Rocket Engineering Corporation Pvt. Ltd., V. Additional Commissioner of Income-tax,

ITA 518/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1319 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B; DHEERAJ JAIN HEERAJ JAIN
• Keywords: Earning of tax free income
• Section: 142(1); 234B; 14A

Judgement Text

, IN THE INCOME TAX APPELLATE T RIBUNAL PUNE BENCH A, PUNE . . , , BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS A WASTHY, JM . / ITA NO.518/PN/2 014 / ASSESSMENT YEAR : 2011-12 ROCKET ENGINEERING CORPORATION PRIVATE LIMITED, D-19, MIDC, SHIROLI, KOLHAPUR 4126 122 PAN NO. AADCR3595 D . / APPELLANT V/S ADDL.CIT, RANGE-1, K OLHAPUR . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / DEPARTMENT BY : SHRI DHEERAJ JAIN HEERAJ JAIN & B / ORDER PER R.K. PANDA, A M : THIS APPEAL FILED BY THE ASSESSEE IS DIRE CTED AGAINST THE ORD ER DATED 12-12-2013 OF THE CIT(A), KOLHAPU R RELATING TO ASSESSM ENT YEAR 2011-12. 2. GROUNDS OF APP EAL NO.1 TO 3 BY THE A SSESSEE ARE AS UNDER : WITHOUT PREJUDICE TO EA CH OTHER : 1) ON THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING TH E ADDITION OF RS. 34,10 ,881/ MADE BY THE A .O. INVOKING SS. 36(1)(III) AND 40A(2)(B) OF TH E ACT WITHOUT PASSING A / DATE OF HEARING :20. 08.2015 / DATE OF PRONOUNCEM ENT:21.08.2015 2 ITA NO.518/PN/2014 'SPEAKING ORDER' BY PRO PERLY DEALING WITH THE A RGUMENTS OF THE APPELLA NT AND SOLELY RELYING ON THE A.O.'S VERSION FOR A. Y. 2 00910. SINCE THE INVOK ED PROVISIONS OF S. 36(1)(II I) & 40A(2)(B) ARE NOT A PPLICABLE TO THE FACTS OF THE CASE THE ADDITION CONFIRM ED BY CIT(A) BE DELETED . 2) ON THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS NOT JUSTIFIED IN CON FIRMING THE ADDITION MA DE BY THE A.O. INVOKING THE PROVISIONS OF S. 36(1) (III) R.W.S. 40A(2)(B) O F THE ACT, SAYING THAT THE ASSESSEECOMPANY ITSELF OFFERED THE SAME FOR TA XATION. THE 'OFFERING TO TAX' WAS UNDER CERTAIN MISC ONCEPTION OF LAW. THE A DDITION IS NOT SUSTAINAB LE AND THE SAME BE DELETED . 3) ON THE FACTS AND CIRC UMSTANCES OF THE CASE A ND IN LAW THE AMOUNT W AS OFFERED TO TAX IN EARLIE R YEARS WAS WITHOUT A PPRECIATING THE STATUTO RY PRESUMPTION THAT THE AD VANCES/LOANS COVERED B Y S. 40A(2)(B) WERE GIV EN OUT OF OWN FUNDS WHIC H ARE INTEREST FREE. TH E INCOME DECLARED IN T HE RETURN ITSELF EXCEEDS TH E AMOUNT OF LOANS PAID TO PERSONS COVERED BY S. 40A(2)(B). IN VIEW OF THE STATUTORY PRESUMP TION ADVANCES/LOANS W ERE PRESUMED TO HAVE BEEN GIVEN OUT OF THE CURRE NT INCOME OF THE YEAR ON WHICH TAX IS ALREADY PA ID WHICH GOES TO BUILD UP THE INTEREST FREE FUN DS. THE ADDITION OF RS.33,37 ,059/ IS UNWARRANTED A ND IT BE DELETED. 3. THE LD. COUNS EL FOR THE ASSESSEE A T THE OUTSET SUBMITT ED THAT THE ABOVE GROUNDS A RE DECIDED AGAINST TH E ASSESSEE BY THE DE CISION OF THE TRIBUNAL IN ASSES SEES OWN CASE FOR A. YRS. 2009-10 & 2010 -11. 4. AFTER HEARING B OTH THE SIDES, WE FIN D THE TRIBUNAL IN AS SESSEES OWN CASE VIDE ITA N O.1948/PN/2013 ORD ER DATED 11-08-2014 FOR A.Y. 2010-11 WHILE DISM ISSING THE GROUNDS RAISED BY THE ASSE SSEE HAS OBSERVED AS UNDER : 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE STANDS DECIDED AGA INST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECE DING ASSESSMENT YEAR. WE FIND THE TRIBUNAL IN ASS ESSEES OWN CASE VIDE I TA NO.849/PN/2013 OR DER DATED 11082014 FOR A .Y. 200910 HAS DECIDED THE ISSUE BY OBSERVING AS UNDER : 6. WE HAVE CONSIDE RED THE RIVAL ARGUMENT S MADE BY BOTH THE SID ES, PERUSED THE ORDERS OF T HE ASSESSING OFFICER AND THE CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF T HE ASSESSEE. WE HAVE A LSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSES SING OFFICER DISALLOWED AN AMOUNT OF RS.33,37,05 9/ BEING EXCESS INTER EST PAID TO THE DIRECT ORS, MEMBERS AND RELATED PARTIES BY INVOKING TH E PROVISIONS OF SECTIO N 40A(2)(B) OF THE I.T. AC T. WHILE DOING SO, HE HA D ALSO CONSIDERED THE OF FER OF THE ASSESSEE FOR ADDI TION OF RS.33,37,059/ F OR TAXATION . THE ASSES SEE AFTER GIVING IN WRITING T O THE ASSESSING OFFICER REGARDING THE REASONS F OR PAYMENT OF EXCESS I NTEREST @21% TO TH E SPECIFIED PERSONS HAS 3 ITA NO.518/PN/2014 CATEGORICALLY STATED TH AT TO BUY PEACE OF MI ND HE WANTS TO OFFER THE INTEREST PAID OVER AND A BOVE THE BANK RATE FOR T AXATION. THEREFORE, HAV ING OFFERED THE SAME TO TAX IN WRITING AND BY GIVIN G THE INDIVIDUAL DETAILS FOR CALCULATING THE DISALLOW ANCE THE ASSESSEE IS NO W AGITATING ON THE GROU ND THAT THERE WAS MISCONCE PTION OF LAW. 6.1 IN OUR OPINION, I T IS NOT A LEGAL ISSUE AN D IS PURELY A FACTUAL ISS UE. THE ASSESSING OFFICER H AD CLEARLY BROUGHT ON R ECORD THE RATE OF INTERE ST PAID TO OUTSIDE CREDITOR S AT 9%, TO THE BANKS AT 14.75% AND 21% PAID TO THE RELATED PARTIES. SIN CE THERE WAS HUGE DIFFE RENCE BETWEEN THE RATE OF INTEREST PAID TO THE BA NK AND THE RATE OF INT EREST PAID TO THE RELAT ED PARTIES, THE ASSESSING OFFICER HAD ASKED THE ASSESSEE TO JUSTIFY T HE REASONABLENESS OF SUCH HUGE INTEREST PAID TO T HE DIRECTORS. THE ASSES SEE HAD GIVEN THE REASONS A ND THEREAFTER TO BUY PEA CE OF MIND HAD OFFERED T HE EXCESS INTEREST PAID TO TAX. THEREFORE, THERE I S NO QUESTION OF ANY LE GAL MISCONCEPTION WHICH TH E ASSESSEE HAD FOREGONE BY WAY OF CONCESSION. IT IS PURELY A FACTUAL MAT TER. THEREFORE, WE DO NOT FIND ANY MERIT IN T HE GROUNDS RAISED BY THE LD. COUNSEL FOR THE ASSESSEE CHALLENGING T HE DISALLOWANCE OF ADDITION OF RS.33,37,079/. 6.2 SO FAR AS THE DEC ISIONS RELIED ON BY THE L D. COUNSEL FOR THE ASSES SEE ARE CONCERNED, NONE OF THE CASE RELATES TO A SIT UATION WHERE THE ASSES SEE HAVING OFFERED FOR TAXAT ION OF THE EXCESS AMOUN T OF INTEREST HAS GOT RELI EF. NO DOUBT, THE BANKS ASK LOT OF FORMALITIES FOR SAN CTIONING OF LOAN WHICH A RE NOT REQUIRED FOR LOANS OBTAINED FROM PRIVATE PARTIES. HOWEVER, IN T HE INSTANT CASE, THE ASSESSE E HAS ALSO OBTAINED LOAN FROM PRIVATE PARTIES AN D HAS PAID INTEREST @9%. THE ASSESSEE ITSELF HA S CALCULATED THE INTERES T TO BE PAID TO THE DIRECTO RS AND RELATED PARTIES @15.60% AND OFFERED THE BALANCE AMOUNT FOR TAXATION. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE VARIOUS CASE DEC ISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE. 6.3 WE FURTHER FIND THAT THE ASSESSEE IN TH E GROUNDS HAS MENTION ED THAT IT HAS SUFFICIENT INTE REST FREE FUNDS AVAILABLE WHICH ARE FAR IN EXCESS OF THE LOANS ADVANCED TO P ERSONS COVERED U/S.40A (2)(B). IN THE INSTANT CA SE, THERE IS NO QUESTION OF D ISALLOWANCE OF INTEREST O N ACCOUNT OF INTEREST FRE E ADVANCES GIVEN TO RELATE D PARTIES. IT IS A REVERSE CASE WHEREIN THE ASSESS EE HAS OBTAINED THE LOAN FROM RELATED PARTIES BY PAYING EXORBITANT RATE OF INTEREST FOR WHICH THE A SSESSING OFFICER DISALLOW ED THE EXCESS INTEREST PA ID TO THE RELATED PARTIES B Y INVOKING THE PROVISIO NS OF SECTION 40A(2)(B) OF THE I.T. ACT. SINCE TH E ASSESSEE ITSELF HAS A GREED FOR THE ADDITION OF RS.33,37,059/ TO TAX B EING EXCESS INTEREST PA ID TO THE RELATED PARTI ES COVERED U/S.40A(2)(B), THEREFORE, THE CIT(A) IN OUR OPINION WAS FU LLY JUSTIFIED IN UPHOLDING T HE ADDITION MADE BY T HE ASSESSING OFFICER. T HE GROUNDS RAISED BY THE AS SESSEE ARE ACCORDINGLY D ISMISSED. 4. FACTS BEING SIM ILAR, THEREFORE, FOLLOW ING THE DECISION OF T HE TRIBUNAL THE ABOVE GROU NDS BY THE ASSESSEE ARE DISMISSED. 5. FACTS BEING S IMILAR, THEREFORE, FO LLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2 009-10 AS WELL AS A. Y. 2010- 11 THE ABOVE GROUND S BY THE ASSESSEE ARE DISMISSED. 4 ITA NO.518/PN/2014 6. GROUND OF APP EAL NO.4 BY THE ASSES SEE READS AS UNDER : 4) ON THE FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT( A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLO WANCE MADE BY A.O. OF RS.93,288/ RESORTING T O PROVISIONS OF S.14A R .W.R. 8D OF THE I.T. RUL ES, 1962. THERE IS NO FINDIN G TO THE EFFECT THAT ANY EXPENDITURE WAS INCURR ED FOR EARNING THE EXEMP T DIVIDEND INCOME. TH E ASSESSEECOMPANY H AD SUFFICIENT NONINTEREST B EARING FUNDS TO MAKE TH E INVESTMENT ON WHICH T HE TAX EXEMPT INCOME HAS BEEN EARNED. IN VIEW OF THIS NO DISALLOWANCE IS CALLED FOR U/S 14A OF TH E ACT R.W.R. 8D OF I. T. R ULES, 1962. THE ADDITION BE DELETED. 7. AFTER HEARING B OTH THE SIDES, WE FIN D THE ASSESSEE COMP ANY HAS SHOWN DIVIDEND INC OME OF RS.2,28,938 /- FROM SHARES IN INDIAN COMPANIES AND CLAIM ED THE SAME AS EXEM PT U/S.10(34) OF THE I.T. ACT. NO EXPENDITURE HAS BEEN DEBITED FOR EARNING THIS INCOM E BEFORE CLAIMING THE EXEMP TION. ON BEING QU ESTIONED BY THE AO IT WAS SUBMITTED THAT NO EXPENDITURE HAS BEE N INCURRED FOR EARN ING THIS INCOME. FOLLOWING T HE ORDER OF HIS PRED ECESSOR FOR A.Y. 200 9-10 AND APPLYING THE PROVISIO NS OF SECTION 14A R.W . RULE8D THE AO DIS ALLOWED AN AMOUNT OF RS .1,07,291/- (WRONGL Y TAKEN IN THE GRO UNDS AS RS.93,288/-). IN APP EAL THE LD.CIT(A) UPH ELD THE ACTION OF THE AO. 8. AGGRIEVED WITH SUCH ORDER OF THE CI T(A) THE ASSESSEE IS I N APPEAL BEFORE US. 9. THE LD. COUNS EL FOR THE ASSESSEE A T THE OUTSET SUBMITT ED THAT THE ABOVE GROUND IS D ECIDED AGAINST THE AS SESSEE BY THE DECISIO N OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y. 2 010-11. 10. AFTER HEARING B OTH THE SIDES, WE FIN D THE TRIBUNAL IN AS SESSEES OWN CASE VIDE ITA N O.1948/PN/2013 FOR A.Y. 2010-11 WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE HAS OBSERV ED AS UNDER : 9. WE HAVE CONSIDE RED THE RIVAL ARGUMENT S MADE BY BOTH THE SID ES. WE FIND AN IDENTICAL ISS UE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSE ES OWN CASE FOR THE A.Y. 2 00910. THE TRIBUNAL VIDE ITA NO.849/PN/20 13 5 ITA NO.518/PN/2014 ORDER DATED 11082014 HAS DISMISSED THE GROU NDS RAISED BY THE ASSESS EE BY OBSERVING AS UNDER : 10. WE HAVE CONSIDE RED THE RIVAL ARGUMENT S MADE BY BOTH THE SID ES, PERUSED THE ORDERS OF T HE ASSESSING OFFICER AND THE CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE. FROM TH E COPY OF THE ASSESSME NT ORDER, WE FIND ON BEING QUESTIONED BY THE ASSE SSING OFFICER TO EXPLAIN AS TO WHY PROPORTIONATE D ISALLOWANCE SHOULD NOT BE MADE FOR CLAIMING THE DIVIDEND INCOME AS EX EMPT U/S.10(34), THE A SSESSEE IN ITS REPLY VI DE SUBMISSION DATED 1708 2011 HAS REPLIED AS UND ER : ' THE COMPANY HAS E ARNED A DIVIDEND OF R S.1,60,976/ FROM INDI AN COMPANIES WHICH IS C LAIMED AS EXEMPT U/S 10(34) OF THE I. T. A CT. HOWEVER, THE EXPENDITU RE INCURRED REGARDING T HE SAME IS NEGLIGIBLE A ND CANNOT BE CORRECTLY ASCE RTAINED'. 10.1 WE FURTHER FIND S IMILAR DISALLOWANCES WE RE MADE IN THE ASSESSME NT ORDERS PASSED FOR A.YR S. 200607 AND 20080 9 BY THE ASSESSING OFFI CER AND NOTHING WAS BROU GHT TO OUR NOTICE AS TO THE OUTCOME OF SU CH DISALLOWANCE MADE BY T HE ASSESSING OFFICER. TH E RELEVANT OBSERVATIONS OF THE ASSESSING OFFICER AT PARA 4.2 AND 4.3 OF THE ASSESSMENT ORDER READ AS UNDER : 4.2 SINCE THE EXPLANA TION OF THE ASSESSEE AS A BOVE WAS NOT ACCEPTABLE IN PURSUANCE TO THE PROVI SIONS OF SECTION 14A OF THE ACT RWR 8D OF THE I, T. RULES, 1962, AND FURTHE R THAT DISALLOWANCE WAS MADE IN THIS REGARD IN THE ASSESSMENT ORDERS PASS ED FOR A. Y. 200607 AN D 200809 BY THE A.OS. ON 05/12/2008 AND 23/12 /2010 RESPECTIVELY, VID E ANNEXURE TO THE NOTI CE U/S 142(1) OF THE ACT DT . 30/08/2011, THE ASSES SEE COMPANY WAS ASKED TO EXPLAIN AS UNDER: 'PLEASE REFER TO THE ASSE SSMENT ORDER PASSED FO R A. Y, 200607 AND 200 8 09 BY THE AOS ON 05/1 2/2008 AND 23/12/201 0. PLEASE STATE AS TO WH Y IDENTICAL VIEW SHOULD NOT BE TAKEN FOR DISA LLOWANCE OF INTEREST O N PAYMENTS S TOWARDS SHARE APPLICA TION MONEY AND ALSO D ISALLOWANCE OF PROPORTIONATE EXPENSES FOR EXEMPTED INCOME (I .E. DIVIDEND)'. 4.3 IN RESPONSE TO TH E ABOVE, THE ASSESSEE CO MPANY , VIDE SUBMISSIO N DT. 12/09/2011, IN SR. N O. 11, THE ASSESSEE COMP ANY REPLIED AS UNDER: '11. REGARDING THE DISA LLOWANCE OF INTEREST ON SHARE APPLICATION MONE Y, I WOULD LIKE TO STATE BEFO RE YOUR HONOUR THAT, THE SHARE APPLICATION . MON EY PAID FOR IPO'S OF VARIOU S COMPANIES REMAIN WI TH THOSE COMPANIES FOR A VERY SHORT PERIOD, AND D IVIDEND IF ANY RECEIVED O N THE SHARES ALLOTTED FRO M SUCH COMPANIES IS CRED ITED IN THE BOOKS OF ACC OUNTS. I, THEREFORE REQU EST YOUR HONOUR, NOT TO DISA LLOW OF INTEREST ON SHARE APPLICATION MONEY. I AL SO BRING TO YOUR HONORS KIND NOTICE THAT, NO H EAVY EXPENSES HAVE BE EN DEBITED TOWARDS EXEMP TED INCOME (I.E. DIVIDEN D) AND THEREFORE, I REQU EST YOUR HONOUR NOT TO DISA LLOW ANY EXPENSES IN THI S REGARD. 10.2 SINCE THE ASSESS EE ITSELF HAD ADMITTED T HAT IT HAS INCURRED CERT AIN EXPENSES ALTHOUGH THE SAME IS NEGLIGIBLE W HICH CANNOT BE CORREC TLY ASCERTAINED AND SINCE C ERTAIN ADDITIONS WERE M ADE DURING A.Y. 20060 7 AND 200809 BY THE A SSESSING OFFICER U/S.14 A AND NOTHING HAS BE EN BROUGHT ON RECORD AS TO THE OUTCOME OF THE SAM E INCLUDING THE QUANTUM , THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT( A) 6 ITA NO.518/PN/2014 UPHOLDING THE DISALLOWA NCE MADE U/S.14A R.W. RULE 8D FOR THE IMPUGN ED ASSESSMENT YEAR. THE C ASE DECISION RELIED ON B Y THE LD. COUNSEL FOR TH E ASSESSEE IS OF NO HELP TO IT IN ABSENCE OF GIVING FU LL DETAILS AND TO EXPLAIN AS TO HOW THE SAID RATIO IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. T HIS GROUND BY THE ASSESSEE IS ACCORDINGLY DISMISSED . 10. IN VIEW OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CA SE UPHOLDING THE ORDER OF THE CIT(A) ON THIS ISSUE IN THE PRECEDI NG ASSESSMENT YEAR AND IN ABSENCE OF ANY CONTRAR Y MATERIAL BROUGHT TO O UR NOTICE AGAINST THE ORDER OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORD ER OF THE CIT(A). ACCORDIN GLY, THE SAME IS UPHELD AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSE D. 11. FOLLOWING THE ORDE R OF THE TRIBUNAL IN A SSESSEES OWN CASE A ND IN ABSENCE OF ANY CONTR ARY MATERIAL BROUGHT TO OUR NOTICE THE ORD ER OF THE CIT(A) ON THIS ISSUE I S UPHELD AND THE GRO UND RAISED BY THE AS SESSEE IS DISMISSED 12. GROUND OF APP EAL NO.5 BY THE ASSES SEE READS AS UNDER : 5) ON THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) WAS NOT JUSTIFIED IN D ISALLOWING AN AMOUNT OF RS.2,53,759/ OUT O F FOUNDATION DAY EXPEN SES OF RS.12,68,794/ BEING EXCESSIVE AND T HE ADDITION OF RS.2,53,759/ BE DELETED. 13. AFTER HEARING B OTH THE SIDES, WE FIN D THE ASSESSEE HAS I NCURRED FOUNDATION DAY EXP ENSES OF RS.12,68,79 4/- AND DEBITED THE SAME TO THE PROFIT AND LOSS A CCOUNT. ON BEING AS KED BY THE AO TO FUR NISH THE RELEVANT DETAILS THE A SSESSEE SUBMITTED AS UNDER : WITH REGARD TO THE FOU NDATION DAY EXPENSES O F RS.12,68,794/, WE WO ULD LIKE TO BRING TO YOUR HONOUR KIND ATTENTION THAT, SAID EXPENSES WE RE INCURRED ON ACCOUNT OF THE FOUNDATION DAY IN T HE YEAR UNDER ASSESSME NT BEING THE COMPLETION OF 50 YEARS SINCE THE INCE PTION OF THE COMPANY. T HE COMPANY HAD CONDUCTED A GOLDEN JUBILEE CEREM ONY DURING THE YEAR UND ER CONSIDERATION. THE DE TAILS OF THE SAME ARE E NCLOSED HEREWITH FOR Y OUR HONOUR KIND PERUSAL. 14. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE AO FURTHER NOTED THAT THE EXPEN DITURE AMOUNT APPE ARS TO BE ON THE HIG HER SIDE FOR WHICH HE ASKED THE ASSESSEE AS TO WHY 20% OF SUCH EXPENSES SHOULD NOT BE DISALLO WED. SINCE THE AUTH ORISED REPRESENTATIV E OF THE ASSESSEE AGREED FOR DISALLOWANCE OF 20 % OF THE AFORESAID EXPENSES 7 ITA NO.518/PN/2014 BEING RS.2,53,759/- , THE AO DISALLOWED THE SAME AND ADDE D TO THE TOTAL INCOME OF THE A SSESSEE. IN APPEAL TH E LD.CIT(A) UPHELD TH E ACTION OF THE AO FOR WHICH T HE ASSESSEE IS IN APP EAL BEFORE US. 15. IN VIEW OF THE ABOVE FACTS, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE CIT(A). THE ASSESSEE ITSELF HAS AGREED BEFORE TH E AO FOR DISALLOWANCE OF 20% OF SUCH EXPENSES W HICH ACCORDING TO TH E AO WAS ON THE HIGHER SIDE. NOTHING WAS BROUGHT BEFORE US TO SHOW TH AT THERE WAS NO ACCEPTANCE B Y THE ASSESSEE FOR SU CH OFFER OR THE ASSES SEE WAS IN POSSESSION OF RELEVANT BILLS AND VOUCHERS JUSTIFYING SUCH EXPENDITURE. WE THE REFORE UPHOLD THE ORD ER OF THE CIT(A) ON TH IS ISSUE AND THE GROUND RAISE D BY THE ASSESSEE IS D ISMISSED. 16. GROUND OF APP EAL NO.6 BY THE ASSES SEE READS AS UNDER : 6. ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT (A) WAS NOT JUSTIFIED IN CONF IRMING THE ADHOC DISALLO WANCE OF RS.1,32,400/ ON ACCOUNT OF VARIOUS EXPE NSES MADE BY THE A.O. T HE ADHOC DISALLOWANCE BE DELETED. 17. AFTER HEARING B OTH THE SIDES, WE FIND THE ASSESSEE HAD DE BITED AN AMOUNT OF RS.13,23 ,995/- UNDER THE HE ADS POSTAGE AND TE LEPHONE, FURNITURE REPAIR AND MAINTENANCE AND C ARTAGE. WHILE VERIFY ING THE BILLS AND VOUCHERS, THE AO NOTED THAT SOME OF THE EXPENS ES WERE SUPPORTED BY SELF M ADE VOUCHERS ONLY F OR WHICH THESE ARE NOT FULLY VERIFIABLE AS TO THE B USINESS NEXUS OF THE ASSESSEE. NO TELEPH ONE CALL REGISTER WAS MAINTAI NED TO ENSURE THAT T HE ENTIRE EXPENSES U NDER THIS HEAD WERE INCURRED FOR THE PURPOSE OF B USINESS. THE AO AC CORDINGLY DISALLOWED ON ADHOC BASIS OF SUCH EXPENS ES AND THUS MADE AD DITION OF RS.1,32,400/-. IN AP PEAL THE LD.CIT(A) UP HELD THE ACTION OF THE AO FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 8 ITA NO.518/PN/2014 18. AFTER HEARING B OTH THE SIDES, WE FIN D THE TRIBUNAL IN AS SESSEES OWN CASE IN THE IMM EDIATELY PRECEDING AS SESSMENT YEAR FOLLOW ING THE ORDER FOR A.Y. 2009 -10 RESTRICTED SUCH DISALLOWANCE TO 5% . THE RELEVANT ORDER OF THE TRIBUNAL AT PARA NOS . 14 AND 15 READ AS U NDER : 14. AFTER HEARING BOT H THE SIDES, WE FIND AN ID ENTICAL ISSUE HAD COME U P BEFORE THE TRIBUNAL IN A SSESSEES OWN CASE IN T HE IMMEDIATELY PRECEDI NG ASSESSMENT YEAR. THE T RIBUNAL VIDE ITA NO.849 /PN/2013 ORDER DATED 11 082014 HAS RESTRICTED S UCH DISALLOWANCE TO 5% BY OBSERVING AS UNDER : 12. WE HAVE CONSIDE RED THE RIVAL ARGUMENT S MADE BY BOTH THE SID ES. THERE IS NO DISPUTE TO THE FACT THAT CERTAIN BILLS AND VOUCHERS WE RE SUPPORTED BY ONLY SE LFMADE VOUCHERS AND WERE NOT AMENABLE FOR VERIFICATION FOR WHICH THE ASSESSING OFFICER M ADE ADHOC DISALLOWANC ES. WE FIND SIMILAR DISALLOW ANCES WERE MADE IN TH E PRECEDING YEAR AND TH E ASSESSEE HAS NOT OBJECT ED TO THE SAME. HOWEV ER, NONE OF THE PARTIES H AS BROUGHT TO OUR NOTICE R EGARDING THE AMOUNT OF DISALLOWANCE. CONSIDER ING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF TH E CONSIDERED OPINION TH AT THE DISALLOWANCE AT 10% ON ADHOC BASIS APPEARS TO BE ON THE HIGHER SID E. WE THEREFORE DIRECT TO RESTRICT SUCH DISALLOWAN CE TO 5% OF THE EXPENS ES. WE HOLD AND DIRECT AC CORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOW ED. 15. FOLLOWING THE SA ME REASONINGS WE DIRE CT THE AO TO RESTRICT SU CH DISALLOWANCE TO 5% OF T HE EXPENSES CLAIMED AS AGAINST 10% MADE BY H IM AND UPHELD BY THE CIT (A). THIS GROUND BY T HE ASSESSEE IS ACCORDIN GLY PARTLY ALLOWED. 19. FOLLOWING THE SAME REASONING WE D IRECT THE AO TO RESTR ICT SUCH DISALLOWANCE TO 5% O F THE EXPENSES CLAIM ED AS AGAINST 10% D ISALLOWED BY HIM AND UPHELD BY THE CIT(A). THIS GROUND BY THE ASS ESSEE IS ACCORDINGLY PARTLY ALL OWED. 20. GROUND OF APP EAL NO.7 BY THE ASSES SEE READS AS UNDER : 7) ON THE FACTS AND C IRCUMSTANCES OF THE CA SE AND IN LAW THE LEVY OF INTEREST U/S 234A, 234B AND 234C IS NOT JUSTIFIE D. THE LEVY OF INTEREST B E QUASHED. 21. AFTER HEARING BOTH THE SIDES, WE A RE OF THE CONSIDERED OPINION THAT LEVY OF INTEREST U/S.234A, 234B AN D 234C IS MANDAT ORY AND CONSEQUENTIAL IN NAT URE. ACCORDINGLY, TH IS GROUND BY THE AS SESSEE IS DISMISSED. 9 ITA NO.518/PN/2014 22. GROUND OF APP EAL NO.8 BEING GENERA L IN NATURE IS DISMISS ED. 23. IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 -08-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) / JUDICIAL MEMBER / ACCOUNTANT MEM BER PUNE ; DATED : 21 ST AUGUST, 2015. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) , / THE CIT(A), KOLHAPU R 4 . / THE CIT, KOLHAPUR 5 . 6. , , / DR, ITAT, A PUNE; / GUARD FILE. / BY ORDER , //TRUE C //TRUE COPY// / SR. PRIVATE SECRETA RY , / ITAT, PUNE