M/S Dey Book Concern, Kolkata V. A.C.I.T Cir - 37,kolkata, Kolkata

ITA 387/KOL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3368 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUVEEL JCITSRDR
• Assessee Lawyers: RAVI TULSIYA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 387 / KOL / 2013 ASSESSMENT YEAR :2009-10 M/S DEY BOOK CONCERN, 15, SHYAMCHARANDEY STREET, KOLKATA -73 [ PAN NO.AAEFD 2942 C ] V/S . ACIT, CIRCLE-37, KOLKATA /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI RAVI TULSIYA, FCA /BY RESPONDENT SHRI RAJAT KR. KUVEEL, JCIT-SR-DR /DATE OF HEARING 27-11-2015 /DATE OF PRONOUNCEMENT 20-01-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANTMEMBER:- THIS APPEAL BY ASSESSEE IS AGAINST THE ORDER OF CO MMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATAIN APPEAL NO.1051 CIT(A)-XXIV/C-37/11- 12 DATED 19.12.2012. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-37, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.12.2011 FOR ASSESSMENT YEAR 2009 -10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE A RBITRARY, ERRONEOUS, WITHOUT PROPER REASONING, INVALID AND BAD IN LAW, T O THE EXTENT TO WHICH THEY ARE PREJUDICIAL TO THE INTE5EST OF THE APPELLANT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OUT OF BOOK DISTRIB UTION EXPENSES TO THE ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 2 EXTENT OF 9,69,062/- BEING 15% OF THE TOTAL EXPENSES CLAIMED IN THIS REGARD AT 64,60,413/- INSTEAD OF ALLOWING THE FULL CLAIM. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OUT OF CARRIAGE INW ARD EXPENSES AT 6,999/- AND OUT OF CARRIAGE OUTWARD EXPENSES AT 7,307/- INSTEAD OF ALLOWING THE FULL CLAIMS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF 1,303/- AND 7,750/- OUT OF GANESH PUJA EXPENSES AND BENGALI NEW YEAR CELEBRATION EXPENSE S RESPECTIVELY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OUT OF SALES PROMOT ION EXPENSES AT 70,904/-, BEING 10% OF THE TOTAL CLAIM OF 7,09,039/- IN THIS REGARD. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT ERRED IN SUSTAINING THE DISALLOWANCE OUT OF CANVASSING CHAR GES AT 99,623/-, BEING 10% OF THE TOTAL CLAIM OF 9,96,235/- IN THIS REGARD. 3. FIRST GROUND RAISED BY ASSESSEE IS THAT LD. CIT( A) ERRED IN SUSTAINING THE DISALLOWANCE OF BOOK DISTRIBUTION EXPENSES TO T HE EXTENT OF 9,69,062/- BEING 15% OF TOTAL EXPENSE CLAIMED BY ASSESSEE OF 64,60,413/-. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PART NERSHIP FIRM ENGAGED IN THE PUBLICATION BUSINESS WHICH INVOLVES BOTH PUBLIS HING AND SELLING BOOKS. DURING THE YEAR ASSESSEE HAS CLAIMED EXPENSE FOR AN AMOUNT OF 64,60,413/- ON ACCOUNT OF BOOKS DISTRIBUTION. THE ASSESSEE SUBM ITTED THAT DISTRIBUTION OF SAMPLE OR SPECIMEN BOOKS TO EDUCATIONAL INSTITUTION S, TEACHERS AND ACADEMICIANS IS ESSENTIAL FOR THE PURPOSE OF MAKING THE BOOKS POPULAR. ONCE THE BOOKS BECOME POPULAR AMONG THE USERS OF THE BOO KS THEN IT IS EASY TO INTRODUCE THE BOOKS IN SCHOOLS & COLLEGES FOR THE C ORRESPONDING ACADEMIC SESSIONS. THE ASSESSEE ALSO SUBMITTED THAT DISTRIBU TION OF SAMPLE BOOKSIN PUBLICATION INDUSTRY IS VERY MUCH PREVALENT AND ESS ENTIAL TO MAKE BONANZA SALE OF THE BOOKS IN COMPETITIVE MARKET. HOWEVER, T HE AO CALLED UPON THE ASSESSEE FOR THE VERIFICATION OF THE EXPENSES BUT T HE ASSESSEE COULD NOT SUBMIT BILLS AND VOUCHERS IN SUPPORT ITS BOOK DISTR IBUTION EXPENSES. ASSESSEE SUBMITTED ONLY CERTAIN RECEIVING REGISTERS WHICH WE RE SIGNED BY VARIOUS ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 3 EDUCATIONAL INSTITUTIONS, TEACHERS AND ACADEMICIANS TO WHOM SPECIMEN COPIES OF BOOKS WERE GIVEN. IT WAS OBSERVED BY AO FROM REC EIVING REGISTERS THAT STAMPS OF VARIOUS REPUTED COLLEGES WERE ALSO MENTIO NED. BESIDES, SOME INDIVIDUAL NAMES OF RECIPIENTS OF SAMPLE BOOKS ALSO WERE RECORDED ALONG WITH PHONE NUMBERS. THE AO RANDOMLY RANG UP TO SOME OF P HONE NUMBERS FOR THE PURPOSE OF VERIFICATION BUT MOST OF THE NUMBERS WER E FOUND OUT OF SERVICES, WHILE OTHER PERSONS REFUSED TO ACKNOWLEDGEOF HAVING RECEIVED ANY SAMPLE BOOK. THE ASSESSEE FURTHER SUBMITTED THAT NO SCHOOL S, COLLEGES AND TEACHERS WILL ADMIT THE FACT THAT THEY HAVE RECEIVED THE SAM PLE BOOKS BECAUSE THIS SYSTEM OF BOOK DISTRIBUTION IS OUTSIDE THE NORM OF EDUCATIONAL SYSTEM. AS SUCH THE AO COULD NOT VERIFY THE EXPENSE REGARDING DISTR IBUTION OF SAMPLE BOOKS, THEREFORE DISALLOWED 35% OF EXPENSE AS CLAIMED BY A SSESSEE UNDER THE HEAD BOOK DISTRIBUTION. ACCORDINGLY, AO ADDED A SUM OF 22,61,145/- TO THE INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ACTION OF AO AFTER GIVING PARTLY RELIEF BY OBSE RVING IN PARA-3.3 OF HIS ORDER, WHICH REPRODUCED BELOW:- 3.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSIONS OF THE LD . A/R. DURING THE YEAR, THE APPELLANT HAS INCURRED AN EXPENDITURE OF RS.64, 60,413/- ON ACCOUNT OF BOOK DISTRIBUTION. THE APPELLANT COULD NOT PRODUC E THE SUPPORTING BILLS AND VOUCHERS BEFORE THE A.O AT THE TIME OF SCRUTINY ASS ESSMENT. DURING THE CURSE OF APPEAL, THE LD. A/R HAS EXPLAINED THAT THE APPEL LANTS BUSINESS OF PUBLISHING AND SELLING BOOKS DEPENDS ON THE DISTRIB UTION OF SAMPLE/SPECIMEN BOOKS TO VARIOUS EDUCATIONAL INSTITUTIONS AND TEACH ER. KEEPING IN VIEW THE VOLUME OF THE BUSINESS, I AM OF THE OPINION THAT TH E EXPENDITURE SHOWN AT RS.64,60,413/- ON ACCOUNT OF BOOK DISTRIBUTION IS V ERY HIGH AND EXCESSIVE. IN MY OPINION, IT WOULD BE REASONABLE AND PROPER IF TH E DISALLOWANCE OUT OF BOOK DISTRIBUTION EXPENSES IS RESTRICTED TO RS.9,69,062/ - BEING 15% OF BOOK DISTRIBUTION EXPENSES. ACCORDINGLY THE AO IS DIRECT ED TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF BOOK DISTRIBUTION EXPENS ES TO RS.9,69,062/- INSTEAD OF RS.22,61,145/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASS ESSEE PREFERRED SECOND APPEAL BEFORE US. ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 4 7. SHRI RAVI TULSIYAN, LD. AUTHORIZED REPRESENTATI VE APPEARING ON BEHALF OF ASSESSEE AND SHRI RAJAT KR. KUVEEL, LD. DEPARTMENTA L REPRESENTATIVE APPEARING ON BEHALF OF REVENUE. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD AR SUBMIT TED A PAPER BOOK WHICH IS RUNNING TOPAGES FROM 1 TO 429. THELD. AR SUBMITTED THAT ASSESSEE IS ENGAGED IN PUBLICATION BUSINESS WHICH REQUIRESLOT OF PROMOT IONAL ACTIVITIES FOR THE GROWTH OF BUSINESS. FOR THAT PURPOSE, IT IS NECESSA RY TO DISTRIBUTE THE SAMPLE BOOKS AMONGST STUDENTS AND TEACHERS SO AS TO INCREA SE SALE OF SUCH BOOKS. AS PER THE PREVAILING PRACTICE IN PUBLICATION BUSIN ESS, THE PROMOTION OF BOOK SELLING IS DONE BY DISTRIBUTING SPECIMEN COPIES OF THE BOOKS TO VARIOUS EDUCATIONAL INSTITUTIONS LIKE SCHOOLS, COLLEGES AND TEACHERS/PRINCIPLES OF SUCH EDUCATIONAL INSTITUTIONS. THE LD. AR FURTHER SUBMIT TED THAT ASSESSEE DISTRIBUTED SAMPLE BOOKS FREE OF COST TO THE ABOVEM ENTIONED PARTIES AFTER TAKING ACKNOWLEDGEMENT FROM THOSE CONCERNED PARTIES AND IN THIS REGARD OUR ATTENTION WAS DRAWN AT PAGES 33 TO 45 OF THE PAPER BOOK, WHEREIN THE RECEIVING OF SAMPLE BOOKS WERE DULY SIGNED BY THE R ECIPIENTS.THE ASSESSEE ALSO SUBMITTED THAT DISTRIBUTION OF SAMPLE BOOKS DO ES NOT INCREASE SALE IN SAME YEAR BUT IN THE YEAR WHEN SAMPLE BOOKS ARE INC LUDED IN THE CURRICULUM OF NEXT ACADEMIC SESSION. LD. AR SUBMITTED THAT SAM PLE BOOKS DISTRIBUTION IS AN INTEGRAL PART OF A PUBLICATION HOUSE AND PRAYED FOR ALLOWING OF ALL THE EXPENSES INCURRED IN RELATION TO SAMPLE BOOKS DISTR IBUTION EXPENSES. ON THE OTHER HAND, LD.DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 9. FROM THE AFORESAID DISCUSSION, WE FIND THAT AO D ISALLOWED THE EXPENSE IN RELATION TO SAMPLE BOOKS DISTRIBUTION ON THE BAS IS OF NON-AVAILABILITY OF SUPPORTING DOCUMENTS AT THE TIME OF ASSESSMENT PROC EEDINGS. THE ASSESSEE WAS ABLE TO PRODUCE ONLY THE RECEIVING REGISTERS DU LY SIGNED BY THE RECIPIENTS TO WHOM THE SPECIMEN COPIES WERE GIVEN. IN THE ABSE NCE OF DOCUMENTARY EVIDENCE THE AO DISALLOWED SUCH EXPENSE ON THE BASI S OF REASONABLE ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 5 ESTIMATE. WE FURTHER FIND THAT SUCH EXPENSE CLAIMED BY ASSESSEE FOR DISTRIBUTING OF SAMPLE BOOKS ARE NOT SUPPORTED FROM THE BILLS & VOUCHERS. HOWEVER, LD. AR WAS ABLE TO GIVE THE REGISTERS, WHE REIN THE DETAILS OF RECIPIENTS OF SAMPLE BOOKS WERE CONTAINED. WE ALSO FIND THAT DISALLOWANCE WAS MADE BY AO @ 35% OF TOTAL BOOK DISTRIBUTION EXP ENSE WHICH HAS BEEN REDUCED BY LD. CIT(A) TO 15%. FROM THE ORDER OF LOW ER AUTHORITIES WE FIND THAT THAT THE NATURE OF THE EXPENSES HAS NOT BEEN DOUBTE D BUT THE SUPPORTING EXPENSES VOUCHERS HAVE NOT BEEN PRODUCED, SO THE DI SALLOWANCE WAS MADE ON ESTIMATED BASIS. NO COMPARISON OF SUCH EXPENSES CLAIMED BY THE ASSESSEE IN THE PRECEDING YEARS OR SUBSEQUENT YEARS RELEVANT TO THE YEAR UNDER CONSIDERATION HAS BEEN FURNISHED. CONSIDERING THE FACT REGARDING THE IMPORTANCE OF DISTRIBUTION OF SAMPLE BOOKS AND TOTA LITY OF THE CLAIM OF ASSESSEE WE FURTHER RESTRICT THE DISTRIBUTION OF SU CH EXPENSES TO THE EXTENT OF 5%. ACCORDINGLY, WE DIRECT THE AO TO RE-COMPUTE THE DISALLOWANCE OF SAMPLE BOOKS DISTRIBUTION EXPENDITURE @ 5% OF THE TOTAL EX PENSE INCURRED BY ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS PARTL Y ALLOWED. 10. GROUND NO. 2RAISED BY THE ASSESSEE IN THIS APPE AL IS THAT LD. CIT(A) ERRED IN SUSTAINING DISALLOWANCE OF CARRIAGE INWARD EXPENSE OF 6,999/- AND CARRIAGE OUTWARD EXPENSES AT 7,307/-. 11. DURING THE YEAR, ASSESSEE HAS CLAIMED CARRIAGE INWARD EXPENSES FOR AN AMOUNT OF 69,990/- WHICH WAS SUPPORTED FROM THE DEBIT VOUCHE RS. THEREFORE, AO HAS DISALLOWED 25% OF CARRIAGE INWARD EXPENSES AND ADDED TO THE INCOME OF ASSESSEE. 12. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO HAS REDUCED THE DISALLOWANCE TO THE EXTENT OF 10% OF CA RRIAGE INWARD EXPENSES BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THE LD. A/R. CONSIDERING THE VOLUME OF THE BUSINESS, THE AO IS DIRECTED TO RESTR ICT (I) THE DISALLOWANCE OUT ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 6 OF CARRIAGE INWARD EXPENSES TO RS.6,999/- AND (II) THE DISALLOWANCE OUT OF CARRIAGE OUTWARD EXPENSES TO RS.7,307/- INSTEAD OF RS.17,498/- AND RS.18,267/- RESPECTIVELY. THESE GROUNDS OF APPEAL A RE PARTLY ALLOWED. 13. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) AS SESSEE PREFERRED SECOND APPEAL BEFORE US. 14. BEFORE US LD. AR SUBMITTED THAT THE ASSESSEE HA S TO PAY CHARGES TO COOLIES AND TRANSPORTS FOR BRINGING THE BOOKS FROM BINDERS TO ITS SALES COUNTER AND THEN AGAIN CARRY THEM OUT TO THE DISTRIBUTORS F OR DELIVERY. SUCH EXPENSES ARE PETTY IN NATURE BUT NUMEROUS IN NUMBER, THE TRA NSPORTERS TO WHOM PAYMENTS ARE MADE ARE USUALLY MINIVAN DRIVERS OR RI CKSHAW PULLERS. THEREFORE, PAYMENTS TO SUCH COLLIES/TRANSPORTERS ARE ONLY MADE IN CASH. MOREOVER, PAYMENTS MADE TO COOLIES/TRANSPORTERS IN THIS REGAR D CONSIST OF VARIOUS AMOUNTS RANGING FROM 10 TO 2,875/-. IT IS ONLY POSSIBLE TO MAKE SUCH PAYMENTS IN CASH AND NOT THROUGH ANY BANKING CHANNE L. IT WAS ALSO SUBMITTED BY LD. AR THAT ON THE REVERSE SIDE OF VOUCHERS THE NAMES OF COOLIES/TRANSPORTS TO WHOM PAYMENT WERE MADE PUT TH EIR SIGNATURES/THUMB IMPRESSIONS. EVIDENCING THE GENUINENESS OF THE EXPE NSE, SAMPLE COPIES OF DEBIT VOUCHERS RELATING TO CARRIAGE INWARD AND C ARRIAGE OUTWARD ENCLOSED AT PAGE NO. 46 TO 89 OF THE PAPER BOOK IS ENCLOSED. TH E ASSESSEE HAS ALSO SUBMITTED A CHART IN SUPPORT OF ITS CLAIM.ON THE OT HER HAND LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 15. AT THE TIME OF HEARING, WE FIND FROM THE CHART GIVEN BY LD. AR IN RELATION TO ABOVE STATED EXPENSES THAT ASSESSEE HAS BEEN INC URRING SUCH EXPENSES FOR THE ABOVE STATED ACTIVITIES AND NO DISALLOWANCE HAS BEEN MADE IN THE PAST. BESIDES, THIS, WE FIND THE AMOUNT INCURRED BY ASSES SEE IS MEAGER. CONSIDERING THE SUBMISSION OF LD. AR AND TOTALITY O F THE FACTS, WE REVERSE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION S MADE BY AO. THIS GROUND NO. 3 OF ASSESSEES APPEAL IS ALLOWED. ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 7 16. GROUND NO.3 RAISED BY THE ASSESSEE IN THIS APPE AL IS THAT LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF 1,303/- AND 7,750/- OUT OF SHREE GANESH PUJA AND BENGALI NEW YEAR CELEBRATION EXPE NSES. 17. DURING THE YEAR ASSESSEE HAS CLAIMED EXPENSES F OR THE PURPOSE OF GANESH PUJA FOR AN AMOUNT OF 5,210/-AND NEW BENGALI YEAR CELEBRATION FOR AN AMOUNT OF 31,000/- ONLY. MOSTLY, THESE EXPENDITURES WERE INCU RRED IN CASH AND SUPPORTED WITH DEBIT VOUCHERS ONLY. THEREF ORE, AO HAS DISALLOWED 25% OF SUCH EXPENSES AND ADDED TOTAL INCOME OF ASSE SSEE. 18. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO HAS UPHELD THE ACTION OF AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THE LD. A/R. CONSIDERING THE NATURE OF THE BUSINESS, THE DISALLOWANCES OF RS.1,3 03/- AND RS.7,750- OUT OF GANESH PUJA AND BENGALI NEW YEAR CELEBRATION RESPEC TIVELY ARE CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 19. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) AS SESSEE PREFERRED SECOND APPEAL BEFORE US. 20. BEFORE US LD. AR SUBMITTED THAT GANESH PUJA I S CONSIDERED NECESSARY FOR BETTERMENT OF ITS BUSINESS. INDIANS HAVE EMOTIO NAL ATTACHMENT WITH SUCH FESTIVAL OF GANESH PUJA. THE PEOPLE OF WEST BENGA LALSO CELEBRATEBENGALI NEW YEAR.ASSESSEE HAS INCURRED EXPENSES ON THE PUR CHASE OF FLOWERS AND SWEETS WHICH WERE DISTRIBUTED AMONGST THE WORKERS A ND BUSINESS ASSOCIATES. THE NECESSARY DETAIL OF SUCH EXPENSE IS ENCLOSED AT PAGES 91 TO 93 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED BY LD. AR THAT SU CH EXPENSES HAVE BEEN INCURRED BY ASSESSEE IN THE EARLIER ASSESSMENT YEAR AND NO DISALLOWANCE WAS MADE. FINALLY, ASSESSEE PRAYED FOR RELIEF OF SUCH E XPENSES. ON THE OTHER HAND LD. DR SIMPLY RELIED ON THE ORDERS OF AUTHORITIES B ELOW. ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 8 21. FROM THE AFORESAID DISCUSSION, WE FIND THAT AO DISALLOWED SUCH EXPENSES ON AD HOC BASIS @ 25% OF THE ABOVE-STATED EXPENSES. HOWEVER, WE FIND FROM THE DETAILS OF EXPENSES GIVEN BY ASSES SEE IN THE FORM OF A COMPARATIVE CHART THAT SUCH EXPENSES HAVE BEEN INCU RRED BY ASSESSEE IN EARLIER YEAR AND NO DISALLOWANCE HAVE BEEN MADE ON THIS ACCOUNT. THEREFORE, IN ORDER TO MAINTAIN THE CONSISTENCY OF SUCH EXPENS ES WE DEEM IT FIT TO REVERSE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE SAME . THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 22. GROUND NO. 4 RAISED BY THE ASSESSEE IN THIS APP EAL IS THAT LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF SALES PROMO TION AT 70,904/- BEING 10% OF 7,09,039/- 23. DURING THE YEAR ASSESSEE HAS CLAIMED SALES PROM OTION EXPENSE FOR AN AMOUNT OF 7,09,039/- WHICH IS COMPRISING THE FOLLOWING:- A. EXPENSES REIMBURSED FOR SALES CAMPAIGN LOCALLY RS.58,406/- B. EXPENSES REIMBURSED FOR SALES CAMPAIGN IN THE DI STRICT RS.3,24,467/- C. CAR HIRED EXPENSES FOR THE ABOVE RS.3,26,166/ - 23.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O FOUND THAT ALL THE EXPENSES CLAIMED BY ASSESSEE IN THE CASE OF (A) AND (B) HAVE BEEN INCURRED IN CASH. THE ASSESSEE HAS PRODUCED ONLY DEBIT VOUCH ERS IN SUPPORT OF ITS CLAIM. THEREFORE, AO HAS DISALLOWED THE ABOVE EXPEN SES @ 15% AND ADDED BACK TO THE TOTAL INCOME OF ASSESSEE. HOWEVER, IN CASE OF (C) ASSESSEE HAS PRODUCED VOUCHERS IN SUPPORT ITS CLAIM BUT AO FOUND ON ESTIMATE BASIS THAT 20% OF SUCH EXPENSES ARE IN PERSONAL NATURE. THEREF ORE, 20% OF SUCH EXPENSES ARE DISALLOWED AND ADDED TO THE TOTAL INCO ME OF ASSESSEE. 24. AGGRIEVE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO HAS REDUCED SUCH EXPENSE TO THE EXTENT OF 10% BY OBSERV ING AS UNDER:- ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 9 6.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THE LD . A/R. DURING THE YEAR, THE APPELLANT HAS INCURRED AN EXPENDITURE OF RS.7,0 9,039/- ON ACCOUNT OF SALES PROMOTION EXPENSES. DURING THE COURSE OF APPE AL, THE LD. A/R HAS EXPLAINED THAT THE APPELLANT DEBITED EXPENSES WHICH WERE INCURRED BY THE SALES BOYS DURING SALES PROMOTION CAMPAIGNS IN DIFF ERENT PLACES OF WEST BENGAL SO THAT THE BOOKS PUBLISHED BY THE APPELLANT WERE ENLISTED IN DIFFERENT SCHOOLS. IN THE ASSESSMENT ORDER, THE AO HAS OBSERV ED THAT THE VOUCHERS IN RELATION TO SALES PROMOTION EXPENSES HAVE BEEN MOST LY MAINTAINED. CONSIDERING THE FACTS OF THE CASE, THE AO IS DIRECT ED TO RESTRICT THE DISALLOWANCE TO RS.70,904/-, BEING 10% OF SALES PRO MOTION EXPENSES INSTEAD OF RS.1,41,808/-. THIS GROUND OF APPEAL IS PARTLY A LLOWED. 25. BEFORE US LD. AR OF ASSESSEE SUBMITTED THAT THE ASSESSEE IN ORDER TO POPULARIZE ITS BUSINESS IN ALL AVENUES OF EDUCATION CONDUCTS PROMOTIONAL CAMPAIGNS THROUGH ITS SALES EXECUTIVE TO INCREASE S ALES ALL OVER OF THIS STATE. FOR THIS PURPOSE SALES EXECUTIVES TRAVEL IN AND OUT SIDE KOLKATA TO DISTRIBUTE BOOKS IN DIFFERENT AREAS AS A PART OF THIS CAMPAIGN . FOR THESAME, THE EMPLOYEES OF THE ASSESSEE INCUR EXPENSES ON FOOD AN D ACCOMMODATION, TRAVELLING ETC. THE EMPLOYEES ARE PAID IN ADVANCE F OR THE SAME. HOWEVER, AFTER RETURNING FROM SUCH CAMPAIGNS, THE EMPLOYEES SUBMITDETAILS OF ACTUAL EXPENSES INCURRED BY THEM. EVIDENCING THESE EXPENSE S, SAMPLE COPIES OF BILLS RELATING TO LODGING EXPENSES ARE ENCLOSED AT PAGE NOS. 107 TO 112 OF THE PAPER BOOK. HOWEVER THERE WAS NO BILL AVAILABLE FOR EXPENSES INCURRED ON FOOD SINCE BILLS FROM HAWKERS OR STREET FOOD CENTRE ARE USUALLY NOT AVAILABLE. THE EXECUTIVES ARE REQUIRED TO EAT AT SMALL VENDORS AND ARE NOT PERMITTED TO EAT AT RESTAURANTS,THEREFORE PROPER BILLS ARE NOT I SSUED FOR THE FOOD EXPENSE. FURTHER, SOMETIMES CAR IS HIRED FOR TRAVELLING IN A ND AROUND KOLKATA AND THE PAYMENTS FOR THE SAME ARE MADE SOMETIME THROUGH CHE QUE AND SOMETIME IN CASH. EVIDENCING THESE EXPENSES SAMPLE COPIES OF BI LLS RELATING TO CAR HIRING EXPENSES ARE ENCLOSED AT PAGE NO. 113 TO 142 OF THE PAPER BOOK. ON THE OTHER HAND LD. DR SIMPLY RELIED ON THE ORDERS OF AU THORITIES BELOW. 26. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASS ESSEE HAS BEEN CLAIMING THESE EXPENSES IN THE EARLIER YEARS AND SUBSEQUENT YEAR TO THE RELEVANT YEAR. BUT NO DISALLOWANCE HAS BEEN MADE IN RESPECT OF THE ABOVE EXPENSES IN ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 10 EARLIER YEARS AND SUBSEQUENT YEARS TO THE RELEVANT ASSESSMENT YEAR.WE FIND THAT THE AO HAS DISALLOWED THE EXPENSES ON ADHOC BASIS DUE TO NON PRODUCTION OF THE SUPPORTING BILLS AND VOUCHERS. HO WEVER THE LD. AR BEFORE US HAS SUBMITTED A CHART SHOWING THE COMPARISON BETWEE N THE TURNOVER AND SUCH EXPENSES FOR THE EARLIER YEARS AND SUBSEQUENT YEAR. THE PURPOSE OF THIS COMPARISON OF EXPENSES OF VARIOUS YEARS ISTO JUSTIF Y THAT THE ASSESSEE HAS BEEN INCURRING SUCH EXPENSES CONSISTENTLY AND NO IS SUE FOR THE DISALLOWANCE AROSE.IN VIEW OF ABOVE AND IN THE INTEREST OF JUSTI CE WE REVERSE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION. THIS GRO UND OF ASSESSEES APPEAL IS ALLOWED. 27. GROUND NO. 5RAISED BY THE ASSESSEE IN THIS APPE AL IS THAT LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF CANVASSING CHARGES AT 99,623/- BEING 10% OF RS. 9,96,235/- 28. DURING THE YEAR ASSESSEE HAS CLAIMED A SUM OF 9,96,235/- TOWARDS THE CANVASSING CHARGES. IT WAS CLAIMED THAT ASSESSEE IS HAVING CERTAIN AGENTS WHO USED TO GO TO THE SHOP OWNERS IN SUNBURN AREAS FOR THE PROMOTION OF ITS PUBLISHING BOOKS. THE AGENTS USED TO CHARGE SOME CO MMISSION FOR THE SALE OF BOOKS AND FOR COLLECTING THE SALE CONSIDERATION FRO M THE SHOP OWNERS. DURING ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE PAYMEN TS HAVE BEEN INCURRED PARTIALLY IN CASH AND PARTIALLY IN CHEQUE. THE ASSE SSEE DID NOT PRODUCE ALL THE VOUCHERS IN SUPPORT OF ITS CLAIM. THEREFORE, 25% OF SUCH EXPENSES WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSE E. 29. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO REDUCED THE DISALLOWANCE TO THE EXTENT OF 10% OF SUCH EXPEN SES BY OBSERVING AS UNDER:- 7.3 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO THE SUBMISSION OF THE LD. A/R. DURING THE YEAR, THE APPELLANT HAS INCURRED THE EXPENDITURE OF RS.2, 49,059/- ON CANVASSING CHARGES. DURING THE COURSE OF APPEAL, THE LD. A/R H AS EXPLAINED THAT THE APPELLANT HAS PAID COMMISSIONS TO BOOK SHOP OWNERS IN SUB-URBAN AREAS FOR ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 11 PROMOTING BOOKS PUBLISHED BY IT. CONSIDERING THE NA TURE OF THE BUSINESS OF THE APPELLANT, THE AO IS DIRECTED TO RESTRICT THE DISAL LOWANCE TO RS.99,623/-, BEING 10% OF CANVASSING CHARGES INSTEAD OF RS.2,49,059/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 30. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) AS SESSEE PREFERRED SECOND APPEAL BEFORE US. 31. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BEFORE US LD. AR SUBMITTED THAT THE ASSESSE E USED TO PAY COMMISSION TO BOOK SHOPS OWNER IN SUB-URBAN AREAS F OR PROMOTING BOOKS PUBLISHED BY IT AND REFLECTED SUCH EXPENSES UNDER T HE HEAD CANVASSING CHARGES. THE NECESSARY DETAIL OF THE CANVASSING CH ARGES IS ENCLOSED AT PAGE NO. 143 TO 429 OF THE PAPER BOOK. ON THE OTHER HAND LD. DR SIMPLY RELIED ON THE ORDERS OF AUTHORITIES BELOW. 32. FROM THE AFORESAID DISCUSSION, WE FIND THAT THE ASSESSEE HAS BEEN INCURRING SUCH EXPENSES FOR CANVASSING CHARGES FOR WHICH NO DISALLOWANCE HAS BEEN MADE BY REVENUE EITHER IN EARLIER YEAR OR SUBSEQUENT YEAR. THEREFORE TO KEEP THE CONSISTENCY INCURRING BY ASSE SSEE FOR SUCH EXPENSES AND CONSIDERING THE FACTS OF THE CASE, WE DELETE TH E ADDITIONS MADE BY AO AND CONFIRMED BY LD. CIT(A) AND AO IS DIRECTED ACCO RDINGLY. 33. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 20/0 1/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 20 / 0 1/201 6 ITA NO.387/KOL/2013 A.Y. 2009-10 M/S DEY BOOK CONCERN V ACIT CIR-37 KOL. PAGE 12 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S DEY BOOK CONCERN, 15, SHYAMCHARAN DE Y ST. KOL-73 2. /RESPONDENT-ACIT, CIR-37, KOLKATA 3. ) *+ , , - / CONCERNED CIT KOLKATA 4., , -- / CIT (A) KOLKATA 5. 012 33*+,, *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,