Maharashtra Solvent Extaction Pvt. Ltd., Jalgaon V. Assistant Commissioner of Income-tax,

ITA 663/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9453 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 663 /P U N/201 6 / ASSESSMENT YEAR : 20 1 2 - 1 3 MAHARASHTRA SOLVENT EXTRACTION PVT. LTD., C/O S.K. OIL INDUSTRIES COMPOUND, SHIVAJI NAGAR, JALGAON 425 306 . / APPELLANT PAN: AADCM8466G VS. THE ASST . COMMISSIONER OF INCOME TAX, CIRCLE 1 , JALGAON . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI VIVEK AGGARWAL / DATE OF HEARING : 15 . 0 1 . 201 8 / DATE OF PRONOUNCEMENT: 25 . 0 1 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , NASHIK , DATED 09 . 0 2 .201 6 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSE E HAS RAISED THE FOLLOWING GROUND S OF APPEAL : - 1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE U/S 40A(2)(B) OF RS.9,88,200/ - IN RESPECT OF COMMISSION PAID TO SHRI RAVI AGRAWAL WITHOUT APPRECIATING THAT NO DISALLOWANCE WAS WARRANTED ON FACT S OF THE CASE. ITA NO. 663 /P U N/20 1 6 MAH SOLVENT EXTRACTION P LTD. 2 2) THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE U/S 40A(2)(B) TO THE EXTENT OF RS.6,00,000/ - IN RESPECT OF THE SALARY PAID TO SMT. SANTOSH S. AGRAWAL WITHOUT APPRECIATING THAT THE SAID DISALLOWANCE WAS NOT JUSTIFIED ON FACTS OF TH E CASE. 3) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.24,290/ - IN RESPECT OF INTEREST PAID TO SMT. APEKSHA AGRAWAL WITHOUT APPRECIATING THAT THE SAID DISALLOWANCE WAS NOT WARRANTED ON FACTS OF THE CASE. 3. DESPITE SERVICE OF NOTICE, NO NE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. HOWEVER, WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE PUNE BENCH OF TRIBUNAL IN EARLIER YEARS IN ASSESSEES OWN CASE. AFTER RISING OF THE BENCH, WRITTEN SUBMISSIONS HAVE BEEN FILED AND WE PROCEED TO DECIDE THE APPEAL AFTER GOING THROUGH THE WRITTEN SUBMISSIONS AND SUBMISSIONS MADE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE AS SESSEE WAS ENGAGED IN THE BUSINESS OF RUNNING A SOLVENT PLANT. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED TOTAL INCOME OF RS.10.46 CRORES. THE ASSESSING OFFICER WHILE COMPUTING ASSESSED INCOME IN THE HANDS OF ASSESSEE HAD MADE CERTAIN DI SALLOWANCE TOTALING RS.46,32,229/ - . 5. THE CIT(A) ALLOWED THE PART OF CLAIM OF ASSESSEE AND AGAINST THE BALANCE CLAIM , ASSESSEE IS IN APPEAL BEFORE US. 6. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE MADE UNDER SECTION 40A(2) OF RS.9, 88,200/ - IN RESPECT OF COMMISSION PAID TO SHRI RAVI AGRAWAL. ITA NO. 663 /P U N/20 1 6 MAH SOLVENT EXTRACTION P LTD. 3 7. WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2009 - 10 IN ITA NO.73/PUN/2013 VIDE ORDER DATED 16.08.2017 HAD DECIDED SIMILAR ISSUE OF ALLOWABILITY OF COMMISSIO N TO SHRI RAVI AGRAWAL. THE TRIBUNAL VIDE PARAS 23 TO 25 OF THE SAID ORDER HAD HELD THAT WHERE IT WAS AN ACCEPTED FACT THAT SHRI RAVI AGRAWAL HAD ACTUALLY RENDERED SERVICES TO THE ASSESSEE COMPANY AND THE PAYMENT HAD BEEN MADE AGAINST RENDERING OF SUCH SE RVICES, THEN THE ASSESSING OFFICER CANNOT DISALLOW THE SAID COMMISSION PAYMENT. SECONDLY, THE SAID COMMISSION INCOME HAD BEEN INCLUDED BY SHRI RAVI AGRAWAL IN HIS INCOME, ON WHICH TAXES HAD BEEN PAID AT THE HIGHEST RATE. HENCE, THE TRIBUNAL HELD THAT NO DISALLOWANCE IS WARRANTED UNDER SECTION 40A(2) (A) OF THE ACT. THE TRIBUNAL PLACED RELIANCE ON THE HONBLE BOMBAY HIGH COURT IN CIT VS. INDO SAUDI SERVICES (TRAVEL) PVT. LTD. (2009) 310 ITR 306 (BOM) . FOLLOWING THE SAME PARITY OF REASONING AS IN ASSESSMEN T YEAR 2009 - 10 AND WHERE SHRI RAVI AGRAWAL IN THE INSTANT ASSESSMENT YEAR HA D ALSO PAID TAXES AT THE HIGHEST RATE OF 30% ON THE SAID INCOME, THE CLAIM OF ASSESSEE IS ALLOWABLE. THE ASSESSEE HAS PLACED ON RECORD EVIDENCE IN THIS REGARD. ACCORDINGLY, WE RE VERSE THE ORDER OF CIT(A) AND ALLOW GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE. 8. THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST DISALLOWANCE OF SALARY OF RS.6 LAKHS PAID TO MRS. SANTOSH AGRAWAL. 9. THE TRIBUNAL ALSO DECIDED SIMILAR ISSUE IN ASSESSME NT YEAR 2009 - 10 VIDE PARA 17 AND HAD DISMISSED THE CLAIM OF ASSESSEE AS MRS. SANTOSH AGRAWAL WAS NOT PAYING TAXES AT THE HIGHEST RATE. HOWEVER, DURING THE YEAR UNDER CONSIDERATION, MRS. SANTOSH AGRAWAL HA D DECLARED TOTAL INCOME OF RS.19,99,680/ - I.E. SALA RY OF RS.6 LAKHS HA D BEEN OFFERED TO TAX BY PAYING TAXES ITA NO. 663 /P U N/20 1 6 MAH SOLVENT EXTRACTION P LTD. 4 AT THE MAXIMUM TAX RATE OF 30%. APPLYING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. INDO SAUDI SERVICES (TRAVEL) PVT. LTD. (SUPRA), WE HOLD THAT IN THE PRESENT YEAR WHERE MRS. S ANTOSH AGRAWAL HAS PAID TAXES AT THE HIGHEST RATE OF 30%, THEN THE SAME IS TO BE ALLOWED IN THE HANDS OF ASSESSEE. THUS, THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS ALLOWED. 10. THE LAST ISSUE RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF INT EREST PAID TO SMT. APEKSHA AGRAWAL OF RS.24,290/ - . THE SAID DISALLOWANCE WAS MADE IN THE HANDS OF ASSESSEE ON ACCOUNT OF RE - WORKING OF INTEREST AT RS.32,366/ - AS AGAINST THE CLAIM OF ASSESSEE RS.56,656/ - . 11. THE CIT(A) HAD UPHELD THE ORDER OF ASSESSING OFFICER SINCE THE ASSESSEE HAD PAID INTEREST ON OUTSTANDING SALARY TO THE EXTENT OF RS.24,290/ - AND NOT ON ANY LOAN ADVANCE TO SMT. APEKSHA AGRAWAL. WE FIND NO MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND WE CONFIRM THE ORDER OF CIT(A) AND DISMISS THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 1 2 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF JANUARY , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 25 TH JANUARY , 201 8 . GCVS R ITA NO. 663 /P U N/20 1 6 MAH SOLVENT EXTRACTION P LTD. 5 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 2 , NASHIK ; 4. / THE CIT - 2 , NASHIK ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE