SAR AGENCIES, Patiala V. ACIT, Patiala

ITA 603/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68459 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 24-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S NAGAR
• Keywords: Depreciation
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 603/CHD/2013 ASSESSMENT YEAR : 2009-10 SAR AGENCIES VS. A.C.I.T. CIRCLE 5104, PHASE 1, URBAN ESTATE PATIALA PATIALA AAVFS 6365D (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI DEEPAK AGGARWAL ASSESSEE BY: SHRI J.S. NAGAR DATE OF HEARING 20.8.2013 DATE OF PRONOUNCEMENT: 6.9.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 22. 3.2013 OF THE LD. CIT(A), PATIALA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS: 1(A) THAT EH LD. CIT(A) HAS ERRED IN CONFIRMING T HE DISALLOWANCE AMOUNTING TO RS. 3,28,500/- BEING 15% OF LABOUR EXPENDITURE SHOWN AS PAYABLE MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE W AS UNABLE TO PRODUCE THE LABOURERS TO WHOM THE PAYMENT WAS MADE WHEREAS AS PER THE ASSESSEE THE DISALLOWANCE I S ADHOC AND BEING TEMPORARY LABOR THE PRESENCE WAS NO T IN THE HANDS OF THE ASSESSEE. (B) THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE DISPUTES THE QUANTUM OF DISALLOWANCE CONFIRMED BY THE LD. CIT(A). 2 THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE AMOUNTING TO RS. 1,18,013/- BEING 1/5 TH OF TOTAL EXPENDITURE OF RS. 5,90,063/- MADE BY THE ASS ESSING OFFICER ON THE GROUND THAT THE PERSONAL USE CAN NOT BE RULED OUT WHEREAS AS PER THE ASSESSEE THE DISALLOWA NCE IS ADHOC AND THERE IS NO MATERIAL ON RECORD TO SUGGEST THE SAID ADDITION. (B) THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE THE ASSESSEE DISPUTES THE QUANTUM OF DISALLOWANCE CONFIRMED BY THE LD. CIT(A). 2 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAS SHOWN LABOUR/WAGES PAYABLE AT RS. 21,90,000/- AS ON 31.3.2009. THE ASSESSEE WAS ASKED WHY 15% OF THE W AGES SHOWN AS PAYABLE SHOULD NOT BE DISALLOWED IN VIEW O F THE DECISION OF ITAT IN CASE OF NARINDER KUMAR SINGLA R /O 3736, DOGRAN STREET, RAGHOMAJRA, PATIALA. IN RESPONSE IT WAS STATED AS UNDER: SIR, IN RESPECT OF YOUR INTENTIONS TO APPLY CASE OF SHRI NARINDER KUMAR SINGLA, A CONTRACTOR CASE REGARDING DISALLOWABLE OF LABOUR PAYABLE. SIR, IT IS SUBMITTE D THAT EACH CASE IS A DIFFERENT CASE AND ONE YEAR STICK CA N NOT BE APPLIED ON ALL THE CASES. MOREOVER THE LABOUR P AYABLE IS A REGULAR FEATURE IN OUR TRADE AS USUALLY WE PAY IT TO BIHARI LABOURERS AFTER MONTH END, DUE TO THIS REASO N IT BECOME PAYABLE AT YEAR END. SIR, MOST OF OUR LABOURERS ARE FROM BIHAR AND USUA LLY THEY LEFT THE WORK DURING PADDY SEASON BUT THE ENTR IES LABOUR WAS PAID IN NEXT YEAR AND DULY BOOKED IN OUR REGULAR BOOKS OF ACCOUNT BUT DUE TO THE FACT THAT T HE LABOUR HAS LEFT FOR THEIR NATIVE PLACES. WE CANNOT PRODUCE THEM HOWEVER, THE OTHER PARTICULARS ARE HERE FOR YO UR PERUSAL. THE ASSESSING OFFICER DID NOT FIND ANY FORCE IN THE ABOVE SUBMISSIONS AND OBSERVED THAT IT COULD NOT BE RULED OUT THAT SOME OF THE WAGES WERE ACTUALLY NOT PAYABLE. ACCOR DINGLY HE DISALLOWED 15% OF THE TOTAL WAGES PAYABLE U/S 68 OF THE ACT. 4 ON APPEAL IT WAS MAINLY SUBMITTED THAT LABOURERS ARE ILLITERATE AND HAVE NO PERMANENT PLACE OF RESIDENCE AND STAY AT THE SITE OF THE ASSESSEE. THEY ARE NOT USING ANY B ANKING FACILITIES AND THEY ARE PAID ON CASH BASIS. RELIANC E WAS PLACED ON THE AUDITED BOOKS OF ACCOUNT. THE LD. CIT(A) DI D NOT FIND FORCE IN THE SAME AND CONFIRMED THE DISALLOWANCE VI DE PARA 4.3 WHICH IS AS UNDER: 3 I HAVE CONSIDERED THE SUBMISSIONS MADE. IT IS AN ADMITTED FACT THAT THE LABOURERS ARE NOT READILY AV AILABLE BEING FROM FAR OFF PLACES HAVING NO RESIDENCE. THE APPELLANT IN HIS SUBMISSION HAS CONTENDED THAT SUCH LABOURERS USUALLY LEAVE THE WORK DURING THE PADDY S EASON AND THAT THEY CANNOT BE PRODUCED. IN VIEW OF THIS, I AM OF THE OPINION THAT THE ASSESSING OFFICER RIGHTLY INVO KED THE DECISION GIVEN BY THE HON'BLE ITAT IN CASE OF SHRI NARINDER KUMAR SINGLA AND CORRECTLY ADDED 15% OF TH E LABOUR SHOWN IS PAYABLE AS ON 31.3.2009. IN VIEW O F THIS, THIS GROUND OF APPEAL IS DISMISSED. 5 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT DISALLOWANCE IN ANY CASE WAS ON HIGH ER SIDE AND MAY BE RESTRICTED TO SOME REASONABLE DISALLOWANCE. 6 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STR ONGLY SUPPORTED THE ORDER OF LD. CIT(A) AND SUBMITTED THA T DISALLOWANCE HAS BEEN CONFIRMED ON THE BASIS OF TH E ORDER OF THE TRIBUNAL. 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. COUNSEL OF THE A SSESSEE. IT IS COMMON KNOWLEDGE THAT THERE IS A GREAT SHORTAGE OF LABOUR IN PUNJAB AND PEOPLE ARE GOING OUT OF THE WAY TO PURSU E THE LABOURERS TO WORK FOR THEM. DAY IN DAY OUT THE THE RE ARE NEWS REPORTS IN THE NEWSPAPERS THAT THE FORMERS/OR CONTR ACTORS ARE USING VARIOUS INCENTIVES SUCH AS INCENTIVE PAYMENT, PROVISIONS FOR COOLERS ETC. TO ATTRACT THE LABOURERS. IN ANY CASE IT IS NOT BELIEVEABLE THAT THE LABOUR FROM BIHAR WOULD LEAVE DURING PADDY SEASON WITHOUT COLLECTING THEIR WAGES. IN TH ESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ASSES SING OFFICER HAS MADE REASONABLE DISALLOWANCE WHICH IS BASED ON THE OBSERVATIONS OF THE TRIBUNAL IN CASE OF SHRI NARIND ER KUMAR SINGLA. ACCORDINGLY WE CONFIRM THE DISALLOWANCE. 4 8 GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE AO FURTHER DISALLOWED 1/5 TH OF THE EXPENDITURE OUT OF TELEPHONE, VEHICLE MAINTENANCE ETC. WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). 9 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THERE CANNOT BE ANY ELEMENT OF PERSONAL USAGE IN CA SE OF TRAVELING EXPENSES. FOR OTHER DISALLOWANCES HE SUBM ITTED THAT REASONABLE DISALLOWANCE MAY BE MADE. 10 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S UPPORTED THE ORDER OF THE LD. CIT(A). 11 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND SOME FORCE IN THE SUBMISSIONS THAT THERE CAN NOT BE ANY PERSONAL ELEMENT IN THE EXPENDITURE WITH REGARD TO TRAVELING EXPENSES UNLESS A SPECIFIC DEFECT IS POINTED OUT IN THIS RES PECT. NORMALLY TRAVELING EXPENSES WOULD BE INCURRED FOR T HE EMPLOYEES. THEREFORE, THERE IS NO JUSTIFICATION O F DISALLOWING 1/5 TH OF THIS EXPENSE AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER NOT TO MAKE ANY DISALLOWANCE IN RESPECT OF TRAVELING EXPENDITURE. 12 AS FAR AS OTHER ITEMS ARE CONCERNED, SAME PERTAI N TO VEHICLE MAINTENANCE (INCLUDING CAR LOAN INTEREST) A ND TELEPHONE EXPENSES. CHANDIGARH BENCH OF THE TRIBUNAL IS CONS ISTENTLY HOLDING THAT 10% DISALLOWANCE OF SUCH ITEMS FOR PER SONAL USAGE IS REASONABLE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE DIS ALLOWANCE OF 10% OUT OF VEHICLE MAINTENANCE INCLUDING PETROL, DEPRECIATION ETC. AND TELEPHONE EXPENSES. 5 13 IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6.9.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6.9.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR