M/s. Agrawal Automobiles, RAJKOT-GUJARAT V. The Assistant Commissioner of Tax, Gandhidham Circle, GANDHIDHAM

ITA 444/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0130 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Keywords: Corroborative evidences
• Section: 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI B.R.JAIN, AM ITA NO. 444/RJT/2012 / ASSESSMENT YEAR 2008-09 M/S AGRAWAL AUTOMOBILES GANDHIDHAM. C/O KALPESH S DOSHI & CO. CHARTERED ACCOUNTANT, 411, COSMO COMPLEX, MAHILA COLLEGE CIRCLE, RAJKOT-360001 PAN: AADFA3192J ( / APPELLANT) VS. ASSTT.COMMISSIONER OF INCOME TAX, GANDHIDHAM CIRCLE, GANDHIDHAM. / RESPONDENT / ASSESSEE BY SHRI. KALPESH DOSHI # / REVENUE BY SHRI AVINASH KUMAR & / DATE OF HEARING 3.12.2012 & / DATE OF PRONOUNCEMENT 7.12.2012 / / / / ORDER & && &. .. . . . . . , , , , # # # # / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 26.6.2012 OF CIT(A)-R AJKOT FOR THE ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A FIRM A ND ENGAGED IN THE BUSINESS OF AUTHORIZED DEALERS OF IOC (RETAIL OUTLE T) FLEET OWNER, TRANSPORT BULK CONTRACTOR. FOR THE YEAR UNDER CONSIDERA TION IT FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.24,56,020/-. IN T HE ASSESSMENT ORDER, THE AO OBSERVED THAT THE ASSESSEE FIRM HAD DEBIT ED AN AMOUNT OF RS.38,243/- BEING PENALTY LEVIED BY THE RTO FOR OVER LOADING. THE AO ITA NO. 444/RJT/2012 2 FURTHER OBSERVED THAT THE VOUCHERS FOR TRIP AND DIESEL EXPENSES WERE NOT SUPPORTED BY EVIDENCE IN FULL. WITH REGARD TO THE PAYMENT OF RS.38,243/- TO RTO, THE AO OBSERVED THAT THESE CHARGES PAID BY THE ASSESSEE TOWARDS OVER LOADING OF VEHICLES IS A PAYMENT FOR AN IN FRACTION OF THE LAWS AND IS THEREFORE NOT AN ALLOWABLE EXPENDITURE. HE ACCORDINGLY DISALLOWED THE SAME. FURTHER, THE AO DISALLOWED RS.1,50,000/- OUT OF TRIP AND DIESEL EXPENSES ON THE GROUND THAT THESE ARE NOT FULLY VERIF IABLE. ON APPEAL, BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT OV ERLOADING OF GOODS SOMETIMES IMPERATIVE AND ESSENTIAL AS PER THE BUSINESS CAR RIED ON BY THE ASSESSEE AND ALSO NECESSITATED BY THE INDIVISIBILITY OR HEAV INESS OF THE GOODS LOADED ON THE TRAILERS THEREFORE SUCH CHARGES PAI D TO THE RTO AUTHORITIES CANNOT BE TERMED AS THE PENALTY. SUCH OV ERLOADING CHARGES PAID ARE NOT PENAL IN NATURE BUT ARE IN THE NATURE OF COMPOUNDING CHARGES PAID FOR TRANSPORTING OVERLOADED GOODS AS PART OF THE BUSINESS EXPENSE AND THERE WAS NO INFRACTION OF ANY STATUTORY LAW. IN SU PPORT OF THIS, THE ASSESSEE PLACED RELIANCE ON CERTAIN CASE LAWS. 3. IN THE IMPUGNED ORDER, THE LD. CITA) CONFIRMED TH E ADDITION OF RS.38,243/- FOR THE DETAILED REASONS GIVEN IN PARAGRA PH 3.2 WHICH READS AS UNDER : 3.2 I HAVE CAREFULLY CONSIDERED THE FINDING GIVEN BY THE AO AND THE CONTENTIONS OF THE AR OF THE APPELLANT AND THE CA SE LAWS CITED BY HIM. REGARDING GROUND NO.1 I.E. DISALLOWANCE OF R S.38,243/- OF OVERLOADING CHARGES PAID TO RTO, GIVING FOOTAGE TO T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PARAMJIT BHASI N AND OTHERS V. UNION OF INDIA AIR (2006)SC,440 ON THE SUBJECT, I HOLD THAT THE CHARGES PAID BY THE APPELLANT TOWARDS OVER LOADING OF VEHICLES IS A PAYMENT FOR AN INFRACTION OF THE LAW AND IS, THEREFOR E, NOT AN ALLOWABLE EXPENDITURE. THE AOS ACTION IN ADDING RS.3 8,243/- TO THE RETURNED INCOME ON THIS POINT IS THEREFORE, JUSTIFI ED AS THE UNDERSIGNED HAS DECIDED THIS ISSUE AGAINST THE APPELLANT FOR IMMEDIATE PRECEDING YEAR AS WELL VIDE ORDER NO.101/09 -10 DATED 15.11.2011. THE ARGUMENTS NOW MADE ARE ALSO WITHOUT ANY ITA NO. 444/RJT/2012 3 SUPPORTING EVIDENCE AS NO EVIDENCE HAS BEEN FILED IN R ESPECT OF CONTENTION NO.19. THE DECISION OF THE HONBLE ITAT, AHMEDABAD IS ALSO IN DIFFERENT CONTEXT AS THE JUDICIARY HAS RECENTL Y BEEN COME VERY HEAVILY ON TRANSPORT AUTHORITIES IN THIS REGARD DUE TO ASTOUNDING INCREASE IN ROAD ACCIDENTS. THE APPELLANTS APP EAL ON THIS POINT IS DISMISSED.. 4. WITH REGARD TO DISALLOWANCE OF RS.1,50,000/- OUT O F TRIP EXPENSES, IT WAS CLAIMED THAT ALL THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS ONLY. IT WAS SUBMITTED THAT THE BUSINESS OF THE ASSESSEE FIRM WAS LABOUR ORIENTED, MAJOR AMOUNT OF LABOUR WORK INVO LVED IN CARRYING OUT THE BUSINESS ACTIVITIES. THE LABOURS AND DRIVERS ARE ALSO U NEDUCATED AND UNORGANIZED, SOMETIMES THE PAYMENTS WERE MADE BY DRI VERS AND THEY ARE NOT TRAINED TO OBTAINED PROPER VOUCHERS IN RESPECT OF EXPENSES INCURRED BY THEM. HE SUBMITTED THAT NONE OF THE EXPENSES IS BOG US OR INFLATED. AFTER CONSIDERING THESE SUBMISSIONS, IN THE IMPUGNED ORDER THE LD. CIT(A) OBSERVED THAT SINCE THE EXPENSES INCURRED ARE NOT FULLY VERIFIABLE DUE TO LACK OF EVIDENCE LIKE BILLS, VOUCHERS, ETC. TO MEET ENDS OF JUSTICE, HE RESTRICTED THE DISALLOWANCE TO 50% OF SUCH DISALLOWANCE M ADE BY THE AO. HE ACCORDINGLY, ALLOWED THE RELIEF OF RS.75,000/- AG AINST THE DISALLOWANCE OF RS.1,50,000/-. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL WITH THE FOLLOWING GROUNDS : 1. THAT ;THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DI SALLOWANCE OF RS.38,243/- OF OVERLOADING CHARGES PAID TO RTO 2. THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE DISAL LOWANCE OF RS.75,000/- OUT OF TRIP EXPENSES 5. AT THE TIME OF HEARING BEFORE US ON BEHALF OF T HE ASSESSEE SHRI KALPESH DOSHI APPEARED AND FILED PAPER BOOK CONTAINING 24 PAGES WHICH INTERALIA INCLUDES THE BALANCESHEET, TRADING ACCOUNT, P ROFIT AND LOSS ACCOUNT PROFIT FOR THE PERIOD ENDED ON 31.3.2008, O RDER OF THE MUMBAI ITA NO. 444/RJT/2012 4 BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V/S SHRI BHA RAT C GANDHI IN ITA NO.4270/ MUM/2009 (AY-2006-07) DATED 30.3.2011 AND THE ORDER OF THE RAJKOT BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE I N M/S AGRAWAL AUTOMOBILES V/S ACIT IN ITA NO.478/RJT/2011 (AY 2007 -08) DATED 30.10.2012. HE SUBMITTED THAT THEY ARE NOT TRAINED I N OBTAINING THE PROPER VOUCHERS. THE ASSESSEE HAS NOT INFLATED THE EXPENSES, T HEREFORE ADHOC DISALLOWANCE MADE OF RS.1,50,000/- BE DELETED. ALTE RNATIVELY, HE PLEADED THAT IT IS AN EXCESSIVE AND THE SAME BE REDUCED TO RS.25,000/-. AS AGAINST THIS, THE LD. DR APPEARED FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 6. WITH REGARD TO DISALLOWANCE OF OVERLOADING CHARGE S OF RS.38,243/- PAID TO RTO, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT V/ S SHRI BHARAT C GANDHI (SUPRA) WHEREIN THE TRIBUNAL FOLLOWING THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S RAMESH STONE WARES REPORTED IN 62 TTJ (ASR) 93 HELD THAT OVERLOADIN G CHARGES PAID BY THE TRANSPORTER AS PER THE RULES IN THE MOTOR VEHICLE ACT ARE ALLOWABLE U/S 37(1) OF THE INCOME TAX ACT, 1961. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THESE CHARGES ARE COMPENSATORY IN NATURE, THEREFORE, THE AO BE DIRECTED TO ALLOW THE SAME. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS PERTINENT TO N OTE THAT ITAT, MUMBAI BENCH IN THE CASE OF SHRI BHARAT C GANDHI(SUPRA) ON IDENTICAL FACTS AND AFTER CONSIDERING THE RELEVANT PROVISIONS OF MOTOR VEHI CLE ACT HELD THAT ASSESSEES PAYMENTS OF COMPOUNDING FEES IS ALLOWABLE. WE, THEREFORE, ITA NO. 444/RJT/2012 5 FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI BHARAT C GANDHI(SUPRA), DELETE THE DISALLOWA NCE OF RS.38,243/- AS OVERLOADING CHARGES PAID TO RTO. GROUND NO.1 IS A LLOWED. 8. WITH REGARD TO GROUND NO.2, IT IS PERTINENT TO NO TE THAT IN THE ASSESSMENT YEAR 2007-08, IN ASSESSEES OWN CASE IN M/S AGRAW AL AUTOMOBILES V/S ACIT IN ITA NO.478/RJT/2011 (SUPRA), THE TRIBUNAL VIDE ORDER DATED 30.10.2012 CONFIRMED THE DISALLOWANCE OF TRIP AND DIESEL EXPENSES TO THE EXTENT OF RS.50,000/-. ADMITTEDLY, IN THE ASSESSMENT YEAR UNDER APPEAL ALSO THE TRIP AND DIESEL EXPENSES ARE NO T FULLY VERIFIABLE. WE, THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 RESTRICT THE DISALLOWANCE TO THE EXTENT OF RS.50,000/- AS AGAINST RS.75,000/- CONFIRMED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. GROUND NO.2 IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD SD ( B.R.JAIN) (T. K. SHARMA) # / ACCOUNTANT MEMBER # /JUDICIAL MEMBER -/ ORDER DATE 7.12.2012. /RAJKOT SRL ITA NO. 444/RJT/2012 6 / / / / 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-, 2. / RESPONDENT- 3. 5 / CONCERNED CIT. 4. 5- / CIT (A). 5. / , , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT.