Linea Fashions (India) Pvt Ltd., CHENNAI V. DCIT, CHENNAI

ITA 80/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7409 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-04-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 11-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B GOWTHAMAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , , $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.65/CHNY/2017 % % /ASSESSMENT YEAR: 2011-12 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. VS. M/S.LINEA FASHIONS (INDIA)- PVT. LTD., NO.51-57, SDF III MEPZ, SEZ, TAMBARAM, CHENNAI-600 045. [PAN: AAACL 7616 C] ( ( /APPELLANT) ( )*( /RESPONDENT) ./ ITA NO.80/CHNY/2017 % % /ASSESSMENT YEAR: 2011-12 M/S.LINEA FASHIONS (INDIA) PVT. LTD., NO.51-57, SDF III MEPZ, SEZ, TAMBARAM, CHENNAI-600 045. [PAN: AAACL 7616 C] VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. ( ( /APPELLANT) ( )*( /RESPONDENT) DEPARTMENT BY : MR. ARV.SREENIVASAN, JCIT ASSESSEE BY : MR.B.GOWTHAMAN, CA , /DATE OF HEARING : 11.07.2018 , /DATE OF PRONOUNCEMENT : 13.07.2018 ITA NOS.65 & 80/CHNY/2017 :- 2 -: / O R D E R PER S. JAYARAMAN , ACCOUNTANT MEMBER : THE REVENUE AS WELL AS THE ASSESSEE FILED THE APPE AL/CROSS-APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI, IN ITA NO.147/2015-16 DATED 31.10.2016 FOR THE AY 2011-12. 2. M/S.LINEA FASHIONS (INDIA) PVT. LTD., THE ASSESS EE, IS CARRYING ON THE BUSINESS OF MANUFACTURING APPAREL FOR EXPORTING. W HILE MAKING ASSESSMENT FOR THE AY 2011-12, THE AO DISALLOWED TH E ASSESSEES CLAIM OF GRATUITY FOR THE REASON THAT THE ASSESSEE HAS NOT F URNISHED THE REQUIRED PROOF IN SUPPORT OF ITS CLAIM. THE AO DISALLOWED T HE DEPRECIATION ON THE GUEST HOUSE AS THE ASSESSEE HAS NOT PRODUCED RELEVA NT MATERIAL IN SUPPORT OF ITS CLAIM. THE AO DISALLOWED EMPLOYEES ESI CONTRIBUTION COLLECTED BY THE COMPANY BUT WAS NOT PAID BEFORE TH E DUE DATE SPECIFIED UNDER ESI ACT U/S.36(1)(VA) R.W.S.2(24)(X). THE AO FOUND DIFFERENCE BETWEEN THE AMOUNT SHOWN IN THE FORM NO.26AS AND TH E TDS CLAIMED IN THE RETURN. SINCE THE ASSESSEE HAS NOT PROVIDED SUF FICIENT PROOF THAT THE DIFFERENTIAL SUM WAS ADMITTED IN THE EARLIER YEAR, HE ADDED THE DIFFERENCE BETWEEN THE GROSS-RECEIPTS AS PER THE TDS CLAIM AND FORM NO.26AS AS AN INCOME. THE AO HAS ALSO DISALLOWED 75% OF THE ASSE SSEES CLAIM TOWARDS REPAIRS AND MAINTENANCE FOR FACTORY AND GUEST HOUSE FOR WANT OF PROOF. FURTHER, THE ASSESSEE CLAIMED LEAVE PAY PAYABLE WHI CH WAS NOT PAID TILL ITA NOS.65 & 80/CHNY/2017 :- 3 -: MARCH, 2011 SINCE IT WAS SHOWN AS AN OUTSTANDING AN D WAS NOT PAID BEFORE THE DUE DATE U/S.139(1), THE AO DISALLOWED I T. 3. AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEFORE THE LD.CIT(A). IN RESPECT OF THE ISSUE ON THE DISALLOWANCE TOWARDS RE PAIRS AND MAINTENANCE, THE LD.CIT(A) HAS RESTRICTED THE DISALLOWANCE AT 25 %. IN RESPECT OF ALL OTHER ISSUES, HE ALLOWED THE ASSESSEES APPEAL. 4. AGGRIEVED, THE REVENUE FILED THE ABOVE APPEAL ON ALL THE ABOVE ISSUES. THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE LD.CIT(A) RESTRICTING THE DISALLOWANCE ON REPAIRS AND MAINTEN ANCE AT 25% OF THE TOTAL EXPENDITURE. ON THE REVENUES APPEAL, THE LD. DR SUBMITTED THAT THE LD.CIT(A) IN VIOLATION OF RULE 46A DECIDED THE ISSU ES VIZ., DISALLOWANCE ON THE CLAIM OF GRATUITY, EXCESS CLAIM OF DEPRECIATION , THE ADDITION MADE TOWARDS DIFFERENCE BETWEEN GROSS-RECEIPTS AND FORM NO.26AS AND DISALLOWANCE MADE U/S.43B. IN RESPECT OF DISALLOWA NCE MADE U/S.36(1)(VA) R.W.S.2(24)(X), THOUGH, THE LD.CIT(A) RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN ALLOWIN G THE APPEAL, THE LD.DR SUBMITTED THAT THE DEPARTMENT HAS FILED A REVIEW PE TITION BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. IN RESPECT OF TH E DISALLOWANCE ON THE CLAIM OF EXPENDITURE TOWARDS REPAIRS AND MAINTENANC E OF BUILDING, THE LD.DR SUBMITTED THAT THE LD.CIT(A) ERRED IN NOT APP RECIATING THE ITA NOS.65 & 80/CHNY/2017 :- 4 -: CONTENTION OF THE AO THAT NO PROOF FOR CLAIM ON REP AIRS AND MAINTENANCE FOR FACTORY AND GUEST HOUSE WAS FURNISHED BY THE AS SESSEE. THE BURDEN WAS ON THE ASSESSEE TO PRODUCE ALL EVIDENCES IN SUP PORT OF THE CLAIMS MADE AND THE ASSESSEE FAILED TO DISCHARGE ITS BURDE N AND THUS PLEASED TO ALLOW THE REVENUES APPEAL. 5. PER CONTRA, THE LD.AR SUPPORTED THE ORDER OF THE LD.CIT(A) IN RESPECT OF ALL THE ABOVE ISSUES, BUT THE LD.AR SUBM ITTED THAT THE LD.CIT(A) ERRED IN HIS ORDER IN RESTRICTING THE DISALLOWANCE AT 25% OF THE TOTAL EXPENDITURE AS AGAINST 75% DISALLOWED BY THE AO. T HE LD.AR SUBMITTED THAT THE LD.CIT(A) FAILED TO APPRECIATE THAT THE AO HAD NOT DISALLOWED SPECIFIC ITEM OF EXPENDITURE ON THE GROUND THAT IT IS NOT ALLOWABLE BUT ONLY MADE AN ADHOC DISALLOWANCE. ALL THE REPAIRS AND MAI NTENANCE EXPENSES WERE INCURRED BY THE ASSESSEE TOWARDS BUSINESS PURP OSE ONLY AND HENCE, THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE TO 25% OF THE TOTAL EXPENDITURE. 6. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT ORDERS. WE FIND FROM THE ASSESSMENT ORDER, THE EMP LOYEES ESI CONTRIBUTION COLLECTED BY THE COMPANY TILL FEBRUARY , 2011 WAS PAID ON OR BEFORE 29.03.2011 AND THE COLLECTION FOR THE MONTH OF MARCH WAS PAID ON 26.04.2011, WELL WITHIN THE TIME OF THE FILING RETU RN UNDER THE IT ACT. THUS, THE LD.CIT(A) HAS CORRECTLY FOLLOWED THE DECI SION OF THE HONBLE ITA NOS.65 & 80/CHNY/2017 :- 5 -: JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. IN DUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD.. HENCE, THE CORRESPON DING GROUNDS OF THE REVENUE ON THIS ISSUE ARE DISMISSED. 7. IN RESPECT OF ALL OTHER ISSUES, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT FURNISHED THE REQUIRED DE TAILS AND HENCE, THE AO MADE THE IMPUGNED DISALLOWANCES. FROM THE ORDER OF THE LD.CIT(A), WE FIND THAT THE ASSESSEE HAS FURNISHED CERTAIN DETAIL S BEFORE THE LD.CIT(A) WHICH HAVE NOT BEEN FURNISHED TO THE AO. SINCE THE REVENUE IS CHALLENGING THE ORDER OF THE LD.CIT(A) UNDER RULE 4 6A, WE FIND MERIT IN THE CLAIM OF THE REVENUE AND HENCE ALL THESE ISSUES ARE REMITTED BACK TO THE AO FOR FRESH EXAMINATION. THE ASSESSEE SHALL F URNISH ALL THE MATERIALS IN SUPPORT OF ITS CLAIMS BEFORE THE AO AND COMPLY T O THE AOS REQUIREMENT AS PER LAW. THE AO IS FREE TO CONDUCT APPROPRIATE ENQUIRY AS DEEMED FIT BUT HE SHALL FURNISH ADEQUATE OPPORTUNITY TO THE AS SESSEE ON THE MATERIAL ETC., TO BE USED AGAINST IT AND DECIDE THESE ISSUES IN ACCORDANCE WITH LAW. ON THE ASSESSEES APPEAL, ON THE RESTRICTION OF DIS ALLOWANCE TOWARDS REPAIRS AND MAINTENANCE @25% BY THE LD.CIT(A), SINC E THE REVENUES APPEAL ON THIS ISSUE IS REMITTED BACK, CONSEQUENTLY THIS ISSUE GETS MERGED IN IT. IN THE FACTS AND CIRCUMSTANCES, THE ASSESSE ES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.65 & 80/CHNY/2017 :- 6 -: 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH JULY, 2018, IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: JULY 13 TH , 2018. TLN , )12 32 /COPY TO: 1. ( /APPELLANT 4. 4 /CIT 2. )*( /RESPONDENT 5. 2 ) /DR 3. 4 ( ) /CIT(A) 6. % /GF