MANGAL SINGH PALSANIA, Jaipur V. ITO, Jaipur

ITA 572/JPR/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7205 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: ANIL KAUSHIK

Judgement Text

1 ITA 572-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 572/JP/2010 ASSTT. YEAR : 2006-07. SHRI MANGAL SINGH PALSANIA, VS. THE INCOME-TAX OF FICER, PROP. RAJASTHAN TRAILER TRANSPORT CO., WARD 4(2), A-4, UDYOG NAGAR, OPP. ROAD NO. 8, JAIPUR. VKIA, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL KAUSHIK RESPONDENT BY : SHRI D.K. MEENA DATE OF HEARING : 21.10.2011 DATE OF PRONOUNCEMENT : 04.11.2011. ORDER DATE OF ORDER : 04/11/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS OBJECTING IN CONFIRMING THE DISA LLOWANCE OF RS. 1,75,140/- OUT OF THE TOTAL EXPENSES. IN FACT, THE AO DISALLOWED 25% OF VARIOUS EXPENSES I.E. FOOD EXPENSES, MISC. WAY EXPENSES, TOLL TAX INCLUDING OT HER EXPENSES. TOTAL EXPENSES WERE SHOWN AT RS. 11,67,600/-. THE LD. CIT (A) RESTRICT ED THESE EXPENSES TO 10%. 2 3. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT IF THESE EXPENSES ARE SUSTAINED AT RS . 75,000/- THAT WILL MEET THE ENDS OF JUSTICE. 4. NEXT ISSUE IS AGAINST CONFIRMING THE ADDITION OF RS. 94,735/- DEBITED TO THE COMMISSION ACCOUNT. 5. THE AO WAS NOT SATISFIED WITH THE EXPLANATION IN RESPECT TO COMMISSION INCOME BY OBSERVING THAT THERE WAS NO LOGIC TO REDUCE THE COMMISSION ACCOUNT WITH THE ADMINISTRATIVE EXPENSES OF MANDAR OFFICE WHETHER TH EY ARE TO BE BORNE BY THE ASSESSEE OR THE TANKER OWNERS. IN BOTH THE SITUATIONS, THE EXPE NSES ARE TO BE DEBITED TO THE PROFIT & LOSS ACCOUNT OF THE RESPECTIVE PERSON. ON THE BASI S OF ACCOUNTING ENTRY ONLY THE EXPENDITURE CANNOT BE ALLOWED. THE LD. CIT (A) ALS O CONFIRMED THE ACTION OF THE AO. IT WAS SUBMITTED BEFORE THE TRIBUNAL THAT BOTH THE LOW ER AUTHORITIES WERE NOT JUSTIFIED IN NOT ALLOWING THE EXPENDITURE WHICH WERE DEBITED DIRECTL Y TO THE COMMISSION INCOME ACCOUNT INSTEAD OF DEBIT THE SAME TO PROFIT & LOSS ACCOUNT, DESPITE THE FACT THAT THERE WILL BE MULTIPLE BASED FINANCIAL ACCOUNTS. THE LD. CIT (A) CONFIRMED THE ACTION OF THE AO. 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND. WE NOTED THAT AS PER AGREEMENT ASSESSEE CHARGED 5% COMMISSION ON TOTAL BILLING OF RS. 1,79, 67,112/-. IN THIS WAY ASSESSEE EARNED COMMISSION OF RS. 8,98,355/-. THE ASSESSEE HAS SHO WN EXPENDITURE ON COMMISSION PAID FURTHER AT RS. 94,735/- AND THE SAME WAS DIRECTLY D EBITED TO THE COMMISSION ACCOUNT. ASSESSEE HAS GIVEN EXPLANATION TO THIS EXTENT AND A S PER NORMAL PRACTICE OF BUSINESS, THE COMMISSION IS PAID FURTHER TO VARIOUS DRIVERS ETC. THEREFORE, THE ASSESSEE HAS SHOWN IN ITS PROFIT & LOSS ACCOUNT NET RECEIPT OF RS. 8,03, 621/-, WHICH IN OUR VIEW, THE ACTION OF 3 THE ASSESSEE IS NOT UNREASONABLE. ACCORDINGLY WE H OLD THAT DISALLOWANCE OF COMMISSION EXPENDITURE WAS NOT JUSTIFIED. ACCORDINGLY WE DELE TE THIS DISALLOWANCE MADE BY THE LOWER AUTHORITIES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 8. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04. 11.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- SHRI MANGAL SINGH PALSANIA, JAIPUR. THE ITO WARD 4(2), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 572/JP/2010) BY ORDER, AR ITAT JAIPUR.