M/s Avon Cycles Ltd., Ludhiana V. DCIT, Ludhiana

MA 33/CHANDI/2009

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6576 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-07-2011
• Assessment Year: 1995-1996
• Appeal Filed On: 17-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: SUBHASH AGGARWAL
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER M.A. NO. 33 /CHD/2009 (IN ITA NO.783/CHD/1998) ASSESSMENT YEAR: 1995-96) & M.A. NO. 34 /CHD/2009 (IN ITA NO.601/CHD/1999) ASSESSMENT YEAR: 1996-97) M/S AVON CYCLES LTD. V THE D.C.I.T., G.T. ROAD, CC-III, LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY: SHRI N.K.SAINI, DR ORDER PER SUSHMA CHOWLA, JM BOTH THE PRESENT MISCELLANEOUS APPLICATIONS ARE MOV ED BY THE APPLICANT- ASSESSEE AGAINST THE CONSOLIDATED ORDER OF THE TRIB UNAL IN I.T.A.NO.783/CHD/1998 AND I.T.A.NO. 601/CHD/1999 RE LATING TO ASSESSMENT YEARS 1995-96 AND 1996-97 (ORDER DATED 28.6.2006. 2. THE MISCELLANEOUS APPLICATION IS AS UNDER : 2. THAT GROUND NO. 4 RAISED BY THE REVENUE WHICH H AS BEEN DEALT WITH BY THE HON'BLE BENCH IN PARA 49 OF THE O RDER RELATED TO DELETION OF ADDITION OF RS.36804/- ON AC COUNT OF DISTRIBUTION OF SHAWLS, BLANKETS AND TRAYS ETC A ND RS.236464/- ON ACCOUNT OF SILVER UTENSILS AND THE HON'BLE BENCH ALLOWED THE APPEAL OF THE REVENUE ON THE BASIS OF JURISDICTIONAL HIGH COURT JUDGMENTS IN THE CASES OF H.M.M. VS. CIT, 252 ITR 842. 2 3. THAT NOW THE ISSUE HAS RECENTLY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE PUNJAB & HARYANA HIG H COURT IN ASSESSEES OWN CASE REPORTED AS CIT VS. AV ON CYCLES LTD. (2008) 303 ITR 345 (P&H) FOR THE ASSESSMENT YEAR 1992-93. 4. THAT SINCE THE ISSUE IS SQUARELY COVERED IN FAVO UR OF THE ASSESSEE BY THE JURISDICTIONAL HIGH COURT, THE ABOV E FINDING CONSTITUTE A MISTAKE APPARENT FROM RECORD W HICH NEEDS TO BE RECTIFIED AND NECESSARY RELIEF ALLOWED. 3. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ISSUE IN THE CAPTIONED APPEALS WAS DECIDED FOLLOWING THE RATIO L AID DOWN IN AVON CYCLES PVT. LTD. VS. CIT, 238 ITR 85 (P&H), BUT THE ISSUE IS COVERED BY THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE S OWN CASE OIN 303 ITR 345 (P&H) AND HENCE THERE IS A MISTAKEN APPARENT FR OM RECORD. THE LEARNED A.R. FURTHER POINTED OUT THAT NO APPEAL HAS BEEN FI LED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE HON'BLE HIGH C OURT. DURING THE COURSE OF HEARING THE LEARNED A.R. WAS CONFRONTED THAT THE IS SUE ARISING IN THE APPEALS BEFORE THE TRIBUNAL WAS COMPUTING THE DISALLOWANCE UNDER SECTION 37(2A) OF THE INCOME TAX ACT, WHEREAS THE ISSUE IN CIT VS. AV ON CYCLES LTD., 303 ITR 345 (P&H) WAS UNDER SECTION 37 (2) OF THE ACT. THE LEARNED A.R. COULD NOT DRAW THE DIFFERENCE. 4. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T THE ORDER OF THE TRIBUNAL IS DATED 28.6.2006, WHEREAS THE DECISION O F THE JURISDICTIONAL HIGH COURT REPORTED IN 303 ITR 345 (P&H) IS SUBSEQUENT O RDER OF THE HIGH COURT AND NOT CONSIDERING THE SAME, CANNOT BE A MISTAKE A PPARENT FROM RECORD. IT WAS FURTHER POINTED OUT BY THE LEARNED D.R. THAT ON THE DATE OF PASSING OF THE ORDER OF THE TRIBUNAL, THE JUDGMENT PASSED BY THE H ON'BLE HIGH COURT WAS IN FAVOUR OF THE DEPARTMENT AND AS SUCH THE ORDER OF T HE TRIBUNAL IS TO BE UPHELD. 3 5. THE LEARNED A.R. FOR THE ASSESSEE IN REJOINDER P OINTED OUT THAT EVEN THE SUBSEQUENT ORDER OF THE JURISDICTIONAL HIGH COURT I S BINDING AND NOT FOLLOWING THE SAME IS A MISTAKE APPARENT FROM RECORD AS HELD IN 252 ITR 76 (P&H). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE GROUND NO.4 RAISED BY THE REVENUE WAS AGAINST THE ALLOWANC E OF EXPENDITURE ON DISTRIBUTION OF SHAWLS, BLANKETS, TRAYS ETC. AMOUNT ING TO RS.36,804/- AND FURTHER DISTRIBUTION ON ACCOUNT OF SILVER UTENSILS AND PROVIDING AIR TICKETS TO DEALERS FOR THE PURPOSE OF COMPUTING DISALLOWANCE U NDER SECTION 37(2) OF THE ACT. THE TRIBUNAL HAS DEALT WITH THE ISSUE IN PARA S 49 TO 51 OF ITS ORDER DATED 28.6.2006. THE ARGUMENTS OF THE LEARNED D.R. WERE THAT THE CIT(A) HAD WRONGLY ALLOWED THE DEDUCTION ON ACCOUNT OF THE AFO RESAID EXPENDITURE BY TREATING THE SAME AS ENTERTAINMENT EXPENSES UNDER S ECTION 37(2) OF THE ACT. IT WAS BROUGHT TO THE NOTICE OF THE BENCH THAT THE ISS UE WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN H.M.M. LTD. VS. CIT, 231 ITR 726, AVON CYCLES PVT. LTD. VS. CIT, 23 8 ITR 85 AND H.M.M. VS. CIT, 252 ITR 842. THE TRIBUNAL HELD THAT AS THE ISSUE IS COVERED AGAINST THE ASSESSEE THE ORDER OF THE CIT(A) IN THIS REGARD WAS SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS REST ORED. 7. THE PERUSAL OF THE ASSESSMENT ORDER RELATING TO ASSESSMENT YEARS 1995-96 AND 1996-97 REVEALS THAT THE DISALLOWANCE ON ACCOUN T OF THE ENTERTAINMENT EXPENSES AND ALSO THE ADVERTISEMENT EXPENSES WAS CO MPUTED IN VIEW OF THE PROVISIONS OF SECTION 37 (2A) OF THE ACT. THE ISSU E BEFORE THE TRIBUNAL IN THE CAPTIONED APPEALS WAS WHETHER THE DISALLOWANCE UNDE R SECTION 37 (2A) OF THE ACT IS WARRANTED. THE TRIBUNAL HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN ASSESSEE OWN CASE, REPORTED IN 238 ITR 85 (P&H) WHERE THE ISSUE RAISED WAS THE ENTERTAINMENT EXPENSES AND ITS DISALLOWANCE UNDER SECTION 37 (2A) OF THE ACT. THE TRIBUNAL VIDE ITS ORDER DATED 28.6.2006 PLACING RELIANCE ON THE ABOVE SAID DECISION OF THE 4 JURISDICTIONAL HIGH COURT HAD ALLOWED THE APPEAL OF THE REVENUE ON THIS GROUND AND RESTORED THE ADDITION MADE BY THE ASSESS ING OFFICER. 8. THE GRIEVANCE OF THE ASSESSEE IS AGAINST THE AFO RESAID DECISION OF THE TRIBUNAL. THE LEARNED A.R. FOR THE ASSESSEE HAS PL ACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN CIT VS. AVON CYCLES I.E. THE ASSESSEE BEFORE US, REPORTED IN 303 ITR 345 (P&H). THE PERUSAL OF THE SAID JUDGMENT REVEALS THAT THE ISSUE IN THE AFORESAID APPEAL WAS THE ALLOWANCE OF EXPENDITURE ON DISTRIBUTION OF GIF T ARTICLES TO DEALER UNDER THE PROVISIONS OF SECTION 37 (2) OF THE ACT. ADMITTEDL Y, THE SAID EXPENDITURE IS ENTERTAINMENT IN NATURE AND IS ALLOWABLE UNDER SECT ION 37(2) OF THE ACT. HOWEVER, IN THE APPEALS BEFORE THE TRIBUNAL THE ISS UE WAS NOT WHETHER THE EXPENDITURE IS ALLOWABLE AS ENTERTAINMENT BUT WHETH ER ANY DISALLOWANCE IS MERITED IN VIEW OF THE PROVISIONS OF SECTION 37 (2A ) OF THE ACT. THE ALLOWANCE UNDER SECTION 37 (2) OF AND THE DISALLOWANCE TO BE COMPUTED UNDER SECTION 37 (2A) OF THE ACT WORKS ON DIFFERENT PARAMETERS. T HE TRIBUNAL HAD DECIDED THE ISSUE FOLLOWING THE RATIO LAID DOWN BY THE JURISDIC TIONAL HIGH COURT IN ASSESSEES OWN CASE OF DISALLOWANCE WORKED OUT UNDE R SECTION 37 (2A) OF THE ACT. WE FIND NO MERIT IN THE STAND OF THE ASSESSEE AND HENCE THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE AG AINST THE ORDER OF THE TRIBUNAL ARE DISMISSED. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FI LED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JULY, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 15 TH JULY, 2011 RATI COPY TO:THE APPELLANT/THE RESPONDENT/THE CIT/THE CI T(A)/THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5