DCIT, Central Circle - XVII, Kolkata, Kolkata V. M/s. Quality Tea & Producing Co. Pvt. Ltd., Kolkata

ITA 570/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2445 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-03-2010
• Court: TRIBUNAL
• Department Lawyers: B R PUROKAYASTHA
• Assessee Lawyers: S D VERMA
• Keywords: Business expenditure
• Section: 43B

Judgement Text

, A , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA () . . , , .!'., #$ [BEFORE SRI B. R. MITTAL, JM & SRI C. D. RAO , AM] % % % % / ITA NO.570 /KOL/2010 &'( )* &'( )* &'( )* &'( )*/ // / ASSESSMENT YEAR : 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX, -VS- M/S. QUA LITY TEA PRODUCING CO. PVT. LTD. CIRCLE-XVII, KOLKATA (PA NO.AAACQ 0459 J) (,- / APPELLANT ) (./,-/ RESPONDENT ) C.O. NO. 36/KOL/2010 IN % % % % / ITA NO.570 /KOL/2010 &'( )* &'( )* &'( )* &'( )*/ // / ASSESSMENT YEAR : 2006-07 M/S. QUALITY TEA PRODUCING CO. PVT. LTD. VS- DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-XVII, KOLKATA. (CROSS OBJECTOR) (RESPONDENT) FOR THE APPELLANT: : 0 /SRI B. R. PUROKAYASTHA FOR THE RESPONDENT 0 /SRI S. D. VERMA #1 / ORDER PER B. R. MITTAL, ( . . . . . . . . , , , , ) : THE DEPARTMENT HAS FILED THE APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST THE ORDER OF LD. CIT(A) DATED 18 TH DECEMBER, 2009 ON THE FOLLOWING GROUND : 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF NON-BUSINESS EXPENDITURE OF RS.6,3 6,917/-, BEING CESS PAYABLE ON CULTIVATION OF GREEN LEAVES. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION TAK ING THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT(A), CENTRAL-1 WAS NOT JUSTIFIE D IN CONFIRMING THE DISALLOWANCE OF RS.3,85,934/- BEING THE AMOUNT OF EMPLOYEES CONTR IBUTION TO P.F WHICH WAS PAID BY THE ASSESSEE COMPANY, BEFORE DUE DATE OF SUBMISSION OF INCOME TAX RETURN. 2. THAT THE LD. CIT(A), CENTRAL-1 WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF A SUM OF RS.56,895/- BEING 50% OF ELECTRICITY EXPENSES TO WARDS PERSONAL USE OF THE DIRECTORS OF THE ASSESSEE COMPANY. 2. IN RESPECT OF THE APPEAL FILED BY THE DEPARTMEN T, WE OBSERVE THAT THE LD. CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AFT INDUSTRIES LTD. 270 ITR 169. THE LD. DR HAS NOT DISPUTED 2 THE ABOVE FACT SAVE AND EXPECT RELYING ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT(A). 3. SINCE THE LD. CIT(A) HAS DECIDED THE ISSUE BY FO LLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE FIND NO INFI RMITY IN THE ORDER OF THE LD. CIT(A). HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND RE JECT THE GROUND OF APPEAL TAKEN BY THE DEPARTMENT. 4. NOW COMING TO THE CROSS OBJECTION TAKEN BY THE ASSESSEE, IN RESPECT OF GROUND NO. 1 OF THE CROSS OBJECTION, WE OBSERVE THAT THE L D. CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE ORDER OF THE SPECIAL BENCH, ITAT, KOL KATA IN THE CASE OF JCIT VS. ITC LTD. 115 TTJ 5 (SB) WHEREIN IT HAS BEEN HELD THAT THE EM PLOYEES CONTRIBUTION IS GOVERNED BY SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE I. T. ACT AND NOT BY SECTION 43B OF THE ACT. THE LD. AR COULD NOT CONTROVERT THE ABOVE FAC TS. HENCE, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND REJECT GROUND NO. 1 OF THE CROSS OBJE CTION TAKEN BY THE ASSESSEE. 5. IN RESPECT OF GROUND NO. 2 OF THE CROSS OBJECTIO N, WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTIES AND HAVE CONSIDERED THE ORDER OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE AO HAS STATED THAT TWO ELECTRICITY METERS BEARING CONSUMER NO. 900416006 AND 9004162003 WERE INSTALLED AT THE RESI DENCE OF THE DIRECTORS OF THE ASSESSEE COMPANY. THE AO HAS STATED THAT THE ENTIR E ELECTRICITY EXPENSES OF RS.1,13,790/- PERTAINING TO ABOVE TWO METERS COULD NOT BE SAID TO HAVE BEEN INCURRED WHOLLY, EXCLUSIVELY AND NECESSARILY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE AO DISALLOWED 50% BEING RS.56,895/- AS PERSONAL EXPEN SES. IN THE FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 6. WE OBSERVE THAT THE AUTHORITIES BELOW HAVE DISAL LOWED 50% OF THE EXPENSES CONSIDERING THAT THE SAME WERE FOR PERSONAL USE OF THE DIRECTORS. HOWEVER, IT IS NOT DENIED THAT THE SAID PAYMENT HAS GENUINELY BEEN MAD E BY THE ASSESSEE COMPANY TOWARDS ELECTRICITY EXPENSES. WE ARE OF THE CONSIDERED VIEW THAT IF THE EXPENSES RELATE TO PERSONAL USE OF DIRECTORS, IT WOULD CONSTITUTE PERQUISITE IN THE HANDS OF DIRECTORS BUT AS FAR AS ASSESSEE COMPANY IS CONCERNED, THE EXPENSES INCURRE D BY IT ARE FULLY ALLOWABLE. IN THIS REGARD, WE ARE SUPPORTED BY THE DECISION OF THE ITA T AHEMEDABAD BENCH IN THE CASE OF SAURASTRA SAMACHAR PVT. LTD. 60 TTJ 465. SIMILAR V IEW HAS ALSO BEEN TAKEN BY THE ITAT, DELHI BENCH IN DCIT VS. HARYANA OXYGEN LTD. (2001) 76 ITD 32. THEREFORE, WE HOLD THAT THE DISALLOWANCE OF RS. 56,895/- MADE BY THE A UTHORITIES BELOW ON ACCOUNT OF PERSONAL USE OF ELECTRICITY EXPENSES OF DIRECTORS I S NOT JUSTIFIED AND IN CASE THE SAID 3 EXPENSES ARE ATTRIBUTABLE TOWARDS PERSONAL USE OF E LECTRICITY OF DIRECTORS THE SAME COULD BE CONSIDERED AS PERQUISITE IN THE HANDS OF THE DIR ECTORS BUT NO DISALLOWANCE IS TO BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. HENCE, GROUN D NO. 2 OF THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED IN PART. . ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010 SD/- SD/- . .. .!' !'!' !'. .. . , , , , #$ #$ #$ #$ . . . . . . . . , , , , (C. D. RAO) (B. R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( ('$ '$ '$ '$) )) ) DATED : 23 RD JULY, 2010 23 &'45 &6 JD.(SR.P.S.) #1 7 .&&8 9#8):- COPY OF THE ORDER FORWARDED TO: 1. ,- /APPELLANT - DCIT, CIRCLE-XVII, KOLKATA 2 ./,- / M/S. M/S. QUALITY TEA PRODUCING CO. PVT. LTD., 6A /DR. RAJENDRA PRASAD SARANI, KOLKATA-700 001.. 3. &1'/ THE CIT, 4. &1' ()/ THE CIT(A), KOLKATA. 5. A&B .&' / DR, KOLKATA BENCHES, KOLKATA /8 .&/ TRUE COPY , #1'C/ BY ORDER , D 5 / DEPUTY REGISTRAR .