M/s. Green Box Sales Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5938/DEL/2016

AI Insights

The case involves M/s. Green Box Sales Private Ltd., the appellant, contesting the order of the CIT (Appeals) which pertained to the assessment year 2012-13. The primary issues in the appeal included the assessment of net loss, disallowances related to bad and doubtful debts, customer loyalty provisions, business promotion expenses, and the claim of depreciation on computers. The CIT (Appeals) had confirmed these additions and disallowances made by the AO, which the appellant challenged. The Tribunal, after considering the arguments and the records, decided to dismiss the appeal, agreeing with the CIT (A)'s findings and reasoning.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113770 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-04-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-11-2016
• Other Referred Cases: M/s. Goetze India Ltd. reported in 284 IT 323(SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Bad and doubtful debts
• Section: 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘C’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.5938/Del./2016 (ASSESSMENT YEAR : 2012-13) M/s. Green Box Sales Private Ltd., vs. DCIT, Circle 10 (2), Rectangle No.1, D – 4, District Centre, New Delhi. Commercial Complex, Saket, New Delhi – 110 017. (PAN : AAPCS2112P) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Anuj Garg, Sr. DR Date of Hearing : 13.04.2023 Date of Order : 19.04.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of ld. CIT (Appeals)-35, New Delhi dated 17.08.2016 pertaining to AY 2012-13. 2. The grounds of appeal taken by the assessee read as under :- “1. That the Order passed by the Learned Commissioner of Income Tax (Appeals) -35, New Delhi for the Assessment Year 2011-12 is bad in law and Void-ab-initio. 2. That the Ld. CIT-Appeal assessed the Net loss at Rs.7,17,00,692/- as against the loss claimed by the Appellant at Rs.7,95,56,495/- which is bad in law and Void-ab-initio. ITA No.5938/Del./2016 2 3. That the Ld. CIT-Appeal confirmed the additions on account of bad and doubtful debts amounting to Rs.61,63,184/-. 4. That the Ld. CIT-Appeal confirmed the additions on account of Customers Loyalty amounting to Rs.14,16,204/-. 5. That the Ld. CIT-Appeal confirmed the additions on account of Business Promotion Expenses amounting to Rs.2,66,600/-. 6. That the Ld. CIT-Appeal did not allow the claim of depreciation on Computers @ 60% as per the Audit Report u/s 44AB of the Act.” 3. Brief facts of the case are that in this case, in the assessment order, the AO made following additions :- Loss declared by the assessee Rs. (7,95,56,495/-) Addition Disallowance as discussed above as para 1 Rs. 61,63,184/- Disallowance as discussed above as para 2 Rs. 14,16,204/- Disallowance as discussed above as para 3 Rs. 2,66,600/- Disallowance as discussed above as para 4 Rs. 9,815/- Total Loss Rs. (7,17,00,692/-) 4. Assessee appealed before the ld. CIT (A). Upon assessee’s appeal, ld. CIT (A) elaborately dealt with the issues and held as under :- “4.1. The AO was asked to confirm the statutory validity of the appeal filed u/s 249(2) /249(4) of the I.T. Act, vide notice dated 08.05.2015 he was also given an opportunity of hearing vide the said notice. However, no reply has been received by the AO. Therefore, it is presumed that the AO confirms the, this statutory validly of the appeal filed does not wish to remain in the appellate proceedings. 4.2. Ground nos. 1, 2 & 6 are of general or consequential nature. Therefore in these grounds do not require separate adjudication. ITA No.5938/Del./2016 3 4.3. Ground no 3 pertains to an addition for provision of bad and doubtful debts which remain to be added in the computation of income by the appellant in the return filled. During the course of the assessment proceedings the appellant accepted the mistakes and filed revised computation of income. Still the said addition has been contend in ground no. 3. Since there is no dispute that it was only a provision, ground no. 3 of the appeal is dismissed. 4.3. Ground no. 7 is linked to ground no. 3. In the return filed the appellant had claimed depreciation on certain items at 15% by treating the same as a part of Plant and Machinery. However, in the revised computation filed during the assessment proceedings, the appellant claimed depreciation at 60% on the said assets on the ground that the said assets qualified for depreciation at 60% and tax auditor u/s 44AB had also computed the depreciation at 60%. 4.4. The AO did not accept the claim in view of the decision of M/s. Goetze India Ltd. reported in 284 IT 323(SC). The appellate jurisdiction starts on the premise that the lower authority erred in taking a decision. It is unthinkable for CIT(A) to hold that the A.O. erred in following a decision of the Apex Court and without holding so the relief requested cannot be given. Therefore, ground number 7 of the appeal is dismissed. It needs to be clarified that the appellant has tried to link ground no. 3 & 7. This is not accepted as the addition contested in ground no.3 would have been made in irrespective whether the appellant had filed a revised computation of income or not. 4.4. Ground no. 4 pertains to a provision of Customer's Loyalty. The appellant explained that it makes sales online and customers have right to cancel their orders till delivery. The sales booked online till 31st march 2016, in which the goods sold were not delivered/ transferred to the customers till that date, were treated as a Provision of Cancellation named as provision of Customer's Loyalty. The appellant explained that in the next year the provision was reversed and the income was offered for tax. From this explanation, it is apparent that the appellant is actually claiming a provision for Goods Return. The provision for Goods Return cannot be allowed under any provision of the I.T. Act. In this case, if the goods sold in a year ITA No.5938/Del./2016 4 are returned in the subsequent year, the accounting for the goods returned in subsequent year has to be made in the subsequent year only. In no case, the entire goods in transit can be deducted by treating the corresponding sales amount as the provision for cancellation of orders. Consequently, ground no. 4 of the appeal is dismissed. 4.5. Ground no. 5 pertains to the disallowance out of business promotion expenses which is the expenditure on Blackberry mobile phones and Sunglasses. The appellant furnished the purchase details of the same, but could not give any details of the persons to whom such items were given. In the absence of such details the claim cannot be accepted. If the said items were given as gifts to customers there should be some detail such customers. Consequently, ground no.5 of the appeal is dismissed.” 5. Against this order, assessee is in appeal before us. None appeared on behalf of the assessee despite several notices and the hearing is adjourned for a long time. Hence, we are going to adjudicate the appeal after hearing the ld. DR for the Revenue and perusing the records. 6. After careful consideration, we find that the disallowance sustained by the ld. CIT (A) has been done on cogent reasoning and no infirmity in the same is noticed by us. Hence, we affirm the order of the ld. CIT (A). 7. In the result, the appeal filed by the assessee stands dismissed. Order pronounced in the open court on this 19 th day of April, 2023. Sd/- sd/- (ANUBHAV SHARMA) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 19 th day of April, 2023 TS ITA No.5938/Del./2016 5 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-35, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.