M/s Kips Publishing World, Panchkula V. Addl. CIT, Panchkula

ITA 645/CHANDI/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3840 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: YOGESH MONGA
• Keywords: Gift; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 645/CHD/2016 ASSESSMENT YEAR: 2011-12 M/S KIPS PUBLISHING WORLD, VS THE ADDL. CIT, SCF 4, SECTOR 2, PANCHKULA CIRCLE, PANCHKULA. PANCHKULA. PAN: AAHFK1596L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI YOGESH MONGA RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 01.12.2016 DATE OF PRONOUNCEMENT : 01.12.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST T HE ORDER OF LD. CIT(APPEALS), PANCHKULA DATED 02.05.20 16 FOR ASSESSMENT YEAR 2011-12. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. 3. GROUND NOS. 1 AND 4 ARE GENERAL AND NEED NO ADJUDICATION. 2 4. ON GROUND NO. 2, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 3,44,363/- ON ACCOUNT OF DISALLOWANCE OF 15% OU T OF BUSINESS PROMOTION EXPENSES. DURING THE ASSESSMENT PROCEEDINGS, THE COMPARATIVE EXPENSES VIS--VIS PRE CEDING YEAR WERE CALLED FOR ON BUSINESS PROMOTION EXPENSES . THE ASSESSING OFFICER EXAMINED THE SAME AND FOUND THAT THERE WAS A SUBSTANTIAL INCREASE IN THE EXPENSES CLAIMED UNDER THE HEAD BUSINESS PROMOTION EXPENSES. THE EXPENS ES UNDER THIS HEAD WERE SEEN TO HAVE INCREASED FROM RS . 16,66,631/- IN THE PRECEDING YEAR TO RS. 22,95,749/ - IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ASKED T O JUSTIFY THE INCREASE IN THE EXPENSES AND TO PRODUCE THE SUPPORTING DOCUMENTARY EVIDENCE FOR THESE EXPENSES FOR VERIFICATION. THE ASSESSEE SUBMITTED BEFORE ASSESS ING OFFICER THAT ASSESSEE FIRM HAD INCURRED CERTAIN EXPENDITURES ON MEETING WITH BUSINESS ASSOCIATES AT HOTELS, GIVING GENERAL KNOWLEDGE BOOKS/GIFTS TO THE BUSINESS DEALERS ETC. THESE EXPENSES ARE BOOKED UN DER THE HEAD BUSINESS PROMOTION EXPENSES. LEDGER ACCOUNT WAS ALSO PRODUCED. 5. THE ASSESSING OFFICER NOTED THAT AT THE TIME OF HEARING, THE BILLS AND VOUCHERS IN SUPPORT OF THESE EXPENSES FURNISHED BY THE ASSESSEE WERE EXAMINED IN DETAIL AND DISCUSSED. IT WAS SEEN THAT MANY OF THE BILLS/VOUCHERS RELATE TO PURCHASE OF SHAWLS, NOVELS , TRAVELING BAGS ETC. WHICH WERE CLAIMED TO HAVE GIFT ED TO THE ASSESSEE'S BUSINESS ASSOCIATES. HOWEVER, NO EVIDEN CE COULD BE PRODUCED IN SUPPORT OF THE SAME. NO EVIDE NCE 3 WAS PRODUCED TO PROVE THAT GIFTS WERE, IN-FACT, MAD E TO DEALERS OR BUSINESS DELEGATES. MOREOVER, MANY OF T HESE EXPENSES SEEM TO BE IN THE NATURE OF PERSONAL GIFTS GIVEN BY THE ASSESSEE FIRMS PARTNERS, WHICH CLEARLY CANN OT QUALIFY AS BUSINESS EXPENSES. THE ASSESSING OFFICE R, THEREFORE, DISALLOWED 15% OF THE EXPENSES AND MADE ADDITION OF RS. 3,44,363/-. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT THESE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUS INESS WHICH MAY VARY AND HAVE BEEN GIVEN TO BUSINESS DELE GATES. THE ASSESSING OFFICER DID NOT DISPUTE THE EXPENSES INCURRED BY ASSESSEE AND HAD MADE THE ADHOC ADDITIO N, SIMPLY ON THE BASIS THAT NO CONFIRMATION HAVE BEEN FILED. THE LD. CIT(APPEALS), HOWEVER, DISMISSED THIS GROUN D OF APPEAL OF THE ASSESSEE. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF T HE VIEW ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSING OFFI CER NOTED IN THE ASSESSMENT ORDER THAT ASSESSEE FURNISHED THE REQUISITE INFORMATION AND DETAILS CALLED BY HIM. T HE BOOKS OF ACCOUNT, BILLS/VOUCHERS FOR SALE/PURCHASES, EXPE NSES ETC. WERE PRODUCED AND EXAMINED AT THE ASSESSMENT S TAGE. THE ASSESSEE ALSO PRODUCED BILLS AND VOUCHERS IN SU PPORT OF CLAIM OF BUSINESS PROMOTION EXPENSES. THE ASSES SEE EXPLAINED THAT THESE BUSINESS PROMOTION EXPENSES HA VE BEEN INCURRED FOR MEETING WITH BUSINESS ASSOCIATES AND GIVING THEM CERTAIN GIFTS. THE ASSESSING OFFICER, H AS HOWEVER, NOT POINTED OUT ANY SPECIFIC ITEMS WHICH W ERE NOT 4 CONNECTED WITH THE BUSINESS ACTIVITY OF THE ASSESSE E. THE ASSESSING OFFICER SIMPLY NOTED THAT THESE EXPENSES WERE PERSONAL IN NATURE AND NO CONFIRMATION HAS BEEN FIL ED. WHEN THE BILLS AND VOUCHERS OF THE EXPENSES HAVE BE EN PRODUCED FOR EXAMINATION OF THE ASSESSING OFFICER, IT IS DUTY OF THE ASSESSING OFFICER TO POINT OUT WHICH OF THE EXPENDITURE SPECIFICALLY HAVE NOT BEEN INCURRED FOR BUSINESS PURPOSE. THEREFORE, ON MERE PRESUMPTION T HAT THESE WERE PERSONAL GIFTS AND NO CONFIRMATION HAVE BEEN FILED, WOULD NOT JUSTIFY THE DISALLOWANCE OF BUSINE SS PROMOTION EXPENSES ON ADHOC BASIS. THE ADDITION IS, THEREFORE, WHOLLY UNJUSTIFIED. WE, ACCORDINGLY, SE T ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDI TION. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. ON GROUND NO. 3, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 44,250/- ON ACCOUNT OF DISALLOWANCE OF 10% EXPE NSES OUT OF BOOKS, NEWSPAPERS AND PERIODICAL EXPENSES ET C. THE ASSESSING OFFICER NOTED THAT ASSESSEE INCURRED CERT AIN EXPENSES IN A SUM OF RS. 4,42,519/- ON ACCOUNT OF B OOKS, NEWSPAPERS, PERIODICAL, OFFICE EXPENSES, PRINTING & STATIONERY, STAFF WELFARE AND REPAIR & MAINTENANCE. THE ASSESSING OFFICER ON EXAMINING BILLS AND VOUCHERS F OR THESE EXPENSES FOUND THAT PART OF THESE EXPENSES WERE UNV OUCHED AND NOT PROPERTY VOUCHED. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED 10% OUT OF THESE EXPENSES. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASS ESSEE PRODUCED COMPLETE BILLS AND VOUCHERS AND ASSESSING OFFICER, WITHOUT POINTING OUT ANY SPECIFIC VOUCHER, WHICH 5 WERE NOT PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, MADE THE ADHOC ADDITION. THE LD. CIT(APPEALS), HOWEVER, CONFIRMED THE ADDITION AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, WE ARE OF T HE VIEW ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE PRODU CED BILLS AND VOUCHERS OF THESE EXPENSES ALONGWITH BOOKS OF A CCOUNT BEFORE ASSESSING OFFICER. THE ASSESSING OFFICER HA S, HOWEVER, NOT POINTED OUT AS TO WHICH OF THE EXPENSE S WERE UNVOUCHED AND HOW THE EXPENSES WERE NOT PROPERTY VOUCHED. IT APPEARS TO BE ADHOC ADDITION. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BE LOW AND DELETE ENTIRE ADDITION. THIS GROUND OF APPEAL OF T HE ASSESSEE IS ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNES H SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST DECEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH