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ITA 473/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2628 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M NARMADA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 473/HYD/2017 ASSESSMENT YEAR: 2008-09 SRSR ADVISORY SERVICES PVT LTD., HYDERABAD. PAN AAHCS0296G VS. DY. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 9, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SMT. M. NARMADA DATE OF HEARING : 12-07-2017 DATE OF PRONOUNCEMENT : 30-08-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 12, HYDERABAD, DATED 25-10-2016 FOR AY 2008-09. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME FOR THE AY 2008-09 ON 29/09/2008, DECLARING INCOME OF RS. 21,01,010/-. THE ASSESSMENT WAS COMPLETED U/ S 143(3) ON 29/12/2010 DETERMINING THE INCOME AT RS. 84,94,005/ - BY DISALLOWING 30% OF EXPENDITURE OF RS. 2.13 CRORE CLAIMED UNDER THE HEAD SALARIES, ADMINISTRATIVE AND OTHER EXPENSES. 2 ITA NO. 473/H/17 SRSR ADVISORY SERVICES PVT. LTD.. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE WAS ASKED TO PRODUCE BILLS/INVOICES IN RESPECT OF E XPENSES DEBITED TO P&L A/C ALONG WITH CASH/BANK PAYMENT VOUCHERS. SINC E THE ASSESSE WAS UNABLE TO PRODUCE THE SAME, THE AO COMPLETED TH E ASSESSMENT BY DISALLOWING 30% OF THE EXPENSES OF RS. 2,13,09,9 84/- CLAIMED UNDER VARIOUS HEADS AND DEBITED TO P&L A/C. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) AND CONTENDED THAT THE AO MADE AN OUTRIGHT DISALLOWANCE OF 30% OF TOTAL EXPENSES CLAIMED, ON S IMILAR LINES, OF AY 2007-08, WHICH WAS CONTESTED AND THE ITAT HAD ALLOW ED PARTIAL RELIEF BY DISALLOWING 10% OF SUCH EXPENSES AS AGAINST THE ENTIRE DISALLOWANCE CONFIRMED BY THE CIT(A). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) FOLLOWING THE DECISION OF ITAT IN ASSESSEES OWN CA SE FOR AY 2007-08 WHEREIN THE ITAT UPHELD THE DISALLOWANCES TO THE EX TENT OF 10% OF SUCH EXPENSES AS AGAINST 30% DISALLOWED IN THE ASSE SSMENT ORDER, DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF TOTAL EXPENSES OF RS. 2,13,09,984/-. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US. 6. GROUND NO. 1 RAISED BY THE ASSESSEE THAT THE CIT (A) ERRED IN SUSTAINING THE ADDITION OF RS. 63,92,995/- IS WHOLL Y UNSUSTAINABLE IN LAW AND FACTS OF THE CASE, WHICH IS GENERAL IN NATU RE. 7. AS REGARDS GROUND NO. 2, THE ACTION OF THE CIT(A ) IN DIRECTING THE AO TO RESTRICT THE DISALLOWANCE TO 10% OF TOTAL EXPENSES OF RS. 2,13,09,984/- IN SPITE OF FURNISHING COMPLETE DETAI LS FOR THE SAME. 3 ITA NO. 473/H/17 SRSR ADVISORY SERVICES PVT. LTD.. 8. AT THE TIME OF HEARING, LD. AR SUBMITTED THAT IN THE EARLIER APPEAL BEFORE ITAT IN THE AY 2007-08, THE BENCH HAS DIRECTED THE AO TO DISALLOW 10% OF THE EXPENDITURE. LD. AR SUBMITTE D THAT THE AO HAS NOT FOLLOWED THE DIRECTION OF ITAT AND DISALLOWED 3 0% OF TOTAL EXPENDITURE. ON APPEAL, CIT(A) HAS REDUCED THE DISA LLOWANCE TO 10% OF THE EXPENSES. HE PRAYED THAT THE EXPENDITURE SHO ULD BE DISALLOWED TO THE EXTENT OF 10% ON THE PROFESSIONAL AND REIMBU RSEMENT OF EXPENSES TO THE CONSULTANTS AS DONE IN THE EARLIER AY 2007-08. 9. LD. DR CONTROVERTING THE ABOVE SUBMISSION OF THE LD. AR SUBMITTED THAT THE CIT(A) HAS FOLLOWED THE DIRECTIO N OF ITAT AND SUBMITTED A STATEMENT SHOWING MANIFOLD INCREASE IN THE OTHER EXPENSES. SHE SUBMITTED THAT INSTEAD OF DISALLOWING IN SELECTIVE HEADS, THE CIT(A) HAS DIRECTED THE AO TO DISALLOW 1 0% ON THE OVERALL EXPENSES. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. THE ONLY ISSUE BEFORE US TO ADJUDICATE I S THAT THE AO HAS DISALLOWED 30% OF THE TOTAL EXPENSES AS THE ASSESSE E FAILED TO FURNISH BANK/CASH BOOK FOR VERIFICATION AND DID NOT PRODUCE BILLS/VOUCHERS FOR VERIFICATION. HOWEVER, IN THE PR EVIOUS AY 2007-08, THE ITAT HAS ADJUDICATED THE SIMILAR ISSUE AS UNDER : 12.2 COMING TO PROFESSIONAL CHARGES AND REIMBURSEME NT OF EXPENSES TO CONSULTANTS, THERE IS ALSO MANIFOLD INC REASE IN THIS EXPENDITURE. WHETHER THE AMOUNTS WERE COVERED BY PR OVISIONS OF TDS OR NOT COULD NOT BE VERIFIED IN THE ABSENCE OF ANY DETAILS. MOREOVER, JUSTIFICATION FOR PAYMENT OF PRO FESSIONAL CHARGES WAS ALSO NOT AVAILABLE ON RECORD. IN THE AB SENCE OF ANY JUSTIFICATION OF EXPENDITURE CLAIMS AND FURTHER IN THE ABSENCE OF BOOKS OF ACCOUNT AVAILABLE AT THIS POINT OF TIME, W E ARE OF THE OPINION THAT DISALLOWANCE OF 10% OF EXPENDITURE WOU LD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE DISALLOWANCE STAN DS MODIFIED AS DIRECTED ABOVE. THIS APPEAL IS ACCORDINGLY, PART LY ALLOWED. 10.1 THE CIT(A) BY FOLLOWING THE ABOVE DIRECTION, D ISALLOWED 10% OF THE OVERALL EXPENDITURE BY FOLLOWING THE ITAT ORDER . HOWEVER, WE OBSERVE THAT THE COORDINATE BENCH HAS DIRECTED DISA LLOWANCE OF 10% 4 ITA NO. 473/H/17 SRSR ADVISORY SERVICES PVT. LTD.. BY OBSERVING THAT THERE IS MANIFOLD INCREASE IN THE EXPENDITURE LIKE PROFESSIONAL CHARGES AND REIMBURSEMENT OF EXPENSES TO CONSULTANTS. SINCE, THE EXPENSES WERE INCREASED MANIFOLD ONLY IN THESE HEADS AND ACCORDINGLY, IT WAS DIRECTED TO DISALLOW 10% ON THE SE HEADS ONLY. HOWEVER, WE OBSERVE THAT DURING THE AY THERE IS MAN IFOLD INCREASE IN THE FOLLOWING HEADS, AS SUBMITTED BY LD. DR: S.NO. NATURE OF EXPENDITURE AY 2008-09 AY 2007-08 DIFFERENCE % INCREASE 1 AMC COMPUTERS 80,000 80,000 100% 2. POSTAGE & TELEGRAMS 8,321 5,889 2,432 41.29% 3. PRINTING & STATIONERY 1,44,020 1,20,661 23,359 19.35% 4. PROFESSIONAL CHARGES 33,00,000 30,00,000 (27,00,000) 6,00,000 20% 5. DIGITAL SIGNATURE CERTIFICATE 15,500 10,000 5,500 55% 6. XEROX MAINTENANCE 1,08,661 28,321 80,340 283% 7. LEASED LINE CHARGES 48,763 43,726 5,037 11.51% 8. REIMBURSEMENT OF EXPENSES 13,51,772 10,75,474 (9,67,927) 2,76,298 28.54% 9. TRAVELLING EXPENSES 2,04,330 89,740 1,14,590 127% 10. GENERATOR MAINTENANCE 34,010 23,018 10,992 47.75% 11. INTERNET EXPENSES 3,600 3,600 100% 12. ELECTRICITY CHARGES 1,03,175 92,859 10,316 11.10% 13. DIRECTORS REMUNERATION 21,14,000 5,28,750 15,85,250 299% 14 CONVEYANCE 4,38,937 3,13,740 1,25,197 39.90% 10.2 ACCORDINGLY, WE DIRECT THE AO TO DISALLOW 10% OF ABOVE EXPENSES IN WHICH EXPENSES INCREASED ABNORMALLY LIK E AMC COMPUTERS, XEROX EXPENSES, PROFESSIONAL CHARGES, RE -IMBURSEMENT EXPENSES, TRAVELLING EXPENSES, DIRECTORS REMUNERAT ION AND 5 ITA NO. 473/H/17 SRSR ADVISORY SERVICES PVT. LTD.. CONVEYANCE. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT AC COUNTANT MEMBER HYDERABAD, DATED: 30 TH AUGUST, 2017. KV COPY TO:- 1) SRSR ADVISOR SERVICES PVT. LTD., 3 RD FLOOR, FLAT NO. 306, PLOT NO. 707-709, ROAD NO. 36, FURTUNE MONARCH MALL, JUBILEE HILLS, HYDERABAD. 2) DCIT, CENTRAL CIRCLE 9, HYDERABAD. 3) CIT(A) - 12, HYDERABAD 4 PR. CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE