Uni Sure Private Ltd., New Delhi V. DCIT, New Delhi

ITA 928/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6543 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 15-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SB GUPTA
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Assessment record

Judgement Text

ITA NO.928/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 928/DEL/2011 A.Y. : 2007-08 M/S UNI SULE PRIVATE LIMITED, 2027/7, CHUNA MANDI, PAHARGANJ, NEW DELHI (PAN: AAACU4144N) VS. DCIT, CIRCLE 18(1), NEW DELHI (APPELLANT ) (RESPONDENT ) ASSESSEE BY : SH. SB GUPTA, CA DEPARTMENT BY : SH. SARABJEET SINGH, SR. DR DATE OF HEARING: 15-02-2016 DATE OF ORDER : 01-3-2016 ORDER PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXI, NEW DELHI DATED 20.12.2010 PERTAINING TO ASSESSMENT YEAR 2007-08 ON THE FOLLOW ING GROUNDS:- 1. THE ORDER PASSED BY THE LD. ASSESSING AUTHORITY IS ARBITRARY, BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE LD. ASSESSING AUTHORITY COULDN'T UNDERSTAND THE NATURE OF THE EXPENSE AND HAS INCORRECTLY TREATED INTEREST PAID F OR THE LATE PAYMENTS OF EXCISE AND SERVICE TAX AS A PENALTY/ P ENAL INTEREST. 3. THE LD. ASSESSING AUTHORITY HAS WRONGLY DISALLOWED 1/7 TH OF THE TOTAL VEHICLE RUNNING AND MAINTENANCE EXPENSES AND 1/7 TH OF DEPRECIATION ITA NO.928/DEL/2011 2 CLAIMED ON ALL THE VEHICLES INCLUDING CARS WITHOUT HAVING ANY ADVERSE MATERIALS IN THE RECORDS. 4. THE LD. ASSESSING AUTHORITY HAS WRONGLY MADE ADDITI ONS OF VEHICLE EXPENSES ON AD HOC BASIS WITHOUT IDENTIFY THE ELEME NT OF VEHICLE EXPENSES WHICH DIDN'T RELATE TO THE BUSINESS OF THE ASSESSEE. 5. THE LD. ASSESSING AUTHORITY IGNORED THE EXPENSE DET AIL FILED OF THE TWO CARS USED BY THE PAID DIRECTOR EMPLOYEES ON THE POO L BASIS AND MADE 1/7TH DISALLOWANCE OF THE ENTIRE VEHICLE' EXPENSES. 6. THE LD. ASSESSING AUTHORITY IGNORED THE FACT THAT A S THE ASSESSEE HAS ALREADY PAID FRINGE BENEFIT TAX ON THE TOTAL VEHICL E RUNNING & MAINTENANCE EXPENSES AND ON DEPRECIATION CLAIMED ON CAR AS PER INCOME-TAX ACT, THE DISALLOWANCE OF THE SAME TANTAM OUNT TO DOUBLE TAXATION. 7. THE ASSESSEE RETAINS THE RIGHT TO ADD, AMEND OR ALT ER ANY OR ALL GROUNDS OF APPEAL. 8. IT IS MOST HUMBLY PRAYED THAT THE UNJUSTIFIE D ADDITIONS MADE MAY PLEASE BE DELETED IN INTEREST OF JUSTICE. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIE S ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT BEING REPEATED HERE FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE STATED THAT THE ISSUE INVOLVED IN GROUND NO. 1 IS GENERAL, THEREFORE, NEE D NOT BE ADJUDICATED UPON. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 2 IS CONCE RNED, HE STATED THAT THE SAME IS COVERED IN FAVOR OF THE ASSESSEE BY THE DEC ISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF LACHMANDAS MATHURADAS VS. COMMISSIONER OF INCOME TAX REPORTED IN 254 ITR 799. HE HAS ALSO FILED THE COPY OF THE ORDER PASSED BY THE HONBLE SUPREME COURT OF INDIA DATED 16.1.1997. 4. LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) O N THE ISSUE IN DISPUTE INVOLVED IN GROUND NO. 2. ITA NO.928/DEL/2011 3 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDER PASSED BY THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE HON BLE SUPREME COURT OF INDIA IN THE CASE OF LACHMANDAS MATHURADAS VS. COMMISSIONER OF INCOME TA X (SUPRA). FOR THE SAKE OF CONVENIENCE, THE ORDER PASSED BY THE HONBLE SUPREME COURT OF INDIA IS REPRODUCED BELOW:- THIS APPEAL ARISES OUT OF THE INCOME-TAX REFERENCE NO. S4 OF 1978 (SEE [1980] 124 ITR 411 (ALL), WHEREIN THE IN COME-TAX APPELLATE TRIBUNAL, DELHI BENCH, HAD REFERRED THE F OLLOWING QUESTIONS TO THE ALLAHABAD HIGH COURT FOR OPINION ( PAGE 413) : '1. WHETHER, THE TRIBUNAL WAS IN LAW JUSTIFIED IN A LLOWING THE ASSESSEE'S CLAIM IN RESPECT OF INTEREST ON THE ARRE ARS OF SALES TAX IN COMPUTING THE ASSESSEE'S INCOME FOR THE YEAR UNDER CONSIDERATION? 2. WHETHER, THE INTEREST ON THE OUTSTANDING BALANCE OF SALES TAX WAS AN ALLOWABLE DEDUCTION UNDER THE INCOME-TAX ACT ? 3. WHETHER THERE WAS MATERIAL ON RECORD JUSTIFYING THE TRIBUNAL'S FINDING THAT THE LIABILITY OF RS. 69,383 FOR DAMAGES HAD CRYSTALLISED IN THE ACCOUNTING PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION? 4. WHETHER THE CLAIM OF THE ASSESSEE FOR DAMAGES CO ULD BE HELD TO BE AN ALLOWABLE DEDUCTION COMPUTING THE ASS ESSEE'S INCOME LIABLE TO ASSESSMENT FOR THE YEAR UNDER CONSIDERATION?' THE ALLAHABAD HIGH COURT BY ITS IMPUGNED JUDGMENT D ATED JANUARY 28, 1980, HAS ANSWERED THE SAID QUESTIONS A GAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. HENCE, THIS APPEAL. ITA NO.928/DEL/2011 4 WHILE GRANTING SPECIAL LEAVE TO APPEAL THE APPEAL H AS BEEN CONFINED TO QUESTIONS NOS. 1 AND 2 ONLY. THE HIGH C OURT HAS PROCEEDED ON THE BASIS THAT THE INTEREST ON ARREARS OF SALES TAX IS PENAL IN NATURE AND HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT IT IS COMPENSATORY IN NATURE. IN TAKING THE SAID VI EW. THE HIGH COURT HAS PLACED RELIANCE ON ITS FULL BENCH DECISION IN S ARAYA SUGAR MILLS P. LTD. V. CIT [1979] 116 ITR 387 (ALL). LEARNED CO UNSEL APPEARING FOR THE APPELLANT-ASSESSEE STATES THAT THE SAID JUDGMEN T OF THE FULL BENCH HAS BEEN REVERSED BY THE LARGER BENCH OF THE HIGH COURT IN TRIVENI ENGINEERING WORKS LTD. V. CIT [1983] 144 IT R 732 (ALL), WHEREIN IT HAS BEEN HELD THAT INTEREST ON ARREARS O F TAX IS COMPENSATORY IN NATURE AND NOT PENAL. THIS QUESTION HAS ALSO BEEN CONSIDERED BY THIS COURT IN CIVIL APPEAL NO. 830 OF 1979 TITLED SARAYA SUGAR MILLS PVT. LTD. V. CIT, DECIDED ON FEB RUARY 29, 1996. IN THAT VIEW OF THE MATTER, THE APPEAL IS ALLOWED A ND QUESTIONS NOS. 1 AND 2 ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. NO ORDER AS TO COSTS. 5. AFTER GOING THROUGH THE AFORESAID ORDER PASSED B Y THE HONBLE SUPREME COURT OF INDIA, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE INVOLVED IN GROUND NO. 2 REGARDING EXPENSES INCURRED BY THE ASSESSEE O N ACCOUNT OF PAYMENT OF INTEREST FOR LATE PAYMENT OF EXCISE AND SERVICE TAX ARE IN COMPENSATORY NATURE AND NOT IN PENAL. THEREFORE, RESPECTFULLY FOLLOWIN G THE HONBLE SUPREME COURT OF INDIA JUDGMENT IN THE CASE OF LACHMANDAS MATHURADAS VS. COMMISSIONER OF INCOME TAX (SUPRA), THE ADDITION INVOLVED IN GROUND NO. 2 IS DELETED. 6. AS REGARDS ISSUE NO. 3 TO 8 ARE CONCERNED, LD. C OUNSEL OF THE ASSESSEE STATED THAT THE ISSUE INVOLVED IN THESE GROUNDS IS ONLY ONE REGARDING WRONGFUL DISALLOWANCE OF 1/7 TH OF THE TOTAL VEHICLE RUNNING AND MAINTENANCE EXPEN SES ON ALL THE VEHICLES INCLUDING CARS WITHOUT HAVING ANY ADVERSE MATERIAL ON RECORD BY THE AO AND CONFIRMED BY THE LD. CIT(A) FOR WANT OF LOG BOOK FOR VERIFICATION. ITA NO.928/DEL/2011 5 HE STATED THAT THE ASSESSEE HAS PRODUCED ALL THE EV IDENCES SUPPORTING THE CLAIM OF THE ASSESSEE BEFORE THE REVENUE AUTHORITIE S WHICH HAVE NOT BEEN APPRECIATED BY THEM. HE ALSO DRAW OUR ATTENTION T OWARDS THE SMALL PAPER BOOK FILED BY HIM CONTAINING PAGES 1 TO 12 IN WHICH HE HAS ATTACHED SOME DECISIONS REFERRED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS HONBLE HIGH COURT ON THE ISSUE IN DISPUTE ALONGWITH THE CO PY OF CHALLAN OF PAYMENT OF SERVICE TAX OF RS. 37,697/-; FBT ASSESSMENT ORDER; COMPUTATION OF FRINGE BENEFITS AND FBT; COPY OF INCOME TAX RETURN CONTAIN ING FIGURES OF FRINGE BENEFITS AND FBT AND DETAILS OF FRINGE BENEFITS CER TIFIED BY THE TAX AUDITORS. HE FURTHER STATED THAT THIS IS A DOUBLE TAXATION MA TTER WHICH HAS NOT BEEN THOROUGHLY EXAMINED BY THE REVENUE AUTHORITIES BELO W, THEREFORE, HE REQUESTED THAT THE ADDITION IN DISPUTE MAY BE DELETED. 7. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES AND STATED THAT THE AO AS WELL AS LD. CIT(A) HAS TH OROUGHLY EXAMINED ALL THE RECORDS AND MADE THE ADDITION FOR WANT OF EVIDENCE. THEREFORE, THE ADDITION INVOLVED IN ISSUE MAY BE UPHELD AND ASSESSEES APPE AL MAY BE DISMISSED. 8. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE INV OLVED IN GROUND NO. 3 TO 8 REGARDING THE DISALLOWANCE OF 1/7 TH OF THE TOTAL VEHICLE RUNNING AND MAINTENANCE EXPENSES EXPENSE OF RS. 5,88,102/-. WE ARE OF THE VIEW THAT AO HAS MADE THE DISALLOWANCE BECAUSE THE COMPANY HAS N OT PRODUCED THE LOG BOOK FOR VERIFICATION, HENCE, THE USAGE OF THE VEHI CLE FOR PERSONAL PURPOSES CANNOT BE RULED OUT. BUT AS PER THE EVIDENCE PROD UCED BY THE ASSESSEE, THE CERTIFICATE BY THE AUTHORISED REPRESENTATIVE OF TH E ASSESSEE, SH. SB GUPTA, CA THAT DOCUMENTS SUBMITTED BEFORE THIS BENCH ARE N OT ADDITIONAL EVIDENCE AND ALL THESE DOCUMENTS FORM PART OF THE ASSESSMENT RECORD OF THE AO. KEEPING IN VIEW OF THE CERTIFICATE BY SH. SB GUPTA, CA, WE ARE OF THE CONSIDERED VIEW THAT THE AO AS WELL AS THE FIRST AP PELLATE AUTHORITY HAS NOT PROPERLY APPRECIATED THE FBT ASSESSMENT ORDER; COMP UTATION OF FRINGE BENEFITS AND FBT; COPY OF INCOME TAX RETURN CONTAINING FIGUR ES OF FRINGE BENEFITS AND FBT AND DETAILS OF FRINGE BENEFITS CERTIFIED BY THE TAX AUDITORS WHICH THE ITA NO.928/DEL/2011 6 ASSESSEE HAS ATTACHED BEFORE US AT PAGES 6 TO 12 I N THE SHAPE OF PAPER BOOK. AFTER EXAMINING THE SAID EVIDENCES, WE ARE OF THE CONSIDERED VIEW THAT IN THE INTEREST OF JUSTICE, THE MATTER REQUIRE THOROUGHLY EXAMINATION AT THE LEVEL OF THE AO. THEREFORE, WE DIRECT THE AO TO EXAMINE THESE D OCUMENTARY EVIDENCES, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01/3/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 01-3-2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR