K.Venugopal, Pondicherry V. ACIT, CHENNAI

ITA 511/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57776 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 18-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR STAND ING
• Assessee Lawyers: V S JAYAKUMAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO.511(MDS)/2011 ASSESSMENT YEAR : 2001-02 SHRI K.VENUGOPAL, 6, PILLAYAR KOIL STREET, BRINDAVANAM, PONDICHERRY-605 013. PAN AAAPG8629H. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE VII, CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S.JAYAKUMAR, ADVOCATE RESPONDENT BY : SHRI K.E.B.RENGARAJAN, JR.STAND ING COUNSEL DATE OF HEARING : 2 ND JANUARY, 2012 DATE OF PRONOUNCEMENT : 3 RD JANUARY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2001-02. THE APPEAL IS DIRECTED AG AINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(APPE ALS)-XII AT - - ITA NO.511 OF 2011 2 CHENNAI ON 18-1-2011. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T, 1961. 2. THE GROUNDS RAISED IN THE PRESENT APPEAL RELATE TO DISALLOWANCES OF VARIOUS EXPENSES CLAIMED BY THE AS SESSEE IN COMPUTING HIS TAXABLE INCOME. 3. THE FIRST POINT OF DISALLOWANCE IS THE EXPENSES INCURRED BY THE ASSESSEE ON DIESEL AND OIL. THE AS SESSEE HAD CLAIMED EXPENSES TOWARDS DIESEL AND OIL INCLUDING R EPAIRS AND MAINTENANCE IN RESPECT OF POCLAIN TO THE EXTENT OF ` 2,26,474/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM ON THE G ROUND THAT THE ASSESSEE HAD NOT ADMITTED ANY INCOME FROM THE O PERATION OF POCLAIN. IN FIRST APPEAL THE COMMISSIONER OF INCOM E- TAX(APPEALS) ALLOWED THE CLAIM OF ` 50,474/- AND CONFIRMED THE DISALLOWANCE OF ` 1,75,000/-. THE CASE OF THE ASSESSEE IS THAT THE POCLAIN WAS NOT OPERATED DURING THE PREVIOUS YE AR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AND THEREAFTER IT WAS SOLD OUT AND NEVERTHELESS IT WAS NECESSARY TO INCUR EXPENDIT URE SO AS TO MAINTAIN THE MACHINE IN WORKING CONDITION. THE REA SON - - ITA NO.511 OF 2011 3 EXPLAINED BY THE ASSESSEE IS ACCEPTABLE BUT FOR THE QUANTUM OF EXPENSES CLAIMED BY THE ASSESSEE AS WELL AS FOR VAR IOUS INFIRMITIES POINTED OUT BY THE ASSESSING AUTHORITY. SOME AMOUNT OF EXPENDITURE HAS NECESSARILY TO BE INCURRED TO KE EP THE MACHINE IN A WORKING CONDITION. BUT, WHEN THE MACH INE HAS NOT BEEN OPERATED IN THE RELEVANT PERIOD, THERE CANNOT BE ANY HUGE EXPENDITURE TOWARDS DIESEL AND OIL. SO ALSO THE PA RTICULARS OF EXPENDITURE CLAIMED BY THE ASSESSEE HAVE NOT BEEN P ROPERLY MAINTAINED AND EXPLAINED BY THE ASSESSEE. THEREFOR E, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT A DISALLOWANCE IS DEFINITELY CALLED FOR. NOW, THE DISALLOWANCE CO NFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IS ` 1,75,000/-. WE REDUCE THE DISALLOWANCE TO A SUM OF ` 1 LAKH. THE ASSESSING AUTHORITY IS DIRECTED TO DISALLOW ` 1 LAKH AND ALLOW THE BALANCE OF EXPENDITURE BY WAY OF DEDUCTION. 4. THE NEXT POINT IS IN RESPECT OF THE EXPENSES RE LATING TO CRANE AND POCLAIN. THE ASSESSING AUTHORITY HAD DISALLOWED 1/4 TH OF THE CLAIM OF THE EXPENDITURE MADE BY THE ASSESS EE. THE ASSESSEE MADE A CLAIM OF ` 1,79,954/- AND THE ASSESSING OFFICER - - ITA NO.511 OF 2011 4 DISALLOWED ` 44,988/-. THIS DISALLOWANCE HAS BEEN CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). FOR THE R EASONS ALREADY STATED IN RESPECT OF POCLAIN, WE FIND THAT THIS NOMINAL DISALLOWANCE MADE BY THE LOWER AUTHORITIES IS JUSTI FIED. THIS GROUND IS ACCORDINGLY REJECTED. 5. THE NEXT QUESTION OF DISALLOWANCE IS IN RESPECT OF MACHINERY MAINTENANCE. THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF ` 14,49,040/-. THE ASSESSING AUTHORITY HAS DISALLOWED 15% OF THE CLAIM, WHICH AMOUNTED TO ` 2,17,458/-. IN FIRST APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEAL S) HAS MODIFIED THE DISALLOWANCE TO 15% AND CONFIRMED THE BALANCE. WE FIND THAT THE DISALLOWANCE CONFIRMED BY THE COMM ISSIONER OF INCOME-TAX(APPEALS) IS JUST AND PROPER, AS THE ASSE SSEE WAS NOT IN A POSITION TO EXPLAIN THE EXPENDITURE IN A CONVI NCING MANNER. THIS GROUND IS ALSO DISMISSED. 6. THE LAST ITEM OF DISALLOWANCE RELATES TO RUNNIN G EXPENDITURE. THE ASSESSEE HAD CLAIMED A TOTAL EXPE NDITURE OF ` 11,67,865/-. THE ASSESSING AUTHORITY DISALLOWED T HE CLAIM. - - ITA NO.511 OF 2011 5 THE COMMISSIONER OF INCOME-TAX(APPEALS) ALLOWED A S UM OF ` 3 LAKHS AND DISALLOWED THE BALANCE OF ` 8,67,865/-. THE DISALLOWANCE WAS MADE BY THE ASSESSING AUTHORITY FO R THE REASON THAT DIFFERENCES EXISTED BETWEEN THE EXPENDI TURE CLAIMED BY THE ASSESSEE VIS--VIS THE BILLS PRODUCED BY THE ASSESSEE. IT WAS ALSO POINTED OUT BY THE ASSESSING AUTHORITY THA T PROPER VOUCHERS WERE NOT AVAILABLE AS ENDORSED BY THE DRIV ERS OF THE TRUCKS. WE CONSIDERED THE MATTER. THE ASSESSEE IS EARNING HIS INCOME FROM OPERATION OF LORRY TRANSPORT. THEREFOR E, A REASONABLE AMOUNT OF EXPENDITURE HAS DEFINITELY TO BE ALLOWED IN RESPECT OF RUNNING OF THE TRUCKS. WE FIND THAT THE AMOUNT ALLOWED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) AT ` 3 LAKHS IS NOT SUFFICIENT. WE MODIFY THE ALLOWANC E TO ` 6 LAKHS AND DISALLOW THE BALANCE AMOUNT. 7. THE ASSESSING AUTHORITY IS DIRECTED TO REVISE T HE ASSESSMENT ON THE ABOVE LINES. 8. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. - - ITA NO.511 OF 2011 6 ORDER PRONOUNCED ON TUESDAY, THE 3 RD OF JANUARY, 2012 AT CHENNAI. SD/- SD/- (GEORGE MATHAN) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 3 RD JANUARY, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.