M/S. STI SANOH INDIA LTD, Indore V. THE ACIT-3(1), Indore

ITA 546/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5798 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 20-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHERI MOHD JAVED
• Assessee Lawyers: S S SOLANKI
• Keywords: Business expenditure; Tax effect; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMITED, 13/1, NEW PALASIA, INDORE. PAN: AABCS0805M APPELLANT RESPONDENT M/S. STI SANOH INDIA LIMITED, 13/1, NEW PALASIA, INDORE. PAN: AABCS0805M VS. ACIT, 3(1), INDORE. APPELLANT RESPONDENT DEPARTMENT BY SHERI MOHD.JAVED, SR. DR ASSESSEE BY SHRI S.S.SOLANKI, CA DATE OF HEARING 23.08.2016 DATE OF PRONOUNCEMENT 23.08.2016 I.T.A. NOS.491 TO 494/IND/2015/IND/2015 AYS:2000-01, 2001-02, 2003-04 & 2005-06 I.T.A. NOS.546 & 547/IND/2015 AYS:2003-04 & 2005-06 DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 2 OF 15 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR: THESE FOUR APPEALS ARE FILED BY THE DEPARTMENT AGAI NST THE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEA LS)-II, INDORE [HEREINAFTER REFERRED TO AS THE CIT(A)] DATE D 31.03.2015, AND PERTAIN TO ASSESSMENT YEARS 2000-01, 2001-02, 2 003-04 AND 2005-06 AND ASSESSEES APPEALS NO. 546 & 547/IN D/2015 ARE FILED AGAINST THE ORDERS OF THE CIT(A)-II, INDO RE, BOTH DATED 31.03.2015 FOR ASSESSMENT YEAR 2003-04 & 2005-06, A GAINST APPEALS DECIDED IN ASSESSMENT ORDER DATED 7.12.200 7, 29.12.2006, 31.03.2006, AND 28.12.2007 OF ACIT 3(1) , INDORE, [HEREINAFTER REFERRED TO AS THE AO]. I.T.A.NOS.491 & 492/IND/2015 A.YS. 2000-01 & 2001 -02: (REVENUES APPEALS) : 2. THE REVENUE IN THE ASSESSMENT YEARS 2000-01 AND 2001-02 HAS TAKEN THE GROUNDS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 56,05,950/- RIGHTLY MA DE BY THE AO ON THE SPECIFIC INFORMATION FOR THE ASSESSMENT Y EARS 2000- 01 AND 2001-02 RECEIVED FROM THE CENTRAL EXCISE DEP ARTMENT, WHEN IT IS CLEAR AND EVIDENT FROM THE ASSESSMENT ORD ER AND DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 3 OF 15 REASONS RECORDED THAT THE AMOUNT OF RS. 56,05,950/- RELATES TO ASSESSMENT YEARS 2000-01 AND 2001-02. 3. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A) CONTENDING THAT THIS AMOUNT HAS ALREADY BEEN SURREN DERED AND TAXED IN ASSESSMENT YEAR 2005-06, HENCE, THIS M AY BE DELETED. THE LD. CIT(A) HAS DELETED THE ADDITION FO R BOTH THE ASSESSMENT YEARS. 4. THE LD. SR. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE A.O. 5. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, CONTENDED THAT THE ADDITION OF RS. 56,05,950/- IS B EING ALLEGED SUPPRESSED SALE WITHOUT GIVING ANY DETAILS OR CALCUL ATION FOR ARRIVING AT THIS FIGURE. HE FURTHER CONTENDED THAT THE ASSESSEE HAS ALREADY OFFERED THE ALLEGED SUPPRESSED INCOME O F RS. 56,56,845/- IN ASSESSMENT YEAR 2005-06 VIDE REVISED RETURN DATED 15.6.2006 ACK.NO.0013300010. THE AO VIDE HIS ORDER U/S 143(3) DATED 28.12.2007 HAS ALREADY ASSESSED TH IS INCOME OF RS. 56,56,845/- WHEREAS THE ORDER FOR ASSESSMENT YEAR 2000-01 WAS PASSED ON 07.12.2007 BY THE SAME A.O. ADDING DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 4 OF 15 THE SAME INCOME AGAIN IN THE ASSESSMENT YEARS 2000- 01 AND 2001-02. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT WHEN THE ASSESSEE HAS ALREADY OFFERED THE ALLEGED SUPPRE SSED INCOME OF RS. 56,56,845/- ON THE BASIS OF SURRENDER MADE IN CENTRAL EXCISE SEARCH IN ASSESSMENT YEAR 2005-06, T HEN THERE IS NO QUESTION TO ADD THE SAME IN ASSESSMENT YEARS 2000-01 AND 2001-02, AS IT WOULD AMOUNT TO DOUBLE ADDITION. WE UPHOLD THE ACTION OF THE LD. CIT(A). THE GROUNDS TA KEN BY THE REVENUE ARE REJECTED IN BOTH THE APPEALS FOR THE AS SESSMENT YEARS UNDER CONSIDERATION. 7. CONSEQUENTLY, REVENUES APPEALS IN I.T.A.NOS. 491 AND 492/IND/2015 ARE DISMISSED. I.T.A.NOS. 493/IND/2015 A.Y. 2003-04 AND 494/IND/2015 A.Y. 2005-06 (REVENUES APPEALS). 8. WE FIND THAT BOTH THE APPEALS FILED BY THE REVENUE ARE BELOW TAX EFFECT. THE CBDT VIDE CIRCULAR NO.21/2015 ISSUED ON 10.12.2015 HAS REVISED THE MONETARY LIMIT FOR FI LING OF APPEAL BEFORE ITAT FIXING THE TAX EFFECT LIMIT AT R S.10 LACS VIDE DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 5 OF 15 CIRCULAR NO. 21/2015 - F NO 279/MISC. 142/2007-ITJ (PT) CENTRAL BOARD DIRECT TAXES DATED 10 TH DECEMBER, 2015. S INCE THE TAX EFFECT INVOLVED IN THE PRESENT APPEALS ARE BELOW THE MONETARY LIMIT, THEREFORE, WE DISMISS THE DEPARTMENT AL APPEALS IN LIMINE BEING NOT MAINTAINABLE. 9. IN THE RESULT, THE APPEALS OF THE REVENUE IN I.T.A. NOS. 493 & 494/IND/2015 STAND DISMISSED, BEING NOT MAINTAINABLE. I.T.A.NO. 546/IND/2015 A.Y. 2003-04: (ASSESSEES APPEAL): 10. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEA L :- THAT THE LD. CIT(A) ERRED IN MAINTAINING THE DISALLOWANCE OF RS. 30 LACS OUT OF PRIOR PERIOD EXPENSES. THE DISALLOWANCE SO MADE BEING ILLEGAL AND WRONG, THE SAME REQUIRES TO BE DELETED. 11. FACTS APROPOS OF THIS GROUND ARE THAT THIS GROUND RELATES TO DISALLOWANCE OF RS. 30 LAC OUT OF NET PRI OR PERIOD EXPENSES OF RS. 35.77 LACS BY HOLDING THAT NO SPECI FIC QUANTIFICATION WAS MADE AND ALSO IN THE ABSENCE OF DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 6 OF 15 JUSTIFICATION BY THE ASSESSEE AS IT WAS OBLIGATORY O N THE PART OF THE ASSESSEE TO INCUR THEM. THE PRE-OPERATIVE EXPEN SES MAINLY CONSIST OF THE FOLLOWING :- (I) SALES TAX PAYMENT RS. 15.00 LACS (II) GOODS RETURNED DUE TO REJECTION RATE DIFFERENCE ETC. RS. 14.50 LACS (III) TURNOVER DISCOUNT RS. 00.50 LAC. 12. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS CONFIRMED THE ADDITION OF RS. 30 LACS. 13. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THESE WERE THE EXPENSES WHICH HAVE BE EN CRYSTALLIZED DURING THE YEAR AND AS PER ACCOUNTING PRINCIPLES HAVE BEEN ACCOUNTED FOR. THE DISALLOWANCE OF RS. 30 LAC IS, THEREFORE, WITHOUT ANY BASIS AND WRONG. THE SAME REQU IRES TO BE DELETED IN FULL. 14. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES. 15. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. SINCE THE ASSESSEE HAS FAILED TO PROVIDE REQUISITE DETAILS AND THE REASONS FOR CRYSTALLIZATION OF THE SAME, WE DO DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 7 OF 15 NOT FIND THAT ANY INTERFERENCE IS NEEDED IN THE FIN DING OF THE LD. CIT(A). ACCORDINGLY, THE FINDINGS OF LD. CIT(A) IS UPHELD. THIS GROUND OF ASSESSEE IS DISMISSED. I.T.A.NO. 547/IND/2015 A.Y. 2005-06 (ASSESSEES A PPEAL) :- 16. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT(A) ERRED IN MAINTAINING THE DISALLOWANCE OF RS. 9,88,383/- BEING PRIOR PERIOD EXPENSES. THE DISALLOWANCE SO MADE BEING ILLEGAL AND WRONG, THE SAME, THEREFORE, REQUIRES TO BE DELETED. 2. THAT THE LD. CIT(A) ERRED IN MAINTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 7 LACS OUT OF DISALLOWANCE OF RS. 15 LACS MADE UNDER THE HEAD TRAVELLING EXPENSES. THE ESTIMATED AND AD HOC DISALLOWANCE SO MADE BEING ILLEGAL AND WRONG, THE SAME, THEREFORE, REQUIRES TO BE DELETED. 3. THAT THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWAN CE TO THE EXTENT OF RS. 1 LAC OUT OF DISALLOWANCE OF R S. DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 8 OF 15 3,40,000/- MADE BY AO UNDER THE HEAD MISC.EXPENSES. THE AD HOC AND ESTIMATED DISALLOWANCE SO MADE BEING ILLEGAL AND WRONG, THE SAME REQUIRES TO BE DELETED. 4. THAT THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWAN CE OF RS. 1 LAC OUT OF STATIONERY AND COMMUNICATION EXPENSES. THE ESTIMATED AND AD HOC ADDITION SO MADE BEING ILLEGAL AND WRONG, THE SAME REQUIRES TO BE DELETED. 17. GROUND NO. 1 PERTAINS TO MAINTAINING THE DISALLOWANCE OF RS. 9,88,383/- BEING PRIOR PERIOD EX PENSES. 18. FACTS APROPOS OF THIS GROUND OF APPEAL ARE THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 9,88,383/- ON ACC OUNT OF PRIOR PERIOD EXPENSES, WHICH WERE DISALLOWED BY THE AO AND ON THE GROUND THAT THE ASSESSEE IS FOLLOWING MERCANT ILE SYSTEM OF ACCOUNTING, WHICH NECESSITATES THAT EXISTENCE FOR PARTICULAR PERIOD SHOULD BE BOOKED IN THAT YEAR ONLY. FURTHER, THE PERUSAL OF LIST OF EXPENSES SHOWS THAT IT INCLUDES MANUFACTURING AND SALES EXPENSES WHICH ARE QUANTIFIA BLE ON ACCRUAL BASIS. THEREFORE, ON THE BASIS OF MATCHING PRINCIPLE DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 9 OF 15 THE AMOUNT CLAIMED ON ACCOUNT OF PRIOR PERIOD EXPEN SES WAS DISALLOWED. THE LD. CIT(A) HAS ALSO UPHELD THE DISA LLOWANCE ON THE GROUND THAT THE ASSESSEE HAS SIMPLY MAINTAINED THAT THE EXPENDITURE WAS CRYSTALLIZED DURING THE YEAR BUT HAS FAILED TO CONTROVERT THE FINDINGS OF THE AO. 19. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT SINCE THE LIABILITY TO PAY THESE EXP ENSES WAS CRYSTALLIZED DURING THE YEAR, THE SAME ARE ALLOWABL E. 20. THE LD. SR. DR SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 21. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT THE EXPENSES CLAIMED WERE RELATED TO MANUFACTURING AND SALES EXPENSES, WHICH WERE EASILY QUANTIFIABLE FOR THE PERIOD FOR WHICH THEY WERE INCU RRED. THEREFORE, AS PER MERCANTILE SYSTEM OF ACCOUNTING, THE RELIABILITY OF EXPENDITURE IS REQUIRED TO BE BOOKED IN THE YEAR IN WHICH IT RELATES. THEREFORE, THE FINDINGS OF THE LOWER AUTHORITIES ARE UPHELD. GROUND OF THE ASSESSEE IS D ISMISSED. DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 10 OF 15 22. GROUND NO. 2 RELATES TO MAINTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 7 LAKHS OUT OF DISALLOWANCE OF RS. 15 LAKHS MADE UNDER THE HEAD TRAVELLING EXPENSES. 23. FACTS RELATING TO THIS GROUND OF APPEAL ARE THAT TH E ASSESSEE HAS CLAIMED TRAVELLING EXPENSES OF RS. 74. 44 LAKHS ON ACCOUNT OF TRAVELLING EXPENSES, WHICH WERE AT RS. 50. 66 LAKHS DURING THE PRECEDING YEAR. THE AO FOUND THAT THE IN CREASE UNDER THIS HEAD HAS BEEN DISPROPORTIONATELY HIGH. O N EXAMINATION OF THE LEDGER ACCOUNT AND VOUCHERS, THE AO NOTED THAT THE TRAVELLING EXPENDITURE PERTAINS TO JAPANES E PEOPLE WHO VISITED VARIOUS PLACES OF INDIA. THE VISIT OF TH ESE PERSONNEL MAY BE FOR PERSONAL PLEASURE OF THE EMPLOYEES AND D IRECTORS OF THE ASSESSEE COMPANY AS THERE IS NO COMMENSURATE IN CREASE IN THE BUSINESS OF THE ASSESSEE COMPANY. THE BILLS ENCLOSED WITH THE VOUCHERS DO NOT INDICATE PURPOSE OF JOURNEY UNDERTAKEN BY THE DIRECTORS OF THE ASSESSEE COMPAN Y AND ALMOST IN ALL CASES THE EXPENSES HAVE BEEN DEBITED EITHER THROUGH ADJUSTMENT VOUCHERS OR REIMBURSEMENT OF EX PENSES FOR WHICH THE ASSESSEE COMPANY HAS NOT KEPT ANY CONT ROL DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 11 OF 15 MECHANISM. ACCORDINGLY, THE AO MADE DISALLOWANCE OF RS. 15 LAKHS BEING 1/5 TH OF THE EXPENSES. 24. IN APPEAL, THE LD. CIT(A) HAS HELD THAT THE AO HAS BEEN FOUND JUSTIFIED IN MAKING APPROPRIATE DISALLOWANCES UNDER THE HEAD, BUT IT IS ALSO THE FACT THAT THE AO HAS NOT P OINTED OUT ANY SPECIFIC DEFECTS IN CLAIMING SUCH EXPENDITURE. IT IS ALSO NOT POINTED OUT THAT THE EXPENDITURE WAS FOR NON-BUSINES S PURPOSES. THEREFORE, CONSIDERING THE FACTS AND CIRC UMSTANCES OF THE CASE, THE LD. CIT(A) HAS RESTRICTED THE DISA LLOWANCE TO RS. 7 LAKHS TO COVER INFIRMITIES POINTED OUT BY THE AO. 25. WE HAVE CONSIDERED THE FACTS AND GIVEN CAREFUL THOUGHT TO THE FINDINGS OF THE LOWER AUTHORITIES. W E ARE OF THE OPINION THAT NO INTERFERENCE IS CALLED FOR ON THE B ASIS OF THE REASONS AS DISCUSSED BY THE LOWER AUTHORITIES IN T HEIR RESPECTIVE ORDERS. THIS GROUND OF APPEAL IS, THEREF ORE, DISMISSED. 26. GROUND NO.3 RELATES TO MAINTAINING THE DISALLOWANCE OF RS. 1 LAC OUT OF RS. 3.40 LAKHS MADE UNDER THE H EAD MISC. EXPENSES AND GROUND NO. 4 RELATES TO RS. 1 LAKH MAI NTAINING DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 12 OF 15 DISALLOWANCE OF RS. 1 LAKH OUT OF STATIONERY AND COMMUNICATIONS EXPENSES. 27. FACTS ARE THAT THIS HEAD IS OF RESIDUARY NATURE AND INCLUDES ALL THE SUNDRY EXPENSES FORM ENTERTAINMENT TO OFFICE EXPENSES ETC. IN FEW INSTANCES PAYMENTS HAVE ALSO BE EN MADE THROUGH SELF MADE CASH VOUCHERS AND PROPER BILLS ET C. ARE NOT AVAILABLE WITH THE VOUCHERS. CONSIDERING THE VOLUME AND SCALE OF BUSINESS AND MAINTENANCE OF RECORDS MIS-USE CANN OT BE RULED OUT. THEREFORE, THE AO DISALLOWED AN AMOUNT O F RS. 3,40,000/- @ 1/10 TH AND ADDED TO THE INCOME OF THE ASSESSEE. 28. THE MATTER CARRIED TO CIT(A), WHO RESTRICTED TO RS. 1 LAC. 29. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE EXPENSES UNDER THE HEAD MISC. EX PENSES ARE BUSINESS EXPENSES LIKE TECHNICIANS EXP., WATER A ND SANITATION EXPENSES, RECRUITMENT CHARGES ETC. THE A D HOC DISALLOWANCE SO MADE WITHOUT EVEN VERIFYING THE CORRE CT NATURE OF EXPENDITURE IS ILLEGAL AND WRONG AND THE SAME REQ UIRES TO BE DELETED. THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE FURTHER CONTENDED THAT THIS IS A CASE OF A COMPANY WHERE DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 13 OF 15 BOOKS OF ACCOUNTS ARE AUDITED. ESTIMATED AND AD HOC DISALLOWANCES ARE NOT PERMITTED IN THE EYES OF LAW PA RTICULARLY IN THE CASE OF A COMPANY. 30. THE LD. SR. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE CIT(A). 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS. 1 LAC TO COVER THE INFIRMITIES POINTED OUT BY THE AO. NO INTERFERENCE IS CALLED FOR. WE UPHOLD THE ACTION OF THE LD. CIT(A). 32. GROUND NO. 3 IS DISMISSED. 33. FACTS REGARDING GROUND NO. 4 ARE THAT THIS GROUND RELATES TO DISALLOWANCE OF RS. 3 LACS OUT OF STATION ERY AND COMMUNICATION EXPENSES OF RS. 31,43,095/- BY ALLEGI NG THAT PERSONAL BENEFIT BY THE EMPLOYEES AND DIRECTORS CA NNOT BE RULED OUT. 34. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THIS TYPE OF DISALLOWANCE IS NOT PERM ITTED IN THE EYES OF LAW PARTICULARLY IN THE CASE OF A COMPAN Y. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 14 OF 15 ASSESSEE IS A PUBLIC LIMITED COMPANY AND THE ACCOUN TS ARE AUDITED BY A CHARTERED ACCOUNTANTS. ALL THE EXPENSE S ARE PROPERLY SUPPORTED AND VOUCHED. THIS IS A CASE OF COMPANY WHERE NO DISALLOWANCE CAN BE MADE FOR ALLEGED PERSONA L USER OF DIRECTORS. THE DISALLOWANCE MADE IS ILLEGAL AND WR ONG. THE SAME REQUIRES TO BE DELETED. 35. THE LD. SR. DR RELIED UPON THE ORDER OF THE CIT(A). 36. WE HAVE CONSIDERED THE FACTS AND MATERIALS AVAILABL E ON RECORD. WE FIND THAT THE BILLS RELATED TO THE M OBILE PHONES HAVE BEEN FOUND BOOKED IN THE BOOKS OF ACCOUNTS. TH EREFORE, PERSONAL ELEMENT IN THIS EXPENDITURE CANNOT BE RULE D OUT. WE UPHOLD ACTION OF THE LD. CIT(A) IN RESTRICTING THE DISALLOWANCE AT RS. 1 LAC. NO INTERFERENCE IS CALLED FOR. GROUND NO. 4 TAKEN BY THE ASSESSEE IS REJECTED. 37. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 547/IND/2015 IS DISMISSED. DY. CIT, 5(1), INDORE VS. M/S. STI SANOH INDIA LIMI TED AND M/S. STI SANOH INDIA LTD. VS. ACIT,3(1), IN DORE I.T.A.NOS. 491 TO 494/IND/2015 AND 546 & 547/IND/2 015 PAGE 15 OF 15 38. CONSEQUENTLY, ALL THE APPEALS OF THE DEPARTMENT AS WELL AS ASSESSEE ARE DISMISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 23 RD AUGUST, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED : 23 RD AUGUST, 2016. CPU* COPY OF THE ORDER FORWARDED TO : THE ASSESSEE/ PCIT- INDORE/ CIT(A)-I, INDORE, AO/ D R- INDORE BENCH/ GUARD FILE BY ORDER ASSISTANT REGISTRAR OF ITAT, INDORE BENCH