M/s Symcom Engineers , Bangalore V. Income Tax Officer Ward-6(4), Bangalore

ITA 710/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7647 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMAMEENAKSHI J
• Assessee Lawyers: PRASHANTH

Judgement Text

V IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, B ENGALURU BEFORE S HRI N.V.VASUDEVAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I TA NO. 710 / BANG/2 0 1 7 (ASSESSMENT YEAR: 2007 - 08 ) M/S.SYMCOM ENGINEERS , 54,SRIVENKATESHWAR INDUSTRIA L SHED, VIDYARANYAPURA POST, JALAHALLI EAST AIRFORCE, M S PALYA, BENGALURU - 560097. PAN: AAKFS 7582 H VS. APPELLANT INCOME - TAX OFFICER, WARD 6(4), BENGALURU. RESPONDENT APPELLANT BY : SHRI PRASHANTH, CA. RESPONDENT BY : SMT.PADMAMEENAKSHI, JCIT(DR) DATE OF HEARING : 18/07/2018 DATE OF PRONOUNCEMENT : 27 /07/2018 O R D E R PER INTURI RAMA RAO, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (AP PEALS), [CIT(A)] BENGALURU - 6, BENGALURU, DATED 14/12/2016 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO . 710 /BANG/20 17 PAGE 2 OF 4 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSI NESS OF MANUFACTURING ELECTRICAL ITA NO . 710 /BANG/20 17 PAGE 3 OF 4 TRANSFORMERS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 WAS FILED ON 05/11/2007 DECLARING TOTAL INCOME OF NIL . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE ITO, WARD 6(4)(4), BENGALU RU, AT TOTAL INCOME OF RS.21,16,640/ - BEFORE SET OFF OF BROUGHT FORWARD LOSSES. WHILE DOING SO, THE ASSESSING OFFICER (AO) MADE DISALLOWANCE OF PARTNER S REMUNERATION OF RS.3 LAKHS ON THE GROUND THAT THE PARTNERSHIP DEED DOES NOT SPECIFY THE EXACT AMOUNT OF REMUNERATION PAYABLE AND ALSO DISALLOWED THE DISALLOWANCE OF RS.1 LAKHS OUT OF TOTAL DISCOUNT OF RS.6,09,818/ - ON THE GROUND THAT THE CLAIM FOR DEDUCTION OF DISCOUNT IS NOT PROPORTIONAL TO THE TURNOVER. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER HAD PARTLY ALLOWED THE APPEAL BY GRANTING RELIEF IN RESPECT OF DISALLOWANCE OF RS.3 LAKHS IN RESPECT OF REMUNERATION PAID TO PARTNERS PLACING RELIANCE ON THE DECISION OF THE HON BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF DURGA DASS DEVI NANDAN VS. ITO (12 TAXMANN.COM 156). HOWEVER CONFIRMED ADDITION ON ACCOUNT OF DISCOUNT ON THE GROUND THAT APPELLANT HAD FAILED TO SUBSTANTIATE THE CLAIM. 5. BEING AGGRIEVED BY THE CONFIRMATION OF THE ADDITION ON ACCOUNT OF DISCOUN T OF RS.1 LAKH, THE APPELLANT IS BEFORE US IN THE PRESENT APPEAL. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE ASSESSMENT ORDER THAT GENUINENESS OF EXPENDITURE ON DISCOUNT IS NOT IN DOUBT. THE AO HAD MADE ADDITION ITA NO . 710 /BANG/20 17 PAGE 4 OF 4 ME RELY BECAUSE THE DISCOUNT IS NOT IN DIRECT PROPORTION TO INCREASE IN TURNOVER. IN OUR CONSIDERED OPINION, THIS CANNOT BE A VALID REASON FOR AD HOC DISALLOWANCE WHEN GENUINENESS OF EXPENDITURE ON DISCOUNT IS NOT IN QUESTION. THEREFORE, WE DIRECT THE AO TO DELETE ADDITION OF RS.1 LAKH MADE ON ACCOUNT OF DISCOUNTS. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2018 SD/ - SD/ - (N.V.VASUDEVAN) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 27/07/2018 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE