The Assistant Commissioner of Income Tax, Hoshiarpur V. Hoshiarpur Improvement Trust, Hoshiarpur

ITA 535/ASR/2013

• Counselvise Citation: 53520914 RSA 2013
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Depreciation; Charitable institution; Revenue expenditure
• Section: 143(3); 142(1); 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 529(ASR)/2013 ASSESSMENT YEAR: 2005-06 PAN: AAATI4915Q HOSHIARPUR IMPROVEMENT VS. INCOME TAX OFFICER, TRUST, CHANDIGARH ROAD, WARD-I, HOSHIARPUR HOSHIARPUR (APPELLANT) (RESPONDENT) AND I.T.A. NO. 535(ASR)/2013 ASSESSMENT YEAR: 2005-06 PAN: AAATI4915Q ASSISTANT COMMISSIONER OF VS. HOSHIARPUR IMPROV EMENT INCOME TAX, HOSHIARPUR CIRCLE, TRUST, CHANDIGARH ROAD, HOSHIARPUR HOSHIARPUR (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. J.S. BHASIN, ADVOCATE DEPARTMENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 20.01.2014 DATE OF PRONOUNCEMENT: 30.01.2014 ORDER PER BENCH 1. THE ASSESSEE HAS FILED THE PRESENT APPEAL I.E. I .T.A. NO. 529(ASR)/2013 AGAINST THE ORDER DATED 27.05.2013 PA SSED BY LEARNED 2 I.T.A. NO. 529 & 535(ASR)/2013 CIT(A), JALANDHAR, FOR THE ASSESSMENT YEAR 2005-06. THE REVENUE HAS ALSO FILED CROSS APPEAL AGAINST THE AFORESAID IMPUG NED ORDER. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN I.T.A. NO. 529(A SR)/2013 ARE REPRODUCED AS UNDER:- I. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) HAS GROSSLY ERRED TO UPHOLD DISALLOWANCE OF 20% OF EXPENSES INCURRED ON INSTALLATION AND MAINTENANCE STATUTE OF SHRI BR AMBEDKAR, AGAINST 50% DISALLOWED BY LEARNED A.O. II. THAT LIKEWISE, THE EXPENSES OF RS. 9,57,906/- INCUR RED UNDER THE HEAD FOUNTAIN EXPENSES, AS DISALLOWED BY LEARNED A. O., HAS BEEN WRONGLY CONFIRMED BY THE LEARNED CIT(A). III. THAT THE ASSESSEE BEING A PUBLIC CHARITABLE TRUST R EGISTERED U/S 12AA, AND CLAIMING EXEMPTION U/S 11, AND NOT RUNNIN G ANY BUSINESS OR TRADE, THE IMPUGNED DISALLOWANCES WERE OTHERWISE UNWARRANTED AND UNTENABLE. IV. THAT THE ORDERS OF THE AUTHORITIES BELOW, TO THE EX TENT DISPUTED HEREIN ABOVE, BEING CONTRARY TO FACTS AND LAW, ARE NOT SUSTAINABLE. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN I .T.A. NO. 535(ASR)/2013 ARE AS UNDER: I. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANC ES AMOUNTING TO RS. 11,29,225/- ON THE GROUND OF MISCELLANEOUS EXPE NDITURE, EXPENDITURE MADE ON CONSTRUCTION, GRATUITY FUND, DO NATION, FEE & SUBSCRIPTION ETC. AS AGAINST THE DISALLOWANCE OF RS . 31,08,491/- MADE BY ASSESSING OFFICER. II. THAT, IT IS PRAYED THAT THE ORDER OF THE LEARNED CI T(A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. III. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED. 3 I.T.A. NO. 529 & 535(ASR)/2013 3. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE- TRUST FILED THE RETURN OF INCOME ON 29.10.2005 DECL ARING A LOSS OF RS. 1,27,43,792/-. SUBSEQUENTLY, THE TRUST FILED A REVI SED RETURN ON 06.02.2006 DECLARING LOSS AT RS. 73,43,449/-. THE R EASONS GIVEN FOR FILING THE REVISED WAS ADOPTING OF MERCANTILE SYSTEM OF AC COUNTS INSTEAD OF CASH SYSTEM. BOTH THE RETURNS WERE PROCESSED UNDER SECTI ON 143(1) OF THE INCOME TAX ACT, 1961, (IN SHORT THE ACT) ON 28.12 .2005 AND 31.03.2006 RESPECTIVELY. THE CASE OF THE ASSESSEE W AS SELECTED FOR SCRUTINY UNDER THE GUIDELINES ISSUED BY THE CBDT AN D THE NOTICES UNDER SECTION 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEED INGS FROM TIME TO TIME. AS PER RECORD, THE ASSESSEE-TRUST WAS GRANTED REGIS TRATION UNDER SECTION 12AA OF THE ACT BY LEARNED CIT, JALANDHAR, VIDE ORD ER DATED 26.04.2006 W.E.F. 01.04.2005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LEARNED AUTHORIZED REPRESENTATIVE APPEARED AND FILED THE IN FORMATION AS CALLED BY THE ASSESSING OFFICER. AFTER EXAMINING THE DETAI LS OF EXPENSES UNDER THE VARIOUS HEADS FILED BY THE TRUST, THE ASSESSING OFFICER NOTICED THAT THE DEVELOPMENT CHARGES HAVE BEEN DEBITED TO INCOME AND EXPENDITURE A/C 4 I.T.A. NO. 529 & 535(ASR)/2013 TO THE TUNE OF RS. 97,92,482/-. THE ASSESSEE WAS AS KED TO FILE COMPLETE HEAD-WISE DETAILS OF THE SAID DEVELOPMENT EXPENSES. THE ASSESSEE VIDE REPLY DATED 14.11.2007 FILED THE DETAILS OF DEVELOP MENT CHARGES, TOTALING RS. 106.43 LACS WHICH INCLUDED CAPITAL EXPENSES RS. 8.51 LACS. THE ASSESSING OFFICER VERIFIED THE DETAILS OF DEVELOPME NT CHARGES UNDER VARIOUS HEADS AND FOUND THAT THE EXPENSES DEBITED F OR THE WORKS WERE NOT GENUINE ONE AND REQUESTED THE ASSESSEE TO DEPUTE AN EMPLOYEE OF TECHNICAL STAFF TO ASSIST THE INSPECTOR OF THIS OFF ICE FOR INSPECTION OF SITES WHERE THE DEVELOPMENTS WERE MADE DURING THE YEAR. I NSPECTOR OF THE OFFICE VISITED THE SITES AND THE INSPECTOR FOUND TH AT THE EXPENSES SHOWN IN THE DETAILS WERE NOT REASONABLE. SOME WORKS WERE TO TALLY NOT CARRIED OUT BUT THE EXPENSES WERE SHOWN IN THE DEVELOPMENT CHAR GES I.E. FIXING OF STATUS AND INSTALLATION OF FOUNTAINS ETC. THE INSPE CTOR SUBMITTED THE REPORT ON 27.11.2007 AND TO CONFRONT THE DISCREPANC IES POINTED OUT BY THE INSPECTOR, A LETTER WAS ISSUED TO E.O. OF ASSESSEE- TRUST ON 03.12.2007. IN RESPONSE TO THE SAME LETTER, THE ASSESSEE-TRUST FIL ED ITS REPLY ON 12.12.2007 GIVING THE JUSTIFICATION OF EXPENSES BY STATING THAT THE REPORT OF THE INSPECTOR OF THE DEPARTMENT MAY NOT BE CONSI DERED AND ACCEPTED AS HE IS NOT TECHNICALLY COMPETENT TO EVALUATE THE EXP ENSES INCURRED ON CIVIL 5 I.T.A. NO. 529 & 535(ASR)/2013 CONSTRUCTION, ROADS AND DEVELOPMENT WORKS. BUT THE ASSESSING OFFICER WAS OF THE VIEW THAT THE MAIN DISCREPANCIES/SHORTCO MINGS POINTED OUT IN INSPECTORS REPORT WHICH WERE THE REALITY OF FACTS CANNOT BE IGNORED. HE WAS ALSO OF THE VIEW THAT THE EXPENSES ON FIXING OF TWO STATUTES HAVE BEEN SHOWN AT RS. 8.41 LACS WHEREAS ONLY ONE STATUTE HAS BEEN FITTED AND THE OTHER IS LYING IN STORE-ROOM AS PER INSPECTORS REP ORT. THE COPIES OF BILLS FOR PURCHASE OF STATES AND FOUNTAINS WERE DEMANDED AS PER ORDER SHEET ENTRY DATED 12.12.2007 BUT THE S.O., IMPROVEMENT TR UST STATED THAT HE JOINED ON TRANSFER IN NOV, 2006 AND HE HAS NOT SEEN SUCH BILLS IN OFFICE RECORD. HE FURTHER STATED THAT THESE ITEMS ARE BEIN G PURCHASED THROUGH CONTRACTORS, BY CALLING TENDERS. 4. AS REGARDS TO THE EXPENSES INCURRED ON INSTALLAT ION OF FOUNTAINS AMOUNTING TO RS. 9.58 LACS, THE ASSESSING OFFICER W AS OF THE VIEW THAT THE FITTING OF STATUTES OF MAHATMA GANDHI AND DR. AMBED KAR IN SCHEME NO. 2 & 11 OF THE TRUST, THE STATUTE OF MAHATMA GANDHI HAS BEEN FITTED WHEREAS STATUTE OF DR. AMBEDKAR HAS BEEN KEPT IN TH E STORE-ROOM DOES NOT APPEAL TO HAVE INCURRED TOTAL EXPENDITURE RS. 8 ,40,750/- WHICH WAS KEPT FOR THE COMPLETION OF THE WHOLE WORK. THE TRUS T HAS NOT PRODUCED THE BILLS FOR PURCHASE OF THE STATUTES AND THE WORK HAS ALSO NOT BEEN 6 I.T.A. NO. 529 & 535(ASR)/2013 COMPLETED. IF THE WORK IS DONE BY CALLING A TENDER, THERE IS NO LOGIC TO MAKE THE FULL PAYMENT OF INCOMPLETE WORK AND NO TEN DER CAN BE CALLED FOR ANY WORK WHICH IS TO BE LEFT INCOMPLETE. THE AS SESSING OFFICER WAS ALSO OF THE VIEW THAT THE TENDERS WERE NOT PRODUCED IN SUPPORT OF THEIR CONTENTION AND HE DISALLOWED 50% OF EXPENSES I.E. 4 ,20,375/- OUT OF TOTAL EXPENSES OF RS. 8,40,750/- ON FIXING OF STATUTES AN D ADDED AS TAXABLE INCOME OF THE TRUST. 5. AS REGARDS TO THE EXPENSES OF RS. 9.58 LAKHS ON INSTALLATION OF FOUNTAINS WHICH HAVE BEEN STATED TO BE KEPT IN THE STORE-ROOM AND NOT FITTED DUE TO THE CIRCUMSTANCES I.E. THE THINLY POP ULATED AREA AND SAFETY OF THE FOUNTAINS, THE ASSESSING OFFICER HAS NOT ACCEPT ED THE EXPLANATION OF THE ASSESSEE AND STATED THAT IF THESE ARE THE CIRCU MSTANCES, THEN WHAT WAS THE NECESSITY TO MAKE FULL PAYMENT FOR THE WORK WHI CH HAS NOT AT ALL BEEN DONE. THE ASSESSING OFFICER ALSO STATED IN THE ASSE SSMENT ORDER THAT NO PIPES WERE SEEN FITTED IN THE PARK WHERE FOUNTAINS WERE TO BE INSTALLED; IT PROVES THAT NO FOUNTAINS WERE PURCHASED AS THESE WE RE NOT SHOWN TO THE INSPECTOR AT THE TIME OF INSPECTION. MORESO, THE TR UST HAS NOT PRODUCED ANY TYPE OF APPROVAL OR TENDER FOR THIS WORK IN SUP PORT OF ITS CONTENTION. THEREFORE, THE TOTAL EXPENDITURE DEBITED ON THIS AC COUNT SEEMS TO HAVE NOT 7 I.T.A. NO. 529 & 535(ASR)/2013 BEEN MADE AT ALL AND THE WHOLE AMOUNT OF RS. 9,57,9 06/-HAS BEEN ADDED AS TAXABLE INCOME OF THE TRUST BY THE ASSESSING OFF ICER. 6. AS REGARDS TO THE MISCELLANEOUS EXPENDITURE OF RS. 6.27 LACS, THE ASSESSING OFFICER SOUGHT THE REPORT FROM THE IN SPECTOR AND GAVE HIS FINDING THAT EXPENDITURE OF RS. 6.27 LACS SHOWN AS MISCELLANEOUS EXPENSES IS NOT GENUINE AND HE ADDED THE SAME TO TH E TAXABLE INCOME OF THE TRUST. 7. AS REGARDS TO THE EXPENDITURE OF RS. 7.35 LACS O N CONSTRUCTION OF 26 SHOPS IN SCHEME NO. 2, THIS EXPENDITURE IS OF CAPITAL NATURE AND NOT REVENUE EXPENDITURE. THESE ARE NOT ALLOWABLE AS REV ENUE EXPENDITURE AND TOTAL EXPENDITURE OF RS. 7,35,000/- FOR CONSTRUCTIO N OF SHOPS IS ADDED AS TAXABLE INCOME OF THE TRUST. 8. AS REGARDS TO THE AMOUNT OF RS. 85,064/-, WHICH THE TRUST HAS DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT AS GR ATUITY, THE TRUST WAS ASKED TO INTIMATE WHETHER GRATUITY FUND MAINTAINED IS AN APPROVED ONE OR NOT ALONGWITH DOCUMENTARY EVIDENCE. IN RESPONSE TO THE SAID QUERY, THE ASSESSEE HAS FAILED TO PROVE THE SAME WITH THE SUPPORT OF DOCUMENTARY EVIDENCE AND THE ASSESSING OFFICER DISALLOWED RS. 8 5,064/- AND ADDED AS 8 I.T.A. NO. 529 & 535(ASR)/2013 TAXABLE INCOME OF THE TRUST BECAUSE THE GRATUITY FU ND HAS NOT BEEN GOT APPROVED FROM THE COMMISSION OF INCOME TAX. 9. AS REGARDS TO THE AMOUNT OF RS. 1,50,000/- DEBIT ED AS DONATION TO THE INCOME AND EXPENDITURE ACCOUNT, WHICH IS STA TED TO BE PAID TO THE CHIEF MINISTERS RELIEF FUND BUT NO RECEIPT EVIDENC ING THE PAYMENT MADE TO C.M. RELIEF FUND HAS BEEN FILED. THEREFORE, THE ASSESSING OFFICER DISALLOWED THE WHOLE EXPENDITURE OF RS. 1,50,000/- AND ADDED AS TAXABLE INCOME OF THE TRUST. 10. AS REGARDS TO A SUM OF RS. 1,00,000/-, WHICH THE ASSESSEE-TRUST HAS DEBITED TO INCOME AND EXPENDITURE ACCOUNT AS FE E AND SUBSCRIPTION, THE ASSESSEE HAS NOT FILED ANY PROOF OF PAYMENT MAD E ON ACCOUNT OF FEE AND SUBSCRIPTION AND THE ASSESSING OFFICER ADDED TH E SAME TO THE TAXABLE INCOME OF THE ASSESSEE TRUST. 11. LASTLY, THE AMOUNT OF RS. 40,122/-, RS 63,062/- AND RS. 62,516/- HAS BEEN DEBITED TO THE INCOME AND EXPENDI TURE ACCOUNT OF THE ASSESSEE ON ACCOUNT OF TELEPHONE, CAR MAINTENANCE A ND CAR DEPRECIATION RESPECTIVELY. THE ASSESSING OFFICER HAS DISALLOWED 1/5 TH EXPENSES ON ACCOUNT OF PERSONAL USE OF THESE AMENITIES BY THE O FFICER AND STAFF OF THE TRUST AND FINALLY HE COMPLETED THE ASSESSMENT BY MA KING THE AFORESAID 9 I.T.A. NO. 529 & 535(ASR)/2013 ADDITIONS WHICH THE ASSESSING OFFICER HAS MENTIONED AT THE LAST PAGE I.E PAGE NO. 04 OF THE ASSESSMENT ORDER AND COMPLETED T HE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 28.12.2007. 12. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSE E FILED AN APPEAL BEFORE LEARNED FIRST APPELLATE AUTHORITY, WH O VIDE IMPUGNED ORDER DATED 27.05.2013, PARTLY ALLOWED THE APPEAL O F THE ASSESSEE AND DISALLOWED 20% OF INCOME ON INSTALLATION AND MAINTE NANCE OF STATUTE OF MAHATMA GANDHI AND DR. B.R. AMBEDKAR AGAINST 50% DI SALLOWED BY THE ASSESSING OFFICER AND CONFIRMED THE ORDER OF ASSESS ING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENSES OF RS. 9,57,906 /- INCURRED UNDER THE HEAD FOUNTAIN EXPENSES AND DELETED THE DISALLOWANCE S MADE BY THE ASSESSING OFFICER AMOUNTING TO RS. 11,29,225/- ON A CCOUNT OF MISCELLANEOUS EXPENDITURE, EXPENDITURE MADE ON CONS TRUCTION, GRATUITY FUND, DONATION AND SUBSCRIPTION ETC. AS AGAINST THE TOTAL DISALLOWANCE OF RS. 31,08,490/- MADE BY THE ASSESSING OFFICER. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE HAVE ALSO THOROUGHLY GONE THROUGH THE PAPER BOOK FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE, CONTAINING PAGES FROM 1 TO 60, IN WHICH 10 I.T.A. NO. 529 & 535(ASR)/2013 HE HAS ATTACHED WRITTEN SUBMISSIONS DATED 23.12.200 9; CONTRACTORS BILL WITH SUPPORTING DOCUMENTS FOR PROVIDING STATUE OF MAHATMA GANDHI; COPY OF PROPOSAL & CONTRACTORS BILL WITH SUPPORTIN G DOCUMENTS FOR INSTALLING STATUTE OF DR. B.R. AMBEDKAR; PROPOSAL N OTE FOR INSTALLATION OF FOUNTAINS; COPIES OF RUNNING BILLS FOR INSTALLING O F FOUNTAINS ALONG WITH SUPPORTING DOCUMENTS; FURTHER SUBMISSION DT. 13.01 .2010 BEFORE CIT(A) FILLING MORE DOCUMENTS; COPY OF PROPOSAL & NEWSPAPE R AD CALLING TENDERS FOR INSTALLATION OF FOUNTAINS; COPIES OF TE NDERS RECEIVED FROM OMESH GUPTA CONTRACTOR, M/S KOTLI JATTAN CO-OP SOCI ETY & M/S KHANAURA BHARAT CO-OPERATIVE SOCIETY; COPY OF REGIS TER OF TENDER WORK SHOWING DETAILS OF 3 TENDERS/OFFERS RECEIVED; COPY OF AGREEMENT ENTERED WITH OMESH GUPTA CONTRACTOR WITH ALLOTMENT LETTER F OR INSTALLATION OF FOUNTAINS; COPY OF REGISTER OF APPROVED ESTIMATES & SANCTIONED ALLOTMENTS FOR FOUNTAINS AND COPY OF MEASUREMENT BO OK SHOWING ACTUAL WORK DONE; RELEASE OF SECURITY TO OMESH GUPTA CONTR ACTOR AFTER COMPLETION OF FOUNTAIN WORK; AND DETAILS OF MISC. E XPENSES. 14. AFTER HEARING THE ARGUMENTS OF BOTH SIDES AND PE RUSING THE ORDER PASSED BY THE REVENUE AUTHORITIES ALONG WITH THE DOCUMENTARY 11 I.T.A. NO. 529 & 535(ASR)/2013 EVIDENCE PRODUCED BY THE LEARNED COUNSEL FOR THE AS SESSEE OUR FINDING ON THE ISSUES INVOLVED IN THE PRESENT APPEALS ARE AS U NDER: 12.1 AS REGARDS TO THE ISSUE INVOLVED IN GROUND NO . 1 OF THE ASSESSEES APPEAL REGARDING DISALLOWANCE OF 20% OF EXPENSES INCURRED ON INSTALLATION AND MAINTENANCE OF STATUTE OF MAHATMA GANDHI AND DR. B.R. AMBEDKAR AGAINST 50% OF DISALLOWANCE BY THE ASSESSI NG OFFICER, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS EXAMINED THE DETAILS OF EXPENSES SHOWN BY THE ASSESSEE UNDER VARIOUS HEADS, WHICH THE ASSESSEE HAS DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT T O THE TUNE OF RS. 97,92,482/-. THE ASSESSEE WAS ASKED TO FILE COMPLET E HEAD-WISE DETAILS OF THE SAID DEVELOPMENT EXPENSES. IN RESPONSE TO THE S AME, THE ASSESSEE FILED THE DETAILS OF DEVELOPMENT CHARGES TOTALING R S. 106.43 LACS WHICH INCLUDED CAPITAL EXPENSES RS. 8.51 LACS. THE ASSESS ING OFFICER VERIFIED THE SAME AND FOUND THAT THE EXPENSES DEBITED FOR TH E WORKS WERE NOT GENUINE ONE AND REQUESTED THE E.O. OF THE ASSESSEE- TRUST TO DEPUTE AN EMPLOYEE OF TECHNICAL STAFF TO ASSIST THE INSPECTOR OF THE A.O.S OFFICE IN INSPECTION OF SITES WHERE THE DEVELOPMENTS WERE MAD E DURING THE YEAR. INSPECTOR OF THE A.O.S OFFICE ALONG WITH SH. RAKES H SHARMA, SDO VISITED THE SITES AND THE INSPECTOR FOUND THAT THE EXPENSES SHOWN IN THE 12 I.T.A. NO. 529 & 535(ASR)/2013 DETAILS WERE NOT REASONABLE AND SUBMITTED HIS REPOR T. SOME WORKS WERE TOTALLY NOT CARRIED OUT BUT THE EXPENSES WERE SHOWN IN THE DEVELOPMENT CHARGES I.E. FIXING OF STATUS AND INSTALLATION OF F OUNTAINS ETC. THE INSPECTOR SUBMITTED THE REPORT ON 27.11.2007 AND TO CONFRONT THE DISCREPANCIES POINTED OUT BY THE INSPECTOR, A LETTE R WAS ISSUED TO E.O. OF ASSESSEE-TRUST ON 03.12.2007. IN RESPONSE TO THE SA ME, THE ASSESSEE-TRUST FILED ITS REPLY ON 12.12.2007 GIVING THE JUSTIFICAT ION OF EXPENSES BY STATING THAT THE REPORT OF THE INSPECTOR OF THE DEP ARTMENT WAS NOT ACCEPTABLE AS HE WAS NOT TECHNICALLY COMPETENT TO E VALUATE THE EXPENSES INCURRED ON CIVIL CONSTRUCTION, ROADS AND DEVELOPME NT WORKS. THE ASSESSING OFFICER HAS FINALLY DISALLOWED 50% OF THE EXPENSES TO THE TUNE OF RS. 4,20,375/- OUT OF TOTAL EXPENSES OF RS. 8,40 ,750/- ON FIXING OF STATUTES AND ADDED THE SAME TO THE TAXABLE INCOME O F THE TRUST. LEARNED CIT HAS RESTRICTED TO 20% IN INSTEAD OF 50% MADE BY THE ASSESSING OFFICE TO MEET THE ENDS OF JUSTICE. 12.2 KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPLAINED BY THE REVENUE AUTHORITIES, WE ARE OF THE VIEW THAT THE AS SESSEE FAILED TO PRODUCED ANY DOCUMENTARY EVIDENCE BEFORE THE REVENU E AUTHORITIES BELOW AS WELL AS BEFORE US ESTABLISHING THAT THESE WORKS HAVE BEEN DONE BY 13 I.T.A. NO. 529 & 535(ASR)/2013 CALLING TENDER AND EVEN OTHERWISE THESE ITEMS WERE PURCHASED THROUGH CONTRACTORS, BY CALLING TENDERS, AS PER THE AVERMEN T MADE BY THE S.O. OF THE ASSESSEE-TRUST. THE REPORT OF THE INSPECTOR REG ARDING EXPENSES ON FIXING OF TWO STATUTES WHEREAS ONLY ONE STATUTE HAS BEEN FITTED AND THE OTHER STATUTE IS LYING IN THE STORE-ROOM, HAS NOT B EEN CONTROVERED BY THE ASSESSEE TILL DATE. THE ASSESSEE HAS ALSO NOT PRODU CED THE BILLS FOR THE PURCHASE OF STATUTE AND THE WORK HAS ALSO NOT BEEN COMPLETED AND IF THE WORK IS NOT COMPLETED THEN THERE IS NOT LOGIC TO MA KE FULL PAYMENT OF INCOMPLETE WORK. THEREFORE, IN OUR CONSIDERED VIEW LEARNED FIRST APPELLATE AUTHORITY HAS REASONABLY RESTRICTED 20% O F EXPENSES INCURRED ON INSTALLATION AND MAINTENANCE OF THE AFORESAID ST ATUTE AGAINST 50% MADE BY THE ASSESSING OFFICER, TO MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DISMISS THE APPEAL FILED BY THE ASSESSEE ON THIS VERY ISSUE AND DECIDE THE ISSUE INVOLVED IN GROUND NO. 1 AGAINST THE ASSE SSEE. 12.3 AS REGARDS TO THE EXPENSES OF RS. 9,57,906/- INCURRED UNDER THE HEAD FOUNTAIN EXPENSES, WHICH HAS BEEN ADDED TO TH E TAXABLE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER AND THE LEARN ED FIRST APPELLATE AUTHORITY HAS UPHELD THE VIEW OF THE ASSESSING OFFI CER ON THE GROUND THAT NO FOUNTAIN WAS FOUND ON THE SPOT AT THE TIME OF VISIT OF THE INSPECTOR 14 I.T.A. NO. 529 & 535(ASR)/2013 I.E. AFTER THE END OF THE FINANCIAL YEAR. AFTER HEA RING BOTH THE PARTIES AND PERUSING THE ORDER PASSED BY THE REVENUE AUTHORITY ON THE ISSUE IN DISPUTE ALONG WITH THE DOCUMENTARY EVIDENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER HAS MADE THE ADDITION IN DISP UTE BY STATING THAT THE ASSESSEE-TRUST HAS NOT PURCHASED THESE FOUNTAINS BE CAUSE THESE HAVE NOT BEEN SHOWN TO THE INSPECTOR AT THE TIME OF SPOT INS PECTION. THE ASSESSING OFFICER STATED THAT WHEN THERE WAS THINLY POPULATED AREA AND THE SAFETY OF THE FOUNTAIN WAS IN DANGER AND THE FOUNTAIN WERE NO T TO BE INSTALLED, WHAT WAS NECESSARY TO MAKE FULL PAYMENT OF THE WORK WHIC H IS NOT AT ALL BEING DONE. THE ASSESSING OFFICER HAS ALSO FOUND THAT NO PIPES WERE SEEN FITTED IN THE PART WHERE FOUNTAINS WERE TO BE INSTA LLED, IT PROVES THAT NO FOUNTAINS WERE PURCHASED AS THESE WERE NOT SHOWN TO THE INSPECTOR AT THE TIME OF INSPECTION. MORESO, THE TRUST HAS NOT PRODU CED ANY TYPE OF APPROVAL OR TENDER FOR THIS WORK IN SUPPORT OF ITS CONTENTION. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES EXPLAINED ABOVE, W E ARE OF THE VIEW THAT LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY UPHEL D THE ORDER OF THE ASSESSING OFFICER ON THIS VERY ISSUE BY PASSING THE IMPUGNED ORDER. THEREFORE, NO INTERFERENCE IS CALLED IN THE WELL RE ASONED ORDER PASSED BY 15 I.T.A. NO. 529 & 535(ASR)/2013 THE LEARNED FIRST APPELLATE AUTHORITY. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE I.E. I.T.A. NO. 529(ASR)/2013 IS DISMI SSED. 12.4 AS REGARDS TO THE GROUND NO. 3, LEARNED AR HA S NOT PRESSED THE SAME AND HAS ALSO ENDORSED ON THE ORIGINAL GROUNDS OF APPEAL. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 15. AS REGARDS TO THE APPEAL FILED BY THE REVENUE I .E. I.T.A. NO. 535(ASR)2013, IN WHICH LEARNED FIRST APPELLATE AUTH ORITY HAS DELETED THE DISALLOWANCE OF RS. 11,29,225/- AS MISCELLANEOUS EX PENDITURE, EXPENDITURE MADE ON CONSTRUCTION, GRATUITY FUNDS, D ONATION, FEE AND SUBSCRIPTION ETC. AGAINST THE DISALLOWANCE OF RS. 3 1,08,490/- MADE BY THE ASSESSING OFFICER, AFTER HEARING BOTH THE PARTIES A ND PERUSING THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONG WITH THE DO CUMENTARY EVIDENCE FILED BY LEARNED COUNSEL FOR THE ASSESSEE, WE ARE O F THE VIEW THAT THE ASSESSING OFFICER MADE VARIOUS ADDITIONS ON ACCOUNT OF MISCELLANEOUS EXPENDITURE ON THE GROUND OF LACK OF EVIDENCE AS WE LL AS ON SOME OTHER TECHNICAL GROUNDS. BUT LEARNED CIT(A) IN THE IMPUGN ED ORDER HAS RIGHTLY STATED THAT AFTER EXAMINING THE DETAILS OF THESE EX PENSES, NO ADVERSE COMMENTS OR DISCREPANCIES ARE POINTED OUT. WE ARE O F THE VIEW THAT IN THE ABSENCE OF EVIDENCE AND HAVING DISCREPANCIES IN THE BILLS AND VOUCHERS, 16 I.T.A. NO. 529 & 535(ASR)/2013 NO DISALLOWANCE IS PERMISSIBLE UNDER THE LAW. THERE FORE, WE UPHOLD THE IMPUGNED ORDER ON THE ISSUE IN DISPUTE AND DISMISS THE APPEAL FILED BY THE REVENUE. 16. KEEPING IN VIEW THE AFORESAID DISCUSSION, WE UP HOLD THE IMPUGNED ORDER DATED 27.05.2013 PASSED BY LEARNED C IT(A), JALANDHAR, AND DISMISS THE APPEALS FILED BY THE ASSESSEE AS WE LL AS BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2014 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JANUARY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: HOSHIARPUR IMPROVEMENT TRUST, CHANDI GARH ROAD, HOSHIARPUR 2. ITO, WARD-I, HOSHIARPUR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.