INTERPORT GLOBAL LOGISTICS P. LTD, MUMBAI V. DCIT RG 5(2), MUMBAI

ITA 4856/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49540 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BRIJMOHAN POORANMAL AGA RWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE THE HONBLE PRESIDENT, SHRI R.V.EASWAR AND SHRI T.R. SOOD (AM) I.T.A.NO. 4856/MUM/2010 ASSESSMENT YEAR: 2006-07 M/S. INTERPORT GLOBAL LOGISTICS PVT. LTD., 5 & 6 GROUND FLOOR, SHRIKANT CHAMBERS, SION TROMBAY RD., CHEMBUR, MUMBAI 400 071. PAN: AAACI 3746 A VS. THE DY. COMMISSIONER OF INCOME-TAX RANGE-5(2),R.NO. 525, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRIJMOHAN POORANMAL AGARWAL RESPONDENT BY : SHRI SUNIL KUMAR SINGH O R D E R PER T.R. SOOD, AM: IN THIS APPEAL THE ASSESSEE HAS RAISED THREE GROUN DS OUT OF WHICH GROUND NO.2 WAS NOT PRESSED. THEREFORE, THE SAME IS DISMI SSED AS NOT PRESSED. THE OTHER GROUNDS I.E. 1 AND 3 ARE AS UNDER: 1. THE LEARNED ASSESSING OFFICER(DY.CIT) HAS ERRED IN DISALLOWING DOCK CHARGES ON ADHOC BASIS OF ` 1,00,000/- INCURRED BY THE APPELLANT COMPANY AND FURTHER THE LEARNED CIT(A)-9, HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISAL LOWING PRINTING & STATIONERY CHARGES ON AD HOC BASIS OF ` 50,000/- INCURRED BY THE APPELLANT COMPANY AND FURTHER THE LEARNED CIT(A)-9 HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER. GROUND NO. 1: 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DU RING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DOCK CHARGES OF ` 13,48,339/-. IT WAS FURTHER NOTICED THAT IN THE IMM EDIATELY PRECEDING YEAR THE EXPENDITURE ON THIS HEAD WAS ONL Y ` 4.34 LACS. THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE WAS INCREASED MORE THAN 300%. HE ALSO OBSERVED THAT MOST OF THESE EXPENSE VOUCHERS WERE S ELF-MADE VOUCHERS AND, ITA NO.4856/MUM/2010 INTERPORT GLOBAL LOGISTICS P.LTD. 2 THEREFORE, THE ASSESSING OFFICER ULTIMATELY DISALLO WED A SUM OF ` 1,00,000/- UNDER THIS HEAD. 3. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED BY THE LEARNED CIT(A). 4. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ADDITION HAS BEEN MADE MERELY ON AD HOC BASIS WITHO UT PINPOINTING ANY DEFECT IN THE VOUCHER. HE FURTHER ARGUED THAT THESE EXPENSES ARE GENERALLY REIMBURSED BY THE CLIENTS AND ARE IN THE NATURE OF SMALL EXPENSES INCURRED BY THE EMPLOYEES WHILE GETTING THE SHIPMENTS CLEARED. MOST OF THESE EXPENSES ARE IN TERMS OF CERTAIN CHARGES. HE ALSO EMPHASIZED THAT THE TURNOV ER OF THE ASSESSEE HAS ALSO INCREASED FROM ` 27 CRORES TO ` 39.7 CRORES IN EARLIER YEARS AND EVEN THE NET PROFI T HAS INCREASED FROM ` 18.23 LAKHS TO ` 29.72 LAKHS. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y, WE FIND THAT THE DISALLOWANCE HAS BEEN MADE PURELY ON AD HOC BASIS. ONCE THE EXPENSES ARE BEING REIMBURSED BY THE CLIENTS, THEN, STRICTLY SPEAKING, THIS ITEM OF EXPENDITURE CANNOT BE EVEN CALLED AS EXPENDITURE AND ACCORDINGLY WE DE LETE THIS ADDITION. GROUND NO. 3 7. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE RE IS NO SUPPORT EVIDENCE IN RESPECT OF REPAIR AND MAINTENANCE EXPENSES AMOUNTIN G TO ` 5,45,642/- AND, THEREFORE, HE MADE A DISALLOWANCE OF ` 50,000/-. 8. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SOME TIMES A SMALL ITEM OF EXPENDITURE LIKE XEROX CHARGE S HAVE TO BE INCURRED FOR WHICH PROPER BILL CANNOT BE AVAILABLE. THIS DISALLOWANCE IS ALSO ON AD HOC BASIS AND CANNOT BE SUSTAINED UNDER THE LAW. ITA NO.4856/MUM/2010 INTERPORT GLOBAL LOGISTICS P.LTD. 3 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE AGR EE WITH THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE ADDITI ON HAS BEEN MADE ON AD HOC BASIS BUT AT THE SAME TIME NO DETAILS HAVE BEEN FIL ED BEFORE US SHOWING THE ITEMS AGAINST WHICH IT IS NOT POSSIBLE TO OBTAIN PROPER V OUCHERS. CONSIDERING THE OVERALL FACTS, WE ARE OF THE VIEW THAT IF THE ADDITION IS R ESTRICTED TO ` 10,000/- THE SAME WOULD MEET THE ENDS OF JUSTICE. THEREFORE, WE S ET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTRICT THE ADDITION ` 10,000/-. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2011. SD. SD. (R.V. EASWAR) (T.R. SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED THE 20 TH JULY, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT, MC-5. MUMBAI. 4. THE CIT(A)-9, MUMBAI 5. THE DR I BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI