M/s Berkeley Automobiles Limited, Chandigarh V. Addl. CIT, Chandigarh

ITA 96/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68376 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ATUL MANDHAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITAS NO. 95 & 96/CHD/2013 ASSESSMENT YEAR : 2008-09 & 2009-10 M/S BERKELEY AUTOMOBILES LTD. V ADDL CIT SCO NO. 42 RANGE V SECTOR 26 CHANDIGARH CHANDIGARH AACCB 4581 E (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ATUL MANDHAR DEPARTMENT BY: SHRI AKHILESH GUPTA DATE OF HEARING 10.7.2013 DATE OF PRONOUNCEMENT 2.8.2013 O R D E R PER T.R.SOOD, A.M THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), CHANDIGARH ON 21.11.2012. THESE WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAME OF CONVENIENCE. ITA NO. 95/CHD/2013 2 IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOW ING GROUNDS: 1 THAT THE ORDER OF THE LD. CIT(A) CHANDIGARH IS DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE. 2 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 2,53,950/- ON ACCOUNT OF STAFF TRAINING EXPENSES. IN THE ALTERNATIVE THE DISALLOWA NCE IS EXCESSIVE. 3 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 4,58,580/- ON ACCOUNT OF CUSTO MER EXPENSES. IN THE ALTERNATIVE THE DISALLOWANCE IS EXCESSIVE. 2 4 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 3,29,765/- ON ACCOUNT OF OTHER SELLING AND DISTRIBUTION EXPENSES. IN THE ALTERNAT IVE THE DISALLOWANCE IS EXCESSIVE. 5 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 2,19,770/- ON ACCOUNT OF VEHICL E RUNNING AND MAINTENANCE EXPENSES. IN THE ALTERNATIV E THE DISALLOWANCE IS EXCESSIVE. 6 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING ADDITION OF VARIOUS EXPENSES UNDER VARIOUS HEADS ON WHICH FBT HAS DULY BEEN PAID AND ASSESSMENT OF FBT HAS ALSO BEEN FRAMED AT RETURNED INCOME UNDER THE PROVISIONS OF SECTION 115WE(3) RESULTING INTO DOUBL E TAXATION. 7 THAT ANY OTHER GROUND WHICH MAY BE TAKEN UP AT T HE TIME OF HEARING WITH THE KIND PERMISSION. 3 GROUNDS NO. 1 & 7 ARE OF GENERAL NATURE AND DO NO T REQUIRE ANY SEPARATE ADJUDICATION. 4 GROUND NO. 2 - AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED THE EXPENSES OF RS. 2,53,950/- UNDER THE HEAD STAFF TRAINING EXPENSES. ON ENQUIRY IT WAS EXPLAINED THAT EXPENDITURE WAS INCURRED ON THE TRAINING OF EM PLOYEES BY THE MARUTI COMPANY. HOWEVER, IT WAS FOUND THAT SUC H EXPENSES WERE NOT SUPPORTED BY PROPER VOUCHERS AND THEREFORE, THIS EXPENDITURE WAS DISALLOWED. 5 ON APPEAL IT WAS STATED BEFORE THE LD. CIT(A) THA T MARUTI UDYOG LTD. UNDERTAKES THE TRAINING CAMPS AT VARIOUS MANUFACTURING SITES FOR THE EMPLOYEES AND THE EXPEN DITURE IS REQUIRED TO BE INCURRED FOR THIS PURPOSE. SUCH TRAI NING IS REQUIRED FOR MECHANICS, SALES STAFF FOR LAUNCHING O F NEW MODELS AND VARIOUS OTHER AREAS OF OPERATION. AFTER EXAMIN ING THE SUBMISSIONS, THE LD. CIT(A) NOTED THAT THE ASSESSIN G OFFICER HAD ALSO OBSERVED THAT THE ASSESSEE WAS AUTHORIZED DISTRIBUTOR 3 OF MARUTI WHO CARRIES OUT TRAINING AND THIS FINDING HAS NOT BEEN CONTROVERTED. HE FURTHER OBSERVED THAT MERE PRODUCT ION OF LEDGER ACCOUNT CANNOT SUBSTANCE THE CLAIM FOR THIS EXPENDITURE. ACCORDINGLY HE CONFIRMED THE DISALLOWANCE. 6 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND T HE CIT(A). HE FURTHER SUBMITTED THAT IN ANY CASE FBT WAS ALSO PAID, THEREFORE, NO DISALLOWANCE WAS CALLED FOR. HE ALSO REFERRED TO PAGE 3 TO 10 OF THE PAPER BOOK WHICH IS A COPY OF VARIOUS EXPENSES. 7 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 8 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT NO FBT WAS PAID IN RESPECT OF STAFF TRAINING. FURTHE R PERUSAL OF THE DETAILS AT PAGE 3 OF THE PAPER BOOK SHOW THAT A SUM OF RS. 1,15,181 HAS BEEN INCURRED WHICH IS MAINLY THE AMOU NT DEBITED BY MARUTI UDYOG LTD. ON ACCOUNT OF TRAINING. IT C AN NOT BE DENIED THAT SOME OF THE EMPLOYEES WERE GOING TO THE COMPANYS VARIOUS AREAS OF OPERATION AND SINCE THE AMOUNT HAVE BEEN DEBITED BY THE COMPANY, THEREFORE, NO ADD ITIONAL EVIDENCE IS POSSIBLE TO SUBSTANTIATE THIS CLAIM. 8.1 AS FAR AS A SUM OF RS. 1,15,181/- IS CONCERNED, THE SAME IS REQUIRED TO BE ALLOWED. 8.2 AS FAR AS OTHER EXPENSES AMOUNTING TO RS. 1,44, 204/- IS CONCERNED, THE SAME HAS BEEN SHOWN TO HAVE BEEN PAI D IN CASH TO VARIOUS EMPLOYEES. (DETAILS OF THE SAME ARE PLACED AT PAGE 52 OF THE PAPER BOOK). FIRST OF ALL THERE IS N O PROPER VOUCHER FOR THE SAME AND SECONDLY ONCE SOME AMOUNTS HAVE BEEN ALREADY DEBITED BY THE MARUTI UDYOG LTD. FOR T RAINING 4 EXPENSES THEN IT IS NOT CLEAR ON WHAT OTHER TRAININ G THESE EXPENSES HAVE BEEN INCURRED. THEREFORE, IN OUR OP INION, THE DISALLOWANCE ON ACCOUNT OF STAFF TRAINING HAS TO B E RESTRICTED ONLY TO THIS AMOUNT I.E. RS. 1,44,204/-. ACCORDING LY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AS SESSING OFFICER TO ALLOW TRAINING EXPENSES AT RS. 1,15,181/ -. 9 GROUND NO. 3 - AFTER CONSIDERING THE RIVAL SUBMI SSIONS WE FIND THAT DURING THE YEAR THE ASSESSEE HAD CLAIMED CUSTOMER EXPENSES UNDER THE HEAD OTHER SELLING AND DISTRIBU TION EXPENSES AMOUNTING TO RS. 15,28,580/-. IN THE ABS ENCE OF PROPER VOUCHERS 30% OF SUCH EXPENSES WERE DISALLOWE D. 10 ON APPEAL THE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT(A). 11 BEFORE US, IT WAS MAINLY SUBMITTED THAT DISALLOW ANCE HAS BEEN MADE ON THE HIGHER SIDE. AGAIN IT WAS SUBMITT ED THAT THE ASSESSEE HAS ALREADY PAID FBT, THEREFORE, NO OTHER DISALLOWANCE WAS CALLED FOR. 12 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT IN THE DETAILS OF FBT REPORT AT PAGE 115 OF TH E PAPER BOOK IN RESPECT OF SALE PROMOTION, TOTAL EXPENDITURE SH OWN IS RS. 4,09,015/-, THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS PAID FBT ON WHOLE OF THE CUSTOMER EXPENSES. IT WAS NOT DENIED BEFORE US THAT VOUCHERS ARE NOT AVAILABLE. HOWEVER, IT IS ALSO CORRECT THAT DISALLOWANCE HAS BEEN MADE ON HIGHER SIDE. CONSIDERING OVERALL CIRCUMSTANCES OF THE CAS E AND THE FACT THAT FBT HAS BEEN PAID ON PART OF THE EXPENSES , WE ARE OF THE OPINION THAT IF DISALLOWANCE OF RS. 2.00 LAKHS IS CONFIRMED, THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDING LY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AS SESSING 5 OFFICER TO MAKE DISALLOWANCE OF RS. 2.00 LAKHS ON A CCOUNT OF CUSTOMER CARE. 13 GROUND NO. 4 AFTER HEARING BOTH THE PARTIES WE FIND THAT THIS FURTHER DISALLOWANCE OF RS. 3,29,765/- WAS MAD E OUT OF OVER SALES & DISTRIBUTION EXPENSES. THIS DISALLOWA NCE HAS ALSO BEEN CONFIRMED BY THE LD. CIT(A). 14 BOTH THE PARTIES MADE SIMILAR LSUBMISSIONS AS IN RESPECT OF GROUND NO. 2. 15 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS DISALLOWANCE HAS ALSO BEEN MADE ON EXCESSIVE BASIS AND ACCORDINGLY WE RESTRICT THE DISALLOWANCE TO 15% OF SALES AND DISTRIBUTION OF THE EXPENSES. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OF FICER TO ALLOW 15% OF SND EXPENSES. 16 GROUND NO. 5 IS REGARDING 30% OF VEHICLE RUNNING AND MAINTENANCE EXPENSES ON ACCOUNT OF PERSONAL USAGE. 17 THIS ADDITION HAS ALSO BEEN CONFIRMED BY THE LD. CIT(A). 18 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT CHANDIGARH BENCHES OF THE TRIBUNAL HAVE CONSISTENTL Y HELD THAT FOR PERSONAL USAGE OF VEHICLES, DISALLOWANCE OF 10% IS JUSTIFIED. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO MAKE DISALLOWAN CE ON ACCOUNT OF VEHICLE RUNNING AND MAINTENANCE @ 10% O F THE TOTAL EXPENDITURE. 19 GROUND NO. 6 NO SEPARATE ADJUDICATION IS REQUI RED FOR THIS GROUND BECAUSE THIS IS ONE OF THE ARGUMENTS WH ICH HAS ALREADY BEEN CONSIDERED WHILE ADJUDICATING OTHER G ROUNDS. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6 ITA NO. 96/CHD/2013 21 IN THIS APPEAL THE ASSESSEE HAS FILED THE FOLLOW ING GROUNDS: 1 THAT THE ORDER OF THE LD. CIT(A) CHANDIGARH IS DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE. 2 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 5,12,647/- ON ACCOUNT OF STAFF TRAINING EXPENSES. IN THE ALTERNATIVE THE DISALLOWA NCE IS EXCESSIVE. 3 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 3,09,611/- ON ACCOUNT OF CUSTO MER EXPENSES. IN THE ALTERNATIVE THE DISALLOWANCE IS EXCESSIVE. 4 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING DISALLOWANCE OF RS. 72,438/- ON ACCOUNT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES. IN THE ALTERNATIV E THE DISALLOWANCE IS EXCESSIVE. 5 THAT THE LD. CIT(A) HAS BEEN UNJUSTIFIED IN UPHOL DING ADDITION OF VARIOUS EXPENSES UNDER VARIOUS HEADS ON WHICH FBT HAS DULY BEEN PAID AND ASSESSMENT OF FBT HAS ALSO BEEN FRAMED AT RETURNED INCOME UNDER THE PROVISIONS OF SECTION 115WE(3) RESULTING INTO DOUBL E TAXATION. 22 GROUND NO. 1 IS OF GENERAL NATURE AND DOES NOT R EQUIRE ANY SEPARATE ADJUDICATION. 23 GROUND NO. 2 IS IN RESPECT OF TRAINING EXPENSES AND THE FACTS AND ARGUMENTS OF BOTH THE PARTIES ARE SAME AS IN ASSESSMENT YEAR 2008-09 WHICH WE HAVE ADJUDICATED A BOVE. FOLLOWING THAT ORDER IN THIS CAE ALSO WE ARE OF THE OPINION THAT TRAINING EXPENSES TO THE EXTENT OF RS. 283,874/- (D ETAILS OF WHICH IS AVAILABLE AT PAGE 3 & 4 OF THE PAPER BOOK) IS REQUIRED TO BE ALLOWED. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE STAFF TRAINING EXPNS TO RS. 2,83,874/- AND DISALLOW THE B ALANCE AMOUNT. 7 24 GROUND NO. 3 - AGAIN THE FACTS ARE SAME AS IN RE SPECT OF GROUND NO. 3 AS IN EARLIER YEAR. CONSIDERING OVERAL L CIRCUMSTANCES WE ARE OF THE VIEW THAT DISALLOWANCE OF RS. 1,30,000/- WILL MEET THE ENDS OF JUSTICE. ACCORDIN GLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AS SESSING OFFICER TO MAKE DISALLOWANCE OF RS. 1,30,000/-. 25 GROUND NO. 4 IS REGARDING DISALLOWANCE ON ACCOUN T OF VEHICLE RUNNING AND MAINTENANCE EXPENSES. WE FIND I N THIS YEAR THE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT(A) ONLY AT 10% OF THE EXPENSES. FOLLOWING OUR ORDER FO R ASSESSMENT YEAR 2008-09, WE CONFIRMED THE DISALLOWA NCE AND ACCORDINGLY ORDER OF THE LD. CIT(A) IS CONFIRMED. 26 GROUND NO. 5 - NO SEPARATE ADJUDICATION IS REQUI RED FOR THIS GROUND BECAUSE THIS IS ONE OF THE ARGUMENTS WH ICH HAS ALREADY BEEN CONSIDERED WHILE ADJUDICATING OTHER G ROUNDS. 27. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2.8.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 2.8.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR