MOIZ M. LOKHANDWALA, MUMBAI V. ACIT CEN CIR 46, MUMBAI

ITA 795/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83839 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH
• Assessee Lawyers: S ATISH CHANDAK; BHUMIKA VORA
• Section: 143(3); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI AMIT SHUKLA , J M ITA NO. 795 / MUM/20 1 2 ( ASSESSMENT YEAR : 2008 - 09 ) MOIZ M. LOKHANDWALA, V - 14 - C, TERTULLIAN ROAD, OPP. DR. PETER DIAS ROAD, BANDRA (W), MUMBAI - 400 018 VS. ACIT, CC - 46, MUMBAI PAN/GIR NO. : A A APL 3378 C ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI SATISH CHAND AK & BHUMIKA VORA /REVENUE BY : SHRI PREETAM SINGH DATE OF HEARING : 9 TH SEPT. 201 4 DATE OF PRONOUNCEMENT : 9 TH SEPT , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER CIT(A ) , DATED 30 - 11 - 2011 FOR ASSESSMENT YEAR 2008 - 09 , IN THE MATTER OF ORDER PASSED UNDER SECTION 153A R.W .S. 143(3) OF THE ACT . 2 . THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO UPHOLDING THE AD - HOC DISALLOWANCE OF BUSINESS PROMOTION EXPENSES OF RS.3 LAKHS. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE IS MAINLY E NGAGED IN THE BUSINESS OF CONSULTANCY. DURING THE YEAR A SEARCH WAS CARRIED OUT ON THE LOKHANDWALA GROUP OF CASES, THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 153A R.W.S ITA NO. 795 /1 2 2 143(3) OF THE ACT . W HILE MAKING ASSESSMENT THE AO STATED THAT ASSESSEE HAD SHOWN CO NSULTANCY INCOME OF RS. 80,89,200/ - AND CLAIMED BUSINESS PROMOTION EXPENSES OF RS.6,36,146/ - . THE AO ALSO STATED THAT ASSESSEE FAILED TO FURNISH THE DETAILS ASKED FOR AND DISALLOWED RS. 3 LAKHS OUT OF BUSINESS PROMOTION EXPENSES. BY THE IMPUGNED ORDER, THE C IT(A) CONFIRMED THE DISALLOWANCE. HENCE, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 . IT WAS ARGUED BY THE LEARNED AR THAT DURING THE COURSE OF SEARCH AT BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE, NO INCRIMINATING MATERIAL/EVIDENCE WAS FOUND INDICAT ING THAT EXPENDITURE RECORDED IN THE BOOKS OF ACCOUNTS ARE NOT GENUINE AND THE AO IN THE ASSESSMENT ORDER HAS NOT BEEN ABLE TO BRING ANYTHING ON RECORD TO SHOW THAT THERE WAS MATERIAL OR EVIDENCE TO SUBSTANTIATE THE ESTIMATE MADE BY HIM FOR THE DISALLOWANC E OF EXPENSES . 5. IT WAS FURTHER CONTENDED THAT THE SAID DISALLOWANCE IS ALSO LIABLE TO BE DELETED IN VIEW OF THE FOLLOWING DECISIONS OF THE ITAT : - (I) ITAT KOLKATA BENCH DECISION IN THE CASE OF LMJ INTERNATIONAL, 119 TTJ 214; (II) ITAT, DELHI BENCH DECI SION IN THE CASE OF SHRI ANIL KUMAR BHATIA VS. ACIT, CENTRAL CIRCLE - 17, NEW DELHI, (ITA NO. 2660 TO 2665/DEL/2009) DATED 01.01.2010. (III) ITAT MUMBAI BENCH DECISION IN THE CASE OF VRAJ FORGINGS LTD. AND VIRAJ IMPOEXPO LTD. IN ITA NO.1948 AND 1949 . 6. ON TH E OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT THE AO WAS JUSTIFIED IN DISALLOWANCE OF RS. 3 LAKHS OUT OF TOTAL BUSINESS PROMOTION EXPENDITURE OF RS. 3,36,146/ - CLAIMED BY THE ASSESSEE. ITA NO. 795 /1 2 3 7. WE HAVE CONSIDERED RIVAL C ONTENTION, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT GROSS INCOME OF ASSESSEE FROM CONSULTANCY WAS TO THE TUNE OF RS. 80,89,200/ - AFTER DEDUCTING EXPENSES FOR EARNING CONSULTANCY INCOME, THE NET INCOME OF RS. 6 4,69,046/ - WAS OFFERED BY THE ASSESSEE. THUS, 80% OF THE GROSS RECEIPTS HAVE ALREADY BEEN OFFERED BY THE ASSESSEE AND 2 0% HAS BEEN CLAIMED AS EXPENDITURE. OUT OF TOTAL EXPENDITURE S SO CLAIMED, THE EXPENDITURE CLAIMED ON ACCOUNT OF BUSINESS PROMOTION WAS TO THE TUNE OF RS. 6,36,146/ - . ON AD - HOC BASIS THE AO HAD DISALLOWED RS. 3 LAKHS, WHICH WORKS OUT TO BE 50% OF THE EXPENDITURE SO CLAIMED. KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS OF CONSULTANCY, WHEREIN SUCH TYPE OF EXPENDITURE IS REQUIRED TO BE INCU RRED TO ENTERTAIN THE CLIENTS AND THE FACT THAT ASSESSEE HAS ALREADY OFFERED 80% OF THE GROSS RECEIPTS AS NET INCOME LIABLE TO TAX THE AD - HOC DISALLOWANCE MADE BY AO APPEARS TO BE UN REASONABLE . KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 10% OF THE EXPENDITURE SO CLAIMED. ACCORDINGLY, WE CONFIRM THE DISALLOWANCE OF RS. 63,614/ - . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCE D IN THE OPEN COURT ON THIS 09 /09/ 201 4 . /09/ 2014 SD/ - SD/ - ( ) ( AMIT SHUKLA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMB AI ; DATED 09/09 /2014 /PKM , PS ITA NO. 795 /1 2 4 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//