ACIT, CHENNAI V. M/s. Dart Global Logistic P Ltd., CHENNAI

ITA 653/CHNY/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4522 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNDARRAMAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A BEFORE SHRI PRADEEP PARIKH, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 653/MDS/2010 ASSESSMENT YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE-I(4) CHENNAI 34. VS. M/S.DART GLOBAL LOGISTIC P. LTD., 31 VELACHERY ROAD, LITTLE MOUNT, SAIDAPET, CHENNAI 35. PAN AAACD 3181 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI SUNDARRAMAN O R D E R PER PRADEEP PARIKH, V.P. THE DEPARTMENT IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. CIT(A), DATED 15.2.2010 FOR ASSESS MENT YEAR 2006-07. FIRST GROUND IN THE APPEAL IS AGAINST THE DELETION OF DISALLOWANCE OF EXPENDITURE INCURRED ON BEHALF OF T HE CLIENTS. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FREIGHT FORWARDING. IT RETURNED A TOTAL INCOME OF ` 1,35,42,250/- FOR THE YEAR UNDER CONSIDERATION. IT WAS FOUND THAT AIR CARGO/SEA CARGO HANDLING EXPENSES WERE SET OFF FROM AIR FREIGHT/SEA FREIGHT RECEIPTS. HOWEVER, THE EXP ENSES WERE NOT FULLY SUPPORTED BY PROPER BILLS AND VOUCHERS. T HEREFORE, THE ASSESSING OFFICER PROPOSED TO MAKE CERTAIN DISA LLOWANCE OUT OF THE SAME EXPENSES. THE CONTENTION OF THE ASS ESSEE WAS THAT SINCE THEY WERE INCURRED ON BEHALF OF THE CLIENTS AND PAID TO THE AIRWAYS OR THE SHIPPING COMPANIES, THEY WERE NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT AND HENCE, N OTHING 2 ITA 653/10 COULD BE DISALLOWED. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE A DISALLOWA NCE ON ESTIMATE BASIS AT 30%. WHILE DOING SO, THE A.O. HAD FOLLOWED HIS EARLIER ORDERS FOR ASSESSMENT YEARS 2001-02, 20 02-03, 2003-04 AND 2005-06. THE CIT(A) DELETED THE ADDITIO N BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE IN ITA NOS.1574, 2030 & 2331/MDS/2006 DATED 9.9.200 9 FOR ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04. 3. IT IS AGREED BY THE PARTIES THAT THE ISSUE IS CO VERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID ORDER OF TH E TRIBUNAL AND HENCE, RESPECTFULLY FOLLOWING THE SAME, WE UPHO LD THE ORDER OF THE CIT(A) DELETING THE DISALLOWANCE MADE IN THE PRESENT YEAR. 4. SECOND GROUND IN THE APPEAL IS AGAINST THE DELET ION OF DISALLOWANCE MADE ON ACCOUNT OF MARKETING FEES PAID TO DART AIR OFFSHORE PVT. LTD., SRI LANKA (DASOPL). THE STA ND OF THE ASSESSEE WAS DASOPL WHICH IS ITS HOLDING COMPANY HA D LOOKED AFTER THE MARKETING ACTIVITIES OF THE ASSESS EE COMPANY WHICH HAD ENABLED THE ASSESSEE TO DO SUBSTA NTIAL BUSINESS. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THE REASONABLENESS OF THE EXPENDITURE AND ACCORDINGLY, DISALLOWED THE ENTIRE SUM UNDER SEC.40A(2)(B) OF TH E INCOME- TAX ACT, 1961 (THE ACT). HERE ALSO, THE CIT(A) DELE TED THE DISALLOWANCE BY FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL CITED SUPRA. 5. ON THIS ISSUE ALSO, IT IS FAIRLY AGREED BY THE P ARTIES THAT THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY TH E EARLIER ORDER OF THE TRIBUNAL CITED IN THE PRECEDING PARAGR APH. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. 3 ITA 653/10 THE ORDER WAS PRONOUNCED IN THE COURT ON 19.7.2010. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (PRADEEP PARIKH) VICE-PRESIDENT CHENNAI, DATED THE 19 TH JULY, 2010 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR