ITO 21(1)(3), MUMBAI V. SHRI. MANDAR PHARMA, MUMBAI

ITA 5622/MUM/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3831 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M DEVADASAN
• Assessee Lawyers: B V JHAVERI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A.NO.5622/MUM/2008 - A.Y 2005-06 INCOME TAX OFFICER 21(1)(3), MUMBAI VS. SHRI MANDAR PHARMA, 6 TH FLOOR, MATHARU ARCADE, SUBHASH RD., VILE PARLE (EAST), MUMBAI 400 057 PAN: AAAFM 6141 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.M.DEVADASAN. RESPONDENT BY : SHRI B.V.JHAVERI. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWIN G GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT[A] ERRED IN DELETING THE DISALLOWANCE TO THE E XTENT OF ` `` ` .47,10,104/- MADE ON ACCOUNT OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS, AO ASKED THE ASSESSEE TO FI LE PARTYWISE DETAILS OF MISCELLANEOUS EXPENSES, POSTAGE, TELEGRA PH AND TELEPHONE EXPENSES, PRINTING AND STATIONERY, PROFESSIONAL FEE S AND LEGAL FEES, SALARY AND BONUS, SALES TAX EXPENSES AND TRAVELLING AND CONVEYANCE EXPENSES. THE ASSESSEE FILED LEDGER COPIES OF EXPEN SES BUT COULD NOT FILE PARTYWISE DETAILS OF THE EXPENSES AND, ACCORDI NGLY, 20% OF THE ABOVE EXPENSES AMOUNTING TO ` `` ` .48,16,991/- WERE DISALLOWED BY THE AO. 2 3. ON APPEAL BEFORE THE CIT[A], IT WAS MAINLY SUBMI TTED THAT THE ASSESSEE HAD FILED THE NORMAL DETAILS OF EXPENSES A ND PARTYWISE DETAILS OF PURCHASES AND SALES WERE FURNISHED. IT WAS FURTH ER ARGUED THAT THE REVENUE EXPENSES ARE NORMALLY RECORDED IN THE BOOKS UNDER VARIOUS HEADS AND NO PARTYWISE DETAILS ARE MAINTAINED. THER EFORE, LEDGER COPIES OF SUCH EXPENSES WERE FILED WHICH CONTAINED ALL THE DETAILS LIKE THE NAME OF THE PARTY, BILL NUMBER, MODE OF PAYMENT , DATE OF PAYMENT AND, THEREFORE, UNDER THESE CIRCUMSTANCES, IT CANNO T BE SAID THAT DETAILS WERE NOT FILED. THE LD. CIT[A] AFTER CONSID ERING THE SUBMISSIONS ALLOWED PART RELIEF VIDE PARAS 7.1 TO 7.5 WHICH REA D AS UNDER: 7.1 THE ENTIRE ADDITION IN THIS CASE, IS BASED ON THESE THREE LINES. IT IS NOT KNOWN HOW 20% OF SALES TAX EXPENSES CAN BE T REATED AS NOT ALLOWABLE. SIMILARLY, THE ESTIMATED DISALLOWANCE OU T OF SALARY AND BONUS CAN BE RARELY SUSTAINED. FACED WITH THIS SITU ATION, I HAVE GONE INTO GREATER DETAILS OF MISCELLANEOUS EXPENSES, POS TAGE, TELEGRAPH AND TELEPHONE EXPENSES AND TRAVELLING AND CONVEYANCE EX PENSES , SINCE IN MY OPINION, NOTHING OUT OF THE FOLLOWING 4 EXPENSES CAN BE CONSIDERED AS NOT ALLOWABLE WITHOUT A CLINCHING EVIDENCE:- 1) PRINTING & STATIONERY ` `` ` . 8,94,711 2) PROFESSIONAL FEES & LEGAL FEES ` `` ` . 8,93,824 3) SALARY & BONUS ` `` ` .1,11,77,457 4) SALES TAX ` `` ` . 15,58,902 7.2 DETAILS OF MISCELLANEOUS EXPENSES SHOW THAT IT CONTAINS THE FOLLOWING:- MISC.EXPENSES A. CONFERENCE CHARGES 292281 B. LICENSE & APPLICATION 103826 C. MEMBERSHIP & SUBSCRIPTION 10301 D. MEMBERSHIP EXPENSES 450 E. M R. ALLOWANCE 383078 F. M R. EXPENSES 5072 G. MISC. EXPENSES 55988 H. CP,[ITER SPFTWARE EX[ 5000 I. DONATION 1650 J. ELECTRICITY CHARGES 28676 3 K. LABOUR CHARGES 1330 L. REPAIRS & MAINTENANCE 145928 M. REGISTRATION CHARGES 35000 N. TEBDER CGARGES 6668 O PROFESSIONAL TAX 10500 P LIASON EXPENSES 163200 IF THE DETAILS WERE NOT SUBMITTED BEFORE THE ASSESS ING OFFICER , THERE IS DEFINITELY SCOPE FOR THE DISALLOWANCE OUT OF THE I TEMS G- MISCELLANEOUS EXPENSES OF ` `` ` .55,988/- AND ITEM D- LIASON EXPENSES OF ` `` ` .1,63,2--/- 20% OF THE SAME IS CONSIDERED AS NOT AL LOWABLE. 7.3 SIMILARLY, THE LEARNED A.R. HAS FILED THE DETAI LS OF POSTAGE, TELEGRAPH AND TELEPHONE EXPENSES. FROM THE DETAILS IT IS SEEN THAT MTNL TEL. NO.26105046 IS INSTALLED AT THE PARTNERS RESIDENCE AND AN AMOUNT OF ` `` ` .6,756/- HAS BEEN PAID IN RESPECT OF THE SAME. THIS AMOUNT IS CLEARLY DISALLOWABLE AND 10% OF THE REMAINING AM OUNT OF TELEPHONE EXPENSES IS ALSO ESTIMATED TO BE PERSONAL IN NATURE . 7.4 FURTHER, IT IS SEEN THAT THERE HAS BEEN TRAVELL ING EXPENSES AT ` `` ` .9,22,975/-. THERE HAS BEEN A HISTORY OF DISALLOWAN CE UNDER THIS HEAD AND THE ITAT HAS ALSO CONFIRMED THE DISALLOWANCE 30 ,000/- FOR A.Y 2001-02. ACCORDINGLY, A SUM OF ` `` ` .50, 000/- IS CONSIDERED NOT ALLOWABLE FOR THE CURRENT YEAR. 7.5 UNDER THE FACTS AND CIRCUMSTANCES STATED ABOVE, ONLY THE ADDITION OF ` `` ` .1,06,887/- WORKED OUT AS UNDER, IS SUSTAINED AND T HE ASSESSING OFFICER IS DIRECTED TO DELETE THE REMAIN ING DISALLOWANCE OF THE EXPENSES OF ` `` ` .47,10,104/-: 1. OUT OF MISCELLANEOUS EXPENSES & LIASON EXPENSES ` `` ` . 43,837/- (20% OF ` `` ` .55,988+ ` `` ` .1,63,200) 2. OUT OF POSTAGE, TELEGRAPH AND TELEPHONE ` `` ` . 13,050/- ( ` `` ` .6,755+6,294-10% OF ` `` ` .62,941) 3. OUT OF TRAVELLING EXPENSES ` `` ` . 50,000/- TOTAL ` `` ` .1,06,887/- ========= 4. BEFORE US, LD. DR RELIED ON THE ORDER OF THE ASS ESSING OFFICER. 5. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE S TRONGLY SUPPORTED THE ORDER OF THE CIT[A]. HE SUBMITTED THA T IN CASE OF POSTAGE AND TELEGRAPH OR SALES TAX THE PAYMENTS ARE MADE TO THE STATE GOVERNMENT AND, THEREFORE, NO PARTYWISE DETAILS WER E POSSIBLE. HE 4 FURTHER REITERATED THE SUBMISSIONS MADE BEFORE THE CIT[A] AND AGAIN EMPHASISED THAT LEDGER COPIES OF EXPENSES WERE FILE D BEFORE THE AO WHICH CONTAINED ALL THE DETAILS. SOME MORE DETAILS WERE CALLED FOR BY THE LD. CIT[A] WHICH WERE FILED AND HE HAS CONFIRME D THE DISALLOWANCES WHICH HAVE NOT BEEN CHALLENGED BY THE ASSESSEE. THE ORDER OF THE LD. CIT[A] IS VERY REASONABLE AND SHOU LD BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. WE FAIL TO UNDERSTAND AS TO WHY PARTYWISE DETAILS AO WANTED IN THE CASE OF POSTAGE AND TELEGRAPH. FOR THIS, ALL THAT ASSESSEE WILL HAVE TO DO IS TO PURCHASE POSTAL STAMPS FROM THE GOVERNMENT OF INDIA , POSTAL DEPARTMENT AND NO PARTYWISE DETAILS ARE POSSIBLE. S AME IS THE CASE FOR SALES TAX PAYMENT WHICH IS MADE TO THE STATE GOVERN MENT. WE ARE OF THE VIEW THAT THE LD. CIT[A] HAS EXAMINED THE ISSUE IN DETAIL AND WHEREVER ADDITION WAS CALLED FOR, THE SAME HAS ALRE ADY BEEN MADE BY HIM. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDE R OF THE LD. CIT[A]. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF NOVEMBER, 2010. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI:19 TH NOVEMBER, 2010.