INTERNAITONAL DESIGN AND TRADE, MUMBAI V. ADDL CIT RG 18(2), MUMBAI

ITA 6012/MUM/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7304 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, I, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH(A .M ) ITA NO.6012/MUM/2010 (ASSESSMENT YEAR : 2006-07) M/S INTERNATIONAL DESIGN AND TRADE, 216, A TO Z INDUSTRIAL ESTATE, G.K..MARG, LOWER PAREL MUMBAI-400013. PAN:AAAFI9012J ADDL. COMMISSIONER OF INCOME TAX, RANGE 18(2), MUMBAI. APPELLANT V/S RESPONDENT DATE OF HEARING : 4.10.2011 DATE OF PRONOUNCEMENT : 7.10.2011 APPELLANT BY : NONE RESPONDENT BY : SHRI SUNIL KUMAR SI NGH O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.5.2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. THE APPEAL WAS FIXED FOR HEARING TODAY I.E.4.10. 2011 AND THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE. DESPITE VALID SERVICE OF NOTICE, AT THE TIME OF HEARING, NO NE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR FILED ANY APP LICATION FOR ADJOURNMENT OF THE CASE. THEREFORE, WE DECIDE T HE APPEAL ITA NO.6012/MUM/2010 (ASSESSMENT YEAR : 2006-07) 2 EX-PARTE, QUA THE ASSESSEE, ON MERITS AFTER HEARI NG THE LEARNED D.R. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN THE BUSINESS OF AS EXPORTER OF GARMENTS/READYMADE GOODS MANUFACTURED BY THE ASSESS EE. IT FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2,04,69,620/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS CALLED FOR CERTAIN D ETAILS WHICH WERE FILED BY THE ASSESSEE. THE AO AFTER CON SIDERING THE SAME ASKED THE ASSESSEE TO FURNISH THE DETAILS OF TELEPHONE EXPENSES, MOTOR CARE EXPENSES AND TRAVELL ING EXPENSES. THE AO AFTER CONSIDERING THE DETAILS OF S AID EXPENSES OBSERVED THAT ALL THE EXPENSES HAVE NOT B EEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PU RPOSES AND PERSONAL USE CANNOT BE RULED OUT. THEREFORE, T HE AO, TO COVER UP THE DISCREPANCY, DISALLOWED 15% I.E RS.1, 36,795/- OUT OF TELEPHONE EXPENSES, 20% I.E RS.1,94,336/- OU T OF MOTOR CAR EXPENSES, CAR DEPRECIATION AND INTEREST ON CAR LOAN AND 15% I.E. RS.2,08,150/- OUT OF TRAVELLING EXPENSES. ON APPEAL, THE LD. CIT(A) FOR THE SAME REASONS UPH ELD THE DISALLOWANCE MADE BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT(A), T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN AL L THE ITA NO.6012/MUM/2010 (ASSESSMENT YEAR : 2006-07) 3 GROUNDS THE SUSTENANCE OF DISALLOWANCE OF TELEPHON E EXPENSES, MOTOR CAR EXPENSES AND TRAVELLING EXPENSE S. 5. AT THE TIME OF HEARING, THE LD. DR SUPPORTS THE ORDER OF THE AO. 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE L EARNED DR AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT EVEN AT THIS SAGE THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THERE WAS NO PERSO NAL USE BY THE PARTNERS OF THE FIRM IN RESPECT OF THE TELEP HONE AND MOTOR CAR. HOWEVER, KEEPING IN VIEW THE VOLUME AN D NATURE OF THE BUSINESS AND CONSISTENT VIEW OF THE TRIBUNA L, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE THE DIS ALLOWANCE OF TELEPHONE EXPENSES SHOULD BE REDUCED TO 10% AND CA R EXPENSES, DEPRECIATION AND INTEREST ON CAR LOAN T O 1/6 TH . WE HOLD AND DIRECT ACCORDINGLY. 7. AS REGARDS, THE TRAVELLING EXPENSES, WE FIND THA T THE AO HAS DISALLOWED RS.2,08,150/- BEING 15% OF FOREI GN TRAVELLING EXPENSES OF RS.13,87,671/- ON THE GROUND THAT IN THE DETAILS FILED BY THE ASSESSEE, THERE IS NO MENT ION THAT WHO TRAVELED TO WHICH COUNTRY AND WHAT WAS THE PURP OSE OF TRAVELLING AND IN THE CAPITAL ACCOUNT OF THE FAMILY MEMBERS NO SUCH TRAVELLING EXPENSES ARE APPEARING. HOWEVER, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FUR NISHED THE ITA NO.6012/MUM/2010 (ASSESSMENT YEAR : 2006-07) 4 COPY OF LEDGER ACCOUNT OF THE FOREIGN TRAVELLING EX PENSES SHOWING THE DETAILS OF PAYMENT MADE TO M/S KRISHN A HOLIDAYS AND TRAVELLING PVT.LTD. IT WAS ALSO STATE D BY THE ASSESSEE THAT THE FOREIGN VISITS WERE UNDERTAKEN BY THE ASSESSEE WITH THE SAMPLES TO HOLD DISCUSSIONS AND T O UNDERSTAND THE REQUIREMENTS OF THE CUSTOMERS WITH R EFERENCE TO QUALITY OF FABRICS, COLOUR, DESIGN, PATTERNS, P ACKING INSTRUCTIONS AND REQUIREMENTS OF THE ACCESSORIES C ONNECTED WITH THE FASHION GARMENTS. IN THE ABSENCE OF ANY M ATERIAL TO SHOW THAT THE FOREIGN TRAVELS WERE MADE BY THE ASSE SSEE ALONG WITH THE FAMILY MEMBERS AND THE ASSESSEE HAS CLAIMED EXPENSES OF THE FAMILY MEMBERS IN THE TRAV ELLING EXPENSES ACCOUNT, WE ARE OF THE VIEW THAT THE AO W AS NOT JUSTIFIED IN MAKING THE ADHOC DISALLOWANCE OF RS.2, 08,150/- BEING 15% OF RS.13,87,671/- AND ACCORDINGLY, WE D ELETE THE SAME. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREF ORE, PARTLY ALLOWED. 8. IN THE RESULT, THE ASSESSEES APPEAL STANDS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH OCTOBER,2011. SD SD (RAJENDRA SINGH) (D .K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO.6012/MUM/2010 (ASSESSMENT YEAR : 2006-07) 5 MUMBAI, DATED 7TH OCTOBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI