SAMSONITE SOUTH ASIA P.LTD, MUMBAI V. ASST CIT CIR 8(3), MUMBAI

ITA 5777/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71809 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 17-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: BHARATI SURVE
• Keywords: Gift

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO, AM ./I.T.A. NO.5777/M/2012 ( / ASSESSMENT YEAR: 2008 - 2009) SAMSONITE SOUTH ASIA P. LTD., 401, AKRUTI STAR, 4 TH FLOOR, OPP. ACKRUTI CENTRE PONT BLDG, CENRAL ROAD, MIDC, ANDHERI (E), MUMBAI 400 093. / VS. ACIT - CIRCLE - 8(3), ROOM NO.204, AAYAKAR BHAVAN, MUMBAI. ./ PAN : AAACS 8598 L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : MS. BHARATI SURVE / RESPONDENT BY : SHRI R.K. SAHU, DR / DATE OF HEARING : 13.11.2013 / DATE OF PRONOUNCEMENT : 06 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.9.2012 IS AGAINST THE ORDER OF THE CIT (A) - 18, MUMBAI DATED 12.7.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING SOLITARY GROUND WHICH READS AS UNDER: 1. DISALLOWANCE OF CSD SERVICE CHARGES AND CSD TRAVELLING AND SALES PROMOTION EXPENSES RS. 6,62,922/ - . THE CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF 2% OF CSD SERVICE CHARGES AND CSD TRAVELLING AND SALES PROMOTION EXPENSES ON THE ALLEGED GROUND THAT THE DISCREPANCIES POINTED OUT BY THE AO ARE MINOR AND INSIGNIFICANT, WH I CH WARRANT DISALLOWANCE AT 2%. 3. AT THE OUTSET, MS. BHARATI SURVE, LD COUNSEL FOR THE ASSESSEE SOUGHT AN ADJOURNMENT IN THIS CASE. HOWEVER, THE SAID REQUEST FOR ADJOURNMENT WAS WITHDRAWAN AND SOUGHT FOR ADJUDICATION OF THE ISSUE CONSIDERING THE MERITS AVAILABLE 2 ON THE RECORDS. LD COUNSE L MENTIONED THAT BRIEFLY STATED THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND MARKETING AND DISTRIBUTION OF LUGGAGE AND TRAVEL ACCESSORIES. IN THE RETURN FILED BY THE ASSESSEE, THERE IS A CLAIM OF DED UCTION ON EXPENSES ON THE FOLLOWING ACCOUNTS. SL NO PARTICULARS AMOUNT (RS.) 1 CSD SERVICE CHARGES 19,649,297/ - 2 CSD TRAVELLING AND SALES PROMOTION 13,496,801/ - TOTAL 33,146,098/ - 4. DURING THE ASSESSMENT PROCEEDINGS, AS PER THE REQUIREMENT OF THE AO, DETAILS WERE FURNISHED. ON PERUSAL OF THE DETAILS, AO NOTICED THAT SOME OF THE VOUCHERS WERE NOT SIGNED AND THE CLAIMS WERE NOT SUPPORTED BY THE BILLS. PARA 4 OF THE AOS ORDER IS RELEV ANT IN THIS REGARD. UNDER THE CIRCUMSTA NCES, AO MADE A DISALLOWANCE OF RS. 33,14,610/ - ADOPTING THE FLAT RATE OF 10%. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, AFTER EXAMINING THE FACTS AND EXPLANATIONS FURNISHED BY THE ASSESSEE, CIT (A) RESTRICTED THE DISALLOWANCE TO 2% OF RS. 33,146,098/ - AND THE RELEVANT DISCUSSION IS GIVEN IN PARA 3.2 OF THE IMPUGNED ORDER. AGGRIEVED , ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND. 6. DURING THE PROCEEDINGS BEFORE US, MS. BHARATI SURVE , LD COUNSEL MENTIONED THAT THE DISALLOWANCE @ 2% IS ON THE HIGH ER SIDE AND THE TRIBUNAL MAY GRANT REASONABLE FURTHER RELIEF. 7. ON THE OTHER HAND, LD DR RE LIED HEAVILY ON THE ORDER OF THE CIT (A). FURTHER, LD DR MENTIONED THAT REVENUE HAS NOT FILED ANY APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE CIT (A) ON THE RELIEF GRANTED BY HIM. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US IN GENERAL AND PARA 3.2 OF THE CIT (A)S ORDER, IN PARTICULAR. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA 3.2 OF THE CIT (A)S ORDER, THE SAME IS REPRODUCED HERE UNDER: 3.2. I HAVE CO NSIDERED THE SUBMISSION OF THE LD COUNSEL AND IN THIS CASE IT IS SEEN THAT THE AO HAS MADE AN AD - HOC DISALLOWANCE OF 10% OF THE TOTAL EXPENSES RELATING TO 3 CSD SERVICE CHARGES AND CSD TRAVELLING AND SALES PROMOTION TO COVER UP DILUTION OF INCOME WHICH THE LD COUNSEL HAS STATED TO BE WITHOUT ANY BASIS AND IN ANY CASE EXCESSIVE. THE LD COUNSEL IN THE SUBMISSIONS STATED ABOVE HAS VERY CLEARLY SHOWN THAT ALL THE PAYMENTS UNDER THESE TWO HEADS HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOS ES AND THE AO HAS ONLY POINTED OUT MINOR DISCREPANCIES LIKE SELF MADE VOUCHERS, OTHER EXPENSES BEING INCLUDED IN TRAVELLING EXPENSES, DIFFERENCE IN DISTANCE BETWEEN PLACES VISITED, PAYMENTS MORE THAN RS. 50,000/ - WITHOUT SUPPORTING / TAXI DETAILS, GIFTS TO CSD PERSONS OR EXPENSES ON BEHALF OF STAFF EDUCATIONAL TOUR WITHOUT ANY BILLS OR SUPPORTING VOUCHERS RELATING TO MUMBAI TO GOA, VOUCHERS RELATING TO OTHER EXPENSE AS MENTIONED IN DETAIL IN APPELLANTS SUBMISSIONS BUT NONE RELATING TO OTHER DISCREPA NCIES ARE OF SUCH A MAGNITUDE SO AS TO WARRANT DISALLOWANCE TO THE EXTENT OF 10% BECAUSE AS SUBMITTED BY THE LD COUNSEL BY THEIR VERY NATURE THEY HAVE BEEN INCURRED FOR THE BUSINESS PURPOSES OF THE APPELLANT AND AS HELD BY THE HONBLE SUPREME COURT IN TH E CASE OF SASSOON J DAVID & CO PVT. LTD VS. CIT 118 ITR 261 (SC) THE NECESSITY OF HAVING INCURRED THESE EXPENSE CANNOT BE EXAMINED BY THE AO AND THEREFORE LOOKING INTO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE OPINION THAT THE DIS CREPANCIES POINTED OUT BY THE AO BEING VERY INSIGNIFICANT , THE ACCOUNT OF CSD SERVICE CHARGES AND CSD TRAVELLING EXPENSES HENCE AO IS DIRECTED TO REDUCE THE DISALLOWANCE FROM 10% TO 2% ONLY. 9. FROM THE ABOVE, IT IS EVIDENT THAT THE DISCREPANCIES NOTICED BY THE AO ARE VERY MINOR AND INSIGNIFICANT AS PER THE CIT (A) AND WE AGREE WITH THE SAME. NO SIGNIFICANT ADVERSE FINDINGS ARE BROUGHT IN TO THE RECORDS BY THE ASSESSING OFFICER ABOUT THE INCORRECT NESS OF THE CLAIM O F THE ASSESSEE. CONSIDERING THE MINOR NATURE OF THE DISCREPANCIES, WE ARE OF THE OPINION THAT THE DISALLOWANCE @ 1% OF RS.33,14 6 ,098/ - SHOULD MEET THE BOTH ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE AO TO RESTRICT THE DISALLOW ANCE TO 1%. THIS SHOULD NOT BE TAKEN AS PRECEDENT FOR MAKING DISALLOWANCES IN OTHER AYS OF THE ASSESSEE. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OP EN COURT ON 6 T H DECEMBER, 2013. S D / - S D / - ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 6 .12 .2013 . . ./ OKK , SR. PS 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI