPELLANT HAD FULLY COMPLIED WITH ALL THE ABOVE NOTICES OF THE LEARNED C1T (APPEAL) LL AND ENCLOSE HEREWITH REPLIES/ WRITTEN STATEMENTS FILED BY THE APPELLANT SOME OF WHICH WERE FILED ACROSS THE TABLE AND SOME WERE EVEN SENT BY SPEED POST, PHOTOCOPIES OF THE SPEED POST RECEIPTS WHENEV ER THE REPLIES 2 WAS SENT BY IT, ARE ALSO SUBMITTED HEREWITH TO EVID ENCE THE COMPLIANCE OF THESE NOTICES. 3. BECAUSE THE FINDING OF THE LEARNED CIT (APPEA L) THAT THE APPELLANT DID NOT ADDUCE EVIDENCE IN SUPPORT OF THE GROUNDS OF APPEAL AND WAS NOT INTERESTED IN PURSUING APPEAL IS IN VIEW OF COPIES OF REPLIES/WRITTEN STATEMENTS SOME OF WHICH WERE SENT BY SPEED POST ARE APPARENTLY WRONG, ARBITRARY, UNLAWFU L, ILLEGAL AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 4. BECAUSE THE LEARNED COMMISSIONER OF LNCOME TA X (APPEALS) 11, KANPUR ERRED IN UPHOLDING THE WRONG DEMAND OF INTER EST FOR DELAYED DEPOSIT OF TDS WHEREAS THERE WAS NO DELAY A ND THE TDS WAS DULY DEPOSITED ON 31.05.2008 THE PRESCRIBED DAT E FOR TDS DEPOSIT. 5. BECAUSE THE LEARNED CIT (APPEAL) II DID NOT TA KE INTO CONSIDERATION THE FACT OF REVISION OF TDS RETURN ON L4.Q4.2011 IN WHICH IN THE COLUMN TO INDICATE MODE OF PAYMENT OF AMOUNT ON WHICH TDS WAS REVISED FROM C TO B TO CORRECTLY SHOW THAT THE AMOUNT WAS NOT PAID BUT WAS ONLY A BOOK ENTRY THERE FORE THE PRESCRIBED DATE WAS 31.05.2008 AND NOT EARLIER. 6. BECAUSE THE FINDINGS OF THE LEARNED COMMISSIO NER OF LNCOME TAX (APPEALS) 11 ARE ARBITRARY, ILLEGAL, UNLAWFUL, BAD IN LAW AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. SIMILARLY THE GROUNDS RAISED BY THE ASSESSEE FOR AY 2009-10 ARE AS UNDER: 1. BECAUSE THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) H, KANPUR HAS WRONGLY STATED IN THE APPELLATE ORDER TH AT NONE OF HIS NOTICES DATED 24.07.2012, 18.01.2013, 15.02.2013, 0 8,08.2013, 19 08.2014 AND 16.02.2015 HAVE BEEN COMPLIED WITH AND THEREFORE HE WRONGLY CONCLUDED THAT THE APPELLANT HAD NOTHING TO SUBMIT AND IS NOT INTERESTED IN PURSUING THE APPEAL. 2. BECAUSE THE APPELLANT HAD FULLY COMPLIED WITH ALL THE ABOVE NOTICES OF THE LEARNED CIT (APPEAL) AND ENCLOSE HEREWITH 6 REP LIES/ WRITTEN STATEMENTS FILED BY THE APPELLANT SOME OF WHICH WER E FILED ACROSS THE TABLE AND SOME WERE EVEN SENT BY SPEED POST, PHOTOC OPIES OF THE SPEED POST RECEIPTS WHENEVER THE REPLIES WAS SENT B Y IT, ARE ALSO SUBMITTED HEREWITH TO EVIDENCE THE COMPLIANCE OF TH ESE NOTICES. 3 3. BECAUSE THE FINDING OF THE LEARNED CIT (APPEAL ) THAT THE APPELLANT DID NOT ADDUCE EVIDENCE IN SUPPORT OF THE GROUNDS OF AP PEAL AND WAS NOT INTERESTED IN PURSUING APPEAL IS IN VIEW OF COPIES OF REPLIES/WRITTEN STATEMENTS SOME OF WHICH WERE SENT BY SPEED POST AR E APPARENTLY WRONG, ARBITRARY, UNLAWFUL, ILLEGAL AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR ERRED IN UPHOLDING THE APPLICATION OF THE PR OVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 WHEREAS BESIDES SOM E SMALL AMOUNTS THERE WAS NO SPECIFIC EXPENDITURE INCURRED BY THE APPELLANT TO EARN TAX-FREE INCOME. 5. BECAUSE WITHOUT PREJUDICE TO GROUND OF APPEAL N O.4 ABOVE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II, KA NPUR ERRED IN UPHOLDING A MISTAKE MADE BY THE LEARNED DCIT BY WRO NGLY INCLUDING SOME INVESTMENTS INCOME OF WHICH WAS TAXABLE SUCH A S INVESTMENTS IN ICICI INDIA ADVANTAGE FUND OF RS. 435.00 LACS AND K OTAK TWIN ADVANTAGE FUND OF RS. 6.50 LACS TO CALCULATE ONE-HA LF PERCENT OF THE AVERAGE OF THE VALUE OF INVESTMENTS THE INCOME OF W HICH WAS EXEMPT. 6. BECAUSE WITHOUT PREJUDICE TO GROUND OF APPEAL N O.4 ABOVE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II, KA NPUR ERRED IN UPHOLDING A MISTAKE MADE BY THE LEARNED DCIT WHEREB Y THE DISALLOWANCE MADE UNDER RULE 8D OF RS.7,05,148.00 W HEREAS THE TOTAL OF EXPENSES AFTER MAKING SPECIFIC DISALLOWANCES OF RS.6,417.00 AND RS.4,65,793.00 CAME TO RS.2,90,231.00 ONLY AND THER EBY MAKING A TOTAL DISALLOWANCE OF RS.11,70,941.00 WHEREAS TOTAL EXPENDITURE CLAIMED BY THE APPELLANT WAS ONLY RS.7,62,441.00. 7. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR ERRED IN UPHOLDING THE DISALLOWANCE OF REMUN ERATION PAID TO A DIRECTOR BY INVOKING PROVISIONS OF SECTION 40A (2)( A) OF THE INCOME TAX ACT, 1961 WHICH WAS DULY AUTHORIZED TO BE PAID UNDER THE COMPANIES ACT. 1956 AND WAS BEING PAID FOR LAST SEV ERAL YEARS AND WAS ALSO BEING ALLOWED BY THE INCOME TAX DEPARTMENT . 8. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) II, KANPUR ERRED IN NOT TAKING INTO CONSIDERATION THE O RDER PASSED BY THE HONOURABLE ITAT LUCKNOW BENCH IN APPELLANT'S OWN CA SE FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08 IN WHICH UNDER THE SAME FACTS AND CIRCUMSTANCES THE DISALLOWANCE UNDER SECTION 14 A TOWARDS ADMINISTRATIVE EXPENSES WAS RESTRICTED TO ONLY RS.2 5,000.00. 4 9. BECAUSE THE FINDINGS OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) II ARE ARBITRARY, ILLEGAL, UNLAWFUL, BAD IN LAW AND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. IN FACT THE HEARING WAS EARLIER FIXED ON 30.07.2015 AND ON THIS DATE, THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT AND ON THE REQUEST OF THE ASSESSEE, THE HEARING WAS ADJOURNED TO 17.09.2015 AND THIS DATE OF HEARING WAS PRONOUNCED IN THE OPEN COU RT AND IN SPITE OF THIS, ON 17.09.2015, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THERE IS NO REQUEST FOR ADJOURNMENT. UNDER THESE FACTS, WE PROCEED TO HEAR THESE APPEALS EX-PARTE QUA THE ASSESSEE. 4. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR OF T HE REVENUE AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND TH AT NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) ALSO IN SPITE OF SEV ERAL NOTICES AND THEREFORE, LD. CIT(A) WAS ALSO COMPELLED TO PASS EX-PARE ORDER. IN AY 2008-09, HE HAS GIVEN A FINDING THAT THE AO HAS RAISED A DEMAND OF RS.31,61 0/- AND THE CONTENTS OF THE AOS ORDER WERE PERUSED AND FOUND CORRECT. WE HAVE ALSO SEEN THAT THE ORDER WAS PASSED BY THE AO U/S 201(1A) OF THE ACT AND WE FIND THAT I T IS NOTED BY THE A.O. THAT TDS WAS SUPPOSED TO BE PAID BY THE ASSESSEE ON OR BEFOR E 07.04.2008, BUT THE SAME WAS PAID BY THE ASSESSEE ON 04.06.2008 AND FOR SUCH DELAYED PAYMENT OF TDS, INTEREST WAS CHARGED BY THE AO U/S 201(1A) AND WE D O NOT FIND ANY INFIRMITY THEREIN. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A) FOR AY 2008-09. IN THE RESULT, APPEAL FOR AY 2008-09 IS DISMISSED. 6. REGARDING THE APPEAL OF THE AY 2009-10, WE FIND THAT ONLY ISSUE IN DISPUTE IS REGARDING DISALLOWANCE MADE BY THE AO OF RS.7,05,14 8/-. WE FIND THAT THIS SUM INCLUDES RS.6,417/- BEING EXPENSES DIRECTLY RELATAB LE TO EXEMPT INCOME AND 5 RS.6,98,731/- IS DISALLOWED @ OF 0.5% OF AVERAGE IN VESTMENT AS PER RULE 8D. SINCE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY TH E LD. CIT(A) ARE AS PER SECTION 14A AND RULE 8D OF I.T. RULES, WE DO NOT FIND ANY R EASON TO INTERFERE THEREIN. REGARDING SECOND DISALLOWANCE OF RS.4,65,793/- OUT OF COMMISSION EXPENDITURE, WE FIND THAT THE AO HAS MADE DETAILED ANALYSIS OF THE WORK DONE BY M/S PREMO TANDON, DIRECTOR AND HE HAS GIVEN A FINDING THAT THERE ARE ONLY TWO INSTANCES OF PURCHASE OF SHARES THROUGH BROKER AND 15 INSTANCES OF SALE OF S HARES THROUGH BROKER AND THERE ARE ONLY 247 ENTRIES AS PER HSBC MUTUAL FUND CONFIR MATIONS. HE HAS ALSO NOTED THAT TOTAL DEPOSIT ENTRIES IN ALL BANK ACCOUNTS ARE ONLY 121 AND TOTAL WITHDRAWAL ENTRIES IN ALL BANK ACCOUNT ARE ONLY 61. BASED ON THIS ANALYSI S OF TOTAL WORK DONE, HE HAS GIVEN A FINDING THAT A SALARY OF RS.10,000/- PER MONTH IS CONSIDERED JUSTIFIED IN THE PRESENT CASE AND ON THIS BASIS, HE ALLOWED DEDUCTION OF RS. 1.20 LAKH AND DISALLOWED THE BALANCE AMOUNT OF RS.4,65,793/- BEING EXTRA PAID TO THE DIRECTOR. AFTER CONSIDERING THE FACTS OF THE PRESENT CASE, ON THIS ISSUE ALSO, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). BOTH THE ISSU ES ARE DECIDED AGAINST THE ASSESSEE. IN THE RESULT, APPEAL FOR AY 2009-10 IS A LSO DISMISSED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 09/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGI STRAR