M/S SANT AUTO WHEELS PRIVATE LIMITED, AMRITSAR V. INCOME TAX OFFICER WARD-5(5), AMRITSAR

ITA 758/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3405 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-02-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 15-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BHAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S. SAINI, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER ITA NO. 758/ASR./2017 : ASSTT. YEAR : 2014-15 M/S SANT AUTO WHEELS PVT. LTD., B-6, RANJIT AVENUE, AMRITSAR VS INCOME TAX OFFICER, WARD-5(5), AMRITSAR (APPELLANT) (RESPONDENT) PAN NO. AAJCS5626G ASSESSEE BY : SHRI. PADAM BHAL, CA REVENUE BY : SMT. RATINDE R KAUR, DR DATE OF HEARING : 20 .02 .201 9 DATE OF PRONOUNCE MENT : 22 .02 .201 9 ORDER PER N. S. SAINI, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-2, AMRITSAR DATED 14.09.2017. 2. IN GROUND NO. 1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1,80,440/- MADE BY THE AO BY DISALLOWING 10% OF THE EXPENSES AS UNDER: I. STAFF WELFARE EXPENSES 1,34,020/- II. TRAVELLING EXPENSES 5,64,599/- III. MISC. EXPENSES 2,82,391/- IV. PRINTING & STATIONERY 8,23,389/- 3. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE S UBMITTED THAT HE IS NOT PRESSING DISALLOWANCE OF 10% OF THE EXPENSES UNDER THE HEAD STAFF WELFARE EXPENSES OF RS.1,34,02 0/- AND ITA NO. 758/A SR./2017 SANT AUTO WHEELS P VT. LTD. 2 MISCELLANEOUS EXPENSES OF RS.2,82,391/-. THEREFORE, THE GROUND OF APPEAL OF THE ASSESSEE RAISED ON THE ADDI TION OF THE ABOVE AMOUNT IS DISMISSED FOR WANT OF PROSECUTION. 4. WITH REGARD TO THE ADDITION OF 10% OF THE EXPENS ES UNDER THE HEAD TRAVELLING EXPENSES OF RS.5,64,599/- AND P RINTING & STATIONERY EXPENSES OF RS.8,23,389/-, HE SUBMITTED THAT THE EXPENSES WERE INCURRED BY PAYMENT MADE THROUGH ACCO UNT PAYEE CHEQUES AND THEREFORE ALL EVIDENCES WERE FILE D BEFORE THE LOWER AUTHORITIES AND HENCE NO ADDITION UNDER T HESE TWO HEADS WAS WARRANTED. THE AO AS WELL AS CIT(A) HAS N OT SPECIFIED FOR WHICH OF THE EXPENSES INCURRED THE VO UCHERS AND BILLS COULD NOT BE PRODUCED BY THE ASSESSEE. THE DI SALLOWANCE CAME TO BE MADE ON ESTIMATE BASIS BY DISALLOWING 10 % OF THE EXPENSES OUT OF THE TOTAL EXPENSES INCURRED UNDER T HE HEAD TRAVELLING AND PRINTING & STATIONERY EXPENSES. 5. ON THE OTHER HAND, THE DR FULLY JUSTIFIED THE OR DER OF THE CIT(A). 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIALS AVAILABLE ON THE RECORD, WE ARE OF THE CO NSIDERED OPINION THAT THE DISALLOWANCE WAS MADE BY THE AO AN D CONFIRMED BY THE CIT(A) UNDER THE HEAD TRAVELLING E XPENSES AND PRINTING & STATIONERY EXPENSES BY ESTIMATING TH E SAME AT 10% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE O N THE GROUND THAT BILLS AND SUPPORTING VOUCHERS COULD NOT BE PRODUCED BY THE ASSESSEE. IN OUR CONSIDERED OPINION , THE ASSESSING OFFICER HAD NOT SPECIFIED FOR WHICH OF TH E EXPENSES, THE VOUCHERS WERE NOT AVAILABLE OR PRODUCED BY THE ASSESSEE. IN ABSENCE OF THE SAME, IN OUR CONSIDERED OPINION, THE ITA NO. 758/A SR./2017 SANT AUTO WHEELS P VT. LTD. 3 DISALLOWANCE MADE OUT OF GENUINE BUSINESS EXPENDITU RE IS UNSUSTAINABLE IN LAW. HENCE, WE SET ASIDE THE ORDER S OF THE LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF 10 % OF THE EXPENSES OUT OF TRAVELLING EXPENSES OF RS.5,64,599/ - AND OUT OF PRINTING & STATIONERY EXPENSES OF RS.8,23,389/- CLAIMED BY THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE AS SESSEE IS ALLOWED. 7. IN GROUND NO. 2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING ADD ITION OF RS.30,837/- BEING 1/8 TH OF THE TELEPHONE EXPENSES OF RS.2,46,699/- ON ACCOUNT OF PERSONAL NATURE. 8. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAS INCURRED TEL EPHONE EXPENSES OF RS.2,46,699/- AND THE ASSESSEE COULD NO T PROVE THAT THE ENTIRE EXPENSES WERE INCURRED FOR THE BUSI NESS OF THE ASSESSEE. HE OBSERVED THAT PERSONAL ELEMENT IN THE SAID EXPENSES CANNOT BE RULED OUT FOR THE DIRECTORS. THE REFORE, HE MADE DISALLOWANCE OF 1/8 TH OUT OF THE TOTAL EXPENDITURE OF RS.2,46,699/- AND ADDED RS.30,837/- TO THE INCOME O F THE ASSESSEE. 9. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO. 10. THE AR OF THE ASSESSEE SUBMITTED THAT IN THE CA SE OF A PRIVATE LIMITED COMPANY, THERE CANNOT BE ANY EXPENS ES INCURRED FOR THE PERSONAL PURPOSES OF THE DIRECTORS OF THE ASSESSEE COMPANY AND PLACED RELIANCE ON THE DECISIO N OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IR ON AND ENGINEERING CO. VS CIT REPORTED AT 253 ITR 749. ITA NO. 758/A SR./2017 SANT AUTO WHEELS P VT. LTD. 4 11. ON THE OTHER HAND, THE DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 12. WE FIND THAT THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGINEERING CO. VS CIT (SUPRA) HAS HELD THAT THE LIMITED COMPANY IS AN INANIMATE PERSON AND THER E CANNOT BE ANYTHING PERSONAL ABOUT SUCH AN ENTITY. HENCE, T HERE CANNOT BE ANY DISALLOWANCE IN THE HANDS OF THE ASSESSEE CO MPANY ON ACCOUNT OF NON-BUSINESS PURPOSE OF THE EXPENSES. RE SPECTFULLY FOLLOWING THE SAID DECISION, WE VACATE THE DISALLOW ANCE OF RS.30,387/- MADE BY THE AO UNDER THE HEAD TELEPHONE EXPENSES AND ALLOW THE GROUND OF APPEAL OF THE ASSE SSEE. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2019) SD/- SD/- (N. K. CHOUDHRY) (N. S. SAINI) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 22/02/2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR