AD 2C (India) Pvt Ltd, Gurgaon V. ACIT Circle-1(1), Gurgaon

ITA 999/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6708 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 07-02-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure; Bad and doubtful debts
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DLEHI BEFORE : SMT. DIVA SINGH, JUDICIAL MEMBER ITA NO.999/DEL/2019 ASSESSMENT YEAR: 2015-16 AD 2C (INDIA) PVT. LTD., VS. ACIT, CIRCLE 1(1), 601-612, 6 TH FLOOR, JMD MEGAPOLIS, GURGAON. SECTOR-48, SOHNA ROAD, GURGAON PAN : AAJCA 7779A (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: MS. RINKU SINGH, SR. DR. DATE OF HEARING : 04.02.2020 DATE OF PRONOUNCEMENT : 06.02.2020 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE, WHEREIN CORRECTNESS OF THE ORDER DATED 30.11.2018 OF CIT(A), GURGAON PE RTAINING TO 2015-16 ASSESSMENT YEAR IS ASSAILED ON THE FOLLOWING GROUND S : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN SUSTAINING ADDITION IN RESPECT OF SE RVICE TAX PAID IN A SUM OF RS.11,97,876, WHEREIN CENVAT CREDIT COULD NOT BE AVAILED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN SUSTAINING ADDITION IN RESPECT OF V ARIOUS EXPENSES INCURRED UNDER THE HEAD OTHER MINOR MISCELLANEOUS A DVANCES WRITTEN OFF RS.294025. 2. AT THE TIME OF HEARING, NO ONE WAS PRESENT ON BE HALF OF THE ASSESSEE. IT IS SEEN THAT THE APPEAL WAS FILED ON 07.02.2019 AND CAME UP FOR HEARING ON 03.09.2019. ON THE SAID DATE, THE ASSESSEE REMAINED UN-REPRESENTED. 2 THEREAFTER, THE APPEAL CAME UP FOR HEARING AGAIN ON 12 TH DECEMBER, 2019. ON THE SAID DATE THE ASSESSEE WAS REPRESENTED BY SR. M ANAGER SARAS KUMAR. HOWEVER, NO SUBMISSIONS WERE ADVANCED ON BEHALF OF THE ASSESSEE AND TIME APPEARS TO HAVE BEEN TAKEN, WHICH WAS GRANTED. THER EAFTER, THE APPEAL CAME UP FOR HEARING ON 04.02.2020, BUT ASSESSEE AGAIN RE MAINED UN-REPRESENTED. THE APPEAL WAS PASSED OVER, BUT NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. IN THE CIRCUMSTANCES, IT WAS DEEMED APPROPRIATE TO PROCEED EX PARTE QUA ASSESSEE APPELLANT ON MERITS. 3. THE LD. DR RELIES ON THE IMPUGNED ORDER. THE ASS ESSEE, AS PER RECORD, IS SHOWN TO BE ENGAGED IN THE BUSINESS OF MOBILE ADVER TISEMENT AND DECLARED INCOME AT RS. NIL. THE ASSESSING OFFICER REQUIRED T HE ASSESSEE TO EXPLAIN THE ALLOWABILITY OF FOLLOWING EXPENDITURE U/S. 37(1) OF THE ACT : PROVISION FOR DOUBTFUL RECEIVABLES :RS.11,67,087/ - BAD DEBTS :RS.29,55,869/- ADVANCES WRITTEN OFF :RS.29,55,189/- ULTIMATELY, THE ASSESSING OFFICER DISALLOWED THE AM OUNT OF RS.29,55,189, THE DETAILS OF WHICH ARE AS UNDER : (I). DEBIT NOTES PERTAINING TO VOLUME DISCOUNTS WRI TTEN OFF RS.14,63,288/- (II). SERVICE TAX WHICH COULD NOT BE CLAIMED AS CE NVAT RS.11,97,876/- (III). OTHER MINOR MISCELLANEOUS ADVANCES WRITTEN OFF. 4. THE ISSUE WAS CHALLENGED IN APPEAL BEFORE THE LD . CIT(A) WHO GRANTED PART RELIEF HOLDING AS UNDER :- EACH OF THE AFORESAID AMOUNTS IS BEING DISCUSSED AS UNDER: - (I) DEBIT NOTES PERTAINING TO VOLUME DISCOUNTS WRIT TEN OFF RS. 14,63,288/- 3 IT IS SEEN FROM THE DOCUMENTS FILED BY THE APPELLANT THAT THE APPELLANT HAD REDUCED RS. 88,21,352/- OUT OF ITS OPERATING EXP ENSES DURING THE YEAR 13-14 RELEVANT ASSESSMENT YEAR 14-15. IT IS FU RTHER SEEN THAT THE APPELLANT HAD DEBITED THE ACCOUNTS OF THE VARIOUS P ARTIES AGAINST WHOM THE DEBIT NOTES WERE RAISED DURING THE YEAR 13- 14. IT IS THEREFORE SEEN THAT THESE AMOUNTS WERE NOT ADVANCES BUT IN THE NATUR E OF DEBITS ON ACCOUNT OF DEBIT NOTES PERTAINING TO VOLUME DISCOUNT RA ISED BY THE APPELLANT. EVIDENTLY, THE EXPENDITURE HAD BEEN REDU CED DURING THE FINANCIAL YEAR 13-14 BY THIS AMOUNT, IMPLYING THEREB Y THAT THESE AMOUNTS HAD BEEN INCLUDED IN THE INCOME OF THE APPE LLANT IN THE IMMEDIATELY PRECEDING YEAR. ANY ADJUSTMENT WITH REG ARD TO THESE VOLUME DISCOUNTS AND DEBIT NOTES WOULD THEREFORE BE ALL OWABLE EXPENDITURE. THE ADDITION MADE BY THE AO TO THIS EX TENT IS DELETED. SERVICE TAX WHICH COULD NOT BE CLAIMED AS CENVAT RS . 11,97,876/- AS REGARDS THE AMOUNT OF 11, 97 876 PAID TOWARDS T HE SERVICE TAX FOR THE SERVICES RECEIVED BY THE COMPANY WHEN THE SERVI CES OFFERED WERE IN THE NEGATIVE LIST OF THE SERVICE TAX, IT IS EVIDENT FROM THE SUBMISSIONS OF THE APPELLANT THAT THESE AMOUNTS WERE PAID BY THE A PPELLANT ALTHOUGH THE SAME WERE NOT PAYABLE. MERELY BECAUSE THE VENDOR S FAILED TO PROVIDE THE SUPPLEMENTARY BILLS BECAUSE OF WHICH THE APPELLANT FAILED TO TAKE THE CENVAT CREDIT DOES NOT IMPLY THAT THE AMOUNT S WOULD BE ALLOWABLE AS BUSINESS EXPENDITURE. THE DISALLOWANCE M ADE BY AO TO THIS EXTENT IS CONFIRMED. (III) OTHER MINOR MISCELLANEOUS ADVANCES WRITTEN OF F. 7. AS REGARDS THE VARIOUS EXPENSES UNDER THIS HEAD, IT IS SEEN THAT ALL THESE AMOUNTS WERE PAID BY THE APPELLANT ALTHOUGH THE SE AMOUNTS WERE NOT PAYABLE OR THESE AMOUNTS WERE PAID IN EXCES S. AS SUCH, THESE EXPENSES DO NOT PARTAKE THE CHARACTER OF BUSINESS EXP ENSES. IT CANNOT BE SAID THAT THESE EXPENSES WERE INCURRED FULLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OF THE APPELLANT. THE ADDIT ION MADE WITH REGARD TO THESE MISCELLANEOUS EXPENSES IS CONFIRMED. 5. ON A READING OF THE ABOVE, IT IS SEEN THAT THE R EASONING AND CONCLUSIONS ARRIVED AT ON FACTS APPEAR TO BE JUSTIFIED. IN THE ABSENCE OF ANY MATERIAL TO SHOW ANY INFIRMITY IN THE SAME BROUGHT ON RECORD, I FIND NO GOOD REASON TO 4 INTERFERE WITH THE IMPUGNED ORDER. THE ADDITIONS SU STAINED BY THE LD. CIT(A) ARE, ACCORDINGLY, UPHELD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. SD/- (DIVA SINGH) JUDICIAL MEMBER DATED: 06/02/2020 AKS