Eagle Agro Farms Pvt Ltd., Pune V. Income-tax Officer, Pune

ITA 825/PUN/2010

• Counselvise Citation: 82524514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 28-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 825/PN/10 (ASSTT. YEAR 2001-02) EAGLE AGGRO FARMS P. LTD. .. APPELLANT 4 TH FLOOR, PARMAR GALLERY, S. NO. 77, WANWADI, PUNE 411 040 PAN AAACE 3848H VS. INCOME-TAX OFFICER, .. RESPONDENT WD. 8(2), PUNE APPELLANT BY: SHRI M K KULKARNI RESPONDENT BY: SHRI S K AMBASTHA DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT : 18.10.2011 ORDER PER G.S. PANNU, AM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V, PUNE DA TED 31.03.2010, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2001-02. 2. GROUND NOS 1 & 2 OF THE APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS NOT JUSTIFIED IN ENHANCING THE ASSESSED INCOME BY HOLDI NG THAT SECTION 35D WAS NOT APPLICABLE AND THE DEDUCTION GRANTED BY AO INVOKING THAT SECTION WAS NOT CORRECT. SINCE THE FEES TO ROC WERE PAID FOR OBTAINMENT OF INCREAS ED WORKING CAPITAL THE EXPENDITURE WAS ALLOWABLE AS REVENUE EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE GROUND NO. 5 REGARDING DEPRECIATION ON POULTRY SHADE CLAIMED @ 2 5% WAS NOT PRESSED BEFORE CIT(A) UNDER MISCONCEPTION OF LAW. SUCH CLAIMS CANNOT BE A LLOWED AFTER AMENDMENT EFFECTIVE FROM 1.4.2004. PRIOR TO THAT, THE CLAIM WAS ALLOWAB LE. THERE IS NO ESTOPPELS AGAINST LAW. THE GROUND BE ALLOWED ACCORDINGLY. 2 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR T HE ASSESSEE DID NOT PRESS THE ABOVE GROUNDS OF APPEAL AND THEREFORE, GROUNDS N O 1 L& 2 OF THE APPEAL ARE DISMISSED. 4. THE NEXT GROUND RELATES TO THE AD HOC DISALLOWANCE O F RS 2,00,000/- OUT OF VARIOUS EXPENSES. THE ASSESSEE IS A COM PANY ENGAGED IN POULTRY BUSINESS. THE ASSESSING OFFICER MADE AN AD HOC DISA LLOWANCE OF RS 2,00,000/- OUT OF TELEPHONE, MISCELLANEOUS, TRAVELLIN G AND CONVEYANCE EXPENSES FOR THE REASON THAT THE EXPENSES WERE NOT FULLY VERIFI ABLE AS THE ASSESSEE HAD NOT MAINTAINED PROPER VOUCHERS FOR VERIFICATION. IN APPEAL , THE COMMISSIONER OF INCOME-TAX (APPEALS) AFFIRMED DISALLOWANCE MADE BY THE ASSESSING OFFICER. HE HELD THAT THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON & ENGG. CO. 253 ITR 749 (GUJ) RELIED UPON BY T HE ASSESSEE WAS NOT APPLICABLE AS THE ISSUE INVOLVED THEREIN WAS REGARDING PERSONAL USE AND NOT NON-VERIFIABILITY OF THE EXPENDITURE AS IN THE ASSESSEE S CASE. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THE ASSESSEE HEREIN IS A COMPANY INCORPORATED UNDER THE COMPANIES A CT, 1956 AND ITS ACCOUNTS ARE DULY AUDITED AND AUDIT REPORT UNDER SECTIO N 44AB, TRADING & PROFIT AND LOSS ACCOUNT, BALANCE SHEET, ETC., WERE ALL SUBMITTED BEFORE THE ASSESSING OFFICER, WHICH FACT HAS BEEN DULY NOTED BY THE ASSESSING OFFICER AND THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING AD HOC DI SALLOWANCE OUT OF VARIOUS EXPENSES ON THE GROUND OF NON-VERIFIABILITY OF SUCH EXPENSES. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE DEFENDED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IT EMERGES FROM THE ASSESSMENT ORDER THAT THE ASSESSEE, A CORPORATE ENTITY, FILE D ITS RETURN OF INCOME ACCOMPANIED BY COMPUTATION OF TOTAL INCOME, AUDIT REPOR T UNDER THE COMPANIES ACT, 1956 AS WELL AS UNDER SECTION 44AB OF THE ACT, TRADI NG & PROFIT AND LOSS ACCOUNT, BALANCE SHEET, ETC. MOREOVER, WE DO NOT FIND ANY PARTICULAR INSTANCE OF 3 NON-MAINTENANCE OF PROPER VOUCHER BROUGHT OUT BY THE ASSESSING OFFICER, RATHER THERE IS ONLY A BALD ASSERTION, UNSUPPORTED BY ANY FACTU AL DETAIL. THEREFORE, WE DO NOT FIND ANY SUBSTANCE IN THE ACTION OF THE ASSESSING OF FICER IN DISALLOWING AN AD HOC SUM FOR NON-MAINTENANCE OF PROPER VOUCHERS. WE FU RTHER FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. KIRL OSKAR FERROUS INDUSTRIES LTD., PUNE IN INCOME-TAX APPEAL NO. 622 OF 2010 DAT ED 04.07.2011 HAS HELD A VIEW THAT IN THE CASE OF A LIMITED COMPANY EXPENDITURE INCURRED ON TELEPHONE, VEHICLE ETC., WHICH ARE CERTIFIED BY THE AUDITORS OF THE COMPANY AS ALSO THE AUDITORS UNDER THE INCOME-TAX ACT CANNOT BE DISALLOWED I N A MECHANICAL AND ROUTINE MANNER. FOLLOWING THE PRECEDENT, THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ASPECT AND DIRECT THE ASSESSI NG OFFICER TO DELETE AD HOC DISALLOWANCE MADE OUT OF VARIOUS EXPENSES. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF OCTOBER, 2011. SD/- SD/- (I C SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 18 TH OCTOBER, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT(A)-V PUNE 4. THE CIT-V, PUNE 5. THE D.R, A BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE 4