M/s SI Property (Kerala) Pvt.Ltd, Trivandrum V. Jt.CIT, Trivandrum

ITA 527/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58253 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: V SATYANARAYANAN
• Keywords: Opportunity of being heard; Question of law; Corroborative evidences
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND SANJAY AROR A, AM I.T.A NO. 527/COCH/2010 ASSESSMENT YEAR: 2007-08 S.I. PROPERTY (KERALA) (P.) LTD., GOLF LINKS ROAD, KOWDIAR P.O., TRIVANDRUM - 695 003. [PAN: AAFCS 2896E] VS. THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, TRIVANDRUM. (ASSESSEE-APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI V.SATYANARAYANAN, CA REVENUE BY MS. S. VIJAYAPRABHA, JR..DR DATE OF HEARING 21/11/2011 DATE OF PRONOUNCEMENT 31/01/2012 O R D E R PER SANJAY ARORA, AM: THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER BY THE COMMISSIONER OF INCOME- TAX (APPEALS)-I, TRIVANDRUM (CIT(A) FOR SHORT) DA TED 14-07-2010, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2007-08. 2. THE APPEAL RAISES THREE ISSUES, EACH OF WHICH WE SHALL TAKE UP IN SERIATIM. THE FIRST ISSUE, RAISED PER GROUND NO. 1, IS IN RESPECT OF CONFIRMATION OF THE DISALLOWANCE OF ` 5,10,230/-. THE BASIS FOR THE ASSESSING OFFICERS (AOS) ACTION WAS THAT THE SAME IS A PENALTY UNDER THE KERALA SALES TAX ACT AND, THEREFO RE, NOT EXIGIBLE FOR DEDUCTION U/S. 37(1) OF THE INCOME TAX ACT, 1961 (THE 'ACT' HEREIN AFTER). THE SAME STOOD CONFIRMED ON THE SAME BASIS, EVEN AS THE ASSESSEE-APPELLANT CLAI MED THAT THE IMPUGNED AMOUNT WAS IN FACT INTEREST ON THE DELAYED PAYMENT OF SALES-TAX, LIABLE AT THE RATE OF 1% OF THE TAX, PAYMENT OF WHICH IS DELAYED, AND AT THE RATE OF 2% ON THE DELAYED PAYMENT OF INTEREST, SO I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 2 THAT THE SAME ARE COMPENSATORY IN NATURE AND, HENCE , DEDUCTIBLE. THE LD. CIT(A) WAS, HOWEVER, OF THE VIEW THAT THE SAME WAS PENAL IN NAT URE AND, THUS, NOT ALLOWABLE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE ASSESSEES CASE IS THAT THE WORD PENAL TY IS BY ITSELF NOT DETERMINATIVE OF THE MATTER, AND DESPITE IT BEING TITLED AS SO, IT MAY W ELL BE COMPENSATORY, IN WHICH CASE IT MERITS ALLOWANCE. THE CHARACTER OF THE IMPOSITION HAS TO BE DECIDED ON THE BASIS OF THE SCHEME OF THE RELEVANT ACT, WITHOUT BEING INFLUENCE D BY ITS NOMENCLATURE, AND FOR WHICH IT PLACES RELIANCE ON THE DECISION IN THE CASE OF CIT VS. N.M.PARTHASARATHY (1995) 212 ITR 105 (MAD.), RENDERED FOLLOWING THE DECISIONS BY THE HONBLE APEX COURT IN THE CASE OF PRAKASH COTTON MILLS (P.) LTD . VS. CIT (1993) 201 ITR 684 (SC) AND CIT VS. AHMEDABAD COTTON MANUFACTURING COMPANY (1994) 205 ITR 163 (SC). THE SAME REPRESENTS TRITE LAW, AND TOWARD WHICH WE MAY REPRODUCE AN EXTRACT FROM T HE DECISION IN THE CASE OF PRAKASH COTTON MILLS (P.) LTD . VS. CIT (SUPRA), AS FOLLOWS: WHENEVER ANY STATUTORY IMPOST PAID BY AN ASSESSEE BY WAY OF DAMAGES OR PENALTY OR INTEREST IS CLAIMED AS AN ALLOWABLE EXPENDITURE U/S . 37(1) OF THE INCOME-TAX ACT, 1961, THE ASSESSING AUTHORITY IS REQUIRED TO EXAMINE THE SCHEME OF THE PROVISIONS OF THE RELEVANT STATUTE PROVIDING FOR PAYMENT OF SUCH IMPOST NOTWIT HSTANDING THE NOMENCLATURE OF THE IMPOST AS GIVEN BY THE STATUTE, TO FIND WHETHER IT IS COMPENSATORY OR PENAL IN NATURE. THE AUTHORITY HAS TO ALLOW DEDUCTION U/S. 37(1) WHEREVE R SUCH EXAMINATION REVEALS THE CONCERNED IMPOST TO BE PURELY COMPENSATORY IN NATUR E. WHEREVER SUCH IMPOST IS FOUND TO BE OF A COMPOSITE NATURE, THAT IS, PARTLY OF COMPEN SATORY NATURE AND PARTLY OF PENAL NATURE, THE AUTHORITIES HAVE TO BIFURCATE THE TWO C OMPONENTS OF THE IMPOST AND GIVE DEDUCTION OF THAT COMPONENT WHICH IS COMPENSATORY I N NATURE AND REFUSE TO GIVE DEDUCTION OF THAT COMPONENT WHICH IS PENAL IN NATUR E. THE REVENUE, HOWEVER, CLAIMS THAT THE IMPUGN ED LIABILITY IS ON ACCOUNT OF AN INFRACTION OF LAW AND, THUS, ONLY PENAL IN NATURE. 3.2 IN OUR VIEW, IT IS NOT DENIED THAT THE LIA BILITY UNDER REFERENCE ARISES ON ACCOUNT OF THE DELAYED PAYMENT OF SALES-TAX AND, FURTHER, ON T HE DELAYED PAYMENT OF THE INTEREST ON THE SAME. SALES-TAX IS A BUSINESS LIABILITY, SO THA T INTEREST ON ITS DELAYED REMISSION WOULD ALSO, THOUGH IN CONSEQUENCE TO A STATUTORY PROVISIO N, LIKE THE SALES-TAX ITSELF, SHOULD I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 3 QUALIFY AS A BUSINESS DEDUCTION U/S. 37(1) OF THE A CT. LIKE-WISE, FOR THE INTEREST ON THE UNPAID INTEREST; THE LATTER QUALIFYING AS A BUSINES S OBLIGATION, WITH THE INTEREST LEVIED BEING A COMPENSATION FOR THE DELAY IN ITS PAYMENT. THE SAME, HOWEVER, MAY HAVE BEEN PROVIDED AT A HIGHER RATE SO AS TO OPERATE AS A DET ERRENT FOR THE ASSESSEE-DEALERS TO REMIT THEIR STATUTORY DUES IN TIME, SO THAT IT MAY HAVE A N ELEMENT OF PENALTY INBUILT THEREIN. SO, HOWEVER, THE LIABILITY, AS IT APPEARS, BEING RECKON ED WITH REFERENCE TO THE PERIOD OF DELAY IN THE PAYMENT (OF INTEREST), THE INTEREST THEREON (ON INTEREST) CAN ONLY BE CONSIDERED AS CHARGE OF INTEREST ON THE PRINCIPAL SUM OF TAX AT A COMPOUND RATE (WHEREBY THE UNPAID INTEREST AUTOMATICALLY ATTRACTS INTEREST, THOUGH AT THE SAME RATE AS THE PRINCIPAL SUM ), SO THAT IT WOULD NOT STAND TO BE CONSIDERED AS PENAL M ERELY BECAUSE INTEREST IS PROVIDED FOR NON-PAYMENT OF INTEREST, A STATUTORY DUE AS THE SAL ES-TAX ITSELF. THAT IS, THE SAME WOULD NOT DETRACT FROM THE COMPENSATORY CHARACTER OF THE PAYMENT, WHICH IT APPARENTLY BEARS. SO, HOWEVER, THESE ARE OUR PRIMA FACIE AND PRELIMINARY OBSERVATIONS, MADE DE HORS ANY PROVISION OF LAW, AND NO FINAL ADJUDICATION IN THE MATTER COULD BE MADE WITHOUT AN ANALYSIS OF THE RELEVANT PROVISIONS OR THE SCHEME O F THE RELEVANT ACT, TO WHICH THERE IS NO REFERENCE EITHER IN THE ORDERS OF THE AUTHORITIES B ELOW OR EVEN IN ITS CASE AS ADVANCED BY THE ASSESSEE BEFORE THEM OR EVEN BEFORE US. FOR ALL WE KNOW, IT MAY WELL BE THAT THE PROVISION OF INTEREST IS NOT AUTOMATIC, AND ON A RE ASONABLE OR BONA FIDE CAUSE BEING SHOWN, STANDS TO BE WAIVED OR REDUCED, AS WHERE (SA Y) THE INTEREST ON INTEREST IS NOT CHARGED. CLEARLY, IN THAT CASE THE ENTIRE SUCH PAYM ENT WOULD BEAR A PENAL CHARACTER; THE LEVY CONFIRMING THE ABSENCE OF A CAUSE FOR DEFAULT. THE RATE OF INTEREST IS ANOTHER INDICATOR AS TO THE EXTENT IT IS COMPENSATORY, AS A N `EXORBITANT RATE WOULD DEFINITELY BEAR AN ELEMENT OF PENALTY, BEING IN EXCESS OF THAT WARR ANTED BY THE CONSIDERATION FOR COMPENSATING THE EXCHEQUER FOR THE DELAYED PAYMENT, AND TOWARD WHICH SOME REASONABLE PARAMETER, AS (SAY) THE BORROWING RATE FOR THE GOVE RNMENT OR THE INTEREST RATE OFFERED BY IT ON EXCESS PAYMENT OF TAX, COULD BE RELEVANT. SO, HO WEVER, THE SAME, WHERE SO HELD, NEEDS TO BE DETERMINED JUDICIOUSLY, CLEARLY SPELLING OUT THE BASIS, BOTH, I.E., FOR HOLDING THE NATURE OF THE LEVY/S AS COMPOSITE, AS ALSO THE MANN ER IN WHICH THE PENAL COMPONENT IS ARRIVED AT, AND NO FIXED NOTION OR RULE CAN BE SAID TO APPLY. THE INTEREST OFFERED BY THE GOVERNMENT MAY WELL BE MINIMAL WITH A VIEW TO DISCO URAGE EXCESS PAYMENT OF TAX, AS I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 4 WOULD BE APPARENT WHERE THE SAME IS BELOW ITS BORRO WING RATE (AS BEING OFFERED ON DIFFERENT PUBLIC DEBT INSTRUMENTS OR THE OVERDRAFT FACILITY ENJOYED BY IT), AS WITHOUT DOUBT IT STANDS TO SAVE INTEREST (ON ITS BORROWINGS) TO T HAT EXTENT. NO RIGID RULE IN THE MATTER CAN IN ANY CASE HOLD, AND A REALISTIC APPROACH TO THE M ATTER IS TO BE APPLIED. IN THE INSTANT CASE, APART FROM BEING DE HORS THE RELEVANT PROVISIONS OF LAW, EVEN THE RATE OF I NTEREST IS NOT CLEAR INASMUCH THERE IS NO REFERENCE TO THE PER IOD TO WHICH THE RATE OF 1% AND 2% RELATE, AS ALSO WHETHER THE SAME APPLIES ON A SIMPL E OR A COMPOUND BASIS, FOR US TO - EXCEPT FOR MAKING SOME BROAD THOUGH RELEVANT OBSERV ATIONS - BE ABLE TO DECIDE THE SAME, NOR WERE ANY ARGUMENTS ADVANCED BY THE PARTIES IN T HE MATTER. 4. THE MATTER IS ACCORDINGLY REMITTED BACK TO THE FILE OF THE AO FOR A DECISION AFRESH ON MERITS AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 5. THE SECOND GROUND ON WHICH THE APPELLATE ORDER I S IMPUGNED RELATES TO THE CONFIRMATION OF THE ADDITION BY THE AO AT ` 15 LAKHS ON ACCOUNT OF BEING NOT PROPERLY VOUCHED, AT ` 10 LAKHS. THE ASSESSEE-COMPANY IS ENGAGED IN THE BU SINESS OF CONSTRUCTION OF FLATS, VILLAS AND REAL ESTATE DEVELOPMENTS IN TH E STATE OF KERALA. THE AO, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, OBSERVED THAT THE EXPENDITURE ON CONSTRUCTION COST WAS LARGELY SUPPORTED BY SELF-MADE VOUCHERS, PARTIC ULARLY IN RESPECT OF PAYMENTS TOWARDS LABOUR CHARGES; REPAIRS; MAINTENANCE; AND MISCELLAN EOUS EXPENSES. EVEN THE ADDRESSES OF THE PAYEES WERE NOT AVAILABLE. HE, THEREFORE, IN VI EW OF THE SAME BEING NOT VERIFIABLE, ESTIMATED THE INFLATION THEREIN TO THE EXTENT OF ` 15 LAKHS. IN APPEAL, THE LD. CIT(A) WAS OF THE VIEW THAT THE DISALLOWANCE COULD NOT HAVE BEEN MADE BY THE AO BY MAKING A GENERAL STATEMENT, BUT ONLY WITH REFERENCE TO THE DISCREPAN CIES SPECIFICALLY PINPOINTED BY HIM, I.E., A LUMPSUM AND AN AD-HOC ESTIMATION AS MADE BY HIM COULD NOT HOLD. AT THE SAME TIME, THE FACT OF EXPENDITURE HAVING BEEN BOOKED WI THOUT PROPER SUPPORTING EVIDENCE, IS NOT DENIED, I.E., EXISTS, AND SOME DISALLOWANCE ON ACCOUNT OF UNPROVED EXPENDITURE IS REQUIRED TO BE MADE. SHE, ACCORDINGLY, CONFIRMED TH E DISALLOWANCE BY REVISING THE ESTIMATE THEREOF TO `1 0 LAKHS. AGGRIEVED, THE ASSESSEE IS IN APPEAL. I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 5 6. THE ASSESSEE HAS PER ITS WRITTEN SUBMISSIONS EXPLAINED THE MANNER AND THE PROCEDURE IN RESPECT OF SUCH EXPENDITURE, CLAIMED TO BE UNVER IFIABLE, IS INCURRED BY THE ASSESSEE, AS WELL AS THE DOCUMENTATION MAINTAINED IN ITS RESPECT . THE EXPENDITURE WHICH IS BOOKED PER SELF-MADE VOUCHERS IS ONLY WITH REGARD TO BULK CONS TRUCTION MATERIAL LIKE SAND, STONE, BRICKS, METAL, RUBBLE ETC., FOR WHICH THE THIRD PAR TY EVIDENCES ARE NOT AVAILABLE IN THE REGULAR COURSE OF BUSINESS. HOWEVER, THE DEFICIENC Y OF THE SYSTEM OR LAPSES ON ACCOUNT OF PRACTICAL DIFFICULTIES/CONSTRAINTS AND THE INDUS TRIAL PRACTICE; THE INVOICES/BILLS IN THE REGULAR FORMAT FOR SUCH MATERIALS BEING NOT AVAILAB LE, IS NOT IN THE LEAST FOR ANY DEFECT AT THE END OF THE ASSESSEE, WHO HAS MAINTAINED SUFFICI ENT DOCUMENTATION FOR THE PURPOSE OF ENSURING COMPLETE AND ADEQUATE TRANSPARENCY AND VIS IBILITY, INCLUDING CONFIRMATION BY THE SUPPLY CONTRACTORS. IN FACT, MOST OF THE SAID P AYMENTS ARE MADE BY ACCOUNT PAYEE CHEQUES AND, IN ANY CASE, THE PAYMENTS ACKNOWLEDGED BY THE PAYEES. SIMILARLY, THE PAYMENT FOR LABOUR CHARGES IS EFFECTED TO THE CONTR ACTORS ONLY AGAINST WORK ORDERS ISSUED AND ACCEPTED BY THE CONTRACTORS, WHO PUT THEIR SIGN ATURES THEREON. THE PAYMENT OF CONTRACT LABOUR IS MADE BY THE MEASUREMENT OF THE W ORK DONE, AS AUTHENTICATED BY THE SITE ENGINEER, DULY ACCEPTED BY THE CONTRACTOR. AGAIN, A SUBSTANTIAL COMPONENT, I.E., ` 371.06 LAKHS OF THE TOTAL PAYMENT (OF ` 413.74 LAKHS) HAS BEEN EFFECTED PER ACCOUNT PAYEE CHEQUES, SO THAT THE PAYMENT IN CASH IS ONLY UNDER IMPOSING AND/OR FOR UNAVOIDABLE REASONS. THE PAYMENTS TO THE CONTRACTORS ARE FURTHE R SUPPORTED BY DEDUCTION OF TAX AT SOURCE. RELIANCE TO A HOST OF CASE LAWS HAS BEEN MA DE. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE FIRST THING THAT WE OBSERVE IS A COMPLETE CASUALNESS IN ITS APPROACH TO THE MATTER BY THE DEPARTMENT. THE AO DOES MENTION OF THE EXPENDITURE FOR SOME PAYMENT CATEGORIES UNDER THE CONSTRUCTION ACCOUNT AS BEING NOT SUBJECT TO PROPER VERIFICATION , BUT DOES NOT DISCUSS THE ASSESSEES CASE IN THE MATTER, NOR SPELLS OUT THE EXPENDITURE ON EACH OF THOSE HEADS, AND BOTH OF WHICH ARE EXTREMELY RELEVANT, AND PROCEEDS TO EFFEC T THE DISALLOWANCE IN AN AD HOC MANNER. THE ORDER OF THE LD. CIT(A) IS ALMOST A REP RODUCTION OF THE ASSESSMENT ORDER; HER ORDER BEING AGAIN SILENT ON THE PRINCIPAL ASPECTS O F THE CASE. HOW IS THE EXTENT, EVEN ASSUMING A VALID CHARGE, WHICH IN PRINCIPLE IT COUL D BE, OF THE DISALLOWANCE TO BE I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 6 ASSESSED IN ITS ABSENCE ? THIS IS AS ONLY A REASONABLE ESTIMATE OF THE UNPR OVED EXPENDITURE OR THE EXTENT OF INFLATION THEREIN IS SUSTAINABLE I N LAW. THE ASSESSEE CLAIMS TO HAVE MAINTAINED COMPLETE INTERNAL RECORDS, SUBSTANTIATIN G THE PURCHASE OF GOODS AND THEIR SUBSEQUENT MOVEMENT AND UTILISATION, AS WELL AS THE EXPENDITURE ON LABOUR. THAT IS, THE IMPUGNED EXPENDITURE IS SUBJECT TO PROPER INTERNAL CONTROL AS TO THE RECEIPT OF THE CORRESPONDING GOODS AND SERVICES, AS WELL AS PAYMEN TS MADE THERE-AGAINST, DULY RECEIPTED WHERE NOT MADE PER ACCOUNT PAYEE CHEQUES, WHICH IS STATED BEFORE US TO BE TO THE EXTENT OF ` 43 LAKHS. IF PROPER THIRD PARTY EVIDENCES ARE NOT AVAILABLE AS AN INDUSTRIAL PRACTICE, ON ACCOUNT OF THE SEVERAL CONSTRAINTS THA T MAY BE OBTAINING, IS IT THE ASSESSEE TO BE BLAMED IN ANY MANNER? FURTHER, COULD IT DO ANY B ETTER THAN SPELLING OUT THE FACTS AND CIRCUMSTANCES ATTENDING ITS CASE, AND FURNISHING TH E RELEVANT RECORDS AND MATERIALS FOR THEIR VERIFICATION BY THE REVENUE AUTHORITIES, AND WHICH COULD IN ANY CASE BE CALLED FOR. IN FACT, THIS FACT, AS WELL AS ALL THAT THE ASSESSE E CLAIMS, IN ADVANCING ITS CASE, OUGHT TO HAVE BEEN SUBJECT TO EXAMINATION BY THE AUTHORITIES BELOW, ISSUING SPECIFIC FINDINGS OF FACT IN THE MATTER, IN THE ABSENCE OF WHICH THESE R EMAIN ONLY ASSERTIONS. WE, NEVERTHELESS, HAVE NO REASON TO DOUBT THE SAME, AND PROCEED ON TH E BASIS OF THEIR VALIDITY. FURTHER, THE QUESTION AS TO THE RELIABILITY OF THE ASSESSEES RE CORDS, ASSUMING THEIR MAINTENANCE, WOULD ARISE. BUT, THE MOOT QUESTION IS: COULD ANY DISALLOWANCE BE EFFECTED WITHOUT SUBJECTI NG IT TO EXAMINATION, AND STATING THE REASON/S AS TO WHY IT IS, OR TO THE EXTENT IT IS SO, CONSIDERED AS NOT RELIABLE ? THE LD. CIT(A), WHO ENJOYS CO-TERMINUS POWERS WIT H THE ASSESSING AUTHORITY, COMMITS THE SAME MISTAKE AS TH E LATTER, WHICH SHE POINTS OUT, SUPPLANTING HER - EQUALLY UNVERIFIED AND UNSUBSTANT IATED ESTIMATE AGAINST THAT BY THE AO, WITHOUT IN ANY MANNER STATING AND MEETING THE A SSESSEES CASE. WHAT IS THE QUANTITY OF BULK MATERIALS AND/OR LABOUR PAID AGAINST THE AG GREGATE CASH PAYMENT OF ` 43 LAKHS, I.E., ASSUMING THE FIGURES FURNISHED BY THE ASSESSEE AS C ORRECT? IS THE SAID COST ANY DIFFERENT FROM THAT IN RESPECT OF THE SAME WHERE PAID PER ACC OUNT PAYEE CHEQUES, WHICH ONLY, AND ONLY TO THAT EXTENT, VALIDATE THE CHARGE OF INFLATI ON. ARE THE PAYEES REGULAR VENDORS FOR THE RESPECTIVE GOODS AND SERVICES? ON WHAT BASIS IS IT SAID THAT THEIR ADDRESSES ARE NOT AVAILABLE, WHICH IS A MUST FOR ANY BUSINESS ENTITY, AND A CHARGE WHICH THE ASSESSEE STRONGLY REFUTES? ARE ANY CORROBORATING EVIDENCES A VAILABLE, AS (SAY) IN THE FORM OF WORK I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 7 COMPLETED FOR WHICH GOODS (OR SERVICES) TO THIS EXT ENT WOULD BE NECESSARILY OR REASONABLY REQUIRED? NO ANSWERS ARE AVAILABLE QUA ANY OF THESE OR LIKE MATTERS OF FACT FOR WANT OF ANY EXERCISE MADE BY THE REVENUE. A DISALLOWANCE, G IVEN THE RECORDS MAINTAINED BY THE ASSESSEE, IT IS TO BE APPRECIATED, CAN ONLY FOLLOW A FINDING AS TO THE RELEVANT EXPENDITURE BEING NOT GENUINE, WHICH IS CONSPICUOUS BY ITS ABSE NCE; THE REVENUE HAVING NOT MADE ANY VERIFICATION/INQUIRY IN THE MATTER. IT IS THESE REASONS THAT IMPELLED US TO STATE OF THE REVENUES APPROACH AS BEING CASUAL AND DE HORS ANY SUBSTANTIVE FINDINGS OF FACT, WHICH THE ISSUE IS ESSENTIALLY ABOUT. ALSO, IT HAS TO BE BORNE IN MIND THAT THE DISALLOWANCE IS QUA EXPENDITURE ON FACTOR/S OF PRODUCTION, AND THERE IS NO REFERENCE TO THE TRADING MARGIN (PROFIT) IN THE ORDERS OF THE AUTHORITIES BELOW. TH IS IS AS ANY INFLATION IN THE TRADING EXPENSES, EVEN AS WE OBSERVE NO INQUIRY QUA ANY INFLATION IN QUANTITY OR PRICE, WOULD LEAD TO A FALL IN THE SAID MARGIN, SUPPORTING THE R EVENUES CASE. THOUGH WE WOULD, FINDING A DEFICIENCY IN THE ADJUDICATION BY THE REV ENUE, BE NORMALLY INCLINED TO RESTORE THE MATTER BACK FOR THE NECESSARY CORRECTION, IN TH E ABSENCE OF ANY PRIMA FACIE CASE MADE OUT BY THE REVENUE, WE DO NOT CONSIDER IT A FIT CAS E FOR DOING SO IN THE PRESENT CASE. WE ALSO DERIVE SUPPORT FROM A HOST OF CASE LAW RELIED UPON BY THE ASSESSEE IN THE MATTER, TO SOME OF WHICH WE MAY REFER AS UNDER:- FRIENDS CLEARING AGENCY (P.) LTD. VS. CIT (2011) 332 ITR 269 (DEL.) RAJAT TRADECOM INDIA (P.) LTD. VS. DCIT , 3 ITR (TRIB.) 32 (IND) COCO COLA INDIA (P.) LTD. VS. DCIT (2008) 10 DTR (TRIB) (PUNE) 149 ACIT VS. KINSHIP SERVICES (INDIA) (P.) LTD. 128 TTJ 108 (COCH) THE ORDERS OF THE AUTHORITIES BELOW ARE, ACCORDING LY, SET ASIDE ON THIS GROUND AND THE DISALLOWANCE DIRECTED FOR DELETION. THE DECISI ON IN THE CASE OF HEMAMBIKA CHITIES AND LOANS PVT. LTD VS. DY. CIT (2004) 266 ITR 427 (KER.), RELIED UPON BY THE REVENUE, WOULD BE OF NO AVAIL. IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE EXPENDITURE DISALLOWED WAS ON TRAVELLING EXPENSES AND KURIE COM MISSION, WHICH COULD NOT BE SUPPORTED BY THE ASSESSEE WITH ANY VALID TRAVEL DOC UMENTS OR WITH RESPECT TO THE PAYMENT OF COMMISSION, SO THAT THE HONBLE HIGH COURT FOUND NO REASON FOR INTERFERENCE WITH THE I.T.A. NO.527/COCH/2010 S.I.PROPERTY (KERALA) (P.) LTD. V. JT. CIT, TRIVAND RUM 8 FINDINGS OF FACT BY THE TRIBUNAL, STATING THAT NO S UBSTANTIAL QUESTION OF LAW AROSE IN THE MATTER. GIVEN OUR FINDING OF FACT, THE SAID CASE, I N FACT, SUPPORTS THE PRESENT ORDER. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.R.S.GANESAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 31ST JANUARY, 2012 GJ COPY TO: 1. M/S. S.I. PROPERTY (KERALA) (P.) LTD., GOLF LINK S ROAD, KOWDIAR P.O., TRIVANDRUM - 695 003. 2. THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-1, T RIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE . BY ORDER (ASSISTANT REGISTRAR) ITAT, COCHIN BENCH