ACIT 11(1), MUMBAI V. RAJENDRA L. NANDA( HUF), MUMBAI

ITA 6291/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71982 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.6291/M/2012 (AY: 2009 - 2010) ACIT - 11(1), R.NO.439, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. / VS. MR. RAJENDRA L. NANDA (HUF), NANDA BHAVAN, BAJAJ ROAD, VILE PARLE (W), MUMBAI 400 057. ./ PAN : AAEHR 6667 N ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANVENDRA GOYAL , DR / RESPONDENT BY : SHRI SANJIV M SHAH / DATE OF HEARING : 12.12.2013 / DATE OF PRONOUNCEMENT : 18 .12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 12.10.2012 IS AGAINST THE ORDER OF THE CIT (A) - 3, MUMBAI DATED 23.8.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE AND IN LAW, THE LD CIT (A) WAS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 0.2% OUT OF PAYMENTS TO JUNIOR ART ISTS AGAINST 2% DISALLOWED BY THE AO DESPITE THE SELF MADE VOUCHERS AND EXPENSES NON - VERIFIABLE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A HUF AND ENGAGED IN THE BUSIN ESS OF JUNIOR ARTIST SUPPLIER. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 2,38,77,930/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 2,66,27,960/ - . DURING THE ASSESSMENT, AO MAD E CERTAIN DISALLOWANCES AND RS.26,35,930/ - IS ONE OF SUCH DISALLOWANCES, BEING 2% OF PAYMENTS MADE TO THE JUNIOR ARTISTS, WHO ARE UNSKILLED, ON THE GROUND THAT THE SAID PAYMENTS WERE MADE IN CASH OR THROUGH SELF - 2 MADE VOUCHERS AND HELD THAT THE ASSESSEE C OULD NOT SUBSTANTIATE ITS CLAIM THROUGH DOCUMENTARY EVIDENCE THAT THE SAID PAYMENTS WERE MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. AGGRIEVED WITH THE ADDITIONS MADE BY THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND PARA 1.3 OF THE IMPUGNED ORDER IS RELEVANT IN THIS REGARD . AGGRIEVED WITH THE PART RELIEF GRANTED BY THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED HEAVILY ON THE ORDER OF THE AO. 6. ON THE OTHER HAND, SHRI SANJEEV M SHAH, LD COUNSE L FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US. ON PERUSAL OF THE ORDER O F THE CIT (A) IN GENERAL AND PARA 1.3 OF THE CIT (A)S ORDER IN PARTICULAR, WHICH READS AS UNDER: 1.3. I HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. HOWEVER, THE AO MADE DISALLOWANCE JUST BECAUSE THE VOUCHERS ARE SELF MADE WHEREAS THE ASSESSEE HAS CLAIMED THAT PAYMENT TO JA IS GOVERNED BY JAA. THE RECORD OF EACH MEMBER IS KEPT BY JAA. T HEREFORE, IT CANNOT BE HELD THAT JA IS NOT VERIFIABLE. IT IS ALSO TRADE PRACTICE THAT NO PERSON WHO IS NOT A MEMBER OF JAA CAN BE ENGAGED BY ANY PRODUCERS. THEREFORE, IT CANNOT BE SAID THAT PAYMENT WERE NOT MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THE AO HAS NOT BROUGHT ON RECORD THAT HOW THE PAYMENTS ARE NOT GENUINE. THE AO HIMSELF WAS ADMITTED BY OBSERVING THAT THE PAYMENTS ARE REQUIRED TO BE MADE IN CASH IN SUCH NATURE OF BUSINESS / PROFESSION. THEREFORE, CONSIDERING TH E NATURE OF BUSINESS OR PROFESSION AND PAYMENTS ARE GOVERNED BY RULE FORMED BY JAA, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE PAYMENTS MADE TO JUNIOR ARTISTES. I FIND THAT THE APPELLANT IS ENGAGED AS JUNIOR ARTISTES SUPPLIER (JAS). THE APPELLANT HAS E ARNED RECEIPT OF RS. 16.16 CR FROM THIS PROFESSION AND CLAIMED EXPENSES BEING PAY MENT MADE TO JA AT RS. 13.17 CR WHICH APPEARS TO BE REASONABLE. HOWEVER, CONSIDERING THE NATURE OF BUSINESS OR PROFESSION AND NOT APPLICABLE OF PAYMENT MOSTLY IN CASH, SAME C AN BE TREATED AS 100% GENUINE AND ELEMENT OF PERSONAL EXPENDITURE OR NON BUSINESS EXPENDITURE IS ALWAYS THERE. THEREFORE, IT WOULD BE REASONABLE TO RESTRICT THE DISALLOWANCE 0.2% OF PAYMENT TO JUNIOR ARTISTES OF TOTAL PAYMENTS OF RS. 13,17,96,452/ - WHICH WORKED OUT TO RS. 2,63,592/ - , HENCE, DISALLOWANCE TO THAT EXTENT IS CONFIRMED AND BALANCE DISALLOWANCE OF RS. 23,72,338/ - [RS.26,35,930/ - RS. 2,63,592/ - ] IS DELETED. ACCORDINGLY, THIS GROUND OF APPEAL IS THEREFORE PARTLY ALLOWED . 3 8. FROM THE ABOVE, IT IS UNDISPUTED THAT THE PAYMENTS WERE MADE BY THE ASSESSEE TO THE JUNIOR ARTISTES, WHO ARE THE MEMBERS OF JUNIOR ARTISTES ASSOCIATION (JAA) . CONSIDERING THE NATURE OF BUSINESS OR PROFESSION, IT CANNOT BE SAID THAT THE PAYMENTS WERE NOT MADE WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF BUSINESS PURPOSES. FURTHER, IN THE ASSESSMENT, AO ADMITTED THAT IN SUCH TYPE OF BUSINESS OR PROFESSION, THE PAYMENTS SHOULD BE MADE ONLY IN CASH. THEREFORE, CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION T HAT THE CIT (A) HAS RIGHTLY RESTRICTED THE DISALLOWANCE TO 0.2% OF THE TOTAL PAYMENTS OF RS.2,63,592/ - . IN OUR VIEW THE DECISION OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, WE UPHELD THE ORDER OF THE CIT (A) AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRON OUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2013. SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 18 .12.2013 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI