M/s. Kesar Corporation, Ahmedabad V. The Income tax Officer,Ward-3(1), Ahmedabad

ITA 434/AHD/2012

• Counselvise Citation: 43420514 RSA 2012
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 17-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KULSHNESHTHA SRDR
• Assessee Lawyers: S N DIVATIA
• Keywords: Business expenditure; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI, A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL ME MBER ITA NO.434/AHD/2012 ASSESSMENT YEAR :2008-09 M/S KESAR CORPORATION PLOT NO.431, P.C. GIDC,NR. APANA BAZAR GAS GODOWN, ODHAV, AHMEDABAD 382415 PAN NO.AEFK4035H V/S . INCOME TAX OFFICER, WARD-3(1), AHMEDABAD (APPELLANT) .. (RESPONDENT) /BY APPELLANT SHRI S.N. DIVATIA, AR /BY RESPONDENT SHRI B.KULSHNESHTHA, SR-DR /DATE OF HEARING 07-06-2012 /DATE OF PRONOUNCEMENT 20-07-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS PRESENT APPEAL OF THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-6, AHMEDABAD D ATED 09-01-2012 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FO LLOWING GROUNDS OF APPEAL:- 1.1 THE ORDER PASSED /S. 250 ON 0\09.1.2012 FOR A. Y. 2008-09 BY CIT(A)-VI, ABAD UPHOLDING THE DISALLOWANCE OF COMMI SSION EXP. OF RS.8,05,974 AND EXHIBITION EXPENSES OF RS.2,62,235 U/S. 40(A)(IA) MADE ITA NO.434/AHD/2012 A.Y. 2008-09 M/S KESAR CORPN. V. ITO WD-3(1) ABD PAGE 2 BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE P RINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGN ED DISALLOWANCES. 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE APPELLANT HAD FAILED TO SUBMIT ANY EVIDENCE TO PROVE THE RENDERING OF SERVICES FOR WHICH COMMISSION WAS PAID SO THAT THE AO WAS JUSTIFIED IN DISALLOWING COMMISSION EXPENSES OF RS.8,05,974. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE ASSE SSEE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THE DI SALLOWANCE OF COMMISSION EXPENSES OF RS.8,05,974. 3.1 THE LD. CIT(A) HAS ERRED IN UPHOLDING THE DISAL LOWANCE OF RS.2,62,235 U/S 40(A)(IA). 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT WHEN T HE APPELLANT HAD MADE TDS ON 31.3.2008 WHICH WAS DEPOSITED BEFORE THE DUE DATE FOR FILING THE RETURN I.E. ON 20.6.2008, THERE WAS NO VIOLATIO N OF THE PROVISIONS OF SECTION 40(A)(IA) AS AMENDED BY FINANCE ACT 2008 W. E.F. 1.4.2005. 2. FACTS IN BRIEF ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE PROCEEDINGS U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS COM PLETED VIDE ORDER DATED ON 29-10-2010 WHEREBY THE ASSESSING OFFICER MADE DISAL LOWANCE ON ACCOUNT OF COMMISSION EXPENSE AND DISALLOWANCE U/S. 40(A)(IA) OF THE ACT FOR NON DEPOSIT OF TAX, DEDUCTED AT SOURCE WITHIN THE STIPU LATED TIME. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER OF ASSESSING OFFICER FILED APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF ASSESSEE. NOW, DISSATISFIED WITH THE ORDER OF LD. CIT(A) HAS FILED SECOND APPEAL BEFORE US. ITA NO.434/AHD/2012 A.Y. 2008-09 M/S KESAR CORPN. V. ITO WD-3(1) ABD PAGE 3 3. LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SU BMITTED THAT ON INSTRUCTION THE GROUND NO.2.1 AND 3.1 ARE ONLY TO B E DECIDED, THE REMAINING ARE ARGUMENTATIVE. 4. FIRST ISSUE INVOLVED IS AGAINST THE CONFIRMATION OF DISALLOWANCE COMMISSION EXPENSES OF RS.8,05,974/-. LD. AR SUBMIT TED THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT THE COMMIS SION WAS PAID BY THE ASSESSEE BY WAY OF CHEQUE AND TAX WAS DEDUCTED AT S OURCE WHICH WAS DEPOSITED IN THE GOVERNMENT ACCOUNT. HE SUBMITTED T HAT MERELY BECAUSE A FEW PARTIES DID NOT CONFIRM THE FACT THAT THE MACHI NERIES WERE PURCHASED THROUGH THE BROKER SHOULD NOT BE THE BASIS OF DISAL LOWANCE OF EXPENDITURE. IT IS SUBMITTED BY LD. AR THAT THE COMMISSION WAS PAID TO THE COMMISSION AGENT FOR HAVING KNOWLEDGE OF THE INTERESTED BUYERS. THER EFORE, TO DISCLOSE THE NAME AND ADDRESS OF SUCH INTERESTED BUYERS COMMISSI ON WAS FIXED WITH THAT AGENT AND SAME WAS PAID. HE SUBMITTED THAT THE AUTH ORITIES BELOW FAILED TO APPRECIATE THE NATURE OF SERVICE PERFORMED BY THE A GENTS IN RESPECT OF TRANSACTION WITH SAID PARTIES. IT IS SUBMITTED THAT THE NATURE OF BUSINESS AND PRODUCTS MANUFACTURED BY THE ASSESSEE ARE SUCH THAT BUSINESS COULD NOT BE CARRIED ON WITHOUT THE HELP OF SUCH AGENTS. IT IS N OT LIKELY THAT CUSTOMER FOR THE PRODUCT BEING A TAILOR MADE ITEM CAN BE SOLD WITHOU T SUCH AGENTS. IT IS SUBMITTED THAT THE PURCHASE ORDER COULD NOT BE OBTA INED DIRECTLY SINCE THE CREDITWORTHINESS OF THE PURCHASER HAD TO BE ASCERTA INED AS BEFORE OBTAINING ORDER AND COMMENCING THE MANUFACTURE. HE SUBMITTED THAT THE ASSESSING OFFICER HAS DISBELIEVED THE EXISTENCE OF AGENT FOR WANT OF AGREEMENT BUT THERE IS NO STATUTORY REQUIREMENT TO SUCH AGREEMENT MORE PARTICULARLY WHEN PARTIES ARE KNOWN AND OLD. HE SUBMITTED UNDER SUCH CIRCUMST ANCES WHEN THE EVIDENCE OF MAKING PAYMENT IS DULY PLACED ON RECORD MERELY BECAUSE THE BUYERS OF THE MACHINERIES WHO DID NOT CONFIRM THE P URCHASES OF SUCH MACHINES THROUGH ANY BROKER DOES NOT MAKE A CLAIM F ALSE AND CALLED FOR DISALLOWANCE. ITA NO.434/AHD/2012 A.Y. 2008-09 M/S KESAR CORPN. V. ITO WD-3(1) ABD PAGE 4 5. ON THE CONTRARY LD. DR OF THE REVENUE SUBMITTED THAT THE EXPENSES ARE CLAIMED BY THE ASSESSEE AS A BUSINESS EXPENDITURE, THEREFORE IT IS INCUMBENT UPON THE ASSESSEE TO PROVE SUCH EXPENDITURE WAS ACT UALLY INCURRED FOR THE PURPOSE OF ITS CLAIM. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOT DISPUTED BY THE REVE NUE THAT THE PAYMENTS ARE MADE BY CHEQUES, TAX HAS BEEN DEDUCTED ON SUCH PAYM ENTS BUT THE BASIS ON WHICH SUCH EXPENDITURE IS NOT ALLOWED IS THAT ON FU RTHER INQUIRY BY THE DEPARTMENT FROM THE CONCERNED BUYERS, IT WAS FOUND THAT THE TRANSACTIONS CLAIMED TO HAVE BEEN EFFECTED THROUGH AGENTS WAS, I N FACT, EFFECTED DIRECTLY BY THE ASSESSEE. THIS FINDING OF THE ASSESSING OFFICER IS NOT REBUTTED BY ANY OTHER EVIDENCE. IN OUR CONSIDERED OPINION, IT IS IN CUMBENT UPON THE ASSESSEE TO PROVE THE EXPENDITURE AS CLAIMED BY IT. IN THE C ASE IN HAND, THE ASSESSEE HAS PROVED PAYMENT TO AGENT BUT COULD NOT REBUT THE FINDING OF AUTHORITIES BELOW THAT THE TRANSACTIONS WERE EFFECTED WITHOUT I NVOLVEMENT OF ANY AGENT. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMI TY INTO THE ORDER PASSED BY LD. CIT(A), THEREFORE THIS GROUND OF ASSESSEES APP EAL IS DISMISSED. 7. NEXT GROUND IS WITH REGARD TO CONFIRMING THE DIS ALLOWANCE OF RS.2,62,235/- U/S. 40(A)(IA) OF THE ACT. LD. AR OF THE ASSESSEE SUBMITTED THAT THERE WAS NO OCCASION TO MAKE DISALLOWANCE U/S 40(A )(IA) OF THE ACT AS THE TAX DEDUCTED AT SOURCE ON 31-03-2008 WAS DULY DEPOSITED BEFORE DUE DATE OF FILING OF RETURN I.E. ON 20-06-2008. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON THE DECISION OF HONBLE CO-ORDINATE BENCH IN THE CA SE OF SHREE SWAMI SAMARTH GRUGH NIRMAN SANSTHAN V. ITO IN ITA NO.747/AHD/2012 DATED 01- 06-2012. LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND ORDER CITED BY LD. AR OF THE ASSESSEE . WE FIND THAT SINCE THE ISSUE IS WELL SETTLED THAT IF THE TAX DEDUCTED AND SUBSEQUENTLY DEPOSITED EVEN ITA NO.434/AHD/2012 A.Y. 2008-09 M/S KESAR CORPN. V. ITO WD-3(1) ABD PAGE 5 BEFORE FILING OF DUE DATE OF INCOME-TAX RETURN THEN NO DISALLOWANCE CAN BE MADE FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF SAMARTH GRUGH NIRMAN SNSTHAN (SUPRA) HENCE WE DIRECT THE ASSESSING OFFICER IS COMPUTED THE DISALLOWANCE AFTER GIVING CREDIT TO TH E TAX DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT BEFORE DUE DATE OF FILING OF INCOME-TAX RETURN TO THIS EXTENT THE DISALLOWANCE BE DELETED. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.MOHAN ALANKAMONY) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 20/07/2012 '() * +, +, +, +, --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. )-2 + +3 / CONCERNED CIT 4. + +3- / CIT (A) 5. .67 ---2, + -2 , '() / DR, ITAT, AHMEDABAD 6. 7:; <= / GUARD FILE. BY ORDER/ +, , /TRUE COPY/ >/ ' ? + -2 , '() * STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 13/07 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 16/07 4) DATE OF CORRECTION 16/07 ITA NO.434/AHD/2012 A.Y. 2008-09 M/S KESAR CORPN. V. ITO WD-3(1) ABD PAGE 6 5) DATE OF FURTHER CORRECTION 17/07 6) DATE OF INITIAL SIGN BY MEMBERS 18/07 7) ORDER UPLOADED ON 20/07 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 20/07