SHRI MATADIN JOSHI, Nagda V. THE ITO 2(2), Ujjain

ITA 528/IND/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5821 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER ITA NO.528/IND/2015 (ASST. YEAR : 2011-12) SHRI MATADIN JOSHI, PROP. M/S. MILAN GOODS TRANSPORT CORPORATION, NAGDA VS. ITO, 2(2) UJJAIN PAN NO. AADJPJ7083J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.S.DESHPANDE CA DEPARTMENT BY : SHRI R.P. MAURYA, - DR DATE OF HEARING : 04/07/2016. DATE OF PRONOUNCEMENT : 04/07/2016. O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), UJJAIN, DATED 08/05/2015. 2. IN GROUND NO. 1 OF THE APPEAL, THE GRIEVANCE OF T HE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,33,001/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961. 3 . I HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE IN STANT CASE, THE ASSESSEE MADE THE PAYMENT OF INTEREST OF RS. 60,720 /- TO M/S. SUNDARAM FINANCE AND RS. 72,281/- TO M/S. TATA MOTO RS ON LOANS TAKEN SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 2 FOR PURCHASE OF VEHICLES. THE REPAYMENT WAS MADE I N THE FORM OF EMIS EVERY MONTH, WHICH INCLUDED INTEREST COMPONENT ALSO . ACCORDING TO THE AO, THE ASSESSEE WAS REQUIRED TO DEDUCT TDS FROM TH E INTEREST COMPONENT OF THE EMI PAID TO THE TWO COMPANIES, WHI CH THE ASSESSEE FAILED TO DO AND, THEREFORE, HE MADE DISALLOWANCE O F RS. 1,33,001/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961. 4. BEING NOT SATISFIED WITH THE ORDER OF AO, THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND RELIED ON TH E DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF NARESH KUMAR D OSHI VS. ACIT, I.T.A.NO. 62/IND/2012 AND ALSO THE DECISION OF HON' BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVIC ES (P) LIMITED, (2013) 357 ITR 642, WHEREIN IT WAS HELD THAT FOR DI SALLOWING EXPENSES FROM BUSINESS AND PROFESSION ON THE GROUND THAT THE TAX HAS NOT BEEN DEDUCTED AT SOURCE, THE AMOUNT SHOULD BE PAYABLE AN D NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE CBDT CIRCULAR NO. 10/DB/2013 DATED 16.12.2 013 WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 40(A)(IA) OF TH E ACT, WOULD COVER THE AMOUNTS PAYABLE AS ON 31 ST MARCH OF THE PREVIOUS YEAR AS WELL AS THE AMOUNTS PAID DURING THE YEAR. THEREFORE, HE DISMISS ED THE GROUND OF APPEAL OF THE ASSESSEE. 6. BEFORE ME, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RECEIVED A CERTIFIC ATE OF CHARTERED SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 3 ACCOUNTANTS CERTIFYING THAT AFTER EXAMINING THE BOO KS OF ACCOUNTS AND THE RECORDS OF M/S. SUNDARAM FINANCE LIMITED FOR TH E PERIOD 1 ST APRIL, 2010 TO 31 ST MARCH, 2011, THAT THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS. 1,08,355/- IN THEIR RETURNS OF INCOME FILED FOR THE ASSESSMENT YEAR 2011-12 AND OFFERED THE SAME TO TAX AS INCOME FROM BUSINESS. THEREFORE, IN VIEW OF THE SECOND PROVISO TO SECTION 40(IA), WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF T HE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII-B ON ANY SUCH S UM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE O F THIS SUB-CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INC OME BY THE RESIDENT PAYEE. HE, THEREFORE, PRAYED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR DELETING THE DISALLOWANCE MADE A FTER VERIFICATION OF THE CERTIFICATE RECEIVED BY THE ASSESSEE AFTER THE ASSE SSMENT PROCEEDINGS WERE OVER IN PURSUANCE TO THE SECOND PROVISO TO SEC TION 40(A)(IA) OF THE INCOME-TAX ACT, 1961. 7. THE LD. DEPARTMENTAL REPRESENTATIVE HAD NO OBJEC TION TO THE SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 8. THEREFORE, I SET ASIDE THE ORDERS OF THE LOWER A UTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF AO FOR ADJUDI CATION OF THE ISSUE AFRESH IN THE LIGHT OF DISCUSSION MADE HEREINABOVE AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 4 9. REGARDING THE DISALLOWANCE OF INTEREST EXPENDITU RE OF RS. 72,281/- PAID TO M/S. TATA MOTORS, THE LD. AUTHORIZ ED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT RE CEIVED ANY SUCH CERTIFICATE SHOWING THAT THE PAYEE HAS SHOWN SUCH I NCOME IN ITS RETURN OF INCOME FILED AND PAID THE DUE TAX THEREON. THERE FORE, THE DISALLOWANCE OF RS. 72,281/- BE SUSTAINED. 10. IN VIEW OF THE ABOVE SUBMISSION OF THE LD. AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE, I CONFIRM THE ADDIT ION TO THE EXTENT OF RS. 72,281/- AND THE GROUND OF APPEAL OF THE ASSESS EE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. THE GRIEVANCE OF THE ASSESSEE IN SECOND GROUND OF APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 22,866/- UNDER THE HEAD PERSONAL EXPENSES. 12. I HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. 13. THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED T HE FOLLOWING EXPENSES :- CAR EXPENSES RS. 17,241/- DEPRECIATION ON CAR RS. 37,550/- TELEPHONE EXPENSES RS. 1,05,585/- PETROL EXPENSES RS. 58,288/- TOTAL RS. 2,28,664/- THE AO OBSERVED THAT THESE EXPENSES ARE PERSONAL I N NATURE AND PERSONAL USE CANNOT BE RULED OUT AND, THEREFORE, HE MADE ESTIMATED SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 5 DISALLOWANCE OF RS. 28,866/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 14. ON APPEAL, THE CIT(A) OBSERVED THAT THE DISALLO WANCE OF 10 % OF THE ABOVE EXPENSES WOULD BE REASONABLE AND, THEREFO RE, RESTRICTED THE DISALLOWANCE TO RS. 22,866/-. 15. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESS EE SUBMITTED THAT THERE WAS NO PERSONAL ELEMENT IN THE EXPENSES CLAIM ED BY THE ASSESSEE AND THAT THE EXPENSES ARE INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE. THE AO HA S FAILED TO POINT OUT ANY SPECIFIC EXPENDITURE INCURRED BY THE ASSESSEE F OR ITS PERSONAL PURPOSES OR USE. THEREFORE, AD HOC DISALLOWANCE MAD E WAS NOT JUSTIFIED. 16. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTH ER HAND SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 17. I AM OF THE CONSIDERED OPINION THAT THE AO HAS MADE AN ESTIMATED DISALLOWANCE OUT OF THE EXPENSES ON CAR A ND TELEPHONE CLAIMED BY THE ASSESSEE AND THEREBY MADE THE DISALL OWANCE OF RS. 28,866/- ON ACCOUNT OF PERSONAL USE AND THE CIT(A) RESTRICTED IT TO RS. 22,866/-. I FIND THAT NONE OF LOWER AUTHORITIES HA VE BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT WHICH OF THE PARTIC ULAR EXPENSES WERE INCURRED BY THE ASSESSEE FOR PERSONAL USE AND NOT F OR THE BUSINESS OF THE ASSESSEE. THEREFORE, I AM OF THE CONSIDERED VIE W THAT AD HOC DISALLOWANCE MADE IN THIS MANNER CANNOT BE SUSTAINE D IN LAW. HENCE, I SET-ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND D ELETE THE ADDITION OF RS. 28,866/- AND ALLOW THE APPEAL OF THE ASSESSEE O N THIS GROUND. SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 6 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY, THE 4 TH DAY OF JULY, 2016, AT INDORE. SD/- (N.S.SAINI) ACCOUNTANT MEMBER DATED : 4TH JULY, 2016. CPU 4.7 COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., INDORE SHRI MATADIN JOSHI, NAGDA VS. ITO, 2(2), UJJAIN. I.T.A.NO. 528/IND/2015 A.Y.2011-12 7