ITO, Chandigarh V. M/s Vantage Trade Fairs (P) Ltd., Chandigarh

ITA 767/CHANDI/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9896 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Competent authority
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 767/CHD/2013 ASSESSMENT YEAR: 2008-09 THE ITO, VS. M/S VANTAGE TRADE FAIRS(P) LTD. WARD 4(3) C/O ROHIT MADAN, H.NO. 3420 CHANDIGARH SECTOR 45-D CHANDIGARH PAN NO. AACCV2079F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K. GUPTA RESPONDENT BY : SHRI SATISH BANSAL DATE OF HEARING : 16/06/2015 DATE OF PRONOUNCEMENT: 17/06/2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A), CHANDIGARH DT. 25/04/2013 RELATING TO ASSESSMENT YE AR 2008-09. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT(A) HAS ERRED IN HOLDING THAT THE PAYMENT OF RENT WAS NOT R EQUIRED TO DEDUCT TAX AT SOURCE IN CASE THE INCOME OF THE PAYEE IS EXEMPT U/S 10(23C)(IV). 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE U/S 40(A)(IA) READ WITH SECTION 194 I BY IGNORING THE PROVISIONS OF S. 197 WHICH REQUIRE A CERTIFICATE OF THE ASSESSING OFFICER IN CASE THE DEDUCTION OF TAX IS T O BE MADE AT A RATE LOWER THAN THAT PRESCRIBED FOR PAYMENT U/S 194 I. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCES UNDER S ECTION 46A(1). 2 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN LAW IN PASSING ORDER U/S 250(6) WITHOUT AF FORDING AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVI DENCES ADMITTED BY LD. CIT(A) WHEN THE ASSESSING OFFICER WAS OF THE VI EW THAT THE ASSESSEE DOES NOT FULFILL THE CONDITIONS OF THE RULE 46A(1) AND HENCE THE SAME SHALL NOT BE ADMITTED BY THE LD. CIT(A). 6. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEAR OR DISPOSED OFF. 3. GROUND NO. 1 OF THE APPEAL IS OF GENERAL NATURE AND HENCE NO COMMENTS ARE BEING GIVEN. 4. GROUND NO. 2 & 3 OF THE APPEAL IS DIRECTED AGAIN ST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 18,43,627/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) ON PAYMENTS MADE TO INDIA TRADE PROMOTION ORGANISAT ION ( IN SHORT ITPO). THE NATURE OF THE BUSINESS OF THE ASSESSEE COMPANY IS H OLDING EXHIBITIONS IN INDIA OR ABROAD I.E., THE COMPANY IS INTO THE BUSINESS OF EX HIBITORS. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HELD ONLY ONE EXHIBITION AT PRAGATI MAIDAN, WHICH IS OWNED AND CONTROLLED BY TH E ITPO AND THE PERIOD OF EVENT WAS 12/10/2007 TO 14/10/2007. FOR THE ASSESSM ENT YEAR 2008-09 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 30/0 9/2008 DECLARING LOSS OF RS. 7,25,411/-. THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY FOR THE YEAR UNDER CONSIDERATION AND THE STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE. WHILE GOING THROUGH THE PROFIT & LOSS ACCOUNT SUBMITTED BY THE ASSESSEE, THE A.O NOTICED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS. 18,43,62 7/- UNDER THE HEAD EXHIBITION VENUE EXPENSES. THE AO REQUIRED THE ASSE SSEE TO FURNISH THE DETAILS AND NATURE OF THESE EXPENSES. THE ASSESSEE FAILED T O PRODUCE ANY EVIDENCE IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE CL AIMED THAT THESE EXPENSES WERE INCURRED FOR HIRING SPACE AT PRAGATI MAIDAN, N EW DELHI FOR CONDUCTING TRADE FAIR. ASSESSEE WAS FURTHER ASKED BY THE A.O A S TO WHETHER TAX HAS BEEN 3 DEDUCTED AT SOURCE AS PER THE PROVISIONS OF SECTION 194-I OF THE I.T. ACT, ON THESE PAYMENTS MADE. IN RESPONSE TO THE ABOVE QUERY, THE ASSESSEE CONTENDED THAT IT WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE AS THEY HAD EXEMPTION CERTIFICATE FOR NON DEDUCTION OF TAX AT SOURCE. ACCORDING TO AO , NO SUCH CERTIFICATE WAS FURNISHED BY THE ASSESSEE COMPANY. IN ABSENCE OF SU CH CERTIFICATE, THE AMOUNT OF RS. 18,43,627/- WAS DISALLOWED BY THE AO UNDER S ECTION 40(A)(IA) OF THE ACT AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE COMPANY 5. BEING AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), AND THE LD. CIT(A) DE LETED THE ADDITION MADE BY THE ASSESSING OFFICER, OBSERVING AS UNDER : I HAVE CONSIDERED THE SUBMISSION OF THE LD. LD. COUNSEL FOR THE ASSESSEE. I HAVE ALSO GONE THROUGH CERTIFICATE ISSU ED BY DGIT(EXEMPTION), NEW DELHI VIDE ORDER NO. 143 DATED 01.05.2008 REGAR DING EXEMPTION GIVEN TO ITPO U/S 10(23C)(IV) OF THE ACT. AS PER TH IS CERTIFICATE, THE INCOME OF ITPO IS EXEMPT U/S 10(23C)(IV) AND TAX WAS NOT R EQUIRED TO BE DEDUCTED FROM ANY PAYMENT MADE TO THIS ORGANIZATION AND SO THE ASSESSING OFFICER WAS NOT RIGHT IN DISALLOWING THE AMOUNT U/S 40(A)(IA) OF THE ACT. HENCE, THE ADDITION MADE ON THIS ACCOUNT I S DELETED. GROUND OF APPEAL NO. 3 IS ALLOWED. 6. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE AND IN MY OPINION THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION. IT IS RELEVANT TO OBSERVE HERE THAT ITPO IS THE NODAL AGENCY OF THE GOVT. OF INDIA ENTERPRISE FOR P ROMOTING THE COUNTRYS EXTERNAL TRADE. THIS AGENCY OF GOVT. OF INDIA, DURI NG ITS EXISTENCE OF NEARLY THREE DECADES, IN THE FORM OF TRADE FAIR AUTHORITY OF IND IA AND TRADE DEVELOPMENT AUTHORITY HAS PLAYED PROACTIVE ROLE IN CATALYZING T RADE, INVESTMENT AND TECHNOLOGY TRANSFER PROCESS. ITS PROMOTIONAL TOOLS INCLUDE ORGANIZING OF FAIRS AND EXHIBITIONS IN INDIA AND ABROAD, BUYER-SELLER MEETS , CONTACT PROMOTION PROGRAMMES, PRODUCT PROMOTION PROGRAMMES, PROMOTION THROUGH OVERSEAS DEPARTMENT STORES, MARKET SURVEYS AND INFORMATION D ISSEMINATION. THE ITPO IS LICENSED UNDER SECTION 25 OF COMPANIES ACT, 1956 AN D AS SUCH IT DOES NOT 4 DECLARE ANY DIVIDEND. THERE IS NO DISPUTE THAT ITPO HAS EXEMPTION UNDER SECTION 10(23C)(IV) OF THE ACT. IT IS NOTICED THAT THE ASSE SSEE HAS SUBMITTED A COPY OF TAX EXEMPTION CERTIFICATE UNDER SECTION 10(23C)(IV) ISS UED BY DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) DATED 01/05/2008 TO ITPO, P RAGATI BHAWAN, PRAGATI MAIDAN, NEW DELHI FOR ASSESSMENT YEAR 2007-08 ONWAR DS. THUS IT IS CLEAR THAT ANY INCOME OF ITPO IS EXEMPT UNDER SECTION 10 OF THE I. T. ACT. THEREFORE, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX FROM ANY PAYMENTS MA DE TO ITPO. IN THAT VIEW OF THE MATTER NO DISALLOWANCE SHOULD HAVE BEEN MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE ACT. IN MY OPINION THE LD. CIT(A) HAS CORRECTLY DELETED THE ADDITION. CONSEQUENTLY, I REJECT GROUND NO. 2 A ND 3 OF THE APPEAL. BEFORE PARTING WITH THIS CASE, I MAY OBSERVE HERE THAT THE RE IS NO VIOLATION OF RULE 46 A OF INCOME TAX RULES 1962. IT IS APPARENT FROM THE R ECORD THAT THE LD. CIT(A) VIDE HIS LETTER DT. 11.03.2013 ASKED THE AO TO SUBMIT RE PORT ON ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE BEFORE HIM. IN RESPONSE T O THE SAID LETTER THE AO VIDE HIS LETTER DT. 01/04/2013, SUBMITTED A REMAND REPOR T WHICH IS AVAILABLE AT PAGES 46 TO 49 OF ASSESSEES PAPER BOOK. IN THIS REPORT T HE AO URGED THE CIT(A) NOT TO ADMIT ANY ADDITIONAL EVIDENCE SUBMITTED BY THE ASSE SSEE BEFORE HIM. THUS IT IS CLEAR THAT AS PER RULE 46A(3), THE CIT(A) HAS AFFOR DED A REASONABLE OPPORTUNITY TO THE AO TO EXAMINE THE EVIDENCE / DOCUMENT BEFORE ADMITTING THE SAME AS ADDITIONAL EVIDENCE THEREFORE, THE EXEMPTION CERTIF ICATE ISSUED BY THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTION), NEW DELHI DT. 01 /05/2008 REGARDING EXEMPTION GIVEN TO ITPO UNDER SECTION 10(23C)(IV) O F THE ACT. HAS CORRECTLY BEEN CONSIDERED BY THE LD. CIT(A). MOREOVER THE SAI D CERTIFICATE WAS ISSUED BY THE COMPETENT AUTHORITY OF THE REVENUE DEPARTMENT A ND WAS IN THE NATURE OF A PUBLIC DOCUMENT. THEREFORE, I DO NOT SEE ANY INFI RMITY IN THE ORDER OF THE LD. CIT(A) REGARDING ADMISSION OF THE ADDITIONAL EVIDEN CE, IF ANY PRODUCE BY THE ASSESSEE BEFORE HIM. CONSEQUENTLY, I REJECT GROUND NO. 2 & 3 OF THE APPEAL. 5 7. WHILE FRAMING ASSESSMENT THE AO MADE AN ADDITION OF RS. 2,83,917/- ON ACCOUNT OF ADHOC DISALLOWANCE OF 25% OF BUSINESS EX PENSES. THE ASSESSEE CLAIMED TOTAL EXPENSES OF RS. 11,35,666/- ON ACCOUN T OF PRINTING & STATIONARY, REPAIR & MAINTENANCE, TOUR & TRAVELLING, ESTABLISHM ENT EXPENSE, VENUE ESTABLISHMENT EXPENSE. THE AO DISALLOWED RS. 2,83,9 17/- BEING 1/4 TH OF TOTAL EXPENSES CLAIMED BY THE ASSESSEE. 8. ON APPEAL THE LD. CIT(A) DELETED THE ADDITION FO R THE REASONS STATED IN PARA 5.3 OF THE IMPUGNED ORDER. 9. AFTER HEARING LD. REPRESENTATIVE OF BOTH THE PAR TIES, I AM OF THE OPINION THAT LD. CIT(A) WAS FULLY JUSTIFIED IN ADMITTING AD DITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES BECAUSE THE BILLS / VOUCHE RS AND BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE AO BECAUSE OF SOME DIS PUTE OF ASSESSEE COMPANY WITH ITS ACCOUNTANT. AN OPPORTUNITY OF BEIN G HEARD TO THE AO WAS AFFORDED BY THE CIT(A) BUT THE AO HAS NOT VERIFIED AND COMMENTED ON THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE CIT(A). THE ONLY OBJECTION RAISED BY THE AO WAS THAT SUFFICIENT OPPO RTUNITY WAS GIVEN TO THE ASSESSEE FOR PRODUCING THE EVIDENCE BUT THE ASSESSE E FAILED TO PRODUCE THE SAME BEFORE HIM. THE LD. CIT(A) CATEGORICALLY STATE D IN HIS ORDER THAT THE BILLS AND VOUCHERS PRODUCED BY THE ASSESSEE ARE GENUINE A ND SINCE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH E SAME BEFORE THE ASSESSING OFFICER AND ARE RELEVANT TO THE GROUNDS O F APPEAL AND HENCE SAME ARE ADMITTED. IN MY OPINION THERE IS NO INFIRMITY I N THE ORDER OF THE CIT(A) SO FAR AS ADMISSION OF ADDITIONAL EVIDENCE IS CONCERNED. O N MERITS ALSO THE CIT(A) HAS OBSERVED THAT MORE THAN 95% OF THE EXPENSES WERE PA ID BY CHEQUES. HE ALSO OBSERVED THAT EXPENSES ON ACCOUNT OF TOUR & TRAVELL S WERE ALSO PAID BY CHEQUES. HOWEVER HE HAS OBSERVED THAT SMALL PORTION OF EXPENSES WERE PAID IN 6 CASH. ACCORDINGLY LD. CIT(A) HELD THAT THERE WAS NO JUSTIFICATION IN MAKING THE DISALLOWANCE. AFTER CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE, I DO NOT SEE ANY MERIT IN THIS APPEAL. CONSEQ UENTLY REMAINING GROUNDS OF APPEALS ARE ALSO DISMISSED. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/06/2015 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 17/06/2015 AG COPY TO:1. THE APPELLANT,2. THE RESPONDENT,3.THE CI T, 4.THE CIT(A),5. THE DR