Anant Kabra, Hyd, Hyderabad V. ITO, Ward-4(3), Hyd, Hyderabad

ITA 995/HYD/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6098 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-05-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M SITHARAM
• Keywords: Gift; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 995/HYD/2016 ASSESSMENT YEAR: 2008-09 SRI ANANT KABRA, HYDERABAD [PAN: AEOPK6878C] VS INCOME TAX OFFICER, WARD-4(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. SRINIVAS, AR FOR REVENUE : SHRI M. SITHARAM, DR DATE OF HEARING : 24-05-2018 DATE OF PRONOUNCEMENT : 08-06-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD, DATED 28-01-2016. 2. BRIEFLY STATED FACTS ARE THAT, ASSESSEE AN INDIVIDU AL, RETURNED INCOME FROM COMMISSION EARNED ON INSURANCE BUSINESS BEING AN AGENT WITH MAX NEW YORK LIFE INSURA NCE CO., LTD. AGAINST THE COMMISSION RECEIVED, ASSESSEE H AS CLAIMED VARIOUS EXPENDITURE IN THE P&L A/C. ASSESSIN G OFFICER ITA NO. 995/HYD/2016 :- 2 - : (AO) DISALLOWED VARIOUS AMOUNTS IN THE ASSESSMENT ORDE R WHICH WAS CONTESTED BEFORE THE LD.CIT(A). CIT(A) WHILE ALLOWING SOME GROUNDS, DID NOT ALLOW THREE OF THE ITEM S. HENCE THE PRESENT APPEAL. THE GROUNDS RAISED BY ASSE SSEE ARE AS UNDER: 1. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE SU STAINED AN AMOUNT OF RS. 56,895/-, BEING 30% OF SALARY DEBITED TO PROFIT & LOSS ACCOUNT. 2. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE SUS TAINED AN AMOUNT OF RS. 1,99,404/- BEING GIFTS DEBITED TO PRO FIT & LOSS ACCOUNT. 3. THE APPELLATE COMMISSIONER OUGHT NOT TO HAVE CON FIRMED AN ADDITION OF RS. 3,13,112/-, MADE BY THE A.O BEING S ALE OF OLD CAR AND WHICH HAS BEEN REDUCED FROM THE BLOCK OF ASSETS . GROUND NO. 4 IS GENERAL IN NATURE. 3. GROUND NOS. 1 & 2 ARE CLAIMS OF EXPENDITURE IN THE P&L A/C. AO NOTICED THAT ASSESSEE HAS CLAIMED AMONGST VARIOUS EXPENDITURES - AN AMOUNT OF RS. 1,89,650/- TOW ARDS SALARIES AND RS. 6,64,680/- TOWARDS GIFT. SINCE THE P ROOF OF EXPENSES WERE NOT FURNISHED, AO DISALLOWED 30% OF THE ABOVE AMOUNTS. IT WAS THE CONTENTION BEFORE THE CIT(A) THAT EXPENDITURES WERE VOUCHED AND GENUINE AND PAYMENTS WE RE THROUGH BANK. LD.CIT(A) IN THE BRIEF ORDER, HOWEVER , DID NOT AGREE STATING THAT NO EVIDENCE WAS SUBMITTED REGARDING THESE AMOUNTS. 3.1. IT WAS THE SUBMISSION OF LD. COUNSEL THAT SALARIE S ARE VERY MEAGRE, PAID TO THE STAFF EMPLOYED FOR HELPI NG HIM AND SHOWED THE ENTRIES FROM THE BANK ACCOUNT THAT AMOUNTS ITA NO. 995/HYD/2016 :- 3 - : ARE PAID THROUGH BANK. LIKE-WISE, HE HAS SHOWN THE D EBIT ENTRIES OF PURCHASE OF GIFT VOUCHERS AND ITEMS TO THE C USTOMERS WHICH WERE DEBITED IN THE ACCOUNT, EITHER THROUGH CHEQU ES OR THROUGH THE CREDIT CARDS. 3.2. CONSIDERING THE ABOVE NATURE OF EXPENDITURE, WE ARE OF THE OPINION THAT ASSESSEE DESERVES TO GET FULL AL LOWANCE OF SALARIES. THE AMOUNT OF RS. 56,895/- DISALLOWED OUT OF THE SALARY AMOUNT IS ALLOWED. 3.3. COMING TO THE GIFTS, IT MAY BE TRUE THAT ASSESSEE MIGHT BE PASSING ON THE GIFTS TO THE CUSTOMERS BUT AS SE EN FROM THE ORDERS OF THE AO AND CIT(A), THERE IS NO PROO F OF PASSING ON THE GIFTS TO THE PARTIES. SINCE AO HAS ALLOW ED MORE THAN 70% OF THE AMOUNT INVOLVED, WE ARE OF THE OPINION THAT ON THE GIVEN FACTS OF THE CASE, THE DISALLOWANCE IS WAR RANTED. GROUND NO. 1 IS ALLOWED AND GROUND NO. 2 IS DISMISS ED. 4. GROUND NO. 3 PERTAINS TO THE ISSUE OF ADDITION ON ACCOUNT OF BEING SALE OF OLD CAR. ASSESSEE HAS SOLD AN OLD CAR AND ADJUSTED THE SALE PRICE IN THE DEPRECIATION SCHEDUL E. FOR THE REASONS BEST KNOWN TO THE AO, HE CONSIDERED THE RECE IPT OF SALE OF CAR AS INCOME, BUT ADDED AS DISALLOWANCE OF SALE OF OLD CAR. 4.1. BEFORE THE LD.CIT(A) IT WAS SUBMITTED THAT OPEL ASTRA CAR WAS SOLD FOR THE ABOVE AMOUNT AND THE SAME WA S REDUCED FROM BLOCK OF ASSETS BEFORE CLAIMING DEPRECI ATION. ITA NO. 995/HYD/2016 :- 4 - : LD.CIT(A), HOWEVER, DISMISSED THE GROUND STATING THAT A SSESSEE HAS NOT FILED ANY PROOF OF SALE OF CAR. 4.2. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PERUSING THE PAPER BOOK IN WHICH THE DEPRECIATION SCH EDULE WAS PLACED, WE ARE OF THE OPINION THAT BOTH AO AND CIT (A) ERRED IN TREATING THE AMOUNT AS INCOME OF ASSESSEE. AS SEEN FROM THE DEPRECIATION SCHEDULE, ASSESSEE HAS SHOWN SA LE OF CAR IN THE DEDUCTIONS AND THE OPENING WDV WAS REDUCED BY THAT EXTENT. THE CONSEQUENT DEPRECATION WAS ALSO LESS TO TH AT EXTENT. SINCE THE AMOUNT WAS ADJUSTED IN THE BLOCK OF THE ASSETS, THE SAME CANNOT BE CONSIDERED AS INCOME AGAIN. MOREOVER, SALE OF PERSONAL CAR DOES NOT BECOME INCOM E AND THERE IS NO ALLEGATION THAT THE ABOVE AMOUNT WAS NOT REC ORDED IN THE BOOKS OF ACCOUNT. WHY THE AO TREATED THE SAME AS INCOME COULD NOT BE UNDERSTOOD AND IT IS EQUALLY PERPL EXING WHY THE CIT(A) CONFIRMED, EVEN THOUGH THE SAME WAS EXPLAINED THAT THE SAID AMOUNT WAS ADJUSTED IN THE BLOCK OF ASSETS. WE ALLOW THE GROUND AND DIRECT THE AO TO DELETE THE ADDITION. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2018 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 8 TH JUNE, 2018 [ TNMM ITA NO. 995/HYD/2016 :- 5 - : COPY TO : 1. SRI ANANT KABRA, 2-4-941 & 942, DEWAS, KACHIGU DA, HYDERABAD. 2. INCOME TAX OFFICER, WARD-4(3), HYDERABAD. 3. CIT(APPEALS)-1, HYDERABAD 4. PR.CIT-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.