NANDAN PETROCHEM LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 7563/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0738 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: R C JAIN; SANJAY SAMDANI
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7563/M/2013 ASSESSMENT YEAR: 2010-11 M/S. NANDAN PETROCHEM LTD., 19-A, SITA ESTATE, AZIZ BAUG, MAHUL ROAD, CHEMBUR, MUMBAI 400 074 PAN: AAACN 1199G VS. ACIT-10(2), ROOM NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI R.C. JAIN, A.R. & SHRI SANJAY SAMDANI, A.R. REVENUE BY : SHRI PAVAN KUMAR BEERLA, D.R. DATE OF HEARING : 27.05.2015 DATE OF PRONOUNCEMENT : 10.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 17.10.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS RELATING TO CONFIRMATION OF DISALLOWANCE OF RS.10,02,685/- TOWA RDS SALE PROMOTION AND ADVERTISEMENT EXPENSES. 3. THE ASSESSEE AN INDIVIDUAL IS IN THE BUSINESS OF MANUFACTURING OF LUBRICATING OIL, JOB WORK OF LUBE OIL AND TRANSPORT ATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HERE INAFTER REFERRED TO AS THE AO) NOTICED THAT THE ASSESSEE HAD CLAIMED EXPENDITU RE OF RS.10,02,685/- FOR ITA NO.7563/M/2013 M/S. NANDAN PETROCHEM LTD. 2 PURCHASE OF JEWELLERY FROM KALINGA JEWELLERS. WHEN ASKED TO EXPLAIN IN THIS RESPECT, THE ASSESSEE SUBMITTED THE COPY OF THE INV OICE ALONG WITH COPY OF BANK STATEMENT. THE ASSESSEE FURTHER EXPLAINED THAT THE ASSESSEE HAD DISTRIBUTED THE GOLD ORNAMENTS TO THE KEY PERSONNEL OF ITS CLIENTS FOR SMOOTH RUNNING OF ITS BUSINESS AND OF AUGMENTING THE SAME. THE AO, HOWEV ER, HELD THAT THE DETAILS OF GOLD ORNAMENTS DID NOT APPEAR IN THE BILL. THE AO FURTHER OBSERVED THAT THE EXPENDITURE OF SUCH TYPE OF GIFTS COULD BE ALLOWED ONLY IF GOLD COINS ARE DISTRIBUTED. THE AO HELD THAT THE ASSESSEE HAD FAI LED TO PROVE THAT THE GOLD ORNAMENT WAS PURCHASED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF BUSINESS. HE THEREFORE MADE THE DISALLOWANCE OF THE SAID EXPE NDITURE AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 4. IN APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO ON THIS ISSUE. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE, BEFORE US, HAS SUBMITTED THAT THE ASSESSEE IS HAVING SUBSTANTIAL TURNOVER OF RS.79.30 CRORES AND DURING THE YEAR THE ASSESSEE HAS RETURNED INCOME OF RS.4.53 CRORES. THE CLIENTS OF THE ASSESSEE ARE BIG CORPORATE HOUSES. THE ASSESSEE TO HAVE BET TER CLIENTAL RELATIONSHIP AND TO PROCURE BUSINESS TOOK THE OPPORTUNITY TO DISTRIB UTE GOLD ITEMS TO THE IMPORTANT PERSONNEL OF VARIOUS CLIENTS UPON WHICH A COST OF RS.10,02,685/- WAS INCURRED. THE LD. A.R. OF THE ASSESSEE HAS FURTHER INVITED OUR ATTENTION TO THE COPY OF THE INVOICE DATED 04.10.09 WHEREIN THE DESC RIPTION HAS BEEN MENTIONED AS NEW GOLD ORNAMENTS OF 677.650 GRAM WEIGHT PURCHA SED FOR THE BILL AMOUNT OF RS.10,02,685/-. THE LD. A.R. HAS FURTHER BROUGH T OUR ATTENTION TO A CERTIFICATE/DECLARATION GIVEN BY THE SELLER KALING A JEWELLERS WHEREIN THE PROPRIETOR OF THE SAID CONCERN HAS CONFIRMED THAT V ARIOUS GOLD ORNAMENTS TOTAL WORTH RS.10,02,685/- HAVING NET WEIGHT OF 677.650 G MS. VIDE INVOICE DATED ITA NO.7563/M/2013 M/S. NANDAN PETROCHEM LTD. 3 04.10.09 WERE SOLD TO THE ASSESSEE AND FURTHER THAT THE SAID GOLD ORNAMENTS CONSIST OF VARIOUS TYPES OF JEWELLERY LIKE GOLD CHA INS, GOLD BANGLES RANGING BETWEEN 25 GMS. TO 60 GMS. THE ASSESSEE HAS ALSO B ROUGHT OUR ATTENTION TO THE DETAILS OF GIFT OF GOLD ORNAMENTS GIVEN TO VARIOUS IMPORTANT PERSONNEL OF THE BUSINESS CLIENT CONCERNS OF THE ASSESSEE. THE ASSE SSEE HAS ALSO MADE A DECLARATION THAT THE ABOVE PAPERS WERE DULY PRODUCE D BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS AS WELL AS THE EV IDENCE PRODUCED BY THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION FOR DISA LLOWANCE OF THE ABOVE EXPENDITURE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.07. 2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 10.07. 2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.