TRINETRAM INVESTMENTS P. LTD, MUMBAI V. DCIT RG 8(3), MUMBAI

ITA 4357/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8043 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ITA NO.4357/MUM/2009 : ASST.YEAR 2005-2006 M/S.TRINETRAM INVESTMENTS PVT. LTD. 601/602 VINAYAK ANGAN 93 OLD PRABHADEVI ROAD, PRABHADEVI MUMBAI 400 025. PAN : AAACT7220Q. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 8(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI D.SONGATE O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER DT. 24.04.2009 PASSED BY THE CIT(A) UPHOLDING THE PENALTY IMPOSED BY THE ASS ESSING OFFICER AMOUNTING TO RS.2,26,560 IN RELATION TO ASSESSMENT YEAR 2005-200 6. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSULTANCY RELATED TO TOURS, TRAVELS A ND ALLIED SERVICES. AS NO BUSINESS INCOME WAS EARNED DURING THE YEAR, THE ASSESSING OF FICER OPINED THAT FOREIGN TRAVELLING EXPENSES AMOUNTING TO RS.4,57,817 WERE N OT ALLOWABLE. HE, THEREFORE, MADE DISALLOWANCE FOR THE SAME. REGARDING LOCAL TRA VELLING EXPENSES OF RS.2,71,561 THE ASSESSING OFFICER, CONSIDERING THE ELEMENT OF PERSONAL NATURE TO THE EXTENT OF 25%, MADE DISALLOWANCE AT RS.67,890. SIM ILARLY BUSINESS PROMOTION EXPENSES OF RS.2,11,626 WERE HELD TO BE DEDUCTIBLE AT THE RATE OF 50%. PURSUANT TO THAT, PENALTY WAS IMPOSED QUA THESE THREE DISALLOWANCES, WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 3. HAVING HEARD BOTH SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THE ASSESSING OFFICER, IN THE COMPUTAT ION OF TOTAL INCOME, HAS ALLOWED ITA NO.4357/MUM/2009 M/S.TRINETRAM INVESTMENTS PRIVATE LIMITED. 2 DEPRECIATION AND ALSO 50% OF BUSINESS PROMOTION EXP ENSES. HE ALSO CONSIDERED LOCAL TRAVELLING EXPENSES TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS TO THE EXTENT OF 75% OF SUCH EXPENSES BY TREATING 25% OF T HE EXPENDITURE UNDER THIS HEAD AS PERSONAL IN NATURE. IN VIEW OF THESE FACTS IT BE COMES CLEAR THAT ALTHOUGH THE ASSESSEE DID NOT EARN ANY INCOME FROM BUSINESS ACTI VITIES, THE ASSESSING OFFICER IMPLIEDLY ADMITTED THAT SOME SORT OF BUSINESS ACTIV ITY WAS DONE BY THE ASSESSEE WHICH IS EVIDENT FROM THE FACT OF ALLOWING THE EXPE NSES AS DISCUSSED ABOVE. IT, THEREFORE, BECOMES APPARENT THAT THE AMOUNTS NOT DI SALLOWED BY THE ASSESSING OFFICER ARE IN CONSIDERATION OF HIS ASSUMPTION THAT SUCH EXPENSES WERE INCURRED FOR NON-BUSINESS PURPOSES. WE ARE REMINDED OF THE RECEN T JUDGEMENT OF THE HONBLE IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] WHEREIN THE COURT HAS HELD THAT MERE MAKING OF A CL AIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT ATTRACT PENALTY U/S.271(1) (C). WHEN THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS IN RETURN WHICH ARE N OT FOUND TO BE INACCURATE, IT WAS FOR THE AUTHORITIES TO ACCEPT THE CLAIM OR NOT BUT THAT COULD NOT LEAD TO THE IMPOSITION OF PENALTY. IN THE FACTS OF THE INSTANT CASE IT IS SEEN THAT THE ASSESSEE CLAIMED SUCH EXPENSES AS HAVING BEEN INCURRED FOR T HE BUSINESS PURPOSES, WITH WHICH THE AO DID NOT FULLY AGREE. IT MAY BE A CAUSE FOR ADDITION BUT CANNOT BE VISITED WITH THE PENALTY. WE, THEREFORE ORDER FOR T HE DELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 16 TH DAY OF MARCH, 2011 . SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 16 TH MARCH, 2011. DEVDAS* ITA NO.4357/MUM/2009 M/S.TRINETRAM INVESTMENTS PRIVATE LIMITED. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XXIX, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.