Deccan Cements Limited, Hyderabad, Hyderabad V. ACIT, Circle-17(1), Hyderabad, Hyderabad

ITA 631/HYD/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2502 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: C S SUBRAHMANYAM
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 631/HYD/2017 ASSESSMENT YEAR: 2012-13 DECCAN CEMENTS LIMITED, HYDERABAD [PAN: AAACD8406G] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-17(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI C.S. SUBRAHMANYAM, AR FOR REVENUE : SMT. N. SWAPNA, DR DATE OF HEARING : 27-02-2018 DATE OF PRONOUNCEMENT : 01-03-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 30-01-2017, FOR THE AY. 2012-13. 2. BRIEFLY STATED FACTS ARE THAT ASSESSEE, A PUBLIC LIM ITED COMPANY ENGAGED IN THE MANUFACTURING AND SALE OF CEM ENT, FILED ITS RETURN OF INCOME FOR THE AY. 2012-13 ON 28 TH SEPTEMBER, 2012 DECLARING INCOME OF RS. 22,17,18,2 20/-. WHILE COMPLETING THE ASSESSMENT U/S. 143(3) OF THE INC OME TAX ACT [ACT] ON 20-03-2015, THE ASSESSING OFFICER (A O) MADE ITA NO. 631/HYD/2017 :- 2 -: TWO DISALLOWANCES VIZ., DISALLOWANCE U/S. 14A AMOUN TING TO RS. 62,528/- AND DISALLOWANCE OF RS. 15,16,100/- ON AN ESTIMATE BASIS @ 20% OF THE EXPENDITURE INCURRED ON PURCHASE AND DISTRIBUTION OF CUSTOMIZED GOLD COINS. TOTAL INCOME W AS DETERMINED AT RS. 22,32,96,850/-. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT(A), WHO DELETED THE ADDITION U/S. 14A WHILE CO NFIRMING THE DISALLOWANCE PARTLY AS UNDER: 7. AS REGARD THE GROUND NO.3 OF ESTIMATED DISALLOW ANCE OF BUSINESS PROMOTION EXPENSES OF RS.15,16,100/-, IT W AS CONTENDED BY THE APPELLANT THAT THE TOTAL BUSINESS PROMOTION EXP ENDITURE IS SUPPORTED BY INVOICES FROM THE SELLER AND ACKNOWLED GMENTS BEING SIGNATURE OBTAINED FROM VARIOUS DEALERS. BUT, ON PE RUSAL OF THE EVIDENCES FURNISHED IT MERELY CONTAINS THE NAME OF THE PERSON, PLACE, NUMBER OF COINS DISTRIBUTED AND SIGNATURE. IT WAS A LSO CLAIMED BY THE APPELLANT THAT THAT THE ASSESSEE IS HAVING 1,011 DE ALERS ACROSS INDIA AND 206 DEALERS ARE ENTITLED FOR THE GOLD COINS DIS TRIBUTION AS INCENTIVE FOR REACHING OR EXCEEDING THE AGREED TURN OVERS. THE APPELLANT MENTIONED THAT THE COMPANY WAS ABLE TO EA RN A SALE INCOME OF RS.1,23,30,23,925/- OUT OF TOTAL TURNOVER OF RS. 3,86,26,81,000/- FOR THE F.Y.2010-11. APART FROM THESE DETAILS, THE APPE LLANT DID NOT PROVIDE THE CRITERIA FOR SELECTION OF THESE 206 DEA LERS ONLY FOR DISTRIBUTION OF GOLD COINS. GENERALLY ANY DISCOUNT OR CREDIT NOTES OR COMMISSION ARE ALLOWABLE EXPENDITURE AS SUCH BENEFI T IS DOCUMENTED AND ALSO TAXABLE IN THE HANDS OF DISTRIBUTORS. BUT IN GOLD COIN INCENTIVES THE AMOUNT REMAINS OUTSIDE THE AMBIT OF TAXATION AND THERE IS ALSO POSSIBILITY OF INFLATION OF EXPENSES BY THE ASSESSEE. IN VIEW OF THESE SHORTCOMINGS AND THE REASONING OF THE AO, I R ESTRICT THE DISALLOWANCE TO 10% OF SUCH EXPENDITURE (RS.75,80,4 93/-) INSTEAD OF 20%. THEREFORE, I DIRECT THE ASSESSING OFFICER TO D ISALLOW RS. 7,58,050/- INSTEAD OF RS.15,16,100/-. IN THE RESULT THE GROUND RAISED BY THE APPELLANT IS PARTLY ALLOWED. 4. ASSESSEE PREFERRED PRESENT APPEAL ON THE PARTIAL CONFIRMATION OF DISALLOWANCE TO AN EXTENT OF RS. 7,58, 050/-. ITA NO. 631/HYD/2017 :- 3 -: THE EIGHT GROUNDS RAISED ARE BASICALLY CONTENTIONS ON THIS ISSUE. 5. LD. COUNSEL REFERRED TO THE SUBMISSIONS MADE BEFOR E THE LD.CIT(A) TO SUBMIT THAT ASSESSEE JUSTIFIED THE EXPENDI TURE WITH RELEVANT DOCUMENTS, BUT LD.CIT(A) DID NOT CONSIDER THEM IN CORRECT PERSPECTIVE. 6. LD.DR, HOWEVER, SUBMITTED THAT LD.CIT(A) IS REASONA BLE IN RESTRICTING THE DISALLOWANCE AND REVENUE HAS ACCE PTED THE ORDER. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT S EE ANY REASON TO INTERFERE WITH THE WELL REASONED ORDER. SINC E ASSESSEE DEVIATED FROM THE EARLIER PRACTICE OF CREDIT NOTES TO GI FT OF GOLD COINS, THE SAME CANNOT BE VERIFIED AS STATED BY THE AO. LD.CIT(A) IS REASONABLE IN RESTRICTING IT TO 10% OF THE CLAIM. WE ACCORDINGLY CONFIRM THE SAME. 8. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 1 ST MARCH, 2018 TNMM ITA NO. 631/HYD/2017 :- 4 -: COPY TO : 1. DECCAN CEMENTS LIMITED, 3-666/B, 3 RD FLOOR, DECCAN CHAMBERS, SOMAJIGUDA, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-17(1), HYDERABAD. 3. CIT(APPEALS)-5, HYDERABAD 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.