M/s Suyash Esim Pvt. Ltd, Indore V. ITO 2 (4), Indore

ITA 707/Ind/2017

• Counselvise Citation: [2018] 129 COUNSELVISE.COM (IT) 9950 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYASR
• Section: 143(3); 142(1)

Judgement Text

M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.707/IND/2017 ASSESSMENT YEAR 2012-13 REVENUE BY SHRI R.P. MOURYA,SR.DR ASSESSEE BY SHRI MANJEET SACHDEVA, ADV. DATE OF HEAR ING 21.12. 2018 DATE OF PRONOUNCEMENT 26 .1 2 .2018 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED A GAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- II (IN SHORT LD.CIT(A)], INDORE DATED 11.08.2017 WHICH ARE AR ISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHO RT THE ACT) DATED 19.03.2015 FRAMED BY ACIT-5(1), INDORE. M/ S. SUYASH EXIM PVT LTD, 5 TH FLOOR, DARSHAN MALL, 15/2 RACE COURSE ROAD, INDORE VS. INCOME TAX OFFICER 2(4), INDORE ( APPELLANT ) (RESPONDENT ) PAN NO.AAGCS2705M M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 2 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING DISALLOWANCE MADE BY ASSESSING OFFICER OF RS.3,00,0 00/- ON ACCOUNT OF REMUNERATION PAID TO DIRECTOR SMT. KAVITA PODDARUND ER SECTION 40A(2)(B) OF THE INCOME TAX ACT. 2 . THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING DISALLOWANCE MADE WITHOUT CONSIDERING THE FACTS OF THE CASE AND APPRECIATING THE SUBMISSIONS OF THE ASSESSEE COMPAN Y. 3. THAT THE DISALLOWANCE MADE OF RS.3,00,000/- IS N OT BASED ON THE FACTS OF THE CASE AND NEEDS TO BE DELETED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD ALTER AND /OR DELETEANY OF THE GROUNDS OF APPEAL 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED I N VARIOUS COMMODITIES AND DERIVATIVES. RETURN OF INCOME FILED ON 29.09.2012 FOR ASSESSMENT YEAR 2012-13 DECLARING TOTAL INCOME OF RS.2,12,62,890/-. THE CASE WAS PICKED UP FOR SCRU TINY AND NOTICES U/S 142(1) AND 143(2) WAS DULY SERVED UPON THE ASSE SSEE. ASSESSMENT COMPLETED U/S 143(3) OF THE ACT AT RS.2 ,16,65,480/- AFTER MAKING DISALLOWANCE U/S 40A(2)(B) AT RS.3,00, 000/- AND DISALLOWANCE OF VARIOUS EXPENSES AT RS.1,02,593/-. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C I(A) AND PARTLY M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 3 SUCCEEDED LD. CIT(A) CONFIRMED THE ADDITION OF RS. 3,00,000/- OBSERVING AS UNDER; 3.0 THIS GROUND OF APPEAL IS WITH REGARD TO DISALL OWANCE OF RS.3,00,000/ - ON ACCOUNT OF REMUNERATION PAID TO DIRECTOR SMT. KAVITA PODDAR UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT. I HAVE CAR EFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE APPEL LANT IN THIS REGARD. 3.1 THE APPELLANT HAS SUBMITTED THAT THE AO HAD MAD E DISALLOWANCE OF REMUNERATION OF RS. 3,00,000/- PAID TO DIRECTOR SMT . KAVITA PODDAR U/S 40A(2)(B) OF THE IT ACT OUT OF REMUNERATION PAID OF RS 6,00,000/- TO THE SAID DIRECTOR BY THE APPELLANT COMPANY. SMT. KAVITA PODDAR WAS DIRECTOR OF THE COMPANY AND INVOLVED IN VARIOUS ASPECTS OF T HE COMPANY SINCE 15 YEARS. THE DIRECTOR SMT. KAVITA PODDAR WAS ACTIVELY INVOLVED IN THE WORKING OF THE COMPANY. 3.2 FURTHER, THE APPELLANT HAS SUBMITTED THAT SMT. KAVITA PODDAR HAD THE QUALIFICATION OF MSC. (CHEMISTRY) AND HAD VAST EXPERIENCE IN THE BUSINESS OF THE APPELLANT COMPANY WHICH THE LEARNED ASSESSING OFFICER HAD FAILED TO APPRECIATE AND MADE THE DISALLOWANCE WITHOUT GIVING ANY FINDING. LOOKING TO THE EXPERIENCE AND QUALIFICATIO N THE REMUNERATION PAID TO KAVITA POODAR WAS QUITE REASONABLE AND AT P AR WITH THE REMUNERATION PAID TO THE ONLY OTHER DIRECTOR OF THE APPELLANT COMPANY FURTHER, THE REMUNERATION PAID TO HER HAD BEEN ALLO WED AS SHOWN BY THE DEPARTMENT IN EARLIER YEARS ALSO. THE ALLOWANCE OF SALARY IN PREVIOUS YEARS CONFIRMED THAT THE DIRECTOR SMT. KAVITA PODDA R WAS ACTIVELY INVOLVED IN THE WORKING OF THE COMPANY AND THE INCR EASE IN SALARY OF DIRECTORS WAS MADE IN BOTH ANIL PODDAR AND KAVITA P ODDAR, WHEREAS THE INCREASE IN SALARY HAD BEEN ACCEPTED IN THE CASE OF ANIL PODDAR, THERE M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 4 WAS NO REASON FOR DISALLOWANCE IN THE CASE OF SMT. KAVITA PODDAR. THE LEARNED ASSESSING OFFICER WAS DISALLOWED THE SALARY PAID TO SMT, KAVITA PODDAR ON FRIVOLOUS GROUND, IN SO FAR AS BY STATING THAT THE AR FAILED TO FURNISH ANY DOCUMENTARY EVIDENCES I.E. DIRECTOR QUA LIFICATION, EXPERIENCE, EFFORT MADE, WORK PROFILE AND HER CONTRIBUTION FOR INCREASING REVENUE FOR THE COMPANY. ON THE ONE' HAND THE LEARNED ASSESSING OFFICER HAD CONSIDERED PAYMENT AT RS. 3,00,000/- TO BE REASONAB LE EVEN WHILE STATED THAT EXPERIENCE, EFFORT MADE ETC. HAD NOT BEEN EXPL AINED. 3.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND FIND THAT THE AO WAS ASKED TO APPELLANT TO FURNISH THE JUSTIFICAT ION OF THE REMUNERATION PAID TO DIRECTOR SMT KAVITA PODDAR BUT THE AR OF THE APPELLANT HAD FAILED TO FURNISH ANY DOCUMENTARY EVI DENCES I.E DIRECTOR QUALIFICATION, EXPERIENCE, EFFORT MADE, WORK PROFIL E AND HER CONTRIBUTION FOR INCREASING REVENUE FOR THE COMPANY AND ON THIS BASIS, THE AO DISALLOWED RS.3,00,000/- ON ACCOUNT OF REMUNERATION PAID TO DIRECTOR SMT. KAVITA PODDAR UNDER SECTION 40A(2)(B} OF THE I NCOME TAX ACT. THEREFORE, I DO NOT FIND ANY MERIT TO INTERFERE WIT H THE FINDINGS OF THE AO. HENCE, THE ADDITION SO MADE BY THE AO IS HEREBY CON FIRMED AND ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. THE SOLE GRIEVANCE RAISED BY THE ASSEESSEE IN IT S APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.3,00 ,000/-MADE BY LD.CIT(A) IN RESPECT OF REMUNERATION PAID TO SMT. K AVITA PODDAR, DIRECTOR. M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 5 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SMT. KAVITA PODDAR IS DIRECTOR IN THE COMPANY SINCE ITS INCEPTI ON. SHE IS REGULARLY DRAWING REMUNERATION AND THE ASSESSEE COM PANY IS CONSISTENTLY BEEN ALLOWED THE CLAIM OF REMUNERATION PAID TO HER. SHE IS ACTIVELY ENGAGED IN THE BUSINESS OF THE COMP ANY. SHE IS WELL EDUCATED AND EXPERIENCED. LD.A.O HAS HIMSELF ALLO WED 50% CLAIM OF REMUNERATION. IN THESE CIRCUMSTANCES BOTH THE L OWER AUTHORITIES ERRED IN CONFIRMING THE DISALLOWANCE U/S 40A(2)(B) OF THE ACT AT RS.3,00,000/-. 8. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEM ENTLY ARGUED AND SUPPORTED THE FINDINGS OF LOWER AUTHORIT IES. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THOUGH THE ASSESSEE HAS RAISED F OUR GROUNDS OF APPEAL, OUT OF WHICH GROUND NO.4 IS GENERAL IN NATU RE AND REMAINING THREE GROUNDS ARE RAISING A COMMON ISSUE RELATING TO DISALLOWANCE U/S 40A(2)(B) OF THE ACT OF REMUNERATI ON PAID TO SMT. KAVITA PODDAR AT RS.3,00,000/- MADE BY LD.A.O AND D ULY CONFIRMED BY LD. CIT(A). M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 6 10. WE FIND THAT THE ASSESSEE COMPANY HAS DISCLOSED INCOME OF RS.2,12,62,890/- IN THE INCOME TAX RETURN SUBMITTED ON 29.09.2012. MINOR DISALLOWANCE OF RS.4,02,593/- HA S BEEN MADE BY THE LD.A.O WHICH INCLUDES THE DISALLOWANCE OF RE MUNERATION PAID TO SMT. KAVITA PODDAR AS DIRECTOR OF COMPANY A T RS.3,00,000/- IT IS AN UNDISPUTED FACT THAT SINCE LAST 15 YEARS SMT. KAVITA PODDAR IS THE DIRECTOR OF THE COMPANY AND REGULARLY DRAWIN G REMUNERATION. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE SM T. KAVITA PODDAR HOLDS THE QUALIFICATION OF M.SC CHEMISTRY. SHE HAS VAST EXPERIENCE IN THE BUSINESS OF THE COMPANY. WE ALSO FIND THAT IN THE PAST ALSO CLAIM OF REMUNERATION PAID TO SMT. KAVITA PODDAR HAVE BEEN ALLOWED CONSISTENTLY. EVEN IN THE INSTANT CA SE UNDER APPEAL 50% OF THE REMUNERATION HAVE BEEN ALLOWED BY LD.A. O WHICH INDICATES THAT LD.A.O IS SATISFIED WITH THE FACT TH AT SMT. KAVITA PODDAR IS PROVIDING HER SERVICES TO THE COMPANY AS DIRECTOR. IN THESE GIVEN FACTS WHEN THE WORKING OF THE DIRECTOR HAS NOT BEEN DISPUTED THEN MERE MAKING DISALLOWANCE BY APPLYING SECTION 40A(2)(B) OF THE ACT WITHOUT BRINGING ANYTHING ON R ECORD TO PROVE THAT THE ALLEGED AMOUNT PAID BY THE ASSESSEE TO SMT . KAVITA PODDAR M/S SUYASH EXIM PVT LTD ITA NO 707/IND/2017 7 IS NEITHER FAIR NOR UNREASONABLE, THEN IN SUCH SITU ATION MAKING AN AD-HOC DISALLOWANCE OF 50% IS NOT JUSTIFIED. WE TH EREFORE SET ASIDE THE FINDINGS OF LOWER AUTHORITIES AND DELETE THE DI SALLOWANCE OF RS.3,00,000/-. IN THE RESULT GROUND NO. 1 TO 3 OF THE ASSESSEE ARE ALLOWED. 11. GROUND NO.4 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 12. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER PRONOUNCED IN THE OPEN COURT ON 26.12.20 18. SD/- ( KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 26 DECEMBER, 2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE