M/S M.I. OVERSEAS LTD.,NOIDA V. DCIT, (INTERNATIONAL TAXATION), DEHRADUN

ITA 2548/DEL/2017

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471640 (ITAT-DEHRADUN)
• Duration Of Justice: 7 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-11-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYANK KUMAR
• Assessee Lawyers: AMIT ARORA; VI SHAL MISHRA
• Keywords: Bad and doubtful debts; Depreciation; TDS; Non-deduction of tax
• Section: 143(1); 40(a)(ia); 194C; 194J

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH ‘DB’, DEHRADUN Before Sh. Satbeer Singh Godara, Judicial Member Sh. Pradip Kumar Kedia, Accountant Member ITA No. 2548/Del./2017 : Asstt. Year : 2011-12 M. I. Overseas Ltd., C/o Nangia & Company, A-109, Sector-136, Noida-201301 Vs DCIT, International Taxation, Circle-1, Dehradun-248001 (APPELLANT) (RESPONDENT) PAN No. AADCM8895K Assessee by: Sh. Amit Arora, Adv. & Sh. Vishal Mishra, Adv. Revenue by: Sh. Mayank Kumar, JCIT, DR Date of Hearing: 19.11.2024 Date of Pronouncement: 27.11.2024 ORDER Per Satbeer Singh Godara, Judicial Member: This assessee’s appeal for Assessment Year 2011-12, arises against the order of CIT(A)-2, Noida dated 28.02.2017 in case No. 40/CIT(A)-2/2015-16 in proceedings u/s 143(1) of the Income Tax Act, 1961 (in short “The Act”). 2. Heard both parties at length. Case files perused. 3. The assessee raises the following substantive grounds for the instant appeal: Ground No. 1 “1.1. On the facts and circumstances of the case, the Ld. CIT(A)/AO erred in restricting the claim of depreciation to INR 6,256,516 as-opposed to the claim of INR 12,979,125 made in the tax return. 1.2. On the facts and circumstances of the case, the Ld. CIT(A)/AO erred in law and on facts in restricting the depreciation claim in respect of assets put to use during the year for more than 183 days to 50 per cent without ITA No 2548/Del/2017 M. I. Overses Ltd. 2 appreciating the documentary evidences submitted by the appellant. Ground No. 2 2.1 On the facts and circumstances of the case, the Ld. CIT(A)/ AO erred in disallowing bad debts of INR 14,825,247 without appreciating the documentary evidences submitted by the appellant. 2.2 On the facts and circumstances of the case the Ld. CIT(A)/AO erred in law in not appreciating that appellant satisfied the statutory rule of writing off the bad debts as irrecoverable and thus, the claim is allowable in terms of the decision of Hon’ble Supreme Court of India in the case of TRF Limited. Ground No. 3 3.1. On the facts and circumstances of the case, the Ld. CIT(A) erred in disallowing staff welfare expense to the extent of 10 per cent of the expenditure on ad-hoc basis. 3.2. On the facts and circumstances of the case, the Ld. CIT(A) erred in not appreciating that the amount expended by the appellant in respect of staff-welfare was indeed wholly and exclusively for the purpose of business. Ground No. 4 4.1. On the facts and circumstances of the case, the Ld. CIT(A)/AO erred in disallowing proportionate expenditure in terms of section 40(a)(ia) of the Income-tax Act, 1961. 4.2. On the facts and circumstances of the case, the Ld. CIT(A)/AO erred in not appreciating that the services provided by M/s Gumpro Drilling Fluids Private Limited and M/s Mohan Enterprises respectively Jail within the abmit of section 194C. The services cannot be categorized as “fees for technical services” in terms of explanation 2 to section 9(1)(vii) of the Act and thus are outside the purview of section 194J of the Act. 4.3. Without prejudice to the above, the Ld. AO erred in not appreciating the scheme of disallowance envisaged in section 40(a)(ia), wherein a disallowance can be made only for non-deduction of tax at source and not for short deduction at source in terms of the decision of Jurisdictional ITAT, New Delhi in the case of UE Trade Corporation (India) Limited Vs. Deputy Commissioner of Income-tax.” 4. We advert to the assessee’s first and foremost substantive ground challenging both the lower authorities restricting it depreciation claimed raised in the impugned assessment year to that of its half only on the ground that it had not put to use ITA No 2548/Del/2017 M. I. Overses Ltd. 3 the corresponding fixed assets for the full relevant precious year i.e. F.Y. 2010-11. The learned counsel, on the other hand, refers to assessee’s paper book at page 23 which turns out to be the recipient’s job completion certificate dated 30.06.2010 followed by the warranty certificate issued w.e.f. the same date along with the inspection release note dated 10.08.2010 as well as the assessment order dated 18.05.2016 for the succeeding assessment year 2012-13 declining the very claim on the ground that the work order regarding the fixed assets i.e. “mud plant KKD” work order/bill is dated 30.09.2010. Learned counsel further submits that the departmental authorities herein have adopted pick and choose method for incorporating the relevant date suitable to the Revenue’s cause only. 5. The Revenue draws strong support from the impugned disallowance made in both the proceedings. We have given our thoughtful consideration and rival arguments and find merit in assessee’s case as it has already come on record that corresponding fixed assets (supra) stood duly installed very well in the first half of the relevant previous year. We thus accept the assessee’s instant first and foremost substantive ground very terms. Necessary computation shall follow as per law. 6. Coming to assessee’s second substantive ground challenging bad debts disallowance of Rs.1,48,25,247/-, a perusal of the assessment discussion in para 7.1 suggests that the Assessing Officer had concluded that it could neither justify the claim nor substantiate how the debts had been considered as not recoverable and bad. We quote T.R.F. Ltd. Vs. CIT [2010] 323 ITR 397 that such a condition nowhere needs to be satisfied in Section 36(1)(vii) of the Act. We accordingly accept the assessee’s instant second ground as well in very terms. ITA No 2548/Del/2017 M. I. Overses Ltd. 4 7. The assessee’s third substantive ground challenges correctness of both the lower authorities disallowing 10% of its expenditure on staff welfare etc. on ad-hoc basis. It emerges from the assessment discussion in paragraph 7.3 that the Assessing Officer had disallowed 25% of the assessee’s claim amounting to Rs.18,46,717/-; coming to Rs.46,56,179/- which has been restricted only to that @ 10% in the lower appellate discussion. We reiterate that all this has done only on estimation basis without satisfying any difference or default at the assessee behest in filing the relevant separate evidence. We thus accept assessee’s third substantive ground in very terms. Necessary computation shall follow as per law. 8. Lastly comes to assessee’s fourth substantive ground that both the learned lower authorities have erred in law and in facts in invoking section 40(a)(ia) disallowance on account of the fact that it had deducted TDS u/s 194C than that section 194J of the Act. It is this TDS difference which forms subject matter of the impugned disallowance. Learned departmental representative quotes P V S Memorial Hospital (2016) 380 ITR 284 that the impugned disallowance in such a factual backdrop indeed deserves to be upheld. 9. We find that case laws CIT Vs. M/s S. K. Tekriwal, 361 ITR 452 (Cal.) had decided the very issue in assessee’s favour and that no guidance is forthcoming from the hon’ble jurisdictional high court in assessee’s case. Faced with this situation, we adopt the view coming is the taxpayer favour in these peculiar facts and circumstances and accept the instant fourth and last substantive ground. Ordered accordingly. ITA No 2548/Del/2017 M. I. Overses Ltd. 5 10. This assessee’s appeal is allowed in above terms. Order Pronounced in the Open Court on 27/11/2024. Sd/- Sd/- (Pradip Kumar Kedia) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 27/11/2024 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR "