M/s. Bharat Tractors Pvt. Ltd., JODHPUR V. DCIT, BIKANER

ITA 398/JODH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7850 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U C JAIN

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 398 /JODH/2014 (A.Y. 20 1 0 - 11 ) M/S. BHARAT TRACTORS PVT. LTD., BAJ AJ SHOWROOM, NEAR RAIL DADA BADI, GANGA SAHAR , BIKANER. VS. DCIT, CIRC L E - I, BIKANER. PAN NO. AACCB 3693 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.C. JAIN DEPARTMENT BY : SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 17 / 0 9 /201 4 . DATE OF PRONOUNCEMENT : 22 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 2 7 /05 /2014 OF L D . CIT(A), BIKANER . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING ADDITION OF RS. 1,50,000/ - MADE BY LD. A.O. BY DISALLOWING CLAIM OF EXPENDITURE UNDER FOLLOWING HEADS: - 2 A) OUT OF DENTING & PAINTING EXPENSES 75,000/ - B) EXPENSES INCURRED IN RESPECT OF JOB CHARGES 75,000/ - 1,50,000/ - 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE UNDER THE FOLLOWING HEADS: - A) 15% OUT OF CLAIM OF REBATE & DI SCOUNT EXPENSES 6 5 , 484 / - B) OUT OF CLAIM OF EXPENDITURE DEBITED TO P & L A / C 5 5 ,000/ - 1, 2 0, 484 / - 3. THAT THE PETITIONER MAY KINDLY BE PERMITTED TO RAISE ANY ADDITIONAL OR ALTERNATIVE GROUNDS AT OR BEFORE THE TIME OF HEARING. 4. THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 2 GROUND NOS. 3 & 4 ARE GENERAL IN NATURE, SO DO NOT REQUIRE ANY COMMENTS ON OUR PART. VIDE GROUND NO. 1, THE GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS. 1,50,000/ - . 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 21/09/2011 DECLARING AN INCOME OF RS. 27,45,020/ - WHICH WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE CLAIMED CONSUMPTION OF PAINTING MATERIAL AT RS. 10,40,225/ - WHEREAS IN THE PRECEDING YEAR , IT WAS RS. 6,64,700/ - , HENCE, EXCESS CLAIMED WAS OF RS. 3,75,525/ - (56.50%) WHILE 3 CORRESPONDING SERVICES CHARGES RECEIPTS INCREASED TO RS. 68,00,279/ - FROM RS. 46,88,155/ - (45.05%) . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE CLAIMED EXPENSES EXCESS BY 56.50% WHILE PROPORTIONATE INCREASE IN SERVICE CHARGES WAS 45.05%. HE DISALLOWED RS. 75,000/ - . SIMILARLY, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE CLAIMED EXCESS PAYMENT TO OUTSIDE JOB WORKSHOP BY 66.53% WHILE PROPORTIONATE INCREASE IN SERVICE CHARGES RECEIPTS WAS 45.05% . U NDER THIS HEAD ALSO, THE ASSESSING OFFICER DISALLOWED RS. 75,000/ - AND ADDED TO THE INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT IN RESPECT OF PAYMENT OF OUTSIDE JOB WORK BILLS WERE MAINTAINED AND WHERE THE PAYMENT WAS MADE TO SMALL REPAIRING SHOPS WHO DID NOT MAINTAIN BILL BOOKS, THE EXPENSES WERE ACCOUNTED FOR ON THE BASIS OF INTERNAL VOUCHERS DULY SIGNED BY SHOP KEEPER ON THE SLIP ISSUED TO OUTSIDER MISTRI BEARING JOB CARD NUMBER THROUGH WHICH WORK SHOP INVOICES WERE PREPARED CHARGING JOB WORK FROM CUSTOMERS. IT WAS FURTHER STATED THAT IN SOME W ARRANTY CLAIMS, JOB WORK OF DENTING & PAINTING WORK WAS ALSO REQUIRED TO BE CARRIED OUT AS THE VEHICLES WERE DENTED AND DEFACED THE COLOUR WHILE REPLACEMENTS OF SPARE PARTS AND REPAIR WORKS. IN THESE CASE S , PAYMENTS FOR DENTING & PAINING MATERIALS WERE IN CURRED, BUT NO SEPARATE RECEIPTS OF SERVICE CHARGES WERE THERE FROM THE CUSTOMERS AS 4 VEHICLES WERE COVERED UNDER WARRANTY SCHEME. IT WAS FURTHER STATED THAT INCREASE IN THE EXPENDITURE WAS NO CRITERIA BY ITSELF FOR DISALLOWANCE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1) CIT VS. CHANDULAL KESHAVLAL & CO. (38 ITR 601) 2) J K WOOLLEN MANUFACTURES VS. CIT (72 ITR 612) 3) ALUMINUM CORP. OF INDIA LTD. VS. CIT (86 ITR 11) 4) SHAHZADA NAND & SONS VS. CIT (108 ITR 358) 5) CIT VS. RAJENDRA PRASAD MOODY (115 ITR 519) 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS FAIR AND REASONABLE AND DID NOT CALL FOR ANY INTERFERENCE BECAUSE THE ASSESSEE HIMSELF ACCEPTED THE FACT THAT TO SMALL REPA I RING SHOPS WHO DID NOT MAINTAIN BILL BOOK S, THE EXPENSES WERE ACCOUNTED FOR ON THE BASIS OF INTERNAL VOUCHERS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS SUSTAINED. NOW THE ASSESSEE IS IN APPEAL. 6 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW WHILE LEARNED D.R. STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) . 5 7 . WE HAVE CONSIDERED THE S UBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE EXPLAINED THE REASON FOR INCREASING THE EXPENSES WHICH WAS MAINLY DUE TO WARRANTY SCHEME AND NO RECOVERY WAS MADE IN THOSE CASE WHERE WARRANTY PERIOD WAS INEXISTENCE . THE ASSESSING OFFICER DID NOT POINT OUT ANY ITEM OF EXPENSES WHICH WAS NOT INCURRED FOR THE BUSINESS PURPOSES . THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. 8 . NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE CONFIRMATION OF ADDITION OF RS. 65,484/ - @ 15% OUT OF CLAIM OF REBATE & DISCOUNT EXPENSES AND RS. 55,000/ - OUT OF THE VARIOUS EXPEN SES D EBITED IN THE P & L ACCOUNT . 9 . FACTS RELATING TO TH I S ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS , NOTICED THAT THE ASSESSEE CLAIMED REBATE AND DISCOU N T EXPENSES OF RS. 4,36,562/ - AND PRODUCED THE VOUCHERS IN SUPPORT OF THE SAID CLAIM. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE DISCOUNT AND REBATE ALLOWED TO THE CUSTOMERS WAS THROUGH SELF MADE VOUCHERS INSTEAD OF SALES B ILLS ISSUED TO THE CUSTOMERS. HE DISALLOWED 20% OF THE EXPENSES I.E. RS. 87,312/ - . THE ASSESSING OFFICER 6 ALSO NOTICED THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 27,51,032/ - UNDER VARIOUS HEADS AND ABOUT 20% OF THOSE EXPENSES WERE THROUGH SELF MADE VOUCHERS . HE ALSO MENTIONED THAT MOST OF THE EXPENDITURE WAS MADE THROUGH BILLS/CHEQUES, BUT PARTLY PAYMENTS WERE MADE BY SELF MADE VOUCHERS, HE N CE, NOT VERIFIABLE. THE ASSESSING OFFICER DISALLOWED 20% OF THE 1/5 TH % OF THE TOTAL EXPENSES I.E. RS. 5,50,000/ - AND ACCORDINGLY DISALLOWED A SUM OF RS. 1,10,000/ - WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 10 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE SALES BILLS OF THE VEHICLES AND SEPARATE PARTS WERE ISSUED ONLINE TH R OUGH ACCOUNTING SOFTWARE OF BAJAJ AUTO LTD. AND HYUNDAI MOTORS INDIA LTD. IT WAS FURTHER STATED THAT THE BILLS WERE ISSUED ON MRP AND DEALERS WERE NOT ALLOWED TO ISSUE BILL LOWER TO THE MRP , FOR THAT REASON S, REBATE AND DISCOUNT WAS ALLOWED TO THE CUSTOMERS THROUGH SELF MADE VOUCHERS. THEREFORE, ADHOC DISALLOW ANCE MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED W ITHOUT POINTING OUT EVEN A SINGLE ITEM OF UN - VOUCHED OR UNVERIFIABLE NATURE OF EXPENDITURE . IT WAS FURTHER STATED THAT THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND NO SPECIFIC DEFECT WAS STATED BY THE ASSESSING OFFICER IN THE DETAILS FILED. 7 11 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, WAS OF THE VIEW THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON HIGHER SIDE. HE RESTRICTED THE DISALLOWANCE AT 15% OF THE EXPENSES UNDER THE HEAD REBATE & DISCOUNT INSTEAD OF 20% DISALLOWED BY THE ASSESSING OFFICER AND ALSO RESTRICTED THE DIS ALLOWANCE FROM OTHER EXPENDITURE TO 10% INSTEAD OF 20% MADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL. 12. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NO INSTANCE OF EXPENSES BEING FOR NON - BUSINESS PURPOSE WAS POINTED OUT EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A) . THEREFORE, DISALLOWANCE SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 13 IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDER OF THE L D. CIT(A) 14 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE , IT IS NOTICED THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS WHICH W ERE DULY AUDITED. HE ALSO DID NOT POINT 8 OUT ANY SPECIFIC ITEMS OF EXPENSES WHICH WAS NOT INCURRED FOR THE BUSINESS PURPOSE S . IN OUR OPINION, T HE ASSESSING OFFICER FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE EVEN HE DID NOT CONSIDER THIS EXPLANATION OF THE ASSESSEE THAT SALES BILLS FOR VEHICLES AND SPARE PARTS WERE ISSUED ONLINE THROUGH ACCOUNTING SOFTWARE , THE BILLS WERE ISSUED ON MAXIMUM RETAIL PRICE (MRP) AND THE DISCOUNT WAS GIVEN THROUGH SELF MADE VOUCHERS BECAUSE THERE WAS NO SUCH SOFTWARE IN THE ACCOUNTING SYSTEM FOR GIVING DISCOUNT . THE ASSESSING OFFICER MADE THE ADHOC DISALLOWANCE WITHOUT ANY BASIS AND THE LD. CIT(A) ALSO RESTRICTED THE SAME IN SLIP SHOD MANNER WITHOUT GIV ING ANY COGENT REASON AND THE BASIS . WE THEREFO RE, CONSIDERING THE TOTALITY OF THE FACTS OF THE PRESENT CASE, ARE OF THE VIEW THAT THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, SAME IS DELETED. 15 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 22 ND SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND SEPTEMBER , 201 4 . VR/ - 9 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .