DCIT, New Delhi V. M/s Fortune Garmets ltd., New Delhi

ITA 4/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4037 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-04-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS MAMTA KOCHHAR
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA, VP AND SHRI H.S.SIDHU, JM ITA NO.4/DEL/2010 ASSESSMENT YEAR : 2003-04 DY. COMMISSIONER OF INCOME TAX, VS. M/S FORTUNE GAR MENTS LTD.. CIRCLE 11(1), NEW DELHI. F-66, RAJOURI GARDEN, NEW DELHI. PAN : AAACF2668J (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. MAMTA KOCHHAR, D.R. RESPONDENT BY : NONE ORDER PER H.S. SIDHU, JM REVENUE HAS FILED THE CAPTIONED APPEAL AGAINST THE ORDER OF THE CIT(A)- XIII, NEW DELHI DATED 20.10.2009 FOR THE ASSESSMENT YEAR 2003-04. 2. AS MANY AS FOUR GROUNDS HAVE BEEN RAISED BUT THE ONLY EFFECTIVE GROUND READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF EXPENDITURE CLAIMED OF RS.13,41,135/- AS THE COMPANY HAD NOT DO NE ANY MANUFACTURING OR SALES. ITA NO.4/DEL/2010 2 3. THE DEPARTMENT HAD FILED THE PRESENT APPEAL ON 1 .1.2010. NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE FOR 20.4.2010. IN RESPO NSE TO THE SAME, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTER IN DISPUTE NOR ANY APPLICATION REQUESTING FOR ADJOURNM ENT OF THE CASE WAS RECEIVED. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERE D OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE HEARING NOTICE AGAIN TO TH E ASSESSEE. WE THEREFORE, PROCEED TO DISPOSE OF THE APPEAL EX PARTE QUA THE A SSESSEE AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 4. AT THE TIME OF HEARING, LD. D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. SHE FURTHER STATED THAT THE ASS ESSEE-COMPANY HAD NEITHER CARRIED OUT ANY MANUFACTURING ACTIVITIES NOR MADE A NY SALES BUT CLAIMED THE EXPENSES TO THE TUNE OF RS.13,41,135/- ON ACCOUNT O F SALARY, DEPRECIATION ETC. SHE FURTHER STATED THAT THE ASSESSEE HAD NOT PRODUCED A NY EVIDENCE BEFORE THE ASSESSING OFFICER FOR SUBSTANTIATING ITS CLAIM. TH EREFORE, THE ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION IN DISPUTE AND THE LD . FIRST APPELLATE AUTHORITY HAD WRONGLY DELETED THE SAME. SHE THEREFORE, PRAYED TH AT THE APPEAL FILED BY THE REVENUE MAY BE ALLOWED AND THE IMPUGNED ORDER PASSE D BY THE LD. FIRST APPELLATE AUTHORITY QUASHED. 5. WE HAVE HEARD THE LD. D.R. AND PERUSED THE IMPUG NED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. WE ARE OF THE CONSI DERED OPINION THAT LD. FIRST ITA NO.4/DEL/2010 3 APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DIS PUTE BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SASSON J. DAVI D & CO. (P) LTD., 118 ITR 261 (SC) AND THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHAGWATI REROLLING MILLS, 211 ITR 227 (RAJ.). WE H AVE GONE THROUGH THESE JUDGMENTS AND ARE OF THE VIEW THAT WHEN THE ASSESSE E-COMPANY WAS NEITHER DISSOLVED NOR WAS ITS BUSINESS CLOSED, THE REVENUE AUTHORITIES WERE UNJUSTIFIED TO DISALLOW THE EXPENSES CLAIMED BY THE ASSESSEE. THE FACTS OF THE CASE ON HAND ARE TOTALLY IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE HON'BLE SUPREME COURT IN THE CASE OF SASSON J. DAVID & CO. P. LTD. (SUPRA). WE FIND THAT THE ASSESSEE- COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF GARMENTS AND CLAIMED EXPENSES OF RS.13,41,135/- ON ACCOUNT OF SA LARY AND DEPRECIATION. AS PER REVENUE RECORD, THE ASSESSEE-COMPANY STARTED ITS BU SINESS IN THE YEAR 1997 AND HAS DONE ITS BUSINESS BUT IN THE YEAR 1999-2000 AND IN THE CURRENT YEAR, IT HAD SUFFERED RECESSION AND THE COMPANY COULD NOT PROCURE EXPORT ORDERS IN THE YEAR UNDER CONSIDERATION. BUT THE COMPANY CLAIMED ONLY THOSE EXPENSES WHICH WERE NECESSARY TO MAINTAIN THE BUSINESS AND ASSETS OF TH E COMPANY WHICH WERE ALLOWABLE UNDER THE INCOME-TAX ACT. 6. KEEPING IN VIEW THE AFORESAID DISCUSSION AND TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SASSON J. DAVID & CO. P. LTD. (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE-COMPANY W AS NEITHER DISSOLVED NOR ITS BUSINESS WAS CLOSED AND WAS HOLDING REGULAR MEETING OF ITS DIRECTORS AND ALSO ITA NO.4/DEL/2010 4 FILING THE RETURN, THE EXPENSES CLAIMED BY THE ASSE SSEE ARE ALLOWABLE AS RIGHTLY HELD BY THE LD. FIRST APPELLATE AUTHORITY. WE ACCORDING UPHOLD THE ORDER OF LD. FIRST APPELLATE AUTHORITY AND REJECT THE GROUNDS OF APPEA L TAKEN BY THE REVENUE IN ITS APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.4.2010. SD/- SD/- (G.E.VEERABHADRAPPA) (H.S.SIDHU) VICE PRESIDENT JUDICIAL MEMBER DATED : 23.04.2010. VSK COPY FORWARDED TO: - 1. APPELLANT-REVENUE 2. RESPONDENT-ASSESSEE 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA NO.4/DEL/2010 5