RAVI AND DEV CHARTERED ACCOUNTANTS, MUMBAI V. ITO 11(3)(2), MUMBAI

ITA 4412/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8645 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G KUTTY
• Assessee Lawyers: DEVENDRA A MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.4412/MUM/2012 ASSESSMENT YEAR-2008-09 M/S. RAVI & DEV, CHARTERED ACCOUNTANTS, 601, A WING, AURUS CHAMBERS, BEHIND MAHINDRA TOWERS, S.S. AMRUTWAR MARG, WORLI, MUMBAI-400 013 PAN-AAAFR 4409 VS. ITO, 11(3)(2), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI DEVENDRA A MEHTA RESPONDENT BY: SHRI K.G. KUTTY DATE OF HEARING :16.10.2012 DATE OF PRONOUNCEMENT: 19.10.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)- 2, MUMBAI DT.10.5.2012 PERTAINING TO ASSESSMENT YE AR 2008-09. 2. THE ASSESSEE HAS QUESTIONED THE ORDER OF THE LD. CIT(A) ON THREE SUBSTANTIVE GROUND. 3. GROUND NO. 1 RELATES TO DISALLOWANCE OF RS. 40,3 18/- MADE BY THE AO ON ACCOUNT OF USE OF TELEPHONE AND MOBILE FOR PERSO NAL AND NON BUSINESS PURPOSE. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEBITED AN A MOUNT OF RS. 3,76,138/- TOWARDS TELEPHONE AND MOBILE EXPENSES. THE AO WAS OF THE OPINION THAT THE NATURE OF THE EXPENSES ARE SUCH THAT THE PERSONAL E LEMENT CANNOT BE RULED ITA NO. 4412/MUM/2012 2 OUT AND ACCORDINGLY DISALLOWED 20% OF RS. 2,01,590 /- AND ADDED TO RS. 40,318/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT( A), THE CIT(A) DECLINED TO INTERFERE WITH THE FINDINGS OF THE AO. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ARGU ED THAT LOOKING TO THE NATURE OF THE PROFESSION, THE EXPENSES ARE REASONAB LE AND DISALLOWANCE IS ON THE HIGHER SIDE. 7. AFTER CONSIDERING THE FACTS, IN OUR CONSIDERATE VIEW, THE DISALLOWANCE OF 10% WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, W E DIRECT THE AO TO RESTRICT THE DISALLOWANCE OF THIS ACCOUNT TO 10% OF RS. 2,01 ,590/-. GROUND NO. 1 IS PARTLY ALLOWED. 8. NEXT GROUND RELATES TO DISALLOWANCE OUT OF STAFF WELFARE EXPENSES. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E AO FOUND THAT THE ASSESSEE HAS DEBITED RS. 99,418/- UNDER THE HEAD S TAFF WELFARE EXPENSES. THE AO WAS OF THE OPINION THAT PERSONAL ELEMENT CAN NOT BE DISCARDED AND THEREFORE DISALLOWED 20% OF THE STAFF WELFARE EXPEN SES AND ADDED RS. 19,883/- TO THE TOTAL INCOME OF THE ASSESSEE. 9. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT( A), AFTER CONSIDERING THE FACTS, THE LD. CIT(A) RESTRICTED THE DISALLOWAN CE TO 10%. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE DISALLOWANCE IS ON THE HIGHER SIDE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. CONSIDERING THE PROFESSION IN WHICH THE ASSESSEE IS IN, DISALLOWANCE OF 5% WILL MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 5% OF THE EXPENS ES CLAIMED UNDER THE HEAD STAFF WELFARE EXPENSES. THIS GROUND OF THE ASSESSE E IS PARTLY ALLOWED. ITA NO. 4412/MUM/2012 3 12. NEXT GROUND RELATES TO THE DISALLOWANCE OUT OF MISCELLANEOUS EXPENSES. THE AO MADE AN ADHOC DISALLOWANCE OF 20% AND ADDED RS. 34,763/- TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) RESTR ICTED THE DISALLOWANCE TO 10%. 13. AFTER GOING THROUGH THE ORDER OF THE LOWER AUTH ORITIES, WE FIND THAT THE DISALLOWANCE OF 5% OF THE EXPENSES CLAIMED UNDER TH IS HEAD WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE AO IS DIRECTED T O RESTRICT THE DISALLOWANCE UNDER THE HEAD MISCELLANEOUS EXPENSES TO 5% OF THE EXPENSES CLAIMED. THIS GROUND IS ALSO PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF OCTOBER, 2012 SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA ) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 19 TH OCTOBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR SMC BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI