Smt. Neetu Darshanjit Singh, Chandigarh V. DCIT, Chandigarh

ITA 727/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51566 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Business expenditure; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER ITA NO. 727/CHD/2011 ASSESSMENT YEAR: 2007-08 SMT. NEETU DARSHANJIT SINGH, VS THE DCIT, CIRCLE 1 (1), H.NO. 318, SECTOR 9, CHANDIGARH CHANDIGARH PAN NO. ANEPS3648D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI JASPAL SHARMA RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 17.11.2011 DATE OF PRONOUNCEMENT : ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 13.5.2011 RELATING TO ASSE SSMENT YEAR 2007-08. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) CHANDIGARH HAS ERRED IN CONFIRMING THE DISALLOWANCES REGARDING DISALLOWING THE WAGES, SALARIES & WORK EXPENSES OF RS. 13,14,20 0/- PAID TO THE EMPLOYEES, ALTHOUGH THE SAME ARE FULLY VOUCHED AND ARE AS PER THE AUDITED BOOKS OF ACCOUNT . 2 HENCE, IT IS REQUESTED THAT APPROPRIATE RELIEF MAY KINDLY BE GRANTED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 24,50,000/- ON ACCOUNT OF COMMISSION PAYMENT. ON INQUIRY, IT WAS FOUND THAT THE PAYMENT HAD BEEN MADE TO DR. DAVINDER GUPTA AND SON S (HUF) AS PER THE MEMORANDUM OF UNDERSTANDING (MOU) EXECUTED BETWEEN M/S INDUS VALLEY CONSULTANTS (OF WHICH THE ASSESSEE IS PROPR IETOR) FIRST PARTY AND DR. DAVINDER GUPTA & SONS (HUF) - SECOND PART Y AS PER THE MOU. THE ASSESSING OFFICER OBSERVED THAT AS PER SCOPE OF MOU, THE SECOND PARTY HAS BEEN AUTHORIZED TO PROVIDE VARIOUS TYPES OF SERVICES INCLUDING IDENTIFICATION OF SUITABLE LAND, HELPING IN RESOLVI NG THE DISPUTES TO ENSURE CLEAR TITLE, FACILITATE MEETINGS WITH THE ACTUAL LA ND OWNERS, CARRY OUT LIAISON WITH OFFICIAL MACHINERY ETC. AND IN LIEU OF THESE SERVICES THEY WERE PAID COMMISSION, BUT THE ASSESSEE HAD CLAIMED EXPEN SES ON ACCOUNT OF WAGES, SALARY AND WORK EXPENSES ALSO AMOUNTING TO R S. 13,14,200/- IN ADDITION TO THE COMMISSION EXPENSES. THE ASSESSING OFFICER QUESTIONED THE GENUINENESS OF THESE EXPENSES AND HE WAS CONVEY ED THAT THE EXPENSES WERE INCURRED ON STAFF ENGAGED FOR IDENTIFICATION O F LAND AND CARRYING OUT INVESTIGATIONS OF TITLE OF LAND ETC. THE ASSESSING OFFICER NOTICED THAT THE EXPENSES ON THE SERVICES WHICH WERE TO BE PROVIDED AS PER MOU CAN NOT BE CLAIMED AGAIN BY THE ASSESSEE. HE ACCORDINGLY DI SALLOWED THE ENTIRE EXPENSES AMOUNTING TO RS. 13,14,200/-. 4. ON APPEAL, THE CIT(A) CONFIRMED THE DISALLOWANCE OF RS. 13,14,200/-. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI JASPA L SHARMA, LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE PAYMENT OF WAGES, SALARIES AND WORK EXPENSES OF THE EMPLOYEES IS A GE NUINE EXPENDITURE FOR THE BUSINESS OF ASSESSEE AND BY NO MEANS CAN IT BE INTERPRETED THAT THE ASSESSEE HAD CLAIMED THE EXPENDITURE TWICE BY WAY O F WAGES, SALARIES AND WORK EXPENSES. ACCORDING TO SHRI JASPAL SHARMA, LD . COUNSEL FOR THE ASSESSEE BOTH THE EXPENDITURE HEADS I.E. COMMISSIO N PAID AND WAGES SALARIES & WORK EXPENSES ARE INDEPENDENT EXPENDITU RE HEADS AND BOTH REPRESENT NORMAL BUSINESS EXPENDITURE OF THE ASSESS EE DULY SUPPORTED BY DOCUMENTARY EVIDENCE AND BOTH ARE ALLOWABLE AS PER HE PROVISIONS OF INCOME TAX ACT, 1961. AS FAR AS WAGES, SALARIES & WORK EXPENSES ARE CONCERNED, IT IS RIGHT OF THE ASSESSEE TO DECIDE AS TO HOW MANY PERSONS AT HOW MUCH REMUNERATION ARE TO BE EMPLOYED FOR HER BU SINESS REQUIREMENTS. SHRI JASPAL SHARMA, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE ACTIVITIE S REQUIRED FOR ARRANGING 550 ACRES OF LAND IN SURROUNDING AREAS OF DISTT. LU DHIANA. SHRI JASPAL SHAMA, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT TO CARRY OUT THE BUSINESS ACTIVITIES OF THE ASSESSEE AND FOR GENERAL ADMINISTRATION AND DOING VARIOUS DOCUMENTATION AND LIAISON WORK ETC., THE ASSESSEE WAS REQUIRED TO EMPLOY THE STAFF AND THAT WAS NATURALLY DONE. ALL THE EXPENSES RELATING TO SALARIES PAID TO THE EMPLOYEES ARE DULY RECORDED IN THE AUDITED BOOKS OF ACCOUNT AND ARE DULY SUPPORTED BY DOCUMENT ARY EVIDENCE. SHRI JASPAL SHARMA, LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS NO JUSTIFICATION IN DISALLOWING WHOLE OF THE SA LARIES AND WAGES EXPENSES OF RS. 13,14,200/- ON THE BASIS OF PRESUMP TIONS AND SURMISES. THE ASSESSEE HAS ALSO FILED THE COPY OF THE AUDIT R EPORT ALONGWITH BALANCE SHEET ACCOUNT. THE ASSESSEE HAS ALSO FILED THE COP IES OF THE WAGES, SALARIES AND WORK EXPENSES. 4 6. IN OUR CONSIDERED VIEW, TO RUN AN ORGANIZATION, THE EMPLOYMENT OF THE EMPLOYEES IS MUST WHERE CONTINUOUS BUSINESS ACT IVITIES IS BEING DONE AND SO MANY BUSINESS DUTIES HAVE TO BE PERFORMED CO NTINUOUSLY AND REASONABLENESS OF THE EXPENDITURE HAS TO BE ADJUDGE D FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT OF THE REVENUE. TH E ASSESSING OFFICER HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOU NT MAINTAINED BY THE ASSESSEE. MOREOVER, THE BOOKS OF ACCOUNT OF THE AS SESSEE ARE AUDITED BY THE STATUTORY AUDITORS. IN THIS CASE, THE ASSESSIN G OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE ON PRESUMPTIVE BASIS AS T HE COMMISSION HAS BEEN PAID, THE SALARIES AND WAGES EXPENSE ARE NOT BONAFI DE, ALTHOUGH HE HIMSELF HAS CONTRADICTED HIS PRESUMPTION BY ACCEPTING THE E XPENSES ON STAFF AND LABOUR WELFARE, TELEPHONE EXPENSES ETC. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE EXPENSES CLAIMED BY THE ASSESSEE W ERE NOT VOUCHED. FROM THE FACTS OF THE PRESENT CASE, IT IS CLEAR THA T THE EXPENSES CLAIMED UNDER THE HEAD COMMISSION PAID AND WAGES, SALAR Y AND WORK EXPENSES ARE INDEPENDENT EXPENDITURE HEADS AND BOTH REPRESEN T NORMAL BUSINESS EXPENDITURE OF THE ASSESSEE, DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE AND HENCE THERE WAS NO JUSTIFICATION IN DISALLOWING THE EXPENSES CLAIMED UNDER THE HEAD WAGES, SALARIES AND WORK EXPENSES. HOWEVER, WE ARE OF THE VIEW THAT ENTIRE EXPENSES CLAIMED UNDER THE ABO VE HEAD CANNOT BE ALLOWED FOR WANT OF SUPPORTING EVIDENCE. THERE IS NO DISCUSSION IN THE ORDER OF LOWER AUTHORITIES THAT THE ASSESSEE FILED THE SUPPORTING EVIDENCE. AT THIS STAGE ALSO, NOTHING WAS FILED EXCEPT THE CO PY OF ACCOUNT OF WAGES, SALARIES AND WORK EXPENSES. HOWEVER, IT IS CLEAR F ROM THE DETAILS THAT THE PAYMENT WERE MADE TO MANAGER, PEON, DRIVER, COMPUTE R OPERATOR ETC. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ENTIRE CLAIM OF THE ASS ESSEE CANNOT BE ALLOWED. 5 WE, THEREFORE, DIRECT HE ASSESSING OFFICER TO DISAL LOW 50% OF THE CLAIM MADE BY THE ASSESSEE. THE ASSESSEE THUS GETS A REL IEF OF RS. 6,57,100/-. 7. NO FURTHER POINT WAS RAISED OR ARGUED BEFORE US. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PARTLY AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF NOVEMBER, 2011. SD/- SD/- (D.K.SRIVASTAVA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 21 ST NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR