Plazma Technologies Pvt. Ltd., Pune V. Additional Commissioner of Income-tax ,

ITA 787/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9113 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 234B

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.787/PUN/2014 / ASSESSMENT YEAR : 2007-08 PLAZMA TECHNOLOGIES PVT. LTD., EL-55, M.I.D.C. BHOSARI, PUNE 411026. PAN : AABCP7293A. . / APPELLANT V/S ADDL.COMMISSIONER OF INCOME TAX, RANGE 10, PUNE. . / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI AJAY MODI / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) V, PUNE DT.25.02.2014 FOR THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- 2.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF WELDING AND CREATING EQUIPMENTS. ASSE SSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON / DATE OF HEARING : 27.06.2017 / DATE OF PRONOUNCEMENT: 31.07.2017 2 02.09.07 DECLARING TOTAL INCOME AT RS.1,45,07,400/-. THE CA SE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.19.11.2009 AND THE TOT AL INCOME WAS DETERMINED AT RS.2,76,84,680/-. AGGRIEVED BY T HE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHO VIDE ORDER DT.25.02.2014 (IN APPEAL NO.PN/CIT(A)-V/ADDL.CIT, RG-9/58/09-10) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AG GRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE AD-HOC DI SALLOWANCES OF RS. 2,21,000/- AT 10% OF THE TOTAL EXPENSES ON THE PLEA THAT THE VOUCHERS IN ALL CASES WERE NOT PRODUCED. THE A. O. WAS NON-CO- OPERATIVE IN SENDING HIS REMAND REPORT AS CALLED FO R BY LD. CIT (A). THE AD-HOC DISALLOWANCE OF RS. 2,21,000/- MADE BY A.O. AND CONFIRMED BY LD. CIT(A) WAS NOT JUSTIFIED WITHOUT R EJECTING THE BOOKS OF ACCOUNT U/S. 145(3) OF THE ACT . THE DISALLOWANCE BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOW ANCE OF RS. 15 LAKHS MADE BY THE A.D. UNDER SECTION 40A(2)(B) OF THE ACT . THE PROVISIONS OF S. 40A(2)(B) HAVE NOT BEEN PROPERLY C ONSIDERED AS INTERPRETED BY HON'BLE BOMBAY HIGH COURT WHILE MAKI NG SUCH A DISALLOWANCE. THE DISALLOWANCE BEING CONTRARY TO PR OVISIONS OF LAW BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE AD-HOC DISALLOWANCE @5% OF 31,13,345/- (11,72,873 +19,40,472). THERE WAS NO REASON TO RESTRICT THE DISALLOWANCE TO 5%. THE ENTIRE AD-HOC DISALLOWANCE IS REQUIRED TO BE DELETED. IT BE DELETED ACCORDINGLY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOW ANCE OF R. 3 LAKHS PAID AS COMMISSION TO THE DIRECTOR OF THE COMP ANY. NO PLAUSIBLE REASON HAS BEEN GIVEN TO CONFIRM THE DISA LLOWANCE. THE DISALLOWANCE BE DELETED. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOW ANCE OF RS. 4,54,580/- OUT OF LEGAL EXPENSES OF RS. 20,32,969/- AS APPELLANT COULD NOT FURNISH THE ADDRESS OF SUCH RECIPIENTS. T HE REASON IS NOT COGENT TO CONFIRM THE DISALLOWANCE. THE DISALLOWANC E OF RS.4,54,580/- BE DELETED. 3 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234B IS NOT JUSTIFIED. 3. FIRST GROUND IS WITH RESPECT TO DISALLOWANCE OF RS.2,21,000/-. 3.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD CLAIMED TRAVELLING EXPENSES OF RS.22,10,20 2/- AND FOREIGN TRAVEL EXPENSES OF RS.10,08,974/-. AO ON PERU SING THE DETAILS NOTICED THAT THE EXPENDITURE INCLUDED RS.16,969 /- WHICH PERTAIN TO EARLIER YEARS. WITH RESPECT TO OTHER TR AVELLING EXPENSES, AO NOTICED THAT SUPPORTING VOUCHERS OF HOTEL, T AX ETC., WERE NOT AVAILABLE WITH THE ASSESSEE. AS FAR AS FOREIGN TR AVEL EXPENSES ARE CONCERNED, AO NOTICED THAT ASSESSEE HAD UNDERTAKEN JOURNEYS TO MUSCAT, LONDON, CHINA, MARITIUS E TC. VERY FREQUENTLY AND THE DAUGHTER OF THE DIRECTOR I.E., MIS S SKYE HUGHEN THOMAS HAD ALSO ACCOMPANIED HIM AND THE EXPENDIT URE INCURRED FOR HER TRAVEL WERE ALSO INCLUDED IN THE FOREIGN TR AVEL EXPENSES. AO NOTED THAT THE BUSINESS THAT WAS UNDERT AKEN BY THE ASSESSEE WITH THESE COUNTRIES WERE ALSO NOT AVAILABLE . HE ACCORDINGLY DISALLOWED 10% OF TOTAL TRAVELLING EXPENSES AN D 20% OF FOREIGN TRAVELLING EXPENSES AND THUS MADE AN AGGREGATE DISALLOWANCE OF RS.4,37,969/-. AGGRIEVED BY THE ORDER OF AO , ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), WHO GRANT ED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- 9.DURING THE COURSE OF APPELLATE PROCEEDINGS, THE A PPELLANT SUBMITTED THAT THE DOMESTIC TRAVEL INCLUDES ALL TIC KET CHARGES, LODGING BOARDING AND OTHER EXPENSES INCURRED DURING OUT OF STATION COMPANY WORK. IT INCLUDES EXPENSES OF ALL T HE SALES AND SERVICES STAFF OF THE COMPANY INCLUDING THE DIRECTO RS. THE DETAILS 4 OF SUCH EXPENSES WERE FILED FROM PAGE 220 TO 235 OF THE PAPER BOOK VOLUME(2). IN RESPECT OF FOREIGN TRAVEL, IT WA S SUBMITTED THAT DIRECTORS HAVE VISITED SINGAPORE, UK, US AND UAE FO R SETTING UP GLOBAL SOURCING NETWORK TO GET A PRICE ADVANTAGE BE SIDES VISIT FOR NEW ORDERS FOR ROBO PLASMA SYSTEM AND CONSUMABLES. IT WAS FURTHER SUBMITTED THAT DURING A.Y. 2006-07 & 2007-0 8, COMPANY GOT NEW ORDERS FROM OVERSEAS CUSTOMERS AND IN A.Y.2 009-10, THE COMPANY RECEIVED ORDER FROM USA WORTH RS. 3.20 CROR ES. THE APPELLANT SUBMITTED THAT COMPANY AUDITORS HAVE ALRE ADY DISALLOWED PERSONAL EXPENSES INCLUDED IN FOREIGN TR AVEL. 10. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. I HAVE ALSO GONE THROUGH TH E DETAILS FIELD BY THE APPELLANT IN THE PAPER BOOK. AS FAR AS PREVIOUS YEAR EXPENSES ARE CONSIDERED. THE AR HAD AGREED FOR ADDITION OF THE SAME. THEREFORE, DISALLOWANCE-OF RS.16,969/- IS UPHELD. IN RESPECT OF DOMESTIC TRAVEL THOUGH THE DETAILS WE RE FILED BEFORE THE ASSESSING OFFICER AND ALSO BEFORE UNDERS IGNED, CONSIDERING THE FACT THAT THERE IS FINDING BY THE A SSESSING OFFICER THAT VOUCHERS IN ALL CASES WERE NOT PRODUCE D, IT IS HELD THAT DISALLOWANCE OF 10% OF THE TOTAL EXPENSES IS J USTIFIED. ACCORDINGLY, ADDITION OF RS. 2,21,000/- IS UPHELD. IN RESPECT OF FOREIGN TRAVEL ALL THE EXPENSES HAVE BEEN BOOKED TH ROUGH TRAVEL AGENTS AND EXPENSES ARE ALSO MET THROUGH CRE DIT CARDS. FURTHER, PERSONAL ELEMENT' HAS BEEN EXCLUDED BY THE AUDITORS WHICH HAS BEEN ACKNOWLEDGED BY THE ASSESSING OFFICE R TOO. THEREFORE, IT IS HELD THAT DISALLOWANCE OF RS. 2,00 ,000/- OUT OF FOREIGN TRAVEL IS NOT JUSTIFIED. ACCORDINGLY, THE A SSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 2 ,00,000/-. THUS, THE APPELLANT GETS RELIEF OF RS.2,00,000/- WH ILE ADDITION OF RS. 2,37,969/- (16,969 + 2,21,000) IS UPHELD. THUS, THE GROUND IS PARTLY ALLOWED . AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN AP PEAL BEFORE US. 4. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES. ON THE OTHER HAND, LD.D.R. SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE OF TRAVELLING EXPENSES. LD. CIT(A) WHILE DECIDIN G THE ISSUE WITH RESPECT TO PAYMENTS OF TRAVEL EXPENSES N OTED THAT 5 ASSESSEE HAD NOT PRODUCED ALL THE VOUCHERS AND IN SUCH A SITUATION THAT DISALLOWANCE TO THE EXTENT OF 10% WAS JUST IFIED. BEFORE US, ASSESSEE HAS NOT PLACED ANY MATERIAL ON RECOR D TO CONTROVERT THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO R EASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS THIS GROUND OF THE ASSESSEE IS DISMISSED. 6. GROUND NO.2 AND 4 BEING INTER-CONNECTED ARE CONSIDER ED TOGETHER. 6.1 AO NOTICED THAT ASSESSEE HAD PAID REMUNERATION OF RS.30,00,000/- AND EX-GRATIA PAYMENT OF RS.67,90,000/- AGGREGATING TO RS.97,90,000/- TO SHRI HUGHEN G. THOMAS A ND REMUNERATION OF RS.30,00,000/- AND EX-GRATIA OF RS.38,60,0 00/- AGGREGATING TO RS.68,60,000/- TO MRS. ARUNDHATI HUGHEN THOMAS, THE DIRECTORS OF THE COMPANY. AO ALSO NOTICED THAT THE REMUNERATION TO THE AFORESAID DIRECTORS FROM APRIL TO DECE MBER WAS @ RS.2,00,000/- PER MONTH AND IT WAS INCREASED TO RS.4,00,000/- PER MONTH FROM JANUARY ONWARDS. THE ASSES SEE WAS ASKED TO JUSTIFY THE PAYMENTS MADE TO THE AFORESAID DIRECT ORS AND TO SHOW CAUSE AS TO WHY THE AMOUNT NOT BE CONS IDERED FOR DISALLOWANCE U/S 40A(2) OF THE ACT. AO NOTED THAT ASSESSE E SUBMITTED THAT THE TURNOVER OF THE ASSESSEES COMPANY WAS INCREASED DUE TO THE HARD-WORK OF THE DIRECTORS. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO IN VIEW OF THE FACT THAT THEY WERE PAID A SALARY OF RS.2,00,000/- PER M ONTH UPTO DECEMBER 2006 AND SUBSEQUENTLY INCREASED TO RS.4,00,000 /- PER 6 MONTH. AO ALSO NOTICED THAT THE PAYMENTS TO THE DIRECT ORS WERE MADE IN THE FORM OF EX-GRATIA AND IT WAS PAID BEFORE THE MONTH TO WHICH IT PERTAINS. HE ACCORDINGLY MADE DISALLOWANCE OF RS.15,00,000/- U/S 40A(2) OF THE ACT. AO ALSO NOTICED THAT RS.6,83,408/- WAS PAID AS SALES COMMISSION TO THE AFORESAID TWO DIRECTORS. AO WAS OF THE VIEW THAT WHEN THERE WAS A SU BSTANTIAL INCOME REMUNERATION AND EX-GRATIA PAYMENT, THERE WAS N O JUSTIFICATION IN PAYMENT OF SALES COMMISSION. HE ACCORDINGLY DISALLOWED THE COMMISSION OF RS.6,83,408/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. 7. WITH RESPECT TO THE DISALLOWANCE MADE U/S 40A(2) OF TH E ACT, LD.CIT(A) UPHELD THE ORDER OF AO BY HOLDING AS UNDER : 14. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEEN TH AT THE APPELLANT COMPANY HAS PAID SUBSTANTIAL EX-GRATIA PAYMENT TO B OTH THE DIRECTORS WHICH IS FAR MORE THAN THE REMUNERATION O F RS. 30 LACS, PROVIDED TO EACH OF THE DIRECTORS. IT IS ALSO SEEN THAT THE PAYMENT HAS NOT BEEN MADE IN SYSTEMATIC MANNER AS E X- GRATIA OF FEBRUARY WAS TAKEN BY ONE OF ITS DIRECTOR IN DECEMBER ITSELF. CONSIDERING THE CONTROLLING INTERE ST OF BOTH THE DIRECTORS IN THE APPELLANT COMPANY AND CONSIDERING THE FACT THAT EX-GRATIA PAYMENT HAS BEEN MADE NOT IN A SYSTE MATIC MANNER, AS POINTED OUT BY THE ASSESSING OFFICER, I FIND THAT ORDER OF ASSESSING OFFICER IN DISALLOWING RS. 15 LA CS U/S. 40A(2) OF THE INCOME-TAX ACT, IS QUITE REASONABLE. ACCORDINGLY, THE GROUND IS DISMISSED. 8. WITH RESPECT TO THE DISALLOWANCE OF SALES COMMISSION, LD. CIT(A) GRANTED PARTIAL RELIEF BY HOLDING AS UNDER : 24. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, THE APPELL ANT CLAIMS THAT RS. 3,83,408/- HAS BEEN MADE TO VARIOUS DEALERS WHILE RS.3 LACS WAS MADE TO MRS. ARUNDHATI HUGHEN THOMAS, ONE OF 7 THE DIRECTORS WHO WAS INSTRUMENTAL IN GETTING WORK OF RS.12 LAC FROM RELIANCE INDUSTRIES LTD., JAMNAGAR. ACCOR DINGLY, IT WAS SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JU STIFIED IN DISALLOWING THE COMMISSION. I HAVE GONE THROUGH THE DETAILS AS WELL AS SUBMISSIONS MADE BY THE APPELLANT. AS FAR AS PAYMENT OF COMMISSION OF RS. 3,83,408/- IS CONCERNED, THE SAME IS HELD TO BE ALLOWABLE AS IT HAS BEEN PAID TO VARIOUS DEALERS. AS FAR AS PAYMENT OF RS.3 LACS TO MRS. ARUNDHATI HUGHEN THOMAS IS CONCERNED, THE APPELLANT CLAIMS THAT THE PAYMENT WAS MADE FOR GETTING THE WORK FROM RELIANCE INDUSTRIES. THIS SUBMISSION OF THE APPELLANT IS NOT SUBSTANTIATED BY THE FACT. FURTHER, THERE IS MERIT IN THE CONTENTION OF THE ASSESSING OFFICER THAT MRS. ARUND HATI HUGHEN THOMAS WAS GETTING HUGE REMUNERATION AS WELL AS EX- GRATIA PAYMENT AND THEREFORE THERE WAS NO REASON FO R MAKING PAYMENT OF COMMISSION TO HER. ACCORDINGLY, COMMISSI ON OF RS.3 LACS PAID TO MRS. ARUNDHATI HUGHEN THOMAS IS DISALLOWED WHILE RS.3,83,408/- PAID TO DEALERS IS A LLOWED. THUS, THE APPELLANT GETS RELIEF OF RS.3,83,408/-. THUS, THE GROUND IS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN AP PEAL BEFORE US. 9. BEFORE US LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD. CIT(A). HE FURTHER SUBMITTED THAT THE EXPEN SE IS REVENUE NEUTRAL BECAUSE THE EXPENSES ON ACCOUNT OF PA YMENT TO DIRECTORS HAS BEEN OFFERED AS INCOME BY THE RESPECTIVE DIRECTORS IN THEIR RETURN OF INCOME AND THEY ARE ALSO TAXED AT MAXIMU M RATES AND THEREFORE NO DISALLOWANCE IS CALLED FOR AND FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONOURABLE BOMBAY HIGH COURT IN THE CASE OF INDO-SAUDI SERVICES (TRAVEL) P. LTD REPORTED IN (2009) 310 ITR 306 (BOM). LD.D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE UPHOLDING THE DISALLOWAN CE U/S 40A(2) OF THE ACT, LD.CIT(A) HAS NOTED THAT THE EX-GRA TIA 8 PAYMENT TO BOTH THE DIRECTORS WAS FAR MORE THAN REMUN ERATION THAT WAS PAID TO HIM AND THE PAYMENT OF EX-GRATIA WAS N OT MADE IN A SYSTEMATIC MANNER. ON THE OTHER HAND, LD.A.R. HAS SUBMITTED THAT THE AMOUNTS RECEIVED FROM ASSESSEE HAVE BEEN OFFERED BY THE RESPECTIVE DIRECTORS IN THEIR RETURN OF INCO ME AND THEY ARE ALSO TAXED AT MAXIMUM RATE AND IT IS REVENUE N EUTRAL. HOWEVER, LD.A.R. HAS NOT PLACED ANY DOCUMENTARY EVIDENCE IN ITS SUPPORT AND FURTHER THE AFORESAID ASSERTION MADE BY LD.A .R. HAS NOT BEEN CONTROVERTED BY REVENUE. IN SUCH A SITUATION WE ARE OF THE VIEW, THAT THE MATTER BE RE-EXAMINED BY THE AO IN T HE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF INDO- SAUDI SERVICES (SUPRA) AND AS PER LAW. WE THEREFORE RESTO RE THE ISSUE BACK TO THE FILE OF AO. THE ASSESSEE IS ALSO DIRECTE D TO PROMPTLY SUBMIT THE DETAILS CALLED FOR BY AO. IN CASE TH E ASSESSEE FAILS TO SUBMIT THE REQUIRED DETAILS, THE AO SHALL BE FREE TO PROCEED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. WITH RESPECT TO THE DISALLOWANCE OF SALES COMMISSION, WE FIND THA T LD.CIT(A) HAS NOTED THAT THE PAYMENT OF RS.3,00,000/- TO M RS. ARUNDHATI HUGHEN THOMAS BEING COMMISSION FOR GETTING T HE WORKERS FROM RELIANCE INDUSTRIES LIMITED WAS NOT SUPPORTE D BY NECESSARY EVIDENCE. THE FINDINGS OF LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE ASSESSEE. IN VIEW OF THESE FACTS, W E FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) ON THIS A SPECT. THUS THE GROUNDS 2 AND 4 OF THE ASSESSEE ARE PARTLY ALLOWED. 11. GROUND NO.3 IS WITH RESPECT TO AD-HOC DISALLOWANCE O F EXPENSES. 9 11.1 AO NOTICED THAT ASSESSEE HAD CLAIMED RS.11,72,873/- AND RS.19,40,472/- UNDER ENTERTAINMENT AND EXHIBITION EXPENSES . AO NOTICED THAT IN THE ABSENCE OF ANY DETAILS AND VOUCHE RS, THE FULL EXPENDITURE CANNOT BE ALLOWED. HE ACCORDINGLY ALLOWED 2 5% OF THE EXPENSES AND MADE DISALLOWANCE OF RS.7,78,340/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD. CIT(A), WHO GRANTED PARTIAL RELIEF BY HOLDING AS UNDER : 17.THIS GROUND PERTAINS TO DISALLOWANCE OF RS. 7,7 8,240/- OUT OF ENTERTAINMENT AND EXHIBITION EXPENSES. THE ISSUE HAS BEEN DISCUSSED IN PARA 9 OF THE ASSESSMENT ORDER. THE AS SESSING OFFICER NOTICED THAT THE APPELLANT COMPANY HAS DEBI TED ITS PROFIT & LOSS A/C BY RS.11,72,873/- AND RS. 19,40,4 72/- UNDER THE HEAD ENTERTAINMENT AND EXHIBITION EXPEN SES. THE ASSESSING OFFICER DISALLOWED 25% OF THESE AMOUNTS O N AD-HOC BASIS, STATING THAT VOUCHERS AND DETAILS ARE NOT AV AILABLE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AP PELLANT SUBMITTED THAT THE EXPENDITURE ON EXHIBITION EXPENS ES WAS INCURRED FOR PARTICIPATION IN VARIOUS EXHIBITIONS F OR GENERATING CUSTOMERS LEADS AND ALSO LETTING THE MARKET KNOW MO RE OF THE PRODUCT, THE COMPANY OFFERED FOR GETTING NEW CUSTOM ERS. THE APPELLANT CONTENDS THAT THE DISALLOWANCE IS NOT JUS TIFIED AS ALL THE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER FOR VERIFICATION. THE APPELLANT ALSO SUBMITTED THE DETAILS OF THESE EXPENSES FROM PAGE 41 TO 44 OF PAPER BOOK TOO . 18. I HAVE GONE THROUGH THE SUBMISSIONS AS WELL AS DETAILS FILED BY THE APPELLANT. CONSIDERING THE TOTALITY OF FACTS, IT IS HELD THAT ENDS OF JUSTICE WILL MEET, IF THE DISALLO WANCE IS RESTRICTED TO 5% OF THE TOTAL' EXPENSES. ACCORDINGL Y, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISAL LOWANCE TO 5% OF THE TOTAL EXPENDITURE UNDER BOTH THE HEADS. THUS , THE GROUND IS PARTLY ALLOWED . AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS NOW IN AP PEAL BEFORE US. 12. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFO RE AO AND LD. CIT(A). LD.D.R. ON THE OTHER HAND SUPPORTED T HE ORDER OF AO. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IS WITH RESPECT TO DISALLOWAN CE OF 10 ENTERTAINMENT AND EXHIBITION EXPENSES ON AD-HOC BASIS. A O WHILE DISALLOWING THE EXPENSES HAS NOTED THAT AS NO DETAILS AND VOUCHERS IN SUPPORT OF EXPENSES WERE FURNISHED, HE PROC EEDED TO DISALLOW 25% OF ENTERTAINMENT AND EXHIBITION EXPENSES WHEN THE MATTER WAS CARRIED BEFORE LD.CIT(A), WE FIND THAT LD. CIT(A) AFTER CONSIDERING THE TOTALITY OF THE FACTS, RESTRICTED THE DIS ALLOWANCE TO 5% AS AGAINST TO 25% MADE BY AO. WE ARE OF THE VIEW T HAT LD.CIT(A) WAS FAIR IN REDUCING THE DISALLOWANCE FROM 25% TO 5 %. BEFORE US, ASSESSEE HAS NOT PLACED ANY MATERIAL TO CONTR OVERT THE FINDINGS OF LD. CIT(A). WE THEREFORE FIND NO REASON TO INTER FERE WITH THE ORDER OF LD. CIT(A) AND THUS, THE GROUND OF THE ASSESSEE IS DISMISSED. 14. GROUND NO.5 IS WITH RESPECT TO DISALLOWANCE OF LEGA L EXPENSES . 14.1 ON PERUSAL OF THE DETAILS OF EXPENSES, AO NOTICED TH AT ASSESSEE HAS CLAIMED RS.20,32,969/- AS LEGAL EXPENSES. ASS ESSEE WAS ASKED TO FURNISH THE DETAILS LIKE NAME AND ADDRESS, AM OUNT PAID AND NATURE OF LEGAL ADVICE SOUGHT. AO NOTED THAT A SSESSEE FURNISHED ONLY THE NAME OF THE PARTIES WITHOUT ADDRESS AND NATURE OF SERVICES RENDERED. HE ACCORDINGLY DISALLOWED TH E EXPENSES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). WHILE DEALING THE ISSUE LD.CIT(A) HAS NOTED THAT ASSESSEE HAS NOT GIVEN FULL DETAILS EVEN IN THE APPE LLATE PROCEEDINGS. TO THE EXTENT THE NECESSARY DETAILS WERE FURNISHED, LD.CIT(A) GRANTED RELIEF OF RS.15,78,389/- AND CONFIRMED 11 DISALLOWANCE FOR BALANCE RS.4,54,580/-. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US, LD.A.R . REITERATED THE SUBMISSIONS MADE BEFORE AO AND CIT(A). LD.D .R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A) AND SU BMITTED THAT ASSESSEE DID NOT FURNISH THE REQUIRED DETAILS EVEN IN APPELLATE PROCEEDINGS AND EVEN BEFORE TRIBUNAL AND THEREFO RE NO INTERFERENCE TO THE ORDER OF LD.CIT(A) IS CALLED FOR. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO DISALLOWANCE OF LEGAL EXPENSES. WE FIND THAT LD.CIT(A) WHILE GRANTING PARTIAL RELIEF TO THE ASSESSEE HAS NOTED THAT AS SESSEE HAS NOT FURNISHED FULL DETAILS EVEN BEFORE HIM. TO THE EXTENT TH E DETAILS WERE FURNISHED THE RELIEF WAS ALLOWED BY LD.CIT(A). BEFO RE US, ALSO ASSESSEE HAS NOT FURNISHED THE REQUIRED DETAILS. IN SUCH A SITUATION, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THE GROUND OF ASSESSEE IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED ON 31 ST DAY OF JULY, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 31 ST JULY, 2017. YAMINI 12 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. THE CIT(A)-5, PUNE. THE CIT-5, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $+,-/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.