Manish Kumar Lath Prop.Manish Udyog, Burhanpur V. Income Tax Officer, Burhanpur

ITA 616/Ind/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4897 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: YOGISH MISHRA
• Assessee Lawyers: S K DESHPANDE
• Keywords: Business expenditure
• Section: 143(3); 54F; 54

Judgement Text

[ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.616/IND/2017 ASSESSMENT YEAR: 2012-13 MANISH KUMAR LATH PROP. MANISH UDYOG NEW TIT ROAD, BURHANPUR / VS. CIT(A) - II INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAMPL8724A APPELLANT BY SHRI S.K. DESHPANDE, AR RESPONDENT BY SHRI YOGISH MISHRA, SR.DR DATE OF HEARING: 18.10.2018 DATE OF PRONOUNCEMENT: 26.10.2018 / O R D E R PER KUL BHARAT, J.M: APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF TH E CIT(A)-II, INDORE DATED 12.7.2017 PERTAINING TO THE [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 2 ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A)- II, INDORE HAS ERRED IN CONFIRMING THE ORDER PERTAI NING TO REJECTION OF CLAIM OF RS.23,79,120/- U/S 54F AND ALSO CONFIRMING THE A DDITION OF RS.23,79,120/- BEING CAPITAL GAIN ARISING FROM SALE OF PLOT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND LAW, THE ORDER DATED 12.76.2017 AS PASSED BY THE LEARNED CIT(A)-II , INDORE REJECTING THE CLAIM OF RS.23,79,120/- U/S 54F OF THE I.T. ACT AND ALSO CONFIRMING THE ADDITION OF RS.23,79,120/- IS INVALID AND UNLAWFUL BECAUSE WHILE PASSING SUCH ORDER, THE LEARNED A.O. FAILED TO CONSIDER THE SUBMISSION MADE BY THE APPELLANT IN COURSE OF APPEAL HEARING. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND LAW, THE FINDING OF THE LEARNED CIT(A) IN HIS ORDER ARE WHOLLY WRONG AND INJUDICIOUS AND ARE OPPOSED TO THE FACTS, AND THEREFORE, THERE IS NO JU STIFICATION IN SUSTAINING SUCH ASSESSMENT ORDER. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER AND NOT ALLOWING THE EXPENSES THROUGH CREDIT CARD OF RS.5,22,614/- AND O UT OF WHICH RS.4,16,039/- HAS FULLY PROVED. [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 3 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) FAILED TO CONSIDER THAT THESE TRANSACTIONS WERE PER TAINING TO THE COMPANY AND NOT TO THE APPELLANT. HENCE, THE ADDITION OF R S.5,22,614/- IS UNWARRANTED AND DESERVES TO BE DELETED. 6. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER OR DELET E ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSM ENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 31.3.2015. THE A.O. DURING THE COURSE OF ASSESSMENT NOTICED THAT ASSESSEE HAD SOLD TWO PLOTS ON 27.2.2012 FOR A SALE CONSIDERATION OF RS.30,00,000/-. IT WAS NOTICED THAT THESE PLOTS WERE PURCHASED ON 9.5.199 5 FOR A SALE CONSIDERATION OF RS.2,22,250/-. THE A.O. S OUGHT EXPLANATION OF THE ASSESSEE AS TO WHY THE CAPITAL GAIN ARISING FROM THESE SALE OF PLOTS WAS NOT OFFERED FOR T AX. THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEPTABLE BY [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 4 THE A.O. THEREFORE, HE MADE ADDITION OF RS.23,79,12 0/- ON ACCOUNT OF LONG TERM CAPITAL GAIN NOT OFFERED FOR TAXATI ON. BEFORE A.O., THE EXPLANATION OF THE ASSESSEE WAS THAT TH E ASSESSEE IS ENTITLED FOR DEDUCTIONS U/S 54F OF THE A CT. THEREFORE, NO LONG TERM CAPITAL GAIN TAX IS PAYABLE BY THE ASSESSEE. THE A.O. FURTHER MADE ADDITION ON ACCOUNT O F CREDIT CARD BILLS PAYMENT AMOUNTING TO RS.5,22,614/- . AGAINST THESE TWO ADDITIONS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DID NOT INTERFERE W ITH THE FINDING OF THE ASSESSING OFFICER AND SUSTAINED BOTH TH E ADDITIONS. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. GROUND NOS.1 & 2 ARE AGAINST DENYING THE CLAIM OF DEDUCTION U/S 54F OF THE ACT. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SYNOPSIS. FOR THE SAKE OF CLARITY, THE SUBMISSIONS O F THE ASSESSEE ARE REPRODUCED AS UNDER: [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 5 [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 6 [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 7 [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 8 4. IN SUPPORT OF THE CONTENTION THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION, THE ASSESSEE HAS RELIED UPON DECISION OF THE COORDINATE BENCH IN ITA NO.2692/AHD/ 2014 DATED 10.9.2015 IN THE CASE OF ASHOK KAPASIAWALA VS. ITO IN WHICH ONE OF US WAS THE PARTY. LD. COUNSEL HAS ALSO [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 9 PLACED RELIANCE ON THE JUDGEMENT OF HON'BLE GUWAHATI HI GH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN 286 ITR 274. LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE DECIS ION OF THE COORDINATE BENCH RENDERED IN THE CASE OF ACIT VS. SMT. ASHA ASHOK BOOB 69 SOT 321. DECISION OF THE COORDINATE BENCH IN THE CASE OF NIPUN MAHROTRA VS. ACI T 297 ITR 0110 (BANG. TRIB). LD. COUNSEL THEREFORE VEHEMENTLY ARGUED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION IN THE LIGHT OF THE CASE LAWS RELIED BY HI M. 5. PER CONTRA, LD. D.R. OPPOSED THE SUBMISSIONS AND SUBMITTED THAT THERE IS NO AMBIGUITY UNDER THE LAW. HE HAS TAKEN US THROUGH THE RELEVANT PROVISIONS OF LAW AND SUBMITTED THAT WHERE THERE IS NO AMBIGUITY UNDER THE LAW, THE LAW IS TO BE APPLIED IN THE STRICT SENSE. HE SU BMITTED THAT THE CASE LAWS AS RELIED BY THE LD. COUNSEL ARE DISTINGUISHABLE ON THE FACTS. [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 10 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CLAIM OF DEDUCTION WAS DENIED BY THE ASSESSING OFFICER ON THE BASIS THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 29.9.2012 AND PLOTS WERE SOLD ON 27.3.2012 FOR RS.30 LAKHS AND THE ASSESSEE HAD PURCHASED RESIDENTIAL FLAT IN MUMBAI ON 3.12.2012 FOR A SUM OF RS.2.57 CRORES. AS PER THE PROVISIONS OF THE ACT, THE ASSESSEE WAS REQUIRED TO DE POSIT THE ENTIRE SALE CONSIDERATION IN THE CLAIM OF DEPOSIT OF CAPITAL GAIN ACCOUNTS ON OR BEFORE DUE DATE OF FILING OF HIS RETURN. THIS FINDING OF THE ASSESSING OFFICER IS SU STAINED BY THE LD. CIT(A). NOW MOOT QUESTION TO BE DECIDED IS WHETHER THE ASSESSEE WOULD BE ENTITLED FOR BENEFIT OF SECTIO N 54F OF THE ACT EVEN HE DOES NOT DEPOSIT THE SALE CONSIDERATI ON AS CONTEMPLATED U/S 54F(4) OF THE ACT. THE COORDINATE B ENCH IN THE CASE OF ASHOK KAPASIAWALA VS. ITO (SUPRA) WHILE [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 11 RELYING UPON THE JUDGEMENT OF THE HON'BLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS. K. RAMACHANDRA RAO (2015) 5 6 TAXAMANN.COM 163 HELD AS UNDER: [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 12 7. IN THE PRESENT CASE, THE PLOT WAS SOLD ON 27.2.2012. DUE DATE OF FILING OF RETURN WAS 29.9.201 2. PAYMENT MADE TO BUILDER OF RS.10 LAKHS ON 3.10.2012. FURTHER PAYMENT MADE TO THE BUILDER OF RS.15 LAKHS O N 2.11.2012 AND AGREEMENT FOR PURCHASE WAS REGISTERED ON 3.12.2012. IT IS THE CASE OF THE ASSESSEE THAT THE SA LE CONSIDERATION WAS UTILISED WITHIN ONE YEAR FROM THE DAT E OF SALE OF THE ORIGINAL ASSET. UNDER THESE FACTS, IT IS AR GUED [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 13 THAT IN THE LIGHT OF THE JUDGEMENT OF THE HON'BLE KAR NATAKA HIGH COURT AND FOLLOWED BY THE COORDINATE BENCH, THE A.O. OUGHT TO HAVE GIVEN BENEFIT OF THE DEDUCTION U/S 54 OF THE ACT. THE REVENUE HAS NOT BROUGHT ANY CONTRARY BINDING PRECEDENT IN OUR NOTICE, THEREFORE, RESPECTFULLY FO LLOWING THE RATIO LAID DOWN BY THE HON'BLE KARNATAKA HIGH COURT IN T HE CASE OF CIT VS. K. RAMACHANDRA RAO (SUPRA), WE DIRECT THE A.O. TO ALLOW DEDUCTION U/S 54F OF THE ACT AND DELETE THE ADDITION. 8. GROUND NOS.3 & 4 ARE AGAINST SUSTAINING THE ADDITION OF RS.5,22,614/- IN RESPECT OF THE PAYMENTS MADE BY CASH CREDIT CARD. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. IT IS SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.5,22,614/- BEING THE CREDIT CARD PAYMENTS. IT WAS SUBMITTED BEFORE THE A.O. THAT THE ASSESSEE IS A DIREC TOR OF M/S. ISPAT INTERNATIONAL PRIVATE LIMITED AND THE CREDIT CARD [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 14 HAS BEEN PROVIDED TO MEET THE EXPENSES. THE A.O. DISALLOWED THE EXPENDITURE ON THE GROUND THAT THE EXPENSES ARE FOR THE PERSONAL USE. IT IS SUBMITTED T HAT THE CREDIT CARD WAS ALLOWED TO BE UTILISED BY THE DIRECTO R OF THE COMPANY FOR THE EXPENSES TO BE INCURRED FOR AND ON BE HALF OF THE COMPANY. THE COMPLETE DETAILS WERE FILED. TH E EXPENSES WERE DEBITED IN THE BOOKS OF THE COMPANY. SINCE THE AMOUNT HAS BEEN PAID BY THE COMPANY AND DEBITED IN THEIR BOOKS AS THE BUSINESS EXPENDITURE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN SUPPORT OF T HIS CONTENTION, A CERTIFICATE FROM THE COMPANY IS ALSO ENCL OSED. 9. ON THE CONTRARY, LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITI ES BELOW. HE SUBMITTED THAT PRE-CONDITION FOR ALLOWANCE OF ANY EXPENDITURE IS THAT THE ASSESSEE IS REQUIRED TO DEMONSTRATE THAT SO INCURRED EXPENDITURE IS RELATED TO BUSINESS OF THE COMPANY. MERELY, A STATEMENT BY THE [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 15 COMPANY THAT IT HAS MADE THE PAYMENTS WOULD NOT BE SUFFICIENT. THE ASSESSEE IS REQUIRED TO PROVE SUCH PAYMENTS AS BUSINESS EXPENDITURE OF THE COMPANY WITH PLAUSIBLE EVIDENCES. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE A.O. DISAL LOWED EXPENDITURE ON THE GROUND THAT EXPENSES INCURRED DO NOT RELATE TO BUSINESS OF COMPANY. IT MAY BE TRUE THAT ON SOME OCCASIONS, THE DIRECTOR OF THE COMPANY INCURS EXPENDI TURE FOR AND ON BEHALF OF THE COMPANY BUT FOR ALLOWANCE OF SU CH EXPENDITURE, IT IS INCUMBENT UPON THE ASSESSEE TO PR OVE THE NATURE OF EXPENDITURE AND PURPOSE OF THE EXPENDIT URE AND CORRELATE WITH THE BUSINESS OF THE COMPANY. IN TH E PRESENT CASE, THE ASSESSEE HAS MERELY MADE A BALD STATEMENT. THE LEDGER ACCOUNT BELONGING TO THE COMPAN Y SO SUBMITTED SPEAKS OF CASH CREDIT WHICH REQUIRES [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 16 VERIFICATION BY THE ASSESSING OFFICER, WHETHER SUCH EXPENDITURE HAD ANY LINK WITH THE BUSINESS OF THE CO MPANY IN WHICH THE ASSESSEE IS A DIRECTOR. WE THEREFORE, SET ASIDE THIS ISSUE TO THE FILE OF THE A.O. FOR A LIMITED PUR POSE TO VERIFY THE LINK BETWEEN THE EXPENSES AND THE BUSINES S OF THE COMPANY WHERE THE ASSESSEE IS THE DIRECTOR. IN T HE EVENT IF THE A.O. FINDS THAT THERE IS SOME RELATION W ITH THE BUSINESS OF THE COMPANY AND EXPENDITURE INCURRED BY T HE ASSESSEE, HE WILL ALLOW SUCH EXPENSES AND DELETE THE ADDITION TO THAT EXTENT. THE GROUND NOS.3 AND 4 OF ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26 . 10.2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 26/10/2018 VG/SPS [ITA NO.616/IND/2017] [MANISH KUMAR LATH, PROPOSITION,. MANISH UDYOG, BUR HANPUR] 17 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE