M/s E.M.Electro mechanical Pvt. Ltd., Bhopal V. Deputy Commissioner of Income Tax- 1(1), Bhopal, Bhopal

ITA 577/Ind/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7211 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 18-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: N D PATWA ADVS
• Keywords: Gift; Corroborative evidences; TDS
• Section: 143(3)

Judgement Text

ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.577/IND/2017 ASSESSMENT YEAR: 2012-13 M/S EM ELECTRO MECHANICALS PVT. LTD. 31, SECTOR-E, INDUSTRIAL AREA, GOVINDPURA, BHOPAL / VS. DCIT - 1(1) BHOPAL ( APPELLANT ) ( RE VENUE ) P.A. NO. AABCE0564F APPELLANT BY SHRI ASHISH GOYAL & SHRI N.D. PATWA, ADVS. REVENUE BY S MT. ASHIMA GUPTA, CIT - DR DATE OF HEARING: 04.07.2019 DATE OF PRONOUNCEMENT: 30.07.2019 / O R D E R PER KUL BHARAT, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-1, BHOP AL DATED 30/05/2017 PERTAINING TO ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 2 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED ORDERS ARE PASSED BY THE LD. LOWER AUTHORI TIES ARE CONTRARY THE MATERIAL, OPPOSED TO THE FACTS AND EQUITY AND LAW. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. LOWER AUTHORITIES HAVE ERRED WERE NOT JUSTIFIED IN NOT ALLOWING THE ALL CLAIM OF VARIOUS EXPENSES ARE CLAI MED BY THE APPELLANT AND THEREFORE THE FOLLOWING EXPENSES MAY PLEASE BE ALLOWED. I.RS.7,32,106/- OUT OF RS.29,28,424/- BEING 25% OF TRAVELING EXPENSES. II. RS.8,68,730/- OUT OF RS.86,87,305/- BEING 10% O F BUILDING REPAIR EXPENSES. III. RS.85,730/- OUT OF RS.857,300/- BEING 10% OF R EPAIR AND MAINTENANCE. IV. RS.2,60,355/- OUT OF RS.1,46,68,471/- DEPRECIAT ION V. RS.1,78,527/- OUT OF RS.1,78,527/- BEING 100% OF GIFT AND PRESENT EXPENSES. VI. RS.2,69,724/- OUT OF TOTAL INTEREST CLAIMED AT RS.3,64,246/- THAT THE EXPENSES CLAIMED BY THE APPELLANT AS FULLY SUPPORTED BY THEIR RESPECTIVE BILLS AND VOUCHERS AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE LD. LO WER AUTHORITIES HAVE NOT VERIFIED OR ESTABLISHED ANY CO NTRARY MATERIAL IN SUPPORT OF THEIR DECISION. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT HE DOES NOT WISH TO PRESS GROUND NOS.1 &GROUND NO.2(IV), THEREFORE, THE GROUND NO.1 & GROUND NO.2( IV) ARE DISMISSED AS NOT PRESSED. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSME NT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 19 61 ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 3 (HEREINAFTER CALLED AS 'THE ACT') WAS FRAMED VIDE O RDER DATED 16.3.2015. 4. THE A.O. THEREBY MADE DISALLOWANCE @ 25% OUT OF TRAVELLING EXPENSES, 10% OUT OF REPAIR & MAINTENANCE EXPENSES, 10% OUT OF BUILDING REPAIR EXPENSES, DISALLOWANCE OF EXCESS DE PRECIATION TO THE TUNE OF RS.2,60,355/-, NET EXPENDITURE OF RS.1,78,5 27/- AND INTEREST OF RS.2,69,724/- WHICH WAS NOT OFFERED FOR TAX. HENCE, THE A.O. COMPUTED INCOME AT RS.7,11,12,852/- AGAINST TH E INCOME OF RS.6,87,17,680/- DECLARED BY THE ASSESSEE IN ITS RE TURN OF INCOME. 5. AGGRIEVED AGAINST THIS, THE ASSESSEE FILED APPEA L BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTL Y ALLOWED THE APPEAL. THEREBY, THE LD. CIT(A) RESTRICTED THE DIS ALLOWANCE OF TRAVELLING EXPENSES TO THE EXTENT OF 10%. REST OF THE DISALLOWANCES AND ADDITIONS WERE CONFIRMED BY THE LD. CIT(A). 6. AGGRIEVED AGAINST THIS, THE ASSESSEE IS IN APPEA L BEFORE THIS TRIBUNAL. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. FOR THE SAKE OF C LARITY, THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER : ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 4 ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 5 ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 6 ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 7 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED. THE EXP ENDITURE IS DULY SUPPORTED BY THE SUPPORTING EVIDENCES. FURTHER, LD . COUNSEL FOR THE ASSESSEE SUBMITTED THAT ENTIRE DISALLOWANCE/ADD ITIONS HAVE BEEN MADE ON ADHOC BASIS WITHOUT CONSIDERING THE MA TERIAL ON RECORD. ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 8 8. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSI ONS AND SUPPORTED ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN RESPECT OF DISALLOWANCE OF TRAVELLING EX PENSES, LD. CIT(A) HAS RESTRICTED TO 10% OF SUCH EXPENDITURE ON THE BA SIS THAT THE ASSESSEE COULD NOT PRODUCE SUPPORTING VOUCHERS, HOW EVER THE CASE OF THE ASSESSEE IS THAT HE HAD PRODUCED ALL THE VOU CHERS. IT IS STATED THAT SET OF VOUCHERS WITH SUPPORTING BILLS W ERE SUBMITTED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE PAPER BOOK PAGE NOS.26 TO 36 T O BUTTRESS THIS ARGUMENT. FURTHER, IT IS STATED THAT THE ENTIRE PA YMENT WAS MADE THROUGH BANKING CHANNELS AND THE DETAILS OF DIRECTO RS TRAVELLING EXPENSES AND OTHERS WERE SEPARATELY FURNISHED BEFOR E THE A.O. IT IS ALSO STATED THAT SAMPLE VOUCHERS REFERRED BY THE A. O. IS NOT VERIFIABLE, IN FACT, IT WAS THE TRAVEL ADVANCE, WHI CH WAS REFUNDED AND HENCE, THE ENTRY WAS REVERSED. CONSIDERING THE TOTALITY OF THE FACTS AND THE MATERIAL PLACED BEFORE US, WE DIRECT THE A.O. TO RESTRICT DISALLOWANCE TO THE EXTENT OF 5% TO PLUG T HE LEAKAGE OF REVENUE, IF ANY. THIS GROUND OF THE ASSESSEE IS PA RTLY ALLOWED. ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 9 10. IN RESPECT OF THE DISALLOWANCE OF BUILDING REPA IRS AND MAINTENANCE EXPENDITURE, THE ADDITION IS MADE PUREL Y ON ESTIMATION BASIS. IT IS STATED THAT COMPLETE SET O F VOUCHERS WITH SUPPORTING BILLS WERE SUBMITTED BEFORE THE LOWER AU THORITIES. THE TDS WAS ALSO DEDUCTED ON THE CONTRACT PAYMENTS AND DULY DEPOSITED. IN RESPECT OF DISALLOWANCE OF REPAIRS A ND MAINTENANCE EXPENDITURE ALSO, IT IS STATED THAT THE A.O. MADE D ISALLOWANCE ON ADHOC BASIS. IN RESPECT OF BOTH THE DISALLOWANCES, THE REVENUE AUTHORITIES HAVE MADE PURELY ON ESTIMATION BASIS. IT IS NOT A CASE WHERE THE ASSESSEE HAS INFLATED THE EXPENSES. THER EFORE, CONSIDERING THE TOTALITY OF THE FACT, WE RESTRICT T HE DISALLOWANCE TO THE EXTENT OF 5% OF THE TOTAL DISALLOWANCE MADE IN THIS REGARD. ANOTHER DISALLOWANCE OF GIFT AND PRESENTS AMOUNTING TO RS.1,78,527/-, IT IS STATED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADDITION HAS BEEN MADE PURELY ON ADHOC BASIS. IT IS STATED THAT THE A.OS ALLEGATION THAT VOUCHERS WERE SELF-MADE A ND NOT RELIABLE IS NOT CORRECT. IT IS STATED THAT THE VOUCHERS SPECIF YING THE NATURE AND PURPOSE WERE MENTIONED IN THE NARRATION AND BILLS/D OCUMENTARY EVIDENCES ALSO. THE ALLEGATION THAT EXPENSES INCUR RED FOR THE FIRST TIME WITHOUT SPECIFYING PURPOSE IS NOT A BASIS FOR THE PURPOSE OF ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 10 DISALLOWANCE. AFTER CONSIDERING RIVAL SUBMISSIONS, LOOKING TO THE TOTALITY OF THE FACTS, THE DISALLOWANCE OUT OF THE GIFT AND PRESENT EXPENSES IS RESTRICTED TO RS.50,000/-. REST OF THE DISALLOWANCE IS DIRECTED TO BE DELETED. 10. ANOTHER ISSUE RAISED BY THE ASSESSEE IS WITH RE GARD TO THE ADDITION IN RESPECT OF THE INTEREST. IT IS STATED THAT UNDER THE MISTAKEN BELIEF THAT THE BALANCE AS ON 31.3.2011 WA S MISUNDERSTOOD AS ACCRUAL DURING THE YEAR WAS ONLY R S.94,522/-. THEREFORE, WE DIRECT THE A.O. TO VERIFY THIS FACT A ND IF FOUND CORRECT DELETE THE ADDITION. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 11. THE APPEAL OF THE ASSESSEE IN ITA NO.577/IND/20 17 FOR THE A.Y. 2012-13 IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30.07.2 019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 30/07/2019 VG/SPS ITA NO.577/IND/2017 M/S. EM ELECTRO MECHANICALS PVT. LTD., BHOPAL 11 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE