DCIT 9(3), MUMBAI V. TIMEZONE ENTERTAINMDENT P. LTD, MUMBAI

ITA 5752/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1677 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARESH G BUCH; HARESH KAPADIA
• Keywords: Gift
• Section: 143(3)

Judgement Text

, BZ** BZ** BZ** BZ** IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , ! '# $ %, & ' BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 5558/MUM./2011 ( / ASSESSMENT YEAR : 200607 ) INCOME TAX OFFICER 9 (3)(3) 2 ND FLOOR, R.NO. 227, AAYAKAR BHAVAN M.K., RD., MUMBAI 400 020 .. / APPELLANT V/S TIMEZONE ENTERTAINMENT PVT. LTD. 301, JAI KRISHNA COMPLEX NEAR FUN REPUBLIC, ANDHERI (W) MUMBAI 400 053. .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AABCT9012F . / ITA NO. 5752/MUM./2011 ( / ASSESSMENT YEAR : 200708 ) DY . COMMISSIONER INCOME TAX 9(3) 2 ND FLOOR, R.NO. 229, AAYAKAR BHAVAN M.K., RD., MUMBAI 400 020 .. / APPELLANT V/S TIMEZONE ENTERTAINMENT PVT. LTD. 301, JAI KRISHNA COMPLEX NEAR FUN REPUBLIC, ANDHERI (W) MUMBAI 400 053. .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AABCT9012F K P M G 2 . / ITA NO. 6638/MUM./2011 ( / ASSESSMENT YEAR : 200809 ) INCOME TAX OFFICER 9 (3)(3) 2 ND FLOOR, R.NO. 227, AAYAKAR BHAVAN M.K., RD., MUMBAI 400 020 .. / APPELLANT V/S TIMEZONE ENTERTAINMENT PVT. LTD. 301, JAI KRISHNA COMPLEX NEAR FUN REPUBLIC, ANDHERI (W) MUMBAI 400 053. .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AABCT9012F ! / REVENUE BY : MR. MANOJ KUMAR '# ! / ASSESSEE BY : MR. HARESH G. BUCH & MR. HARESH KAPADIA $ % #& / DATE OF HEARING 06.03.2013 '( )* #& / DATE OF ORDER 08.03.2013 $ / ORDER '# $ %, & (! / PER AMIT SHUKLA, J.M. THE AFORESAID APPEALS HAVE BEEN FILED BY THE DEPART MENT FOR THE QUANTUM OF ASSESSMENTS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) FOR THE ASSESSMEN T YEARS 200607, 200708 AND 200809, AGAINST ORDER, PASSED BY THE LEARNED C IT (APPEALS)20, MUMBAI, ON DIFFERENT DATES. SINCE THE ISSUE INVOLVE D IN ALL THE APPEALS, ARE COMMON, THEREFORE, SAME ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER. 2. FOR THE SAKE OF CONVENIENCE GROUNDS OF APPEAL, R AISED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 200607 IS REPRO DUCED HEREUNDER : K P M G 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE O F ` 28,33,034/ WITHOUT APPRECIATING THE FACT, THERE W AS NO PRESUMPTIVE FORMULA PRESCRIBED UNDER THE ACT TO RES TRICT DISALLOWANCE TO A CERTAIN PERCENTAGE OF SALES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE O F ` 10,44,891/ WITHOUT APPRECIATING THE FACT THAT THE SE EXPENSES LACKED CLARITY AS TO EXACTLY WHAT THESE EX PENSES PERTAINED TO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE O F ` 14,12,553/ OUT OF REPAIRS & MAINTENANCE WITHOUT APPRECIATING THE FACT THAT THESE EXPENSES WERE NOT SUPPORTED BY VALID EVIDENCE. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A ) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER BE RESTORED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SETTI NG UP AND MANAGING FAMILY ENTERTAINMENT CENTRES. THE FACTS RELEVANT FO R GROUND NO. 1 IS THAT, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTED THAT ASSESSEE HAS DEBITED A SUM OF ` 52,05,260/ AS EXPENSES ON MERCHANDISE REDEMPTION UNDER THE HEAD OPERATING AND OTHER EXP ENSES. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED AS UNDER : WORKING OF MERCHANDISE REDEMPTION. WE ARE THE BUSINESS OF SETTING UP AND MANAGING FAM ILY ENTERTAINMENT CENTRES. AT OUT STORES, CUSTOMERS WIN TICKETS WHILE PLAYING ON CERTAIN CATEGORY OF GAMES. THESE TICKETS ARE REDEEMED AGAINST MERCHANDISE. IT IS OBSERVED THAT THERE IS A LWAYS A TIME GAP BETWEEN THE CUSTOMER WINNING THE TICKETS AND REDEEM ING THE SAME AGAINST THE MERCHANDISE, SINCE OUR CUSTOMERS ACCUMU LATE TICKETS TO REDEEM THE SAME AGAINST MERCHANDISE OF THEIR CHOICE . TO FACTOR THIS, K P M G 4 WE PROVIDE OUR UNUTILIZED TICKETS BY PROVIDING @ 1. 5% OF GROSS REVENUE. 4. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH REDEMPTION DETAILS OF EXPENSES AS AGAINST REVENUE COLLECTION F OR ANY OF THE FOUR WEEKS OF THE RELEVANT FINANCIAL YEAR. THESE DETAILS WERE RAN DOMLY SELECTED AS 1 ST WEEK OF APRIL 2005, 3 RD WEEK OF SEPTEMBER 2005, 2 ND WEEK OF DECEMBER 2005 AND 4 TH WEEK OF MARCH 2006. ON PERUSAL OF SUCH DETAILS, TH E ASSESSING OFFICER OBSERVED THAT FROM THE GENERAL PATTERN OF THE MERCHANDISE REDEMP TION, ON AN AVERAGE, AS AGAINST THE REVENUE COLLECTION, 5% W OULD BE THE OUTGO AS FAR AS THE MERCHANDISE REDEMPTION IS CONCERNED. THE EXPENSES AMOUNTING ` 52,05,260/ DEBITED IN THE P&L ACCOUNT UNDER THE H EAD MERCHANDISE EXPENSE THUS WORKS OUT TO 11% OF THE TOTAL REVENUE COLLECTION OF ` 474,44,528/. ACCORDINGLY, HE RESTRICTED THE MERCH ANDISE REDEMPTION EXPENSES TO 5% OF THE GROSS REVENUE I.E. AT ` 23,74,226/. THUS, THE DIFFERENTIAL AMOUNT OF ` 28,33,034/ WAS DISALLOWED. 5. BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THE EN TIRE CONCEPT OF THE MERCHANDISE REDEMPTION EXPENSES AND HOW IT IS CLA IMED IN THE BOOKS OF ACCOUNT. IT WAS SUBMITTED THAT, WHEN A CUSTOMER VIS ITS IN THE TEPL CENTRES AND BUYS A CARD, LOADED WITH THE MONEY FOR THE COST OF THE GAME AND WHEN HE PLAYS THE GAME, COST OF THE GAME GETS UTILIZED F ROM SUCH AMOUNT OF MONEY LOADED ON HIS CARD. INCERTAIN GAMES, THE CUST OMER GETS BENEFIT IN THE FORM OF POINTS OR TICKETS WHEN HE PLAYS THE GAMES. SUCH POINTS OR TICKETS ARE ACCUMULATED ON HIS CARD, WHICH CAN BE REDEEMED AGAI NST DIFFERENT TYPES OF MERCHANDISE OFFERED BY THE ASSESSEE AND THIS IS VAL ID FOR ONE YEAR. THE BALANCE CASH AMOUNT LOADED ON THE CARD WHICH CAN BE USED BY HIM ONLY FOR PLAYING THE GAMES AND POINTS/TICKETS CREDITED ON IT S CARD CAN BE REDEEMED AGAINST MERCHANDISES ONLY. THE CASH AMOUNT LOADED O N CARD IS IMMEDIATELY TREATED AS SALES BY THE ASSESSEE IRRESPECTIVE OF TH E FACT THAT WHEN THE CUSTOMER USES THE CARD FOR PLAYING THE GAME. THE PO INTS/TICKETS EARNED BY K P M G 5 THE CUSTOMER ON ITS CARD ARE REDEEMED AGAINST MERCH ANDISES AND TO THE EXTENT THE SAME ARE REDEEMED DURING THE SAME FINANC IAL YEAR, THE COST IS BOOKED IN THE BOOKS OF ACCOUNT. HOWEVER, TO THE EXT ENT SUCH POINT REMAINS UNREDEEMED AT THE END OF THE FINANCIAL YEAR, WHICH CAN BE REDEEMED BY THE CUSTOMER ANY TIME WITHIN THE PERIOD OF ONE YEAR, A PROVISION IS MADE IN THE BOOKS OF ACCOUNT, BASED ON ESTIMATED COST OF SUCH U NREDEEMED POINTS AT 1.5% OF THE TOTAL SALES. THIS WAS EXPLAINED BY WAY OF AN EXAMPLE IN THE FOLLOWING MANNER, WHICH HAS BEEN REPRODUCED AT PA RA 3.5 OF THE APPELLATE ORDER : 3.5 THIS MAY BE BETTER EXPLAINED BY AN EXAMPLE AS F OLLOWS: SAY, A CUSTOMER HAS LOADED ` 1,000/ ON HIS CARD WHICH HE CAN UTILIZE WHILE PLAYING VARIOUS GAMES AT A STORE. THIS IS ACCOUNTED AS SALES BY TEPL IMMEDIATELY. ASSUME THE CUSTOMER UTILIZES ` 500/ TOWARDS GAMES ON WHICH HE WINS TICKETS/POINTS WORTH ` 200/. NOW THE CUSTOMER HAS THE OPTION TO REDEEM THOSE POINTS/TICKETS AGAINST MERCHANDISE IN THE FOR M OF GIFTS AND OTHER PRIZE ITEMS. IF HE SO REDEEMS THE TICKETS FOR SAY, ` 100/ DURING THE YEAR, P&L ACCOUNT WOULD BE DEBITED BY ` 100/ UNDER THE HEAD MERCHANDISE REDEMPTION FOR THAT FINANCIAL YEAR, REFLECTING THE VALUE OF ACTUAL MERCHANDISE CONSUMED BY TEPL. FOR THE REMAINING ` 100/ OF THE TICKETS STILL AVAILABLE TO THE CUSTOM ER, WHICH THE CUSTOMER DOES NOT REDEEM IN THAT FINANCIA L YEAR, IT WOULD BE CARRIED FORWARDED AND HENCE THE CUSTOMER WOULD HAVE THE OPTION TO REDEEM SUCH BALANCE ` 100/ OF THE TICKETS IN THE SUBSEQUENT YEAR (THE POINTS/TICKETS LAPSE AFTER A PERIOD OF 1 YEAR FROM THE DATE OF REFILL ON THE CARD). IN RESPECT OF SUCH UNREDEEMED TICKETS OF ` 100/ THE APPELLATE PROVIDES AT AN ESTIMATED 1.5% ON SALES, WHICH IS RE FLECTED IN THE P&L UNDER THE HEAD UNUTILIZED TICKETS. THE TOTAL COST OF POINTS/TICKETS EARNED BY THE CUST OMER IS THEREFORE ` 100/ BEING THE COST OF MERCHANDISE ACTUALLY REDEE MED AND TAKEN BY THE CUSTOMER, PLUS ` 15/ BEING PROVISION @ 1.5% ON SALES OF ` 1000/ FOR THE UNREDEEMED TICKETS WORTH ` 100, I.E. ` 100 + 15 = 115/. K P M G 6 6. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT TO TAL COST OF THE POINTS EARNED BY THE CUSTOMERS ON THEIR SPENDING ON THE GA MES WAS AT ` 52.05 LACS WHICH WAS TOWARD ACTUAL REDEMPTION AND SUM OF ` 2.2 LACS WAS PROVISION MADE FOR UNREDEEMED POINTS. THE PROVISIONS SHOWN AS UNUTILIZED IN THE BALANCE SHEET AGGREGATED TO ` 54.5 LACS WHICH WORKS OUT TO 11.4%. THIS WAS MUCH LOWER THAN THE INTERNATIONAL NORMS ON THESE KI NDS OF GAMES WHICH IS AROUND OF 14% TO 15%. SO FAR AS A SUM OF ` 52,05,260/ DEBITED IN THE P&L ACCOUNT, IS THE ACTUAL EXPENSES INCURRED FOR PURCHA SE OF MERCHANDISE FOR THE ENTIRE PERIOD, WHICH EXCLUDES THE PROVISIONS FOR TH E UNUTILIZED TICKETS OF THE ABOVE AMOUNTS. 7. THE LEARNED CIT(A) DULY APPRECIATED THE ASSESSEE S SUBMISSION AND THE ACCOUNTING TREATMENT OF MERCHANDISE EXPENSES, AND D ELETED THE ADDITION, AFTER OBSERVING AND HOLDING AS UNDER : 3.12 I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION. THE A.O. HAS MADE AN ADHOC DISA LLOWANCE ON HIS SUBJECTIVE REASONING THAT ON AN AVERAGE AGAINST THE REVENUE (SALES COLLECTION) 5% WOULD BE THE OUTGO AS FAR AS MERCHAN DISE REDUCTION IS CONCERNED. THE BASIS FOR ARISING ON THIS CONCLUSION IS NOT DISCLOSED. 3.13 THE APPELLANT ON THE OTHER HAND HAS ELABORA TELY HIGHLIGHTED THAT THE DEBIT OF ` 52,05,260/ IS ON ACCOUNT OF ACTUAL EXPENSES INCURRED FOR PURCHASE OF MERCHANDISE OF EN TIRE PERIOD WHICH IS EXCLUDING THE PROVISIONS FOR THE UNUTILIZED TICK ETS OF THE ABOVE AMOUNTS. IT IS OBVIOUS THAT THE ACTUAL EXPENDITURE IS ON ACCOUNT OF MERCHANDISE WHICH HAS BEEN REDEEMED (CONSUMED) BY T HE CUSTOMERS. IT IS A SETTLED POSITION OF LAW THAT THE EXPENDITUR E INCURRED FOR THE PURPOSES OF BUSINESS IS AN ALLOWABLE EXPENDITURE. 3.14 THERE IS NO RATIONAL IN THE ACTION OF THE A.O . IN PEGGING THIS EXPENDITURE AT 5% OF SALES IN LIGHT OF THE FACTS THAT THE APPELLANT HAS DEMONSTRATED THE FIGURES OF EARLIER Y EARS WHICH SHOWS THAT SUCH EXPENDITURE HOVERS AROUND 10% OF THE TOTA L SALES. IN ANY K P M G 7 CASE, THERE IS NO PRESUMPTIVE FORMULA PRESCRIBED UN DER THE ACT TO RESTRICT DISALLOWANCE TO A CERTAIN PERCENTAGE OF SA LES. 3.15 TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMS TANCES CUMULATIVELY THE ACTION OF THE A.O. IS HELD TO BE A RBITRARILY THE ADDITION SO MADE IS DELETED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE ASSESSING OFFICER HAS BASED HIS REASONING ON RANDOM SAMPLES F OR FOUR DIFFERENT WEEKS IN THE GIVEN FINANCIAL YEAR AND HAS WORKED OUT THE MERCHANDISE REDEMPTION EXPENSES WHICH COMES TO 5% AND ACCORDINGLY, HE HAS RESTRICTED THE EXPENSES TO THE EXTENT. THEREFORE, THERE IS NO INFI RMITY IN THE CONCLUSION DRAWN BY THE ASSESSING OFFICER. HE, THUS STRONGLY RELIED UPON THE FINDINGS OF THE A.O.. 9. ON THE OTHER HAND THE LEARNED COUNSEL SUBMITTED THAT SO FAR AS AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT AT ` 52,05,260/, ARE ACTUAL EXPENSES INCURRED FOR PURCHASE OF MERCHANDISE FOR THE ENTIRE PERIOD AND THIS DOES NOT INCLUDE THE PROVISIONS FOR UNUTILIZED TICKETS. HE R EFERRED TO THE SUBMISSIONS MADE BEFORE THE CIT(A) WHICH HAVE BEEN INCORPORATED IN PARA 3.3 TO 3.11 AND STRONGLY RELIED UPON THE FINDINGS OF THE CIT(A) . 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE ORDER OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER HAS RE STRICTED THE EXPENSES OF ` 52,05,260/ DEBITED IN THE PROFIT AND LOSS ACCOUNT TO ` 23,74,226/ BASED ON SOME WEEKLY RANDOM DETAILS OF EXPENSES. ON THE O THER HAND, THE ASSESSEES CASE IS THAT, IT BOOKS THE ACTUAL EXPENS ES INCURRED FOR THE PURCHASE OF MERCHANDISE AND MAKES A PROVISION FOR T HE UNUTILIZED TICKETS IN THE BALANCE SHEET. THESE EXPENSES HAVE BEEN INCURRE D BY THE ASSESSEE ON REDEMPTION OF POINTS OR TICKETS BY THE CUSTOMERS FO R DIFFERENT TYPES OF MERCHANDISE OFFERED BY THE ASSESSEE, WHO BUYS THE C ARD FOR PLAYING THE GAMES AT VARIOUS CENTRES. TO THE EXTENT THAT POINTS OR TICKETS ARE UNREDEEMED AT THE END OF FINANCIAL YEAR, THE ASSESS EE MAKES A PROVISION K P M G 8 BASED ON ESTIMATE BASIS, AS, SUCH POINTS CAN BE RED EEMED IN THE NEXT FINANCIAL YEAR BY THE CUSTOMER AT ANY TIME, BECAUSE THE VALID PERIOD FOR REDEEMING THE POINTS IS FOR UP TO ONE YEAR. THE MAN NER IN WHICH THE ASSESSING OFFICER HAS PROCEEDED TO ANALYSE THE NATU RE OF EXPENSES, BY COLLECTING THE SAMPLE DETAILS OF FOUR WEEKS ON RAND OM BASIS IS NOT CORRECT APPROACH FOR APPRECIATING THE FACTS OF THE ASSESSEE S CASE, ESPECIALLY WHEN THE ASSESSEE HAS GIVEN ALL THE DETAILS WITH REGARD TO THE NATURE OF EXPENSES WHICH HAD ACTUALLY BEEN INCURRED DURING THE YEAR. H E HAS FAILED TO APPRECIATE THAT UNUTILIZED OR UNREDEEMED POINTS HAVE BEEN TAKE N AS PROVISION IN THE BALANCE SHEET AND ONLY ACTUAL EXPENSES FOR PURCHASE OF MERCHANDISE HAS BEEN BOOKED IN THE PROFIT AND LOSS ACCOUNT. THUS, T HE SUM OF ` 52,05,260/ IS THE ACTUAL AMOUNT INCURRED BY THE ASSESSEE ON ME RCHANDISE REDEMPTION AND THIS DOES NOT CONTAIN EXPENSES ON UNREDEEMED PO INTS. THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE CIT(A) HAS NOT BEE N REBUTTED BEFORE US. THUS, THE CONCLUSION DRAWN BY THE CIT(A) BASED ON S UCH EXPLANATION APPEARS TO BE CORRECT AND THE SAME IS AFFIRMED. ACCORDINGLY , GROUND NO. 1 RAISED BY THE DEPARTMENT STANDS DISMISSED. 11. IN GROUND NO. 2, THE DEPARTMENT HAS CHALLENGED THE DELETION OF DISALLOWANCE OF ` 10,44,891, BEING 1/3 RD OF OTHER EXPENSES WHICH WAS MADE ON ADHOC BASIS BY THE ASSESSING OFFICER. THE ASSESS ING OFFICER OBSERVED THAT UNDER SCHEDULE 12, WHICH PROVIDES DETAIL, OF OPER ATION AND OTHER EXPENSES, THE ASSESSEE HAS DEBITED A SUM OF ` 31,34,674/ AS OTHER EXPENSES. AFTER ANALYSING THE BREAKUP CALLED FOR, B Y THE ASSESSEE, HE HELD THAT IT ALSO INCLUDES GENERAL BILLING LIKE CREDIT C ARD EXPENSES, DIWALI EXPENSES, TELEPHONE EXPENSES AND COMMISSION AND BROKERAGE. HE , THUS, HELD THAT THERE IS NO CLARITY AS TO EXACTLY WHAT THESE EXPENS ES PERTAIN TO, HENCE 1/3 RD OF THESE EXPENSES WERE DISALLOWED. 12. BEFORE THE CIT(A), THE ASSESSEE PROVIDED ALL TH E DETAILS RELATING TO MISCELLANEOUS EXPENSES AGGREGATING TO ` 31,34,674/ AND SUBMITTED THAT K P M G 9 THESE EXPENSES PERTAIN TO NORMAL BUSINESS EXPENDITU RE LIKE AUDIT FEES, BOOKS AND PERIODICALS, CLEARING AND FORWARDING EXPENSES, PRINTING AND STATIONARY, STAFF RECRUITMENT, TRANSPORT, ETC. IN RESPECT OF TH ESE EXPENSES LEDGER ACCOUNTS WERE ALSO SUBMITTED. A DETAIL WRITEUP ON THE NATURE OF EXPENSE WAS ALSO GIVEN BEFORE THE CIT(A), WHICH HAS BEEN IN CORPORATED IN PARA 4.5 OF CIT(A) ORDER. THE LD. CIT(A) AFTER APPRECIATING THE NATURE OF EXPENSES, HELD THAT THESE ARE NORMAL EXPENDITURE NECESSARY FOR RUN NING OF BUSINESS AND IT IS NEITHER PERSONAL NOR CAPITAL IN NATURE. HE THUS, DE LETED THE ADHOC ADDITION. 13. BOTH THE PARTIES RELIED UPON RESPECTIVE ORDERS . 14. AFTER CAREFULLY CONSIDERING THE RIVAL CONTENTIO NS AND THE FINDINGS OF THE ASSESSING OFFICER AND THE CIT(A), WE FIND THAT THE CIT(A) HAS EXAMINED THE NATURE OF EXPENSES AND FOUND THAT THESE WERE INCURR ED FOR THE PURPOSE OF BUSINESS ONLY. THE ASSESSING OFFICER HAS NOT POINTE D OUT ANY DISCREPANCY OR DEFECT EITHER IN THE DETAILS OF EXPENSES OR ANY BIL LS AND VOUCHERS THAT THEY ARE FOR NONBUSINESS PURPOSE OR ARE PERSONAL IN NAT URE. THUS, ADHOC ADDITION MADE BY THE ASSESSING OFFICER CANNOT BE SUSTAINED. ACCORDINGLY, THE FINDING GIVEN BY THE CIT(A) IS UPHELD. IN THE RESULT GROUND NO. 2 RAISED BY THE DEPARTMENT STANDS DISMISSED. 15. IN GROUND NO. 3, THE DEPARTMENT HAS CHALLENGED THE DELETION OF DISALLOWANCE OF ` 44,12,553/ OUT OF REPAIRS AND MAINTENANCE. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS DEBITED A SUM OF ` 21,59,729/ UNDER THE HEAD REPAIRS AND MAINTENANCE. WHEREAS I N THE EARLIER YEAR THE SAME WAS AT ` 5,74,791/. SINCE THE ASSESSEES BUSINESS HAS INCR EASED ONLY BY 30%, THEREFORE, THESE EXPENSES SHOULD BE ALLOWED ONLY TO THAT EXTENT ONLY AND ACCORDINGLY, A SUM OF ` 7,47,126/ WAS HELD TO BE ALLOWABLE BY HIM. HENCE BALANCE SUM OF ` 14,12,553/ WAS DISALLOWED. K P M G 10 16. BEFORE THE CIT(A), IT WAS SUBMITTED THAT THESE EXPENSES HAVE BEEN INCURRED IN THE NORMAL COURSE OF BUSINESS AND ALL T HE RELEVANT DETAILS WAS FILED BEFORE THE ASSESSING OFFICER. THE CIT(A) DELE TED THE SAID ADDITION ON THE GROUND THAT NO DEFECT HAS BEEN FOUND IN SUCH DE TAILS BY THE ASSESSING OFFICER AND THESE HAVE BEEN INCURRED IN NORMAL COUR SE OF BUSINESS. ACCORDINGLY, HE DELETED THE SAID AMOUNT. 17. AFTER CAREFULLY CONSIDERING THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE CIT(A) AND ALSO THE SUBMISSION MADE BEFORE U S BY THE RESPECTIVE PARTIES, WE FIND THAT THE ASSESSING OFFICER HAS MAD E THE DISALLOWANCE PURELY ON ADHOC BASIS, WITHOUT POINTING OUT ANY DISCREPANC Y OR DEFECT IN THE DETAILS SUBMITTED BEFORE HIM. THE REASON FOR DISALLOWANCE T HAT EXPENSES SHOULD BE RESTRICTED TO THE PERCENTAGE OF INCREASE IN THE BUS INESS, IS WHOLLY INCORRECT APPROACH, WHICH CANNOT BE SUSTAINED. WITHOUT FINDIN G ANY DEFECT IN THE DETAILS OF BILLS AND VOUCHERS, NO DISALLOWANCE CAN BE MADE. THUS, THE FINDING GIVEN BY THE CIT(A) IS UPHELD. ACCORDINGLY GROUND N O. 3 ALSO STANDS DISMISSED. IN THE RESULT APPEAL FOR THE ASSESSMENT YEAR 2006.07 IS DISMISSED. 18. IN THE ASSESSMENT YEAR 200708 AND 200809 EXAC TLY SIMILAR ISSUES HAVE BEEN RAISED BY THE DEPARTMENT AND THE CIT(A) H AS RELIED UPON HIS FINDING GIVEN IN THE APPEAL FOR THE ASSESSMENT YEAR 200607. BOTH THE PARTIES HAVE ALSO AGREED THAT ISSUES INVOLVED ARE S IMILAR. SINCE WE HAVE ALREADY GIVEN OUR FINDING IN ASSESSMENT YEAR 20060 7, THE SAME WILL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO. ACCORDINGLY, APPEALS FOR TH E ASSESSMENT YEAR 200708 AND 200809 FILED BY THE DE PARTMENT ARE ALSO DISMISSED. 19. IN THE RESULT, ALL THE APPEALS FILED BY THE DEP ARTMENT, STANDS DISMISSED. K P M G 11 ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MARCH, 2013. SD/ . B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/ '# $ % & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, *+ DATED: 08 TH MARCH, 2013. '( #+, -,# / COPY OF THE ORDER FORWARDED TO : (1) '# / THE ASSESSEE; (2) / THE REVENUE; (3) $ .#() / THE CIT(A); (4) $ .# / THE CIT, MUMBAI CITY CONCERNED; (5) ,12 # 3, & 3, $ % / THE DR, ITAT, MUMBAI; (6) 25 6% / GUARD FILE. ,# # / TRUE COPY '( $ / BY ORDER S.K.SHARMA 7 / 8 / (DY./ASSTT. REGISTRAR) & 3, $ % / ITAT, MUMBAI