INTERNATIONAL CARGO CARRIER, Jaipur V. ACIT, Jaipur

ITA 5/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99585 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: N S VYAS

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 5/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 M/S. INTERNATIONAL CARGO CARRIER F-10, TRANSPORT NAGAR JAIPUR CUKE VS. THE ACIT CIRCLE- 5 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAAF 13687 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI N.S. VYAS JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT-.. DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/12/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 14/12/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 28-11-2013 FOR THE ASSES SMENT YEAR 2008-09 RAISING FOLLOWING GROUNDS OF APPEAL:- 1 THAT THE AUTHORITIES BELOW ERRED IN APPLYING TH E PROVISION OF SECTION 145(3) OF THE I.T. ACT, 1961 T HEREBY MAKING AN ADDITION OF RS. 1.00 LAC TO ITS DECLARED TOTAL INCOME. ITA NO. 5//JP/2014 M/S. INTERNATIONAL CARGO CARRIER VS. ACIT, CIRCLE- 5, JAIPUR . 2 2. THAT THE AUTHORITIES BELOW FURTHER ERRED IN DISA LLOWING OUT OF TELEPHONE, TRAVELING, CAR EXPENSES AND DEPRE CIATION AMOUNTING TO RS. 62,393/- 3. THAT THE AUTHORITIES BELOW FURTHER ERRED IN MAKI NG AN ADDITION U/S 40A(2)(B) OF THE I.T. ACT, 1961 AMOUNT ING TO RS. 1,34,540/- 2.1 THE LD. COUNSEL CONTENDS THAT ASSESSEES BUSINE SS WAS SAME AND SIMILAR DISALLOWANCES WERE NOT MADE IN EARLIER YEAR S INCLUDING ASSESSMENT YEAR 2006-07. IF BOOKS OF ACCOUNTS ARE REJECTED AND INCOME ESTIMATED THEN NO OTHER TRADING ADDITION LIKE THE TELEPHONE E XPENSES RAISED IN GROUND NO. 2 CAN BE MADE. RELIANCE IS PLACED ON ITA T JAIPUR BENCH IN THE CASE OF PRAVEEN KUMAR SHRIMAL VS. ITO (ITA NO. 598/JP/2014 DATED 29-01-2015) RELYING ON THE JUDGMENT OF HON'BLE ALL AHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSIDHAR, 229 I TR 229 HAS HELD AS UNDER: 4. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE R ECORD. I FIND MERIT IN THE ARGUMENTS OF LEARNED COUNSEL FOR THE ASSESSEE THAT WHEN THE BOOKS OF ACCOUNT ARE REJECTE D AND TRADING ADDITIONS ARE MADE, THERE IS NO JUSTIFICATI ON IN MAKING FURTHER AD HOC DISALLOWANCE QUA TELEPHONE AN D CONVEYANCE EXPENDITURE. THIS VIEW IS SUPPORTED THE ITAT IN ASSESSEES OWN CASE FOR PRECEDING YEAR. IN VIEW THE REOF, THE ADDITION IS DELETED. ITA NO. 5//JP/2014 M/S. INTERNATIONAL CARGO CARRIER VS. ACIT, CIRCLE- 5, JAIPUR . 3 2.2 APROPOS GROUND NO. 3, THE LD. COUNSEL FOR THE A SSESSEE CONTENDS AS UNDER:- THE ASSESSEE IS PAYING THE INTEREST TO PARTNERS @ 12% AS SPECIFIED IN THE INSTRUMENT OF PARTNERSHIP D EED AND WHICH IS ALSO AS PER IT RULES. BUT THE INTEREST @ 1 8% WAS PAID TO THE MEMBERS / RELATIVES OF THE PARTNERS. THE RAT E OF INTEREST PAID TO RELATIVES IS 18% WHICH IS QUITE REASONABLE DUE TO THE FACT THAT THE OUTSIDE PARTIES ARE CHARGING INTEREST @ 18% AND EVEN THE BANKS ARE CHARGING INTEREST IN BETWEEN 16% TO 18% INCLUSIVELY OF INCIDENTAL CHARGES. AS SUCH, INTERES T PAID TO THE RELATIVES OF THE PARTNER @ 18% IS NOT EXCESSIVE AND THE AO WAS NOT JUSTIFIED IN DISALLOWING 5% CLAIM ABOVE 12% WHI CH WAS PAID TO THE PARTNERS. WE RELY THE DECISION OF CIT V S. AMRIT SOAP CO. (2009) 308 ITR 287 (P&H) - WHEREIN IT WAS HELD THAT WHERE THE RATE OF INTEREST PAID TO RELATED PARTY IS NOT H IGHER THAN WHAT IS PAID TO OTHERS. THERE CAN BE NO DISALLOWANCES, T HERE ARE THREE REQUIREMENTS FOR JUDGING THE REASONABLENESS OR OTHE RWISE OF PAYMENT. IT IS NECESSARY TO CONSIDER ALL THE THREE TESTS WITH DISALLOWANCES BEING WARRANTED WITH REFERENCE TO ONE OF THE TEST WHERE THE PAYMENT IS EXCESSIVE WITH REFERENCE TO LE GITIMATE NEEDS OF BUSINESS, WHICH IS ONE OF THE TEST, DISALL OWANCE IS JUSTIFIED. 2.3 THE LD. DR IS HEARD. 2.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN MY CONSIDERED VIEW, THE BOO KS OF ACCOUNT HAVE BEEN RIGHTLY REJECTED AND DISALLOWANCE OF RS. 1.00 LAC AS HELD BY THE LD. CIT(A) IS CONFIRMED. SINCE THE BOOKS OF ACCOUNT STA NDS REJECTED AND TRADING ADDITION BEING CONFIRMED BY THE LD. CIT(A). I FIND MERIT IN THE ITA NO. 5//JP/2014 M/S. INTERNATIONAL CARGO CARRIER VS. ACIT, CIRCLE- 5, JAIPUR . 4 ALTERNATE CONTENTION OF THE LD. COUNSEL FOR THE AS SESSEE THAT NO OTHER ADDITION CAN BE MADE AS HELD IN THE CASE OF PRAVEEN KUMAR SHRIMAL VS. ITO(SUPRA). CONSEQUENTLY GROUND 1 IS DISMISSED AND NO. 2 IS ALLOWED. 2.5 APROPOS GROUND NO. 3, THERE IS MERIT IN THE CON TENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT PAYMENT OF INTEREST T O THE RELATIVES @ 15% CANNOT BE HELD TO UNREASONABLE OR EXCESSIVE U/S 40( A)(2)(B) OF THE ACT. IN VIEW OF IT, THE ADDITION SUSTAINED AMOUNTING TO RS. 1,34,530/- IS DELETED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /12/201 5. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 /12/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. INTERNATIONAL CARGO CARRIER, JA IPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 5, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 5/JP/2014) VKNS'KKUQLKJ@ BY ORDER, ITA NO. 5//JP/2014 M/S. INTERNATIONAL CARGO CARRIER VS. ACIT, CIRCLE- 5, JAIPUR . 5 LGK;D IATHDKJ@ ASSISTANT. REGISTRAR