M/s. Imperial Auto Industries Ltd., New Delhi V. DCIT, Faridabad

ITA 4604/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2977 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SSH ASHWANI TANEJA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SH.N.K.SAINI, ACCOUNTANT MEMBER AND SH.K.N.CHARY, JUDICIAL MEMBER ITA NO. 4604/DEL/2016 (ASSESSMENT YEAR: 2012 -13) APPELLANT BY S/SH. ASHWANI TANEJA & SHAANTANU JAIN, ADV. RESPONDENT BY SH. ARUN KUMAR YADAV, SR.DR DATE OF HEARING 14 . 12 .2017 DATE OF PRONOUNCEMENT 15 . 12 .2017 ORDER PER K.N.CHARY, JM AGGRIEVED BY THE ORDER DATED 28.07.2016 IN APPEAL NO.139/CIT(A)(C)/GGN/2014-15 PASSED BY THE LD. COMM ISSIONER OF INCOME TAX (APPEAL) [IN SHORT CIT(A)]-3, GURGAON FOR TH E AY 2012-13, THE ASSESSEE FILED THIS APPEAL ON VARIOUS GROUND. 2. BRIEFLY STATED FACTS ARE THAT FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSEE FILED THEIR RETURN OF INCOME ON 30/09/2012 AND DURING THE SCRUTINY, AS AGAINST THE RETURNED INCOME OF RS. 28,21,18,470/ -,THE INCOME OF THE IMPERIAL AUTO INDUSTRIES LTD., C/O-M/S. RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049. PAN-AAACI0645J VS DCIT, CENTRAL CIRCLE-1, FARIDABAD. (APPELLANT) (RESPONDENT) ITA NO. 4604/DEL/2016 PAGE | 2 ASSESSEE WAS ASSESSED AT RS. 27,43,98,953/-BY MAKIN G CERTAIN ADDITIONS. IN APPEAL, LD. CIT(A) DELETED CERTAIN ADDITIONS, BUT I NSOFAR AS THE ADDITION OF RS. 10 LACS MADE BY THE ASSESSING OFFICER ON ADHOC BASI S, LD CIT(A) RESTRICTED THE SAME TO RS. 5 LACS, STATING THAT THE ASSESSEE H AS NOT DENIED THAT PART OF THE EXPENSES CLAIMED UNDER THE HEADING BUSINESS PR OMOTION EXPENSES WERE NOT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOS E AS STATED BY THE AO. DISPUTING THIS, THE ASSESSEE PREFERRED THIS APPEAL BEFORE US. 3. IT IS THE SUBMISSION OF THE LD. AR THAT VIDE PAR AGRAPH NO. 2.4 OF HIS ORDER, LD. AO OBSERVED THAT THE ASSESSEE HAS SUBMIT TED THAT EXPENSES ARE VERY MUCH GENUINE, BUT A PART THEREOF MAY BE DISALL OWED TREATING THE SAME AS FOR NON-BUSINESS PURPOSES, WHEREAS LD CIT(A) ALS O OBSERVED THAT EVEN DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAS N OT DENIED THAT PART OF THE EXPENSES CLAIMED UNDER THE HEADING BUSINESS PROMOTI ON EXPENSES WERE NOT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. LD. AR BROUGHT TO OUR NOTICE THAT, BY WAY OF LETTER DATED 26/09/2014 ADDRESSED T O THE LD. AO, THE ASSESSEE STATED THAT,- THE ASSESSEE COMPANY IS DOING ITS BUSINESS WITH VAR IOUS ORIGINAL ENTREPRENEUR MANUFACTURERS, THOSE IN NEED TO BE ATTE NDED AND ACCOMPANIED DURING THE COURSE OF THE INSPECTIONS, VAC ATIONS, ADVISES, DISCUSSIONS, OPINIONS, GUIDELINES, FEASIBILITIES AN D TO MAINTAIN RUNNING BUSINESS. THIS IS A REGULAR PRACTICE AND UTMOST NEED OF EVERY BUSINESS ENTITY. THE ASSESSEE COMPANY IS HAVING VARIOUS PROD UCTION UNITS AT VARIOUS LOCATIONS IN INDIA AS DESCRIBED IN OUR EARLI ER REPLY SUBMITTED ON 16/05/2014 AS POINT NO. 1. THESE EXPENSES ARE PUREL Y AND COMPREHENSIVELY FOR BUSINESS PURPOSE. WE ARE APPEND ING BELOW THE ITA NO. 4604/DEL/2016 PAGE | 3 CATEGORIZATION OF BUSINESS PROMOTION EXPENSES INCUR RED DURING THE FINANCIAL YEAR 2011-12:- ABSTRACT OF BUSINESS PROMOTION EXPENSES S NO PARTICULARS AMOUNT 1 CUSTOMER MEET EXPENSES/SEMINAR/CUSTOMER LUNCH AND DINNER EXPENSES/OTHERS 73,95,685 2 DIWALI EXPENSES/OCCASIONAL MONUMENTS AND GIFTS 3 0,26,829 3 NEW YEAR RETIREES AND OTHERS 2,480 TOTAL 1,04,24,994 4. BASING ON THIS, THE LD. AR SUBMITS THAT THERE IS NO TRUTH IN THE OBSERVATIONS OF THE AUTHORITIES BELOW THAT THE ASSE SSEE NEVER STATED THAT THE ENTIRE EXPENDITURE WAS NOT FOR BUSINESS PURPOSES. L D. AR SUBMITS THAT THERE IS NO BASIS FOR THE AUTHORITIES TO MAKE THE DISALLO WANCE OF THE EXPENSES UNDER THE CATEGORY OF BUSINESS PROMOTION EXPENSES AND AT THE SAME TIME NEITHER THE AO NOR THE LD CIT(A) POINTED OUT ANY D ISCREPANCY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HE SUBMITS THAT WITHOUT R EJECTING THE BOOKS OF ACCOUNTS OR POINTING OUT ANY DISCREPANCY THEREIN, I S NOT OPEN FOR THE AUTHORITIES TO MAKE ANY DISALLOWANCE ON AD HOC BASI S. LD. DR RELIES UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD. IT IS AN UNDISPUTED FACT THAT NEITHER THE LD. AO NOT THE LD CIT(A) POINTED OUT A NY DISCREPANCY RELATING TO THE BUSINESS PROMOTION EXPENSES WITH REFERENCE TO THE BOOKS OF ACCOUNTS OF THE ASSESSEE. BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT REJECTED. THOUGH, THE LD. AO AND FOR THAT MATTER LD. CIT(A) MADE THE AD HOC DISALLOWANCE, ITA NO. 4604/DEL/2016 PAGE | 4 THERE DOES NOT APPEAR TO BE ANY BASIS FOR THE SAME. IT IS NOT IN DISPUTE THAT VIDE LETTER DATED 26/09/2014 THE ASSESSEE HAS ALWAY S BEEN MAINTAINING THAT EXPENSES ARE PURELY AND COMPREHENSIVELY FURTHER BUS INESS PURPOSE. THERE IS NO DISPUTE THAT ANY OF THESE EXPENSES ARE NOT FOR B USINESS PURPOSE. IT IS NOT THE CASE OF THE REVENUE THAT ANY OF THESE EXPENSES IS TOWARDS PERSONAL EXPENSE OF ANY PERSON RELATING TO THE ASSESSEE. IN THESE CIRCUMSTANCES, WE FIND IT DIFFICULT TO SUSTAIN THE AD-HOC DISALLOWANC E, IN THE ABSENCE OF AUTHORITIES POINTING OUT ANY DISCREPANCY IN RESPECT OF THESE EXPENSES WITH REFERENCE TO THE BOOKS OF ACCOUNTS MAINTAINED BY TH E ASSESSEE. THERE IS NO BASIS FOR QUANTIFYING THE DISALLOWANCE. WE, THEREFO RE, FIND IT DIFFICULT TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW, AS SUC H, WHILE UPHOLDING THE CONTENTION OF THE ASSESSEE, WE FIND THAT THE DISALL OWANCE HAS TO BE DELETED. WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE DISALL OWANCE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15 TH DECEMBER, 2017. SD/- SD/- (N.K.SAINI) (K.N.CHARY ) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* DATE:-15.12.2017 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELH I