Messrs. A.K. Shaw, Hooghly V. ITO, Ward - 23(2), Hooghly , Hooghly

ITA 60/KOL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6088 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 10-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IMLIMEREN JAMIR
• Assessee Lawyers: CHIRANJIT GOSWAMI
• Keywords: Fair market value

Judgement Text

1 ITA NO.60/KOL/2018 MESSRS A.K.SHAW A.Y. 2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC K OLKATA [BEFORE HONBLE SHRI N.S.SAINI, AM ] ITA NO.60/KOL/2018 ASSESSMENT YEAR : 2013-14 MESSRS. A.K.SHAW -VERSUS- I.T.O., WARD 23 (2) HOOGHLY HOOGHLY (PAN:AAKFA 9276 E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI CHIRANJIT GOSWAMI, FCA FOR THE RESPONDENT: SHRI IMLIMEREN JAMIR, ADDL. CIT , SR. DR DATE OF HEARING : 10.07.2018. DATE OF PRONOUNCEMENT : 11.07.2018. ORDER PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER DATED 10.11.2017 OF C.I.T-(A)-6, KOLKATA FOR A.Y. 2013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1) ... FOR THAT THE ORDER OF THE C.I.T.(APPEAL) VI DE APPEAL NO.: 426//CIT(A)- 6/KOL-2015-2016 IS MISCONCEIVED, BAD ON MERITS OF F ACTS AND IN LAW. 2) ... FOR THAT THE C.I.T.(APPEAL) ERRED IN LAW CON FIRMING THE 'DISALLOWANCE OF THE MANAGERIAL REMUNERATION IN AS MUCH AS THE APPEL LANT BY VIRTUE OF PAYMENT OF THE SAID MANAGERIAL REMUNERATION HAD BEEN ABLE T O ENHANCE THE TURNOVER TO A CONSIDERABLE EXTENT. 3) ... FOR THAT THE RECIPIENTS OF THE MANAGERIAL RE MUNERATION HAD ALREADY PAID 'DUE TAXES' ON THE SAID REMUNERATION RECEIVED, RESU LTING IN 'DOUBLE TAXATION'. 4) FOR THAT THE REST MAY BE ARGUED AT THE TIME OF H EARING OF THIS APPEAL. 3. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE ASSESSING OFFICER DISALLOWED RS.3,96,000/- CLAIMED BY THE ASSESSEE UNDER THE HEA D MANAGERIAL REMUNERATION 2 ITA NO.60/KOL/2018 MESSRS A.K.SHAW A.Y. 2013-14 WHICH WAS PAID TO MR.HIRANMOY GON AND MRS. SUDIPTA GON WHICH WAS CONFIRMED BY THE CIT(A). BUT ON FURTHER APPEAL TO THE TRIBUNAL, THE TRIBUNAL VACATED THE DISALLOWANCE. HE FILED COPY OF THE ORDER OF THIS BE NCH OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSELF IN ITA NO.144/KOL/2018 DATED 27.06 .2018. HENCE HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE ABOVE DECISION OF THE TRIBUNAL AND THEREFORE FOLLOWING THE SAME THE ADDIT ION SHOULD BE DELETED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED W ITH THE ABOVE SUBMISSION OF THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE. 5. WE FIND THAT THE TRIBUNAL IN A.Y.2014-15 HELD AS UNDER :- 2. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN T HE BUSINESS OF WINE MERCHANTS. IT HAS TWO PARTNERS. THE ISSUE BEFORE ME IS THE DISALLOWANCE OF EXPENDITURE CLAIMED OF RS. 3,96,000/- UNDER THE HEA D MANAGERS REMUNERATION PAID TO MR. HIRANMOY GON AND MS. SUDIPTA GON. 3. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRC UMSTANCES OF THE CASE, A PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTH ORITIES BELOW AS WELL AS CASE LAW CITED, I HOLD AS FOLLOWS. 4. AFTER HEARING RIVAL CONTENTION I FIND THAT THE P REMISES ON WHICH THE AO DISALLOWED THE CLAIM OF THE ASSESSEE IS ERRONEOUS. THE ASSESSEE IS A PARTNERSHIP FIRM. THE AO CONFUSED THE PAYMENT OF SALARY TO MANA GER, WITH THAT OF PAYMENT OF SALARY TO A MANAGING DIRECTOR OR MANAGING PERSONNEL . THE FACT REMAINS THAT THE ASSESSEES TURNOVER HAS INCREASED FROM 1.8 CRORES F OR THE FINANCIAL YEAR 2009-10 TO 4.14 CRORES FOR THE FINANCIAL YEAR 2012-13. THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER. SECTION 40A(2) DOES NOT COME INTO P LAY AS NO COMPARATIVE INSTANCE HAVE BEEN CITED BY THE AO TO COME TO A CON CLUSION THAT THE EXPENDITURE IS EXCESSIVE OR UNREASONABLE, HAVING REGARD TO THE FAIR MARKET VALUE OF SUCH SERVICES. 5. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED TO GRANT DEDUCTION OF MANAGERS REMUNERATION AS CLAIMED BY TH E ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 3 ITA NO.60/KOL/2018 MESSRS A.K.SHAW A.Y. 2013-14 6. THE FACTS BEING IDENTICAL RESPECTFULLY FOLLOWING THE PRECEDENT WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ADDI TION OF RS.3,96,000/- UNDER THE HEAD MANAGERS REMUNERATION AND ALLOW THE GROUND OF AP PEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. O RDER PRONOUNCED IN THE OPEN COURT ON 11.07.2018. SD/- [ N.S.SAINI ] ACCOUNTA NT MEMBER DATED : 11.07.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1.MESSRS A.K.SHAW, 667, G.T.ROAD, SERAMPUR, HOOGHLY -712201. 2. I.T.O., WD-23(2), HOOGHLY. 3. C.I.T.(A)-6, KOLKATA 4. C.I.T.-4 , KOLKATA.. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES 4 ITA NO.60/KOL/2018 MESSRS A.K.SHAW A.Y. 2013-14