ALTO ENTERPRISES PVT. LTD., CHENNAI V. ACIT, COMPANY CIRCLE-1(4), CHENNAI

ITA 57/CHNY/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6948 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-08-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITA
• Assessee Lawyers: K BALASUBR AMANIAN
• Keywords: Business expenditure
• Section: 143(3); 143(1); 143(2); 13; 154

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A. NO. 57/CHNY/2020 / ASSESSMENT YEAR: 2008-09 M/S. ALTO ENTERPRISES PRIVATE LTD., NEW NO. 17/1, OLD NO. 9, BAZULLA ROAD, T. NAGAR, CHENNAI 600 017. [PAN:AAECA7489E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(4), CHENNAI 600 034. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI K. BALASUBRAMANIAN, ADVOCATE / RESPONDENT BY : MS. R. ANITA, JCIT / DATE OF HEARING : 10.08.2021 /DATE OF PRONOUNCEMENT : 13.08.2021 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, DATED 27.09.2019 RELEVANT TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.1 IN THE ORDER UNDER APPEAL CIT(A)-1 ERRED IN NOT DIRECTING THE AO TO ALLOW OTHER EXPENDITURE DEBITED TO P & L A/C FOR EARNING INTEREST INCOME, EXCLUDING INTEREST AND TRAVEL EXPENDITURE. 1.2 LEARNED CIT(A)-1 ERRED IN NOT FOLLOWING HER PREDECESSOR ORDER FOR AY 2007- 08 FOR ALLOWING ALL THE EXPENDITURE DEBITED TO P & L A/C AS THE LATTER ORDER HAS BEEN ACCEPTED BY THE DEPARTMENT BY NOT RAISING SPECIFIC GROUND IN THE APPEAL FILED BY IT AGAINST THE LATTERS DIRECTIONS. 2. AS TO ALLOWING OF TRAVEL EXPENDITURE APPELLANT IS WILLING TO ABIDE BY THE DIRECTIONS OF ITAT CHENNAI FOR AY 2007-08. I.T.A. NO. 57/CHNY/20 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ADMITTING TOTAL INCOME OF .81,27,901/-. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. AFTER CONSIDERING THE DETAILS FILED AGAINST THE STATUTORY NOTICES AND DETAILS AVAILABLE ON RECORD, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 20.12.2010 BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT .1,31,45,557/-. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHICH WAS DISMISSED ON MERITS AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FOLLOWING EARLIER YEARS APPELLATE ORDER. AGAINST THE APPELLATE ORDER, THE ASSESSEE FILED A PETITION UNDER SECTION 154 OF THE ACT TOWARDS NON- CONSIDERATION OF SUMMARY DISALLOWANCES OF VARIOUS EXPENSES CLAIMED BY THE ASSESSEE DESPITE RAISING SPECIFIC GROUNDS OF APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL BY REJECTING THE CLAIM OF OTHER EXPENSES. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE ASSESSING OFFICER HAS RECOGNIZED THE BUSINESS OF THE ASSESSEE AS MONEY LENDING AND INTEREST INCOME WAS COMPUTED BY SUMMARILY REJECTING VARIOUS EXPENSES INCURRED AND CLAIMED BY THE ASSESSEE. BY FOLLOWING THE ITAT ORDER I.T.A. NO. 57/CHNY/20 3 FOR THE ASSESSMENT YEAR 2007-08, EVEN THOUGH THE LD. CIT(A) ALLOWED SET OFF OF INTEREST EXPENDITURE AGAINST INTEREST INCOME, THE REJECTION OF OTHER EXPENSES INVOLVED IN ASSESSEES BUSINESS WAS NOT CORRECT AND PRAYED FOR ALLOWING THE OTHER BUSINESS EXPENSES INCURRED BY THE ASSESSEE. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS REJECTED THE INTEREST EXPENDITURE AND OTHER EXPENSES CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE BUSINESS OF THE ASSESSEE IS YET TO COMMENCE AND THE EXPENSES ON PRE-OPERATIVE PERIOD CANNOT BE ALLOWED. ON APPEAL AGAINST THE PETITION UNDER SECTION 154 OF THE ACT, THE LD. CIT(A) HAS ALLOWED THE INTEREST EXPENDITURE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2007-08 IN I.T.A. NO. 1711/MDS/2013 DATED25.04.2014, WHEREIN, IT WAS HELD THAT THE INTEREST PAID BY THE ASSESSEE ON UNSECURED LOANS HAS TO BE SET OFF AGAINST THE INTEREST RECEIVED ON LOAN FUNDS DEPOSITED BY THE ASSESSEE ON WHICH INTEREST INCOME WAS ADMITTED. HOWEVER, BY OBSERVING THAT THE ASSESSEE HAS NOT SUBSTANTIATED THAT THE EXPENSES OTHER THAN INTEREST EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS, THE LD. CIT(A) REJECTED THE CLAIM OF OTHER EXPENSES. IN THIS CASE, INTEREST INCOME WAS RECOGNIZED AND THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE WAS ALSO ALLOWED BY THE LD. CIT(A). I.T.A. NO. 57/CHNY/20 4 EVEN THOUGH THE BUSINESS OF THE ASSESSEE IS YET TO COMMENCE, THE ASSESSEE IS LIABLE TO INCUR OTHER MISCELLANEOUS EXPENSES. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE EXPENSES SUCH AS ADVERTISEMENT .81,788/-, BANK CHARGES .3,516/-, AUDIT FEES .16,854/-, PETRO CHARGES CAR .10,769/-, CONSULTANCY CHARGES 1,20,000/-, RATES & TAXES .9,664/-, MISCELLANEOUS EXPENSES .10,539/-, PRINTING & STATIONERY .290/-, COMPUTER MAINTENANCE .1,995/-, FILING FEES .2,550/-, SALARIES .6,875/- AND TELEPHONE CHARGES .3,88,772/- AFTER VERIFICATION OF BILLS AND VOUCHERS, ETC. SO FAR AS TRAVELLING EXPENSES OF .14,07,632/- IS CONCERNED, IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS ADMITTED TO ABIDE BY THE DIRECTIONS OF ITAT FOR THE ASSESSMENT YEAR 2007-08, THERE IS NO NEED FOR ADJUDICATION. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED TO THE ABOVE EXTENT. ORDER PRONOUNCED ON THE 13 TH AUGUST, 2021 IN CHENNAI. SD/- SD/- [ . , ] [ . , ] (G. MANJUNATHA) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 13.08.2021 VM/- /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. ( )/CIT(A), 4. /CIT, 5. /DR & 6. /GF.