Dy. Commissioner of Income Tax-II, Kanpur V. Shri M/s Kartideya International, Kanpur

ITA 99/LKW/2014

• Counselvise Citation: 9923714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-09-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R R JAIN
• Keywords: Capital expenditure
• Section: 80IB; 27

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.99 & 100/LKW/2014 ASSESSMENT YEAR: 2005 06 & 2009 10 DCIT II, KANPUR VS. M/S KARTIKEYA INTERNATIONAL, 113/105, SWAROOP NAGAR, KANPUR - 208002 PAN:AADFK4969K (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI R. R. JAIN, C. A. REVENUE BY SHRI AMIT NIGAM, SR. DR DATE OF HEARING 10/09/2015 DATE OF PRONOUNCEMENT 14/10/2015 O R D E R PER A. K. GARODIA, A.M. BOTH THESE ARE REVENUES APPEALS DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT (A) II, KANPUR DATED 18.11.20 13 FOR A.Y. 2005 06 & DATED 26.11.2013 FOR A. Y. 2009 10. BOTH THESE AP PEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FOR THE A. Y. 2005 06. 3. IN THIS YEAR, THE ONLY GRIEVANCE OF THE REVENUE IS ABOUT DELETION OF PENALTY OF RS. 450,000/- IMPOSED BY THE A.O. U/S 27 1 (1) (C) OF THE I.T. ACT. 4. LEARNED DR OF THE REVENUE SUPPORTED THE PENALTY ORDER. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). HE ALSO PLACED RELIANCE ON A JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED I N THE CASE OF CIT VS. ARVIND FOOTWEAR (P) LTD., 72 DTR 294. 2 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW AND THE JUDGM ENT CITED BY THE LEARNED AR OF THE ASSESSEE. WE FIND THAT IN THE PRESENT CAS E, PENALTY WAS IMPOSED IN RESPECT OF DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB OF THE I T ACT ON DUTY DRAW BACK. IN THE CASE OF CIT V S. ARVIND FOOTWEAR (P) LTD. (SUPRA) ALSO, THE DISPUTE BEFORE HONBLE ALLAH ABAD HIGH COURT WAS SAME I.E. PENALTY FOR DISALLOWANCE OF DEDUCTION U/S 80IB IN RESPECT OF INCENTIVES BY WAY OF DUTY DRAW BACK. IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT IN THAT CASE THAT MERE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB ESPECIALLY WHEN THE LAW WAS CLARIFIED BY THE APEX C OURT SUBSEQUENT TO FILING OF RETURN WAS NOT SUFFICIENT TO LEVY PENALTY U/S 27 1 (1) (C ) OF I. T. ACT. RESPECTFULLY FOLLOWING THIS JUDGMENT, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. NOW, WE TAKE UP THE APPEAL FOR THE A. Y. 2009 10. 8. IN THIS YEAR, AS PER GROUND NO. 1, THE GRIEVANCE OF THE REVENUE IS ABOUT DELETION OF DISALLOWANCE OF RS. 12,88,325/- U /S 40 (A) (IA) OF THE I. T. ACT. 9. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSME NT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF C IT (A). HE ALSO SUBMITTED THAT ON PAGES 1 TO 14 OF THE PAPER BOOK A RE THE RELEVANT BILLS OF SHIPPING AGENCIES AND RELEVANT PAGES ARE 4 TO 6 FOR EXPENSES INCURRED ON ASSESSEES BEHALF. HE ALSO DRAWN OUR ATTENTION TO A NNEXURE 1 TO WRITTEN SUBMISSIONS AND POINTED OUT THAT DETAILS OF EXPENSE S ARE GIVEN HERE WHICH INCLUDES RS. 52,77,662/- ON ACCOUNT OF EXPORT FREIG HT, RS. 135,450/- ON ACCOUNT OF AGENCY COMMISSION AND RS. 13,74,642/- ON ACCOUNT OF REIMBURSEMENT OF EXPENSES. IT WAS POINTED OUT THAT ON FIRST TWO AMOUNTS, NO DISALLOWANCE IS MADE AND OUT OF THIRD AMOUNT ALS O, NO DISALLOWANCE WAS 3 MADE FOR SERVICE TAX RS. 86,317/- AND DISALLOWANCE IS MADE OF RS. 12,88,325/- BEING (RS. 13,74,642/- MINUS RS. 86,317 /-). AT THIS JUNCTURE, IT WAS POINTED OUT BY THE BENCH THAT IF COMBINED BILL IS RAISED FOR AGENCY COMMISSION AND REIMBURSEMENT OF EXPENSES THEN TDS I S REQUIRED TO BE DEDUCTED ON TOTAL AMOUNT. IN REPLY, HE SUBMITTED TH AT AS PER BILLS AVAILABLE IN THE PAPER BOOK, IT CAN BE SEEN THAT BILLS ARE RA ISED SEPARATELY AND THEREFORE, NO TDS IS REQUIRED TO BE DEDUCTED FROM R EIMBURSEMENT OF EXPENSES. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. WE FIND THAT IN THE BILL ON PAGE NO. 4 OF THE PAPER BOOK ALSO, THE HEADING GIVEN IS EXPEN SES INCURRED ON YOUR BEHALF BUT IT INCLUDES AGENCY COMMISSION OF RS. 15 00/- ALSO. HENCE, IT IS SEEN THAT COMBINED BILL IS RAISED FOR REIMBURSEMENT OF EXPENSES AND AGENCY COMMISSION. SIMILARLY ON PAGE 5 AND 6 ALSO, AGENCY COMMISSION OF RS. 1500/- AND RS. 1000/- RESPECTIVELY IS INCLUDED. SO IS THE CASE ON PAGE 8, 13, 14 & 15. HENCE, IT IS SEEN THAT COMBINED BILLS WERE RAISED FOR AGENCY COMMISSION AND REIMBURSEMENT OF EXPENSES AND THEREF ORE TDS IS REQUIRED TO BE DEDUCTED ON TOTAL AMOUNT. IN THIS VIEW OF THE MATTER, WE REVERSE THE ORDER OF CIT (A) ON THIS ISSUE AND RESTORE THAT OF THE A.O. GROUND NO. 1 IS ALLOWED. 11. AS PER GROUND NO. 2, THE DISPUTE IS ABOUT DELET ION OF ADDITION OF RS. 100,000/- AND AS PER GROUND NO. 3, THE DISPUTE IS A BOUT RESTRICTION THE ADDITION OF RS. 2 LACS TO RS. 1.50 LACS. 12. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER AND LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF C IT (A). 4 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GO NE THROUGH THE ORDERS OF THE LOWER AUTHORITIES BELOW. WE FIND THAT ADDITION OF RS. 1 LACS WAS MADE BY THE A.O. ON THIS BASIS THAT DEVELOPMENT OF SOFTWARE IS A CAPITAL EXPENDITURE. THIS WAS DELETED BY LEARNED CI T (A) ON THIS BASIS THAT THE SOFTWARE WAS NOT FOUND FITTING FOR THE BUSINESS . HE FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN TH E CASE OF CIT VS. ASAHI INDIA SAFETY GLASS LTD., 346 ITR 329. RESPECTFULLY FOLLOWING THIS JUDGMENT, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. GROUND NO. 2 IS REJECTED. 14. ABOUT GROUND NO. 3, WE FIND THAT AD HOC DISALLO WANCE WAS MADE BY THE A.O. OF RS. 2 LACS WHICH WAS REDUCED BY CIT (A) TO RS. 1.50 LACS. CONSIDERING THE FACT OF THE PRESENT CASE, WE DECLIN E TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE ALSO. GROUND NO. 3 IS ALSO REJECTED. 15. IN THE RESULT, THIS APPEAL OF THE REVENUE IS PA RTLY ALLOWED. 16. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE FOR A. Y. 2005 0 06 IS DISMISSED AND ITS APPEAL FOR A. Y. 2009 10 IS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD. SD. (SUNIL KUMAR YADAV) ( A. K. GARO DIA ) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:14/10/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGIST RAR