M/s. Anjani Pharmaceuticals, Bhopal V. The I.T.O., Bhopal

ITA 595/IND/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6074 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 29-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: H P VERMA; A GOYAL
• Keywords: Commercial expediency

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.595/IND/2009 A.Y. 2005-06 M/S ANJANI PHARMACEUTICALS BHOPAL (PAN AACFA-4008Q) .APPELLANT VS INCOME TAX OFFICER WARD-1(2) BHOPAL .RESPONDENT APPELLANT BY : SHRI H.P. VERMA AND SHRI A.GOYAL RESPONDENT BY : SMT. APARNA KARAN, SR. DR O R D E R THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF THE LD.CIT(A) DATED 16.9.2009. DURING HEARING OF THIS APPEAL, I H AVE HEARD SHRI HP VERMA ALONG WITH SHRI ASHISH GOYAL, LEARNED COUNSEL FOR THE ASSESSEE AND SMT. APARNA KARAN, LEARNED SENIOR DR. THE FIRS T GROUND IS GENERAL IN NATURE, THEREFORE, WAS NOT PRESSED BY THE LEARNE D COUNSEL FOR THE ASSESSEE, CONSEQUENTLY THIS GROUND IS DISMISSED AS NOT PRESSED. 2. THE NEXT GROUND I.E. 2(I) PERTAINS TO DISALLOWAN CE OF RS.30,000/- ON ACCOUNT OF TELEPHONE AND TRAVELLING EXPENSES. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ADDITION IS Q UITE UNJUSTIFIED. ALTERNATIVELY, IT WAS PLEADED THAT IT MAY BE SUBSTA NTIALLY REDUCED. ON THE 2 OTHER HAND, THE LEARNED SR. DR STRONGLY DEFENDED TH E ADDITION BY CONTENDING THAT NECESSARY DETAILS FOR CLAIMING SUCH EXPENSES WERE NOT FURNISHED BY THE ASSESSEE. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF AYURVEDIC MED ICINES. IT WAS NOTED BY THE AO THAT THE ASSESSEE CLAIMED RS.56,542 /- AS TELEPHONE EXPENSES AND RS.2,57,604/- AS TRAVELLING EXPENSES ( TOTAL RS.13,14,146/- ) AGAINST RS.1,93,295/- IN THE PRECEDING YEAR. TH E STAND OF THE AO AS WELL AS OF THE LEARNEDSR. DR IS THAT PERSONAL USE B Y THE PARTNERS IN CLAIMNING THE ABOVE EXPENSES CANNOT BE RULED. ACCOR DINGLY, THE DISALLOWANCE WAS CLAIMED BY THE JUSTIFIED. DURING H EARING THE LEARNED SR. DR ALSO CONTENDED THAT MAJOR PORTION OF THE EXPENSE S WAS NOT FULLY SUPPORTED BY BILLS. KEEPING IN VIEW THE FACTS NARR ATED BEFORE ME, I FIND THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTUAL FINDING MENTIONED IN THE IMPUGNED ORDER. AT THE SAME TIME, THE PERSONAL USE OF TELEPHONE AND VEHICLE ALSO CANNOT BE RULED, THEREFORE, I HAVE NOT FOUND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS IS SUE, THEREFORE, THE SAME IS UPHELD, CONSEQUENTLY, THIS GROUND OF THE ASSESSEE I S HAVING NO MERIT AND THE SAME IS DISMISSED. 3. THE NEXT PART OF THE GROUND (II) PERTAINS TO DIS ALLOWANCE OF RS.12,000/- ON ACCOUNT OF VEHICLE MAINTENANCE EXPEN SES. THE STAND OF 3 THE ASSESSEE IS THAT THE DEPARTMENT EVEN ALLOWED 1. 13% , THOUGH, THE ASSESSMENT FRAMED U/S 143(1). ON THE OTHER HAND, TH E STAND OF THE REVENUE IS THAT IT WAS NOT SUPPORTED BY PROPER VOUC HERS. ON PERUSAL OF RECORD AND AFTER CONSIDERING THE RIV AL SUBMISSIONS PUT FORTH BY THE LEARNED RESPECTIVE COUNSELS, THE A SSESSEE CLAIMED RS.40,953/- AS VEHICLE MAINTENANCE EXPENSES OUT OF WHICH AN AMOUNT OFRS.12,000/- WAS DISALLOWED ON THE GROUND THAT IT WAS NOT SUPPORTED WITH PROPER VOUCHERS. KEEPING IN VIEW THE SMALLNES S OF AMOUNT AND ALSO TO PUT AN END TO THE LITIGATION, THE DISALLOWA NCE OFRS.12,000/- IS REDUCED TO RS.6,000/-, THEREFORE, THIS GROUND OF TH E ASSESSEE IS PARTLY ALLOWED. 4. THE LAST GROUND (III) PERTAINS TO THE AMOUNT OF RS.10,368/- ON ACCOUNT OF INTEREST PAID TO PERSONS SPECIFIED U/S 4 0A(2)(B) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSES SEE PAID INTEREST OF RS.10,368/- BY CONTENDING THAT IT IS VERY EASY TO T AKE INTERST FROM THE MARKET IN COMPARISON TO THE BANK BY FURTHER CLAIMIN G THAT THE INTEREST WAS PAID FOR COMMERCIAL EXPENDIENCY. HOWEVER, THE L EARNED COUNSEL WAS FAIR ENOUGH TO EXPLAIN THAT THE LOAN WAS FROM T HE SISTER CONCERN. ON THE OTHER THE LEARNED SR. DR STRONGLY DEFENDED THE ADDITION ON THE GROUND THAT IT WAS NOTHING BUT A METHOD DEVISED BY THE ASSESSEE TO DEFRAUD THE REVENUE ESPECIALLY WHEN IT WAS FROM THE SISTER CONCERN. 4 I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND T HAT THE ASSESSEE PAID INTEREST AT THE RATE OF 18% AGAINST T HE PREVAILING RATE OF 14% CHARGED BY THE BANK/FINANCIAL INSTITUTION. THE ASSESSEE PAID INTEREST OF RS.62,208/- TO THE PERSONS SPECIFIED U/ S 40A(2)(B) OF THE ACT. THE LEARNED FIRST APPELLATE AUTHORITY HAS CONSIDERE D THE DECISION OF SA BUILDERS LIMITED (288 ITR 1 ) (SC) AND CONFIRMED TH E AMOUNT OF RS.5,648/- AS INTEREST PAID TO INTERESTED PARTIES. IN THE PRESENT APPEAL, THE INTEREST WAS ADMITTEDLY PAID TO INTERESTED PART IES SPECIFIED U/S 40A(2)(B) OF THE ACT BY PAYING RATE OF INTEREST AT 18% AGAINST THE PREVAILING MARKET RATE OF 14% TO 15% AT THE RELEVAN T TIME. EVEN OTHERWISE, NO COMMERCIAL EXPEDIENCY WAS EXPLAINED B Y THE ASSESSEE, THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE DECISION FROM THE HONBLE APEX COURT IN SA BUILDERS LIMITED(SUPRA) M AY NOT HELP THE ASSESSEE. EVEN OTHERWISE, THE REVENUE HAS ONLY DISA LLOWED THE INTEREST WHICH WAS FOUND TO BE UNREASONABLE. IT IS NOT THE CASE THAT THE DISALLOWANCE HAS BEEN MADE MECHANICALLY. IN VIEW OF THESE FACTS, I HAVE NOT FOUND ANY INFIRMITY IN THE STAND OF THE CIT(A), THEREFORE, IT IS UPHELD. THIS GROUND OF THE ASSESSEE IS DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED COUNSELS FROM BOTH SIDES AT CONCLUSION OF THE HEARI NG ON 15 TH FEBRUARY, 2010. 5 ORDER PRONOUNCED IN THE OPEN COURT ON 15.2.2010 . SD (JOGINDER SINGH) JUDICIAL MEMBER FEBRUARY 15 TH , 2010 !VYAS! COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE