ACIT, Ludhiana V. M/s Kangaro Industries (Regd.), Ludhiana

ITA 983/CHANDI/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95716 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 08-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL; RAJEEV SHARMA DRS
• Assessee Lawyers: S K MUKHI
• Keywords: Rule of consistency; Revenue expenditure
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.983/CHD/2013 (ASSESSMENT YEAR : 2004-05) THE A.C.I.T., VS. M/S KANGARO INDUSTRIES(REGD.), CENTRAL CIRCLE-II, B-XXX-6754, FOCAL POINT, LUDHIANA. LUDHIANA. PAN: AABFK4859L ITA NO.1138/CHD/2012 (ASSESSMENT YEAR : 2007-08) THE D.C.I.T., VS. M/S KANGARO INDUSTRIES(REGD.), CENTRAL CIRCLE-II, B-XXX-6754, FOCAL POINT, LUDHIANA. LUDHIANA. PAN: AABFK4859L AND ITA NO.1004/CHD/2012 (ASSESSMENT YEAR : 2008-09) & ITA NO.1005/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE A.C.I.T., VS. M/S KANGARO INDUSTRIES(REGD.), CENTRAL CIRCLE-II, B-XXX-6754, FOCAL POINT, LUDHIANA. LUDHIANA. PAN: AABFK4859L (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI S.K.MITTAL & RAJEEV SHARMA, DRS RESPONDENT BY : SHRI S.K.MUKHI DATE OF HEARING : 26.10.2015 DATE OF PRONOUNCEMENT : 27.11.2015 2 O R D E R PER RANO JAIN, A.M . : THESE FOUR APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)I, LUDHIANA DAT ED 17.7.2013, 31.8.2012, 13.7.2012 AND 13.7.2012 FOR ASSESSMENT YEARS 2004-05, 2007-08, 2008-09 AND 2009 -10 RESPECTIVELY. ITA NO.983/CHD/2013 : 2. THE ONLY ISSUE IN THIS APPEAL IS REGARDING THE EXCLUSION OF SCRAP SALES IN THE TOTAL TURNOVER FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80HHC OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD CONFRONTED THE ASSESSEE WITH THE ISSUE AS TO WHY THE SCRAP SALES SHOULD NOT BE EXCLU DED FROM THE TOTAL TURNOVER AND PROFITS OF BUSINESS FOR COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. FOR THIS PURPOSE, THE ASSESSING OFFICER RELIED UPON THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF P ARKER CYCLES INDS. AND M/S ALLIED ENGINEERS IN ITA NO.637 AND 638/CHD/2005 DATED 12.5.2006. RELYING ON CERTAIN O THER CASES, THE ASSESSING OFFICER PROCEEDED TO WORK OUT THE DEDUCTION UNDER SECTION 80HHC OF THE ACT EXCLUDING THE SCRAP SALES FROM THE TOTAL TURNOVER. 3 4. THE LEARNED CIT (APPEALS) ALLOWED THE APPEAL OF THE ASSESSEE ON THIS ISSUE AND DIRECTED THE ASSESSI NG OFFICER TO INCLUDE THE FIGURE OF SCRAP SALES IN THE TOTAL TURN OVER. THE LEARNED CIT (APPEALS) REFERRED TO THE DETAILED OBSERVATIONS MADE BY THE I.T.A.T., CHANDIG ARH BENCH IN ASSESSEES OWN CASE IN AN EARLIER YEAR IN ITA NO.23/CHD/2007, WHEREBY THE APPEAL OF THE ASSESSEE WAS DECIDED IN ITS FAVOUR. THE LEARNED CIT (APPEALS) OBSERVED THAT THE ORDER OF THE HON'BLE I.T.A.T., CHANDIGARH BENCH SHOWS THAT THE RELIEF GRANTED TO THE ASSESSEE WAS O N MERITS AND IT HAS BEEN CLEARLY MENTIONED IN THE ORD ER THAT THE CONTRARY DECISION IN THE CASE OF PARKER CYCLE INDS. (SUPRA) WHICH WAS ALSO RELIED UPON BY THE ASSESSING OFFICER WAS BASED UPON CONCESSION AND, THEREFORE, W AS NOT BINDING IN NATURE. ON THE BASIS OF THIS, THE LEAR NED CIT (APPEALS) GAVE RELIEF TO THE ASSESSEE. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS) AND FURTHER, BROUGHT TO OUR ATTENTION THA T THE CASE OF PARKER CYCLE INDS. (SUPRA) HAS BEEN VERY RI GHTLY DISTINGUISHED BY THE LEARNED CIT (APPEALS). FURTH ER, IT WAS SUBMITTED THAT THE ISSUE ALSO STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HON'B LE SUPREME COURT IN THE CASE OF CIT VS. PUNJAB STAINL ESS STEEL INDUSTRIES, C.A.NO.5592 OF 2008 DATED 5.5.201 4, WHEREBY IN VERY CLEAR TERM, IT HAS BEEN HELD BY THE 4 HON'BLE APEX COURT THAT THE SALE OF SCRAP SHOULD BE INCLUDED IN THE TOTAL TURNOVER. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE L EARNED CIT (APPEALS) AS HE HAS GIVEN RELIEF TO THE ASSESSE E FOLLOWING THE EARLIER ORDER IN ASSESSEES OWN CASE. FURTHER, FROM THE PERUSAL OF THE JUDGMENT OF THE HO N'BLE SUPREME COURT IN THE CASE OF PUNJAB STAINLESS STEE L INDUSTRIES (SUPRA), WE SEE THAT IN A JUDGMENT RUNNI NG INTO 17 PAGES, WHEREBY THE HON'BLE APEX COURT AFTER ANAL YZING THE ISSUE IN DETAIL, OBSERVED THAT THE WORD TURNOV ER WOULD MEAN TOTAL SALES. THE SAID SALES WOULD DE FINITELY NOT INCLUDE THE SCRAP MATERIAL WHICH IS EITHER TO B E DEDUCTED FROM THE COST OF RAW MATERIAL OR IS TO BE SHOWN SEPARATELY UNDER THE DIFFERENT HEAD. 7. IN VIEW OF THE ABOVE, FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT, WE DO NOT FIND ANY INFIR MITY IN THE ACTION OF THE LEARNED CIT (APPEALS) IN HOLDI NG THAT THE SALE OF SCRAP SHOULD BE INCLUDED IN THE TOTAL T URNOVER FOR PURPOSES OF COMPUTATION OF DEDUCTION UNDER SECT ION 80HHC OF THE ACT. 8. THE APPEAL OF THE REVENUE IS DISMISSED. 5 ITA NO.1138/CHD/2012 : 9. THE GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER : 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FA CTS OF THE CASE IN DELETING THE ADDITION OF RS.8,51,09 2/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES WHICH ACTUALLY RELATED TO THE EARLIER YEARS AND NOT T HIS YEAR. 10. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.60,34,158/- ON ACCOUNT OF LITIGATION EXPENSES, WHEREAS THE ACTUAL AMOUNT INCURRED DURING THE YEAR WAS RS.51,88,061/-. ON CONFRONTING BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT 20% OF THE LITIGATION EXPENSES ARE CLAIMED AS EXPENSES BY THE ASSESSEE IN ONE PARTICULAR YEAR ON THE BASIS OF MET HOD OF ACCOUNTING REGULARLY EMPLOYED. REJECTING THE CONT ENTION OF THE ASSESSEE THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE EXPENSES OTHER THAN WHAT WERE ACTUALLY INCURRED DURING THE YEAR. 11. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMITTED BY THE ASSESSEE THAT THE EXPENDITURE BEIN G REVENUE IN NATURE WAS SPREAD OVER TREATING THE SAME AS DEFERRED REVENUE EXPENDITURE TO BE CLAIMED IN FIVE YEARS TIME AS A NORMAL ACCOUNTING POLICY WHICH IS BEING FOLLOWED CONSISTENTLY AND HAS BEEN ACCEPTED A S SUCH BY THE DEPARTMENT. IT WAS FURTHER STATED THAT THE 6 DEFERRED REVENUE EXPENDITURE IS ESSENTIALLY AN ACCO UNTING CONCEPT AS PER WHICH THE EXPENSES ARE ESSENTIALLY R EVENUE IN NATURE BUT FOR VARIOUS REASONS AND ALSO FOR THE REASON THAT THERE IS PRESUMPTION THAT THE EXPENDITURE WILL RESULT IN BENEFITS OVER A NUMBER OF PERIODS, THE SAME IS S PREAD OUT AND WRITTEN OFF OVER A PERIOD OF TIME. FURTHE R, IT WAS SUBMITTED BEFORE THE LEARNED CIT (APPEALS) THAT THI S ACCOUNTING POLICY IS BEING CONSISTENTLY FOLLOWED WI THOUT ANY VARIATION. THESE EXPENSES HAVE BEEN ALLOWED I N THE PAST UNIFORMLY EVEN IN ASSESSMENTS MADE UNDER SECTI ON 143(3) IN ASSESSMENT YEARS 2004-05 AND 2005-06. THE RELIANCE WAS PLACED ON THE JUDGMENT OF DELHI HIGH C OURT IN THE CASE OF CIT VS. BHARAT ALUMINUM CO. LTD. A GREED WITH THE SUBMISSIONS SO MADE BY THE ASSESSEE THE LE ARNED CIT (APPEALS) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. FURTHER, IT WAS HELD BY THE LE ARNED CIT (APPEALS) THAT CLAIMING OF 20% OF THE LITIGATIO N EXPENSES WAS STARTED BY THE ASSESSEE IN ASSESSMENT YEAR 2001-02 ON ACCOUNT OF VERY HEAVY LEGAL EXPENSES, WH ICH DID NOT DESERVE TO BE DEBITED AGAINST THE PROFITS O F ONE PARTICULAR YEAR. THE SAID PRACTICE HAS BEEN ACCEP TED BY THE DEPARTMENT. HOWEVER, DURING THE SEARCH ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER HAS BEEN INCONSI STENT WITH RESPECT TO THIS ISSUE IN DIFFERENT ASSESSMENT YEARS. THE CLAIM OF THE EXPENSES ON THIS BASIS HAS BEEN AL LOWED BY THE SAME ASSESSING OFFICER FOR ASSESSMENT YEARS 2004- 05 AND 2005-06. THE EXPENDITURE INCURRED FROM YEAR TO YEAR BY THE ASSESSEE, NO CLAIM IN ONE PARTICULAR YE AR WAS 7 DUE TO THE FACT THAT THE EXPENSES WERE DERIVING AN ENDURING BENEFIT. IN THIS WAY, THE LEARNED CIT (A PPEALS) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFI CER. 12. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THE PR INCIPLE OF ESTOPPEL IS NOT APPLICABLE SO FAR AS THE METHOD OF ACCOUNTING IS CONCERNED. RELIANCE WAS PLACED ON T HE JUDGMENT OF CIT VS. JAMNA DASS RAMESHWAR DASS (1952 ) 21 ITR 109 (P&H) AND THAT OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. BRITISH PAINTS INDIA LTD. ( 1991) 188 ITR 44 (SC). 13. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UP ON THE ORDER OF THE LEARNED CIT (APPEALS) AND STRESSED ON THE FACT THAT THE SAME ACCOUNTING POLICY HAS BEEN FOLLO WED BY THE ASSESSEE FOR THE LAST MANY YEARS AND THE DEPART MENT HAS BEEN ACCEPTING THE SAME CONSISTENTLY AND WITHOU T THERE BEING ANY CHANGE IN THE FACTS DURING THE RELE VANT YEAR, NO SUCH DISALLOWANCE CAN BE MADE. THE COPIES OF ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 FRAMED ON THE SAME DATE AS IN ASSESSMENT YE AR 2007-08 ALLOWING DEFERRED REVENUE EXPENSES BY THE ASSESSING OFFICER HIMSELF, WERE ALSO PLACED ON RECO RD. IT WAS FURTHER SUBMITTED THAT THE DEPARTMENT HAS NOT PREFERRED ANY APPEAL AGAINST THE SAID ORDER OF THE LEARNED CIT (APPEALS). EVEN IN ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER HAS ALLOWED DEFERRED REVENUE EXPENDITURE, COPY OF WHICH IS PLACED IN THE PAPER B OOK AT 8 PAGES 65 TO 67. IN FURTHERANCE OF HIS ARGUMENTS, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT IF THE ASSESSING OFFICER PREFERS TO ALLOW ONLY THE EXPENDI TURE INCURRED DURING THE YEAR, SINCE IN EARLIER YEARS 20 % OF EXPENDITURE CLAIMED EVERY YEAR ON ACCUMULATED BASIS HAVE BEEN ALLOWED, A TOTAL REWORKING OF THE SAID EXPENSE S, IS REQUIRED TO BE DONE. 14. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF B OTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. IT I S A MATTER OF RECORD THAT FOR THE LAST SO MANY YEARS THE ASSESSEE HAS BEEN FOLLOWING THE PRACTICE OF CLAIMING LITIGATION EXPEN SES @ 20% IN A DURATION OF FIVE YEARS. FROM THE PERUSAL OF VAR IOUS ORDERS OF LOWER AUTHORITIES FOR VARIOUS ASSESSMENT YEARS, THIS IS ALSO OBSERVED THAT THE DEPARTMENT HAS BEEN ACCEPTING THE CLAIM AS SUCH. SINCE THERE IS NO CHANGE IN THE FACTS DURIN G THE YEAR EVEN THE LEARNED D.R. COULD NOT BRING TO OUR ATTENT ION ANY DISTINGUISHING FACTS IN THIS YEAR, WE ARE NOT INCLI NED TO INTERFERE WITH THE FINDINGS GIVEN BY THE LEARNED CI T (APPEALS) ON THE BASIS OF PRINCIPLE OF CONSISTENCY. IT IS A TRITE LAW THAT THE PRINCIPLE OF ESTOPPEL IS NOT APPLICABLE TO THE INCOME TAX MATTERS, THIS IS ALSO SETTLED THAT THERE BEING NO D ISTINGUISHING FACTS EMERGING DURING THE YEAR, THE DEPARTMENT CANN OT TAKE A DIFFERENT VIEW OTHER THAN TAKEN IN EARLIER YEARS. THIS VIEW HAS BEEN HELD BY VARIOUS COURTS IN A NUMBER OF JUDGMENT S INCLUDING THAT OF HON'BLE SUPREME COURT IN THE CAS E OF RADHASOAMI SATSANG VS. CIT (1992) 193 ITR 321 (SC) AND DELHI 9 HIGH COURT IN THE CASE OF CIT VS. NEO POLY PACK (P ) LTD. (2000) 245 ITR 492. THE GROUND OF APPEAL RAISED BY THE REV ENUE IS DISMISSED. 15. THE GROUND OF APPEAL NO.2 RAISED BY THE REVENU E READS AS UNDER : 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 50,000/- MADE ON ACCOUNT OF PAYMENT OF BONUS AND LEAVE WITH WAGES, WHICH WERE NOT FULLY VERIFIABLE FROM THE RECORDS PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 16. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE WAGES AND BONUS REGISTERS AND ON PERUSAL OF THESE REGISTERS, IT WAS FOUND BY THE ASSESSING OFFI CER THAT THE SIGNATURES OF SOME OF THE WORKERS ON THESE REGI STERS ARE AT VARIANCE AND SOME TIME THE SIGNATURE AND THU MB IMPRESSIONS APPARENTLY APPEARED TO BE NOT REASONABL E. IN THIS BACKGROUND, THE ASSESSING OFFICER DISALLOWED THE AM OUNT OF RS.1 LAC OUT OF BONUS AND WAGES. 17. BEFORE THE LEARNED CIT (APPEALS), IT WAS SUBMI TTED THAT THE DISALLOWANCE SO MADE BY THE ASSESSING OFFI CER IS ARBITRARY. THE LEARNED CIT (APPEALS) CONCURRING WIT H THE SUBMISSIONS MADE BY THE ASSESSEE HELD THAT THE ACTI ON OF THE ASSESSING OFFICER IS ARBITRARY ESPECIALLY WHEN NO B OGUS CLAIM HAS BEEN DETECTED AND THE EXPENSES HAVE BEEN PRESUMED T O BE ON HIGHER SIDE WITHOUT POINTING OUT SO ON THE BASIS OF ANY FACTUAL DATA. IN THIS VIEW, THE LEARNED CIT (APPEALS) DEL ETED THE ADDITION. 10 18. THE LEARNED D.R. SUBMITTED BEFORE US THAT THE ADDITION WAS MADE ON AN AGREED BASIS, WHEREBY THE ASSESSEE HIMSELF DURING THE COURSE OF ASSESSMENT PROCEEDINGS AGREED TO THE SAID DISALLOWANCE. 19. ON PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THAT OF THE LEARNED CIT (APPEALS)S ORDER, WE SEE N OWHERE THIS FACT IS EMERGING FROM THIS ORDER THAT THE ADDI TION HAS BEEN MADE ON AGREED BASIS. HOWEVER, LOOKING TO TH E FACT THAT CERTAINLY THERE WAS CERTAIN DISCREPANCY IN THE BONUS AND LEAVE WITH WAGES REGISTER, THE ASSESSING OFFICE R PROCEEDED TO MAKE DISALLOWANCE, WHICH WAS A VERY SM ALL PORTION OF THE TOTAL EXPENSES CLAIMED BY THE ASSESS EE AND ALSO TO THE FACT THAT THE LEARNED CIT (APPEALS) DE LETED THE DISALLOWANCE IN A VERY SUMMARY MANNER, WE UPHOLD TH E ACTION OF THE ASSESSING OFFICER IN MAKING THE DISALLOWANCE. THE GROUND OF APPEAL RAISED BY THE R EVENUE IS ALLOWED. 20. THE GROUND NO.3 RAISED BY THE REVENUE READS AS UNDER : 3. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS.50,000/- TO RS.10,000/- MADE BY THE AO ON ACCOUNT O DISALLOWANCE OF FOREIGN TRAV ELING EXPENSES BEING PERSONAL EXPENSES WHILE ON TOUR, AS T HE ASSESSEE HAD NOT PRODUCED ALL THE BILLS OF TRAVELING AS WELL AS HOTEL LODGING AND BOARDING OR LOCAL TRAVELING TAXI BILLS ETC., DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. 21. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.8,00,493/- UNDER THE HEAD 11 FOREIGN TRAVEL AND AS THE ASSESSEE COULD NOT PROD UCE ALL THE BILLS PERTAINING TO BOARDING AND LODGING ABROAD OR LOCAL TRAVELING IN TAXIS AND TRAIN, THE ASSESSING O FFICER PRESUMED THAT THE PERSONAL USE OF FOREIGN TRAVEL EX PENSES COULD NOT BE RULED OUT AND, THEREFORE, MADE AN ESTI MATED DISALLOWANCE OF RS.50,000/-. 22. THE LEARNED CIT (APPEALS) OBSERVED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ABSOL UTELY ADHOC WITHOUT REALIZING THAT THE ASSESSEE FIRM IS I N THE BUSINESS OF EXPORT OF PRODUCTS AND VISITING ABROAD FOR BUSINESS PURPOSES IS NOT A MATTER OF LEISURE, ESPEC IALLY WHEN SUCH TRIPS HAVE TO BE UNDERTAKEN ON YEAR TO YE AR BASIS. IN THIS WAY, HE RESTRICTED THE DISALLOWANC E TO RS.10,000/-. 23. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS). 24. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED CIT (APPEALS). T5HOUGH THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER ON AN ARBITRARY BASIS AND EVEN THE LEARNED CIT (APPEALS) HAS RESTRICTED TO IT ARBI TRARILY, WE ARE IN AGREEMENT WITH THE FINDINGS GIVEN BY THE LEARNED 12 CIT (APPEALS) THAT THE ASSESSEE BEING IN THE BUSINE SS OF EXPORT OF PRODUCTS AND VISITING ABROAD FOR BUSINESS PURPOSES AND NOT FOR LEISURE AND TRIPS ARE TO BE TA KEN ON YEAR TO YEAR BASIS, THEREFORE, WE CONFIRM THE ORDER OF THE LEARNED CIT (APPEALS) ON THIS ISSUE. THE GROUND O F APPEAL RAISED BY THE REVENUE IS DISMISSED. 25. THE GROUND NOS.4 AND 5 RAISED BY THE REVENUE ARE GENERAL IN NATURE, HENCE NEEDS NO ADJUDICATION. 26. THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ITA NO.1004/CHD/2012 : 27. THE GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER: 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN DELETING THE ADDITION OF RS. 20,05,476/- MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES WHICH ACTUALLY RELATED TO THE EARLIER YEARS AND NOT THIS YEAR. 28. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 29. THE GROUND NO.2 RAISED BY THE REVENUE READS AS UNDER : 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN 13 DELETING THE ADDITION OF RS.50,000/- MADE ON ACCOUNT OF PAYMENT OF BONUS AND LEAVE WITH WAGES, WHICH WERE NOT FULLY VERIFIABLE FROM THE RECORDS PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 30. THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISS UE IN GROUND NO.2 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE MUTATIS MUTANDIS. 31. THE GROUND NO.3 RAISED BY THE REVENUE READS AS UNDER : 3. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.50,000/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF GENERAL EXPENSES AS SOME VOUCHERS PERTAINING TO THESE EXPENSES WERE APPEARED TO BE SELF MADE. 32. BRIEFLY, THE FACTS OF THE CASE ARE THAT A DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER OUT OF GENERAL EXPENSES POINTING OUT THAT THE SOME VOUCHER S WERE SELF MADE AND DID NOT HAVE BILLS. THE LEARNE D CIT (APPEALS) DELETED THE DISALLOWANCE OBSERVING THAT T HE ASSESSING OFFICER HAS MADE THE DISALLOWANCE WITHOUT ANY LOGICAL BASIS AS NO SPECIFIC UNVOUCHED EXPENSE HAS BEEN BROUGHT ON RECORD. THE DISALLOWANCE HAS BEEN MADE B Y THE ASSESSING OFFICER ON THE BASIS OF GENERAL OBSERVATI ON AND THE QUANTIFICATION THEREOF ALSO DOES NOT SEEM TO HA VE ANY BASIS. 14 33. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED COUNSEL FOR TH E ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT (APPEALS). 34. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE ORDER OF THE LEARNED CIT (APPEALS ), WE DO NOT FIND ANY INFIRMITY THEREIN AS WE SEE THAT TH E ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY SPE CIFIC REASON AND ANY SPECIFIC EXPENSE, WHICH IS NOT ALLOW ABLE UNDER THE INCOME TAX ACT. BY MAKING AN ESTIMATED DISALLOWANCE OUT OF THE TOTAL EXPENSES CLAIMED BY T HE ASSESSEE, THE ASSESSING OFFICER IN A WAY ACCEPTS TH E FACT THAT THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. HOWEVER , HE MAKES AN ADHOC DISALLOWANCE WITHOUT PINPOINTING AS TO WHICH COMPONENT OF THE TOTAL EXPENSES CLAIMED BY TH E ASSESSEE IS NOT ALLOWABLE. THE MANNER IN WHICH TH E DISALLOWANCE IS MADE IS TOTALLY ARBITRARY. THEREF ORE, WE UPHOLD THE ACTION OF THE LEARNED CIT (APPEALS) IN D ELETING THE DISALLOWANCE. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 35. THE GROUND NO.4 RAISED BY THE REVENUE READS AS UNDER : 4. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN REDUCING THE ADDITION OF RS. 50,000/- TO RS.10,000/ - MADE 15 BY THE AO ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVE LING EXPENSES BEING PERSONAL EXPENSES WHILE ON TOUR, AS THE ASSESSEE HAD NOT PRODUCED ALL THE BILLS OF TRAVELLINGS WELL AS HOTEL LODGING AND BOARDING OR LO CAL TRAVELING TAXI BILLS ETC., DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. 36. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 37. THE GROUND NOS.5 AND 6 RAISED BY THE REVENUE ARE GENERAL IN NATURE, HENCE NEEDS NO ADJUDICATION. ITA NO.1005/CHD/2012 : 38. THE GROUND NO.1 RAISED BY THE REVENUE READS AS UNDER: 1. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACT S OF THE CASE IN DELETING THE ADDITION OF RS. 24,05,022/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES WHICH ACTUALLY RELATED TO THE EARLIER YEARS AND NOT THIS YEA R. 39. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.1 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 40. THE GROUND NO.2 RAISED BY THE REVENUE READS AS 16 UNDER : 2. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.50,000/- MADE ON ACCOUNT OF PAYMENT OF BONUS AND LEAVE WITH WAGES, WHICH WERE NOT FULLY VERIFIABLE FROM THE RECORDS PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. 41. THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISS UE IN GROUND NO.2 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE MUTATIS MUTANDIS. 42. THE GROUND NO.3 RAISED BY THE REVENUE READS AS UNDER : 3. THAT LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.50,000/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF GENERAL EXPENSES AS SOME VOUCHERS PERTAINING TO THESE EXPENSES WERE APPEARED TO BE SELF MADE. 43. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISSUE IN GROUND NO.3 RAISED BY THE REVENUE IN ITA NO.1004/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1004/CHD/2012 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 44. THE GROUND NO.4 RAISED BY THE REVENUE READS AS UNDER : 4. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN 17 REDUCING THE ADDITION OF RS. 50,000/- TO RS.10,000/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVE LING EXPENSES BEING PERSONAL EXPENSES WHILE ON TOUR, AS THE ASSESSEE HAD NOT PRODUCED ALL THE BILLS OF TRAVELLINGS WELL AS HOTEL LODGING AND BOARDING OR LO CAL TRAVELING TAXI BILLS ETC., DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. 45. THE ISSUE IN THIS GROUND IS SIMILAR TO THE ISS UE IN GROUND NO.3 RAISED BY THE REVENUE IN ITA NO.1138/CHD/2012 AND THE FINDINGS GIVEN IN ITA NO.1138/CHD/2012 SHALL APPLY TO THIS CASE MUTATIS MUTANDIS. 46. THE GROUND NOS.5 AND 6 RAISED BY THE REVENUE ARE GENERAL IN NATURE, HENCE NEEDS NO ADJUDICATION. 47. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO.983/CHD/2013 IS DISMISSED, AND THE APPEALS OF TH E REVENUE IN ITA NO NO.1138/CHD/2012, ITA NO.1004/CHD/2012 & ITA NO.1005/CHD/2012 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF NOVEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 27 TH NOVEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH