M/s. Anandu Brandy Shop, Pondicherry V. ITO, Pondicherry

ITA 632/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58031 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 03-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N DEVANATHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 632/(MDS)/2010 ASSESSMENT YEAR: 2005-06 M/S. ANANDU BRANDY SHOP, INCOME-TAX OFFICER, NO.461 BHARATHI ST., VS. WARD-I(1), PONDICHERRY. PONDICHERRY PAN AAJFA 4928 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. DEVANATHAN, ADVOCAT E RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL. COMMISSIONER OF INCOME-TAX DATE OF HEARING : 1 ST MARCH, 2012 DATE OF PRONOUNCEMENT : 13 TH MARCH, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2005-06. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-XII AT CHENNAI DATED 29.01.2010. IT ARISES OUT OF THE ASSESSMENT COMPLE TED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1961. ITA 632/10 :- 2 -: 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF TRADING IN INDIAN MADE FOREIGN LIQUOR. IN COMPUTING ITS INCOM E, THE ASSESSEE HAS CLAIMED A DEDUCTION OF ` 1,12,152/- ESTIMATED AT 20% OF TURNOVER AS SALES PROMOTION EXPENSES. THESE EXPENS ES INCURRED BY THE ASSESSEE, AS STATED BY IT, ALSO INCLUDED CORKEG E, A DISCOUNT GIVEN TO CONSUMERS ON PRODUCTION OF BOTTLE CAPS OF PARTICULAR BRANDS OF LIQUOR. ACCORDING TO THE ASSESSEE, THIS WAS A P RACTICE OF GIVING INCENTIVES TO PROMOTE THE SALES OF THOSE BRANDS. T HE CLAIM WAS DISALLOWED BY THE ASSESSING AUTHORITY. IN FIRST AP PEAL, THE COMMISSIONER OF INCOME-TAX(APPEALS) RESTRICTED THE DISALLOWANCE TO 10% AS AGAINST THE DISALLOWANCE OF 20% MADE BY THE ASSESSING OFFICER. IT IS AGAINST THIS RESIDUAL ADDITION SUST AINED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) THAT THE ASSESS EE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI N. DEVANATHAN, THE LEARNED COUNSEL APPEARIN G FOR THE ASSESSEE CONTENDED THAT THE QUANTUM OF ADDITION SUS TAINED BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IS VERY SMALL A ND THE TAX LIABILITY IS ALSO NEGLIGIBLE. BUT THE ASSESSEE IS MORE CONCERNED ABOUT THE MANNER IN WHICH A LEGITIMATE CLAIM MADE BY THE ASSESSEE WAS ITA 632/10 :- 3 -: DISALLOWED BY THE LOWER AUTHORITIES WITHOUT MAKING ANY ENQUIRIES. IT IS, ON THIS LEGAL ISSUE THAT THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE US. THE LEARNED COUNSEL EXPLAINED THAT EVER Y TRADE AND BUSINESS HAS GOT ITS OWN PARTICULAR TYPE OF EXPENSE S DEPENDING UPON THE ENVIRONMENT IN WHICH THEY OPERATE. THE SA LES PROMOTION EXPENSES WHICH INCLUDED COREKEGE IS AN INCENTIVE PR ACTICE IN THE WHOLE INDUSTRY. THE ASSESSING OFFICER SHOULD HAVE CARRIED OUT NECESSARY ENQUIRIES BEFORE COMING TO A CONCLUSION A GAINST THE ASSESSEE. 3. WE HEARD THE LEARNED COMMISSIONER ALSO. 4. ON GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT THE CONCLUSIONS WERE ARRIVED AT BY THE LOWER AUTHORITIE S WITHOUT MAKING PROPER ENQUIRIES, AS ARGUED BY THE LEARNED COUNSEL . LET THE MATTER BE INVESTIGATED AND THE ASSESSING OFFICER MAY COME TO A CONCLUSION. HE MAY DECIDE IN ACCORDANCE WITH LAW BUT ONLY AFTER MAKING A PROPER ENQUIRY. FOR THIS PURPOSE, THE FIL E IS REMITTED BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICER IS FURTHER DIRECTED TO ITA 632/10 :- 4 -: PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO PRESENT T HE CASE BEFORE HIM. 5. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 13 TH OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 13 TH MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.