UTILITY POWERTECH LTD, MUMBAI V. ACIT RG 1(3), MUMBAI

ITA 5502/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4249 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-08-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 07-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ BAISAL
• Keywords: Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI. J. SUDHAKAR REDDY (A.M.) AND SHRI. V.D . RAO (J.M.) ITA NO.5502/MUM/2009 ASSESSMENT YEAR : 2006-2007 UTILITY POWERTECH LTD. RELIANCE ENERGY CENTRE, SANTACRUZ (E), MUMBAI 400 055. PAN : AAACU3458P VS. A.C.I.T. RG. 1(3) R.NO.564, AAYAKAR BHAVAN, MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JITENDRA SANGHAVI SHRI SHANKAR PAWAR RESPONDENT BY : SHRI NIRAJ BAISAL O R D E R PER V.D. RAO, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11.08.2009 OF THE CIT(A)-XXI, MUMBAI RELATING TO A SSESSMENT YEAR 2006- 07. 2 . AT THE TIME OF HEARING LEARNED COUNSEL OF THE ASSES SEE HAS SUBMITTED THAT ALL THE ISSUES INVOLVED IN THIS APPEAL COVERED BY EARLIER YEAR I.E. ASSESSMENT YEAR 2005-06, THE SAME ORDER MAY BE PASS ED. 3. ON THE OTHER HAND, THE LEARNED DR HAS NOT OBJECT ED AS AGAINST THE SUBMISSIONS MADE BY THE LD COUNSEL FOR THE ASSESSEE . 4. THE FIRST GROUND OF APPEAL RELATES TO DISALLOWAN CE U/S.40(1)(IA) AMOUNTING TO ` .9,63,447/- ON ACCOUNT OF NON-DEDUCTION OF TAX AT S OURCE. THE CASE OF THE ASSESSEE IS THAT, HE HAS REIMBURSED THE OFFICE UP-KEEPING EXPENSES TO RELIANCE ENERGY LTD. AND HE IS DENIED T HE PAYMENT IN THE NATURE OF RENT. HOWEVER, THE ASSESSING OFFICER AND THE CIT(A) WERE OF THE OPINION THAT THE PAYMENT MADE BY THE ASSESSEE ATTRA CTS SECTION 40(A)(IA) AND ITA NO.5502/MUM/2009 ASSESSMENT YEAR : 2006-2007 2 DISALLOWANCE WAS MADE TO THE EXTENT OF ` .9,63,447/-. THIS ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.2561/M/09 FOR ASSESSMENT YEAR 2005-0 6 BY ORDER DATED 19.04.2010. FOR THE SAKE OF CONVENIENCE THE RELEV ANT PORTION OF THE PRESENT ISSUE IS EXTRACTED HERE UNDER: WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE RECORD. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SEIMENS AKTIONGESELLSCHAFT (SUPRA) HAS HELD THAT REIMBURSEMENT OF EXPENSES CANNOT BE REGARDED AS REV ENUE IN THE HANDS OF THE PAYEE. WHILE DECIDING THE ISSUE, THE HONBLE HIGH COURT HAS FOLLOWED THE DECISION OF HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. INDUSTRIAL ENGG. PROJE CTS P. LTD. (202 ITR 1041). IT IS A SETTLED PROPOSITION OF LAW FROM THE VARIOUS DECISIONS OF HIGH COURTS AND PARTICULARLY T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT (SUPRA) THAT W HEN THERE IS NO ELEMENT OF INCOME AND THE PAYMENT IS ONLY AS A REIMBURSEMENT OF EXPENSES INCURRED BY THE PAYEE, TH EN NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA). IN THE CAS E IN HAND, THE ASSESSING OFFICER HAS NOT GIVEN A FINDING THAT THE EXPENSES WERE FOR OFFICE UP-KEEPING AS REVENUE RECEIPT IN TH E HANDS OF RELIANCE ENERGY LTD. AND NOT A PURE REIMBURSEMENT O F EXPENSES. RESPECTFULLY, FOLLOWING THE DECISION OF THE HONBLE HIGH COURT (SUPRA), WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE, RESPECTFULLY, FOLLOW DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA). THIS GROUND OF APPEA L RAISED BY THE ASSESSEE IS ALLOWED. 5. THE SECOND GROUND OF APPEAL RAISED BY THE ASSESS EE RELATES TO DISALLOWANCE OF TRAVELING EXPENSES OF ` .84,574/-. THE ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT ASSESSEE WAS F AILED TO PRODUCE SUPPORTING DOCUMENTS TO JUSTIFY THE CLAIM OF EXPEND ITURE IN THE ABSENCE OF VERIFIABLE ADDRESSES AND VOUCHERS. THE ASSESSING O FFICER HAS DISALLOWED 10% OF THE EXPENDITURE AND SAME WAS ADDED BACK TO T HE TOTAL INCOME OF THE ASSESSEE. HOWEVER, ON APPEAL, THE LEARNED CIT(A) R EDUCED DISALLOWANCE TO 5% AND GRANT THE RELIEF OF ` .84,574/-. AS AGAINST THE ORDER OF THE CIT(A), THE ASSESSEE RAISED PRESENT GROUND OF APPEAL BEFORE US. IN EARLIER YEAR THE SIMILAR ISSUE WAS CONSIDERED BY THE TRIBUNAL IN ASS ESSEES OWN CASE (SUPRA) AND HELD AS UNDER: ITA NO.5502/MUM/2009 ASSESSMENT YEAR : 2006-2007 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER HAS DIS ALLOWED 10% OF THE TRAVELING EXPENSES ON THE GROUND THAT THE AS SESSEE HAS FAILED TO PRODUCE VERIFIABLE VOUCHERS AND ADDRESSES . IT IS NOT THE CASE OF THE REVENUE THAT THE CLAIM OF THE ASSES SEE IS BOGUS AND NOT RELATED TO THE NATURE OF THE BUSINESS OF TH E ASSESSEE. SINCE THE TRAVELING EXPENSE ARE PETTY IN NATURE AND KEEPING IN VIEW THE NATURE OF THE BUSINESS OF THE ASSESSEE AT THE SITES LOCATED IN REMOTE AREAS, IT NOT ALWAYS POSSIBLE TO OBTAIN PROPER VOUCHERS FOR THE SAID EXPENDITURE. EVEN OTHERWISE, WHEN THE EXPENDITURE HAS NOT BEEN FOUND AS ABNORMAL IN COMPA RISON TO THE TOTAL TURNOVER AND INCOME ADMITTED BY THE ASSES SEE, THEN IT IS NOT JUSTIFIED ON THE PART OF THE LOWER AUTHORITI ES TO DISALLOW CERTAIN PERCENTAGE OF THE EXPENSES WHICH IS AD-HOC IN NATURE. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES AND NA TURE OF THE EXPENSES AS WELL AS THE BUSINESS ACTIVITIES OF THE ASSESSEE, WE DO NOT FIND ANY REASON TO DISBELIEVE THE EXPLANATIO N OF THE ASSESSEE. ACCORDINGLY, THE ADDITION SUSTAINED BY T HE CIT(A) IS DELETED. WE, RESPECTFULLY, FOLLOWING THE DECISION OF THE TRI BUNAL IN ASSESSEES OWN CASE (SUPRA). THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 6. GROUND NO.3 & 4 RELATES TO BUSINESS PROMOTION EX PENSES. 7. WE HAVE HEARD LEARNED AR AND DR, PERUSED THE REL EVANT RECORD. THE ISSUE INVOLVED IN THIS APPEAL IS IDENTICAL TO THE E ARLIER YEAR, WHEREIN HONBLE TRIBUNAL HAS CONSIDERED BOTH THE GROUNDS DECIDED IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO.2561/ M/09 FOR ASSESSMENT YEAR 2005-06. THIS GROUND OF APPEAL RAISED BY TH E ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF OCTOBER, 2010. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER SD/- (V.D. RAO) JUDICIAL MEMBER MUMBAI, DATED 20 TH OCTOBER, 2010. JANHAVI ITA NO.5502/MUM/2009 ASSESSMENT YEAR : 2006-2007 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI