Income Tax Officer-5(1), Kanpur V. M/s Espiem Engines & Machines Pvt. Ltd., Kanpur

ITA 558/LKW/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100334 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 131; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.558/LKW/2014 ASSESSMENT YEAR:2003 - 04 M/S EXPIEM ENGINES & MACHINES PVT. LTD., 4 - , BHARGAVA ESTATE, KANPUR. PAN:AAACE4127H VS INCOME TAX OFFICER - 5(1), KANPUR. (RESPONDENT) (APPELLANT) C.O.NO. 02 /LKW/201 5 (IN ITA NO.558/LKW/2014) ASSESSMENT YEAR:2003 - 04 INCOME TAX OFFICER - 5(1), KANPUR. VS M/S EXPIEM ENGINES & MACHINES PVT. LTD., 4 - , BHARGAVA ESTATE, KANPUR. PAN:AAACE4127H (RESPONDENT) (OBJECTOR) SHRI R. K. RAM, D. R. REVENUE BY NONE ASSESSEE BY 21/07/2015 DATE OF HEARING 28 /08/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THE APPEAL IS FILED BY THE REVENUE AND THE CROSS OBJECTION IS FILED BY THE ASSESSEE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 31/03/2014 FOR ASSESSMENT YEAR 2003 - 04. 2. IN ITS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.11,35,126/ - DELETING THE ADDITION ON ACCOUNT OF JOB CHARGES INCOME WITHOUT APPRECIATING THE MERITS OF THE CASE AS WELL AS FACTS AND MATERIAL BROUGHT ON RECORD B Y THE AO. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF OF RS.11,35,126/ - DELETING THE ADDITION ON ACCOUNT OF JOB CHARGES INCOME WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO SUBSTANTIATE THE REASON FOR FALL IN N.P. RATE FOR JOB CHARGES INCOME AND ALSO FAILED TO ELUCIDATE ANY REASON FOR HUGE INCREASE IN EXPENSES IN THE A.Y. UNDER CONSIDERATION. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELI EF OF RS.11,50,186/ - DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION WITHOUT APPRECIATING THE FACT THAT THE SAME WAS PAID BY THE ASSESSEE COMPANY TO M/S RAM SHREE STEELS PVT. LTD. WITHOUT ANY SPECIFIC SERVICES RENDERED BY IT AND ASSESSE E FAILED TO ESTABLISH THAT THE SAID EXPENDITURE WAS SOLELY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS OF ASSESSEE COMPANY. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF IN RESPECT OF VA RIOUS DISALLOWANCES MADE UNDER DIFFERENT HEADS OF EXPENDITURE DEBITED WITHOUT CONSIDERING THE FACTS AND MATERIAL BROUGHT ON RECORD BY THE A.O. AS WELL AS MARKS OF THE CASE. 5. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF ASSESSING OFFICER BE RESTORED. 3. SHRI P. K. KAPOOR, C.A. SUBMITTED AN APPLICATION FOR ADJOURNMENT BUT SINCE THIS IS AN OLD APPEAL AND HEARING WAS ADJOURNED EARLIER ON SEVERAL OCCASIONS, ADJOURNMENT APPLICATION WAS REJECTED. SHRI P. K. KAPOOR, C.A. 3 SUBMITTED THAT HE IS NOT AUTHORIZED TO MAKE ARGUMENTS IN THIS CASE AND THEREFORE, THE APPEAL WAS HEARD EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE AND PERUSED THE MATERIAL AVAILABLE AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. REGARDING THE FIRST ISSUE RAISED BY THE REVENUE AS PER GROUND NO. 1 & 2, WE FIND THAT THE ISSUE WAS DECIDED BY LEARNED CIT(A) BY MAKING FOLLOWING OBSERVATIONS ON PAGE NO. 6 & 7 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - I HAVE CONSIDERED THE CONTENTIONS OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE AO HAS ITSELF IN THE ORDER WRITTEN THAT THE APPELLANT HAS SUBMITTED THAT BEING CONSOLIDATED BUSINESS, THE APPELLANT HAS NOT SEGREGATED THE PARTS, TRAVELLING AND OTHER EXPENSES INCURRED DURING PROVIDING MAINTENANCE SERVICES OF DIESEL ENGINES. ALL THE E XPENSES ARE BOOKED IN TOTALITY AND EXPENSES INCURRED IN JOB WORK INCOME HAVE NOT BEEN BOOKED UNDER THE HEAD NET JOB INCOME CHARGES. FURTHER THE APPELLANT HAS NOT MAINTAINED BOOKS OF ACCOUNTS OF JOB WORK EXPENSES SEPARATELY AND THE SELLING OF PARTS AND SERV ICE CONTRACTS SEPARATELY. THE ASSESSING OFFICER HAS ALSO NOT APPRECIATED THE FACT THAT THE APPELLANT IS IN NATURE OF SUCH BUSINESS WHERE THE APPELLANT CANNOT ENSURE THE CONTINUITY OF THE RUNNING OF THE ENGINES. THE BREAKDOWNS IN DIESEL ENGINES MAY BE DUE TO VARIOUS REASONS WHICH ARE BEYOND THE CONTROL OF THE APPELLANT AND THE PERSONS OWNING THE DIESEL ENGINES. IT MAY ALSO BE IMPORTANT TO MENTION THAT ALL THE LIST OF VOUCHERS WHICH HAS BEEN QUOTED IN THE ORDER IS EITHER FULLY SUPPORTED OR WHEREVER THE SUPPO RTING CANNOT BE TAKEN DUE TO BUSINESS PRACTICES SELF MADE VOUCHERS ARE PRESENT. THE ASSESSING OFFICER HAS ERRED BY ON ONE HAND IS ACCEPTING THE NET PROFIT OF THE APPELLANT AND ON THE OTHER HAND REJECTING THE JOB INCOME BOOKS WHICH ARE NOT KEPT SEPARATELY B Y THE APPELLANT. THE HON'BLE APEX COURT (SUPRA) HAS ALSO HELD THAT ESTIMATION CANNOT BE MADE UNLESS THE BOOKS OF ACCOUNTS ARE REJECTED. THERE CAN BE A PART REJECTION OF BOOKS IF BOOKS OF 4 ACCOUNTS ARE SEPARATELY MAINTAINED FOR SEPARATE BUSINESSES BEING DONE BY THE ASSESSEE. HOWEVER IF THE BOOKS OF ACCOUNTS ARE NOT SEPARATELY MAINTAINED THEN IT IS NOT CORRECT TO ESTIMATE INCOME FOR A PART OF INCOME AND LEAVE THE REMAINING. CONSIDERING ALL THE ASPECTS I HAVE COME TO THE CONCLUSION THAT THE ASSESSING OFFICER HA S ERRED IN REJECTING AND ADDING RS.11,35,126/ - ON ADHOC ESTIMATE BASIS BY MERELY COMPARING THE PREVIOUS YEAR COMPARABLES. THUS THE APPELLANT GETS RELIEF AND THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 6. WE FIND THAT THE ONLY OBJECTION OF THE ASSESSING OFFICER IS THAT THE NET PROFIT RATE IN THE PRESENT YEAR AGAINST JOB CHARGES HAS BEEN REDUCED TO 63.27% AS AGAINST 76.89% IN ASSESSMENT YEAR 2002 - 03 AND 75.58% IN ASSESSMENT YEAR 2001 - 02. THE ASSESSING OFFICER HAS APPLIED THE AVERAGE NET PROFIT RATE OF 76.23% BEING AVERAGE OF LAST TWO YEARS. IN THIS REGARD, IT WAS THE CLAIM OF THE ASSESSEE BEFORE LEARNED CIT(A) THAT THE ASSESSEE HAS NOT MAINTAINED THE BOOKS OF ACCOUNT OF JOB WORK SEPARATELY AND SELLING OF PARTS SEPARATELY. REGARDING THE REASON FOR FALL IN NET PROFIT RATE, IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT SEGREGATED THE TRAVELLING AND OTHER EXPENSES INCURRED DURING PROVIDING MAINTENANCE SERVICES OF DIESEL ENGINE AND PARTS SELLING BUSINESS . IT IS ALSO VERY I MPORTANT TO CONSIDER THE NATURE OF BUSINESS OF THE ASSESSEE WHICH IS SELLING AND SERVICE OF DIESEL ENGINE. IN SERVIC ING OF DIESEL ENGINE, IN THE INITIAL YEARS , INCOME MAY BE HIGH BECAUSE THE BREAK - DOWN ARE LESS BUT AS THE ENGINE GROWS OLD, BREAK - DOWN ARE MORE RESULTING INTO FALL IN PROFIT OF THE SERVICE PROVIDER. APART FROM POINTING OUT FALL IN NET PROFIT RATE, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF THE ASSESSEE. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE EXPENSES ARE NOT SUPPORTED BY BILL AND VOUCHERS. CONSIDERING THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE . GROUND NO. 1 & 2 ARE REJECTED. 5 7. REGARDING GROUND NO. 3, THE DEC ISION OF LEARNED CIT(A) IS AFTER MAKING FOLLOWING OBSERVATION ON PAGES 19 & 20 OF HIS ORDER , WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - I HAVE CONSIDERED THE CONTENTIONS OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. ALLOWABILITY OF COMMISSION UNDER THE INCOME TAX ACT, 1961 IS VERY CLEAR AS HELD BY MANY JUDICIAL AUTHORITIES. THERE ARE 5 MAJOR COMPONENTS THE SERVICES R ENDERED HAVE TO BE ESTABLISHED, THE GENUINENESS OF THE TRANSACTION HAS TO BE ESTABLISHED, THE EXPENDITURE SHOULD BE FOR BUSINESS PURPOSES, THE EXPENDITURE SHOULD NOT BE A CAPITAL EXPENDITURE AND THE EXPENDITURE SHOULD NOT BE A PERSONAL EXPENDITURE. NOW AS FAR AS THE 3 COMPONENTS GOES THAT EXPENDITURE SHOULD BE FOR BUSINESS PURPOSES, SHOULD NOT BE PERSONAL OR NOT CAPITAL, NO OBSERVATIONS HAVE BEEN GIVEN BY THE ASSESSING OFFICER THUS THE ASSESSING OFFICER IS NOT DOUBTING THAT THE EXPENDITURE IS ALLOWABLE UND ER SECTION 37 OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER IN ITS ENTIRE GAMUT HAS CHALLENGED THE RENDERING OF SERVICES AND THE GENUINENESS OF THE TRANSACTION. NOW FROM WHATEVER APPEARS ON THE RECORD IS THAT RENDERING OF SERVICES AND THE GENUINENESS OF THE TRANSACTION ARE CLEARLY JUSTIFIED BY THE FACT THAT THE PAYMENT HAS BEEN MADE UNDER AN AGREEMENT, THE PAYMENT HAS BEEN MADE BY ACCOUNT PAYEES CHEQUES AND TAX AS REQUIRED TO BE DEDUCTED ON THE SAME HAS BEEN DEDUCTED. THE GENUINENESS OF THE TRANSACTION IS ALSO JUSTIFIED BY THE STATEMENT OF THE AUTHORIZED PERSONS WHO APPEARED ON BEHALF OF THE COMMISSION AGENT. EVEN THE NAME OF THE TELECOM DEPARTMENT OF ALLAHABAD WHO ALSO WAS A CLIENT BROUGHT BY THE COMMISSION AGENT HAS BEEN ACCEPTED BY THE ACCOUNTANT OF THE COMMISSION AGENT WHICH CLEARLY SIGNIFY THAT SERVICES HAVE BEEN RENDERED. ELSE IT IS NORMALLY NOT THERE THAT SUCH INFORMATION ARE AVAILABLE WITH MERE ACCOUNTANTS. MOREOVER IT'S A STATEMENT OF OATH UNDER SECTION 131 OF THE INCOME TAX ACT, 1961 AND NOWHER E IN THE ORDER THE ASSESSING OFFICER HAS PROVED THAT THE STATEMENT MADE ON OATH IS FALSE. THUS KEEPING IN MIND ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE COMMISSION PAYMENT IS JUSTIFIED AND THE ADDITION NEEDS TO BE DELETED. 6 8. FROM THE ABOVE PARA FROM THE ORDER OF LEARNED CIT(A), IT IS SEEN THAT A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT THE GENUINENESS OF THE TRANSACTION IS JUSTIFIED BY THE STATEMENT OF THE AUTHORIZED PERSONS WHO APPEARED ON BEHALF OF THE COMMISSION AGE NT. HE HAS ALSO NOTED THAT A STATEMENT ON OATH U/S 131 OF THE ACT HAS BEEN RECORDED BY THE ASSESSING OFFICER OF THE ACCOUNTANT OF THE COMMISSION AGENT AND HE HAS CONFIRMED THE SERVICES RENDERED. THE PRESENT DIRECTOR OF THE COMMISSION AGENT ALSO APPEARED BEFORE THE ASSESSING OFFICER BUT HE COULD NOT THROW ANY LIGHT ON THIS ASPECT BECAUSE HE WAS NOT THE DIRECTOR OF THE COMMISSION AGENT DURING THE PERIOD WHEN THE TRANSACTION TOOK PLACE AND THE PERSON S WHO W ERE DIRECTOR S DURING THE RELEVANT PERIOD W ERE NO T A VAILABLE, WHEN TE A.O. ASKED TO APPEAR . IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE PAYMENT HAS BEEN MADE UNDER AN AGREEMENT BY WAY OF ACCOUNT PAYEE CHEQUE AFTER DEDUCTING TDS AND THE DIRECTOR OF THE COMMISSION AGENT COMPANY AS WELL AS ACCOUNTANT O F THAT COMPANY HAVE APPEARED BEFORE THE ASSESSING OFFICER AND THE TRANSACTION WAS CONFIRMED AND NO ADVERSE MATERIAL OR ADVERSE STATEMENT OF THESE PERSONS IS THE BASIS OF THE ACTION OF THE A.O. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTE RFERE IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. GROUND NO. 3 IS ALSO REJECTED. 9. REGARDING GROUND NO. 4 I.E. REGARDING VARIOUS DISALLOWANCE S , WHICH ARE PARTLY DELETED BY CIT(A) AND THE ASSESSEE HAS FILED CROSS OBJECTION HAVING GRIEVANCE OF THE PART DIS ALLOWANCE UPHELD BY CIT(A), WE FIND THAT OUT OF DISALLOWANCE OF RS.2,200/ - UNDER THE HEAD LEGAL EXPENSES, ENTIRE AMOUNT OF DISALLOWANCE WAS SUSTAINED BY CIT(A). SIMILARLY FOR DISALLOWANCE OF RS.7,430/ - ON ACCOUNT OF ADVERTISEMENT ALSO, ENTIRE DISALLOWANCE WAS SUSTAINED BY CIT(A). OUT OF DISALLOWANCE OF RS.24,123/ - UNDER THE HEAD MISC. EXPENSES, CIT(A) HAS CONFIRMED THE DISALLOWANCE OF RS.7,920/ - . OUT OF DISALLOWANCE OF RS.68,851/ - UNDER THE HEAD TELEPHONE EXPENSES, CIT(A) 7 HAS CONFIRMED THE DISALLOWANCE O F RS.7,500/ - . SIMILARLY OUT OF DISALLOWANCE OF RS.6,657/ - UND ER THE HEAD VEHICLE RUNNING AND DEPRECIATION, DISALLOWANCE IS CONFIRMED OF RS.2,500/ - . REGARDING THE LAST TWO DISALLOWANCES OUT OF TELEPHONE AND VEHICLE RUNNING AND DEPRECIATION, WE ARE OF THE CONSIDERED OPINION THAT AS PER THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SAYAJI IRON AND ENGG. CO. LTD. VS CIT [2002] 253 ITR 749 (GUJ), EVEN IF THERE IS PERSONAL USE OF TELEPHONE AND VEHICLES ETC. BY THE DIRECTORS / EMPLOYEES OF T HE COMPANY, THE SAME CAN BE INCLUDED IN THE PERQUISITES VALUE OF THE CONCERNED DIRECTOR/ EMPLOYEE BUT THE DISALLOWANCE CANNOT BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE GUJARAT HIGH COURT, WE HO LD THAT NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY OUT OF TELEPHONE AND VEHICLE RUNNING AND DEPRECIATION. 9.1 REGARDING DISALLOWANCE OF LEGAL EXPENSES OF RS.2,200/ - , IT IS NOTED BY CIT(A) THAT THE DISALLOWANCE HAS BEEN MADE FOR DOCUMENTS EXPENSES OF NEW JEEP. IN OUR CONSIDERED OPINION, SUCH EXPENSES FOR NEW JEEP CANNOT BE CONSIDERED AS REVENUE EXPENDITURE AND HEN CE, WE DECLINE TO INTERFERE IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE . 9.2 REGARDING DISALLOWANCE OF RS.7,430/ - UNDER THE HEAD ADVERTISEMENT EXPENSES, IT IS NOTED BY CIT(A) ON PAGE NO. 10 OF HIS ORDER THAT THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSE E ARE SELF - MADE VOUCHERS BUT ADVERTISEMENT EXPENSES ARE NORMALLY PROPERLY SUPPORTED BY BILLS AND VOUCHERS AND IF NOT SUPPORTED BY BILLS AND VOUCHERS, IT NEEDS TO BE DISALLOWED. LEARNED A.R. OF THE ASSESSEE COULD NOT POINT OUT ANY DEFECT IN TH IS FINDING IN THE ORDER OF CIT(A) AND THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE . 8 9.3 R EGARDING DISALLOWANCE OF MISC. EXPENSES OF RS.25,123/ - , WHICH HAS BEEN RESTRICTED BY CIT(A) TO RS.7,920/ - , WE FIND THAT CIT(A) HAS ALLOWED RELIEF OF RS.17,203/ - IN RESPECT OF BALANCE WRITTEN OFF AND THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR RELIEF ALLOWED BY HIM ON THIS ISSUE. REGARDING THE ADDITION CONFIRMED BY CIT(A) OF RS.7,920/ - OUT OF MISC. EXPENSES, WE FIND THA T A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT THESE EXPENSES WERE NOT INCURRED FOR BUSINESS PURPOSES. THIS FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE BY BRINGING COGENT MATERIAL ON RECORD AND HENCE, ON THIS ISSUE ALSO, W E DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 10. WE HAVE CONSIDERED THE DETAILS OF DISALLOWANCES MADE BY CIT(A) OUT OF VARIOUS EXPENSES, WHICH WERE PARTLY CONFIRMED OR FULLY CONFIRMED BY CIT(A) BECAUSE THESE DETAILS ARE GIVEN BY THE ASSES SEE IN THE CROSS OBJECTION. THERE ARE CERTAIN OTHER DISALLOWANCE ALSO, WHICH ARE FULLY DELETED BY CIT(A) BUT THE REVENUE HAS NOT PIN POINTED THE DELETION OF DISALLOWANCE AGAINST WHICH THE APPEAL HAS BEEN FILED BY THE REVENUE. ST ILL , WE HAVE TRIED TO EXAM INE AND DECIDE THESE ISSUES BY GOING THROUGH THE ORDER OF CIT(A). ON PAGE NO. 8 OF HIS ORDER, CIT(A) HAS DECIDED THE ISSUE OF DISALLOWANCE OF RS.23,988/ - UNDER THE HEADING TRAVELLING EXPENSES. THIS DISALLOWANCE WAS DELETED BY CIT(A) ON THE BASIS THAT N OWHERE IN THE ORDER OF THE ASSESSING OFFICER , HE HAS SAID THAT THE EXPENSES HAVE EITHER NOT BEEN INCURRED FOR BUSINESS PURPOSES OR ARE PERSONAL IN NATURE OR CAPITAL IN NATURE AND THEREFORE, THE SAME ARE ALLOWABLE U/S 37 OF THE ACT. WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF CIT(A) ON THIS ISSUE BECAUSE THERE IS NO SPECIFIC OBJECTION OF THE A.O. AS HAS BEEN NOTED BY CIT (A) AND THIS FINDING OF CIT (A) COULD NOT BE CONTROVERTED BY LEARNED DR OF THE REVENUE. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CI T (A) ON THIS ISSUE . 9 10.1 THE DISALLOWANCE OF RS.2,355/ - OUT OF CONVEYANCE EXPENSES WAS ALSO DELETED BY CIT(A) BY MAKING THE SAME OBSERVATION. SIMILARLY THE DISALLOWANCE OF RS.12,080/ - UNDER THE HEAD REPAIRS AND MAINTENANCE WAS ALSO DELETED BY CIT(A) B Y MAKING THE SAME OBSERVATION. FOR THE SAME REASONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THESE ISSUES ALSO. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THESE ISSUES ALSO. 10.2 THE DISALLOWANCE OF RS.26,014/ - UNDER THE HEAD ING REPAIRS AND MAINTENANCE OTHERS EXPENSES WAS DELETED BY CIT(A) BY MAKING SAME OBSERVATION ON PAGE 10 OF HIS ORDER. SO IS THE CASE REGARDING DISALLOWANCE OF RS.14,640/ - UNDER THE HEAD OFFICE MAINTENANCE EXPENSES. SIMILARLY, THE DISALLOWANCE OF RS,25,0 17/ - UNDER THE HEAD SALES PROMOTION EXPENSES WAS ALSO DELETED BY CIT(A) BY MAKING SAME OBSERVATION. FOR THE SAME REASONS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THESE ISSUES ALSO. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON T HESE ISSUES ALSO. 10.3 THE DISALLOWANCE OF RS,40,734/ - OUT OF INTEREST EXPENSES MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISION OF RS.40A(2)(B) WAS DELETED BY CIT(A) ON THE BASIS THAT THE INTEREST RATE PAID BY THE ASSESSEE WAS 21% FOR 4 MONTHS AND 15% FOR 8 MONTHS AND IT IS NOTED BY THE ASSESSING OFFICER ALSO THAT EVEN THE RATE OF INTEREST ALLOWABLE ON PARTNERS CAPITAL U/S 40 B WAS 18% UP TO 01/06/2002, WHICH CLEARLY GIVES AN INDICATION THAT THE RATES PAID BY THE ASSESSEE DID NOT GIVE ANY EXCESSIVE BENEFIT TO THE PERSON COVERED U/S 40A(2)(B) OF THE ACT. ON THIS ISSUE ALSO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 11. AS PER ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN GROUND NO. 4 OF THE REVENUES APPEAL AND THE SAME IS REJECTED WHEREAS REGARDING GROUND NO. 1 RAISED BY THE ASSESSEE IN CROSS OBJECTION, WE HAVE DELETED THE PART 10 DISALLOWANCE SUSTAINED BY CIT(A) UNDER THE HEADING TELEPHONE EXPENSES AND VEHICLE RUNNING AND DEPRECIATION AND CONFIRM THE PART DISALLOWANCE SUSTAINED BY CIT(A) UNDER THREE REMAINING HEADS I.E. LEGAL EXPENSES, ADVERTISEMENT EXPENSES AND MISC. EXPENSES. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 28 /08/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR