Sooraj Creation Pvt.Ltd., Surat V. The Income tax Officer,Ward-4(3), Surat

ITA 434/AHD/2010

• Counselvise Citation: 43420514 RSA 2010
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: SANJU S MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 434/ AHD/2010 (ASSESSMENT YEAR 2006-07) SOORAJ CREATION PVT. LTD., 7314/2, SACHIN GIDC, SACHIN, SURAT-394230 VS. ITO WARD 4(3), SURAT PAN/GIR NO. : AAICS410Q (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SANJU S MEHTA, AR RESPONDENT BY: SHRI B L YADAV, SR. DR DATE OF HEARING: 22.05.2012 DATE OF PRONOUNCEMENT: 22.05.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) IV, SURAT DATED 28.10.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS AND SUB- GROUNDS BUT IN THE COURSE OF HEARING BEFORE US, LD. A.R. SUBMITTED THA T THE ONLY EFFECTIVE GROUND OF THE ASSESSEE IS REGARDING DISALLOWANCE MA DE BY THE A.O. OF RS.7.22 LACS U/S 40(A)(IA) OF THE INCOME TAX ACT, 1 961 IN RESPECT OF PAYMENT OF FREIGHT AND CLEARING CHARGES BY THE ASSE SSEE COMPANY. IT IS FURTHER SUBMITTED THAT THIS DISALLOWANCE IS NOT JUS TIFIED BECAUSE THIS PAYMENT OF FREIGHT AND CLEARING CHARGES WAS IN RESP ECT OF PLANT AND MACHINERY AND THE SAME WAS CAPITALIZED AND NOT DEBI TED TO P & L ACCOUNT AND, THEREFORE, NO DISALLOWANCE CAN BE MADE U/S 40( A)(IA) IN RESPECT OF I.T.A.NO.343 /AHD/2010 2 THIS EXPENDITURE OF RS.7.22 LACS FOR WHICH, ADMITTE DLY NO TDS WAS DEDUCTED BY THE ASSESSEE. HE ALSO PLACED RELIANCE ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF SUMILON INDUSTRIES LTD. IN I.T.A.NOS. 3296 & 3297/AHD/2008 DATED 12.11.2010. HE SUBMITTE D A COPY OF THIS TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO PARS 1 1 OF THIS TRIBUNAL DECISION. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE TRIBUNAL DECISION CITED BY THE LD. A.R. OF THE ASSE SSEE. IT IS ADMITTED FACTUAL POSITION THAT PAYMENT OF RS.7.22 LACS ON AC COUNT OF CLEARING AND FORWARDING CHARGES WAS PAID BY THE ASSESSEE WITHOUT DEDUCTING TDS BUT THE SAME WAS IN RESPECT OF EMBROIDERY MACHINE PURCH ASED BY THE ASSESSEE COMPANY AND THIS EXPENDITURE WAS CAPITALIZED AND WA S NOT DEBITED TO THE P & L ACCOUNT. UNDER THESE FACTS, WE ARE OF THE CO NSIDERED OPINION THAT NO DISALLOWANCE U/S 40(A)(IA) IS CALLED FOR BECAUSE ONLY THOSE EXPENSES CAN BE DISALLOWED U/S 40(A)(IA) WHICH ARE DEBITED T O P & L ACCOUNT OR OTHERWISE CLAIMED BY THE ASSESSEE AS DEDUCTION. SI NCE NO DEDUCTION IS CLAIMED BY THE ASSESSEE IN RESPECT OF THIS EXPENDIT URE OF RS.7.22 LACS, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT. THE TRIBUNAL DECISION CITED BY THE LD. A.R. ALSO SUPPORTS THE CASE OF THE ASSESSEE. IN THAT CASE ALSO, IT WAS HELD BY THE TRIBUNAL THAT WHEN THE PAY MENT OF RS.47744/- BEING THE CHARGES FOR CLEARING OF IMPORT CONSIGNMEN T OF PLANT & MACHINERY WAS NOT DEBITED TO P & L ACCOUNT, NO DISA LLOWANCE THEREOF CAN BE MADE EVEN IF NO TDS IS MADE. RESPECTFULLY FOLLO WING THE TRIBUNAL DECISION, WE HOLD THAT IN THE FACTS OF THE PRESENT CASE, NO DISALLOWANCE U/S I.T.A.NO.343 /AHD/2010 3 40(A)(IA) CAN BE MADE OUT OF THIS PAYMENT OF RS.7.2 2 LACS AND, THEREFORE, THIS DISALLOWANCE IS DELETED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. 6. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING ITSELF AS MENTIONED HEREINABOVE. (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 22/5/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22/5/2012 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/5 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23/5 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/5 /12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .