CHIRAG INTERNATIONAL, MUMBAI V. ACIT 14(1), MUMBAI

ITA 4004/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2203 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 26-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: N M PORWAL
• Keywords: Depreciation; Retrospective amendment; Reasonable cause; Tax effect; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI D.K. AGARWAL, JM AND SHRI T.R. SOOD, AM I.T.A.NO.4004/MUM/2009 ASSESSMENT YEAR : 2004-05 M/S. CHIRAG INTERNATIONAL, 140-K, CAVEL CROSS LANE NO.7, KALBADEVI ROAD, MUMBAI 400 002. PAN: AAAFC 0723 C VS. THE ASST. COMMISSIONER OF INCOME TAX-14(1), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI 400 021. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.M. PORWAL RESPONDENT BY : SHRI SUMEET KUMAR O R D E R PER T.R. SOOD, AM: IN THIS APPEAL OF THE ASSESSEE VARIOUS GROUNDS HAV E BEEN RAISED, OUT OF WHICH GROUND NOS. 1 AND 5 HAVE NOT PRESSED BEFORE U S. THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. THE OTHER GROUNDS ARE AS UNDER: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCES OF 3% OF EXPENSES OUT OF M OTOR VEHICLE EXPENSES, MOTOR CAR DEPRECIATION AND INTEREST ON MO TOR VEHICLE LOAN. 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE THE LEARN ED CIT(A) ERRED IN DISALLOWING CLAIM OF 80HHC. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEAR NED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCES OF PAYMENT MADE TO PF & ESIC. GROUND NO.2. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS INCURRED A SUM OF RS. 28,73,587/- TOWARDS MOTOR-CAR VEHICLE EXPENSES FOR PETROL, REPAIRS, INTEREST, DEPRECIATION AND BUSINESS PROMOTION EXPENSES. THE A SSESSING OFFICER OBSERVED THAT NATURE OF EXPENSES WOULD INDICATE THAT ASSESSEE THA T THERE WAS CERTAINLY A PERSONAL ELEMENT ALSO. SINCE PROPER RECORDS HAVE NOT BEEN M AINTAINED, A LUMP SUM 3 % AMOUNT WAS DISALLOWED BY THE A.O. 3. THE ACTION OF THE ASSESSING OFFICER WAS CONFIRME D BY THE LEARNED CIT(A). ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 2 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT ADDITION HAS BEEN MADE ON THE BASIS OF PRESUMPTION AND CONJECTUR ES. IN ANY CASE, THE ADDITION HAS BEEN MADE ON HIGHER SIDE BECAUSE TOTAL AMOUNT O F PETROL AND VEHICLE MAINTENANCE, ETC. BASICALLY RELATED EVEN TO THE COM MERCIAL VEHICLE AND THIS REGARD HE REFERRED TO THE CHART SHOWING THE DETAILS OF EXP ENSES WHICH CLEARLY INCLUDED THE COMMERCIAL VEHICLE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THOUGH THE DISALLOWANCE HAS BEEN MADE ONLY AT 3% FOR PERSONAL USE, IT CANNOT BE DENIED IN THE ABSENCE OR RECORD, BUT AT THE SAME TIME THE DISALLO WANCE HAS BEEN EXTENDED EVEN TO COMMERCIAL VEHICLES WHICH CANNOT BE SAID TO HAVE BEEN USED FOR PERSONAL PURPOSES. THEREFORE, KEEPING THE OVER ALL FACTS IN VIEW, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND ESTIMATE THE PERSONAL USER ONLY AT 2% OF THE VALUATION OF EXPENSES. THE ASSESSING OFFICER IS DIRECTED TO REST RICT THE ADDITION AT 2%. GROUND NO.3: 7. AFTER HEARING BOTH THE PARTIES WE FIND THAT DEDU CTION U/S.80HHC HAS BEEN DENIED IN RESPECT OF EXPORT INCENTIVES. WE FURTHER FIND FROM THE ANNEXURES OF THE ASSESSMENT ORDER THAT THE TURNOVER OF THE ASSESSEE IS RS. 6,62,73,126/-. SINCE THE TURNOVER IS LESS THAN RS. 10 CRORES, AND THE ACT HA S BEEN AMENDED BY THE FIFTH PROVISO WITH RETROSPECTIVE EFFECT VIDE TAXATION LAW S (AMENDMENT) ACT, 2005 WITH RETROSPECTIVE EFFECT FROM 1.4.1992, ALLOWING THE DE DUCTION EVEN IN RESPECT OF EXPORT INCENTIVES WHERE TURNOVER IS LESS THAN RS.10 CRORES . THEREFORE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BA CK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO ALLOW THE DEDUCTION AS PE R THE AMENDED LAW. ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 3 GROUND NO.4 : 8. AFTER HEARING BOTH THE PARTIES, WE FIND THT DEDU CTION IN RESPECT OF CONTRIBUTION TO PF AND ESIC HAS BEEN DENIED BECAUSE THE PAYMENTS WERE MADE BEYOND THE DUE DATE. 9. BEFORE US THE LEARNED COUNSEL FRO THE ASSESSEE R ELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EX TRUSIONS LTD. (319 ITR 306), WHEREIN THE DEDUCTION U/S.43B IN RESPECT OF PROVIDE NT FUND WAS HELD TO BE ALLOWABLE IF THE SAME WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN. 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE POINTED OUT THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT TH E PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FI ND THAT NOW THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSTIONS LTD.(SUPRA). HO WEVER SINCE THE DATES OF PAYMENTS ARE NOT AVAILABLE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R WITH DIRECTION THAT DEDUCTION SHOULD BE ALLOWED IN RESPECT OF PF & ESIC CONTRIBUT ION IF THE SAME HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. 12. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF MAY, 2010. SD. SD. (D.K. AGARWAL) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 7 TH MAY, 2010. COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-XIV, MUMBAI 4. THE CIT(A)-XIV, MUMBAI 5. THE DR C BENCH, MUMBAI BY ORDER KN/ /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 4 ORDER PRONCOUNCED ON . 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE- APPELLANT AS WELL AS NO PETITION FOR ADJOURNMENT WA S FILED. WE FIND FROM THE RECORDS THAT ASSESSEE-APPELLANT WAS SERVED NOTICE B Y REGISTERED POST ACKNOWLEDGEMENT DUE TWICE AND THE ACKNOWLEDG EMENT CARDS DULY SIGNED BY THE ASSESSEE ON 25.07.2007 AND 16.11.2 007 , RECEIVED BACK. IT IS THEREFORE, PRESUMED THAT THE ASSESSEE IS NOT INTERE STED IN PURSUING THE APPEAL FILED BY IT. IT HAS BEEN HELD BY THE HONBLE MADHYA PRADESH HIGH COURT IN ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT (223 ITR 480)(MP) THAT IF THE PARTY, AT WHOSE INSTANCE THE REFERENCE IS MADE, FAI LS TO APPEAR AT THE HEARING OR FAILS IN TAKING STEPS FOR PREPARATION OF PAPER-B OOKS, SO AS TO ENABLE HEARING OF THE REFERENCE, THE COURT IS NOT BOUND TO ANSWER THE REFERENCE. THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CIT VS. MULTIPLAN (INDIA) PVT. LTD., 38 ITD 320 (DEL.) IS ALSO TO THE SAME EFFECT. IN THE FACTS OF THE CASE WE HOLD THAT THE ASSESSEE IS NOT INTERESTED IN PURSUIN G THE PRESENT APPEAL BEFORE THE TRIBUNAL, ACCORDINGLY THE APPEAL OF THE ASSESSE E IS DISMISSED AS UNADMITTED. THE ASSESSEE, IF SO ADVISED, SHALL BE FREE TO MOVE THE TRIBUNAL ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 5 PRAYING FOR RECALLING OF THIS ORDER PROVIDED THE AS SESSEE IS ABLE TO ESTABLISH THE REASONABLE CAUSE BEHIND THE NON-APPEARANCE ON T HE DATE OF HEARING AND IN THAT CASE THE TRIBUNAL MAY IN ITS DISCRETION REC ALL THIS ORDER AND THE APPEAL MAY BE RESTORED FOR RE-HEARING. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2 007. 2. FROM THE GROUNDS FILED BY THE ASSESSEE BEFORE TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WE FIND THAT THE LEVY PERTAINE D TO CONCEALMENT OF INCOME OF RS. 1,02,744/- AND THE PENALTY LEVIED WAS RS. 22,24 8/-. THEREFORE IN VIEW OF CBDT CIRCULAR F.NO. 279/MISC.142/2007-IT DATED 15 TH MAY, 2008 THE APPEAL IS NOT MAINTAINABLE, TAX EFFECT BEING LESS THAN RS. 2 LAKH S. VIDE PARA 4 OF THIS CIRCULAR IT IS CLEARLY MENTIONED THAT THE TAX EFFECT IN ASCERTAINI NG MONETARY LIMITS FOR FILING OF APPEALS, IN THE CASE OF PENALTY ORDERS, WOULD MEAN QUANTUM OF PENALTY DELETED OR REDUCED. 3. THEREFORE, APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED ON THIS _______ DAY OF MAY, 2009 . (G.C. GUPTA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE ______MAY, 2009. KN COPY TO: 6. THE ASSESSEE 7. THE ITO-26(1)(2), MUMBAI. 8. THE CIT, CITY-XXVI, MUMBAI 9. THE CIT(A)-XXVIII, MUMBAI 10. THE DR, G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 6 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18.05.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18.05.09 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.4004/M/09 M/S.CHIRAG INTERNATIONAL 7