ACIT, Pune v. Tata Ficosa Automotive Systems Ltd., Pune

ITA 1279/PUN/2009 | 2006-2007
Pronouncement Date: 30-03-2011 | Result: Dismissed

Appeal Details

RSA Number 127924514 RSA 2009
Assessee PAN AAACT5755A
Bench Pune
Appeal Number ITA 1279/PUN/2009
Duration Of Justice 1 year(s) 4 month(s) 23 day(s)
Appellant ACIT, Pune
Respondent Tata Ficosa Automotive Systems Ltd., Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2011
Date Of Final Hearing 24-03-2011
Next Hearing Date 24-03-2011
Assessment Year 2006-2007
Appeal Filed On 06-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR JM AND SHRI G.S. PANN U AM ITA NO. 1279/PN/2009 ASSTT. YEAR 2006-07 ASSTT. CIT CIR. 7 PUNE APPELLANT V. TATA FICOSA AUTOMOTIVE SYSTEMS LTD. S.NO. 235 245 HINJEWADI MULSHI PUNE-411 057. PAN AAACT 5755 A . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE DEPARTMENT BY : SHRI J.D. ONKAR ORDER PER SHAILENDRA KUMAR YADAV JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-III PUNE DATED 11-8-2009 FOR THE A.Y. 2006-0 7. 2. THE FIRST ISSUE IS WITH REGARDS TO REDUCTION OF DISALLOWANCE TO 5% IN RESPECT OF TRAVELING MISCELLANEOUS AND CE LL PHONE EXPENSES. THE ASSESSING OFFICER HAS MADE THE DISALL OWANCES OF RS. 7 69 946/- RS. 30 000/- AND RS. 90 000/- OUT O F TRAVELING EXPENSES MISCELLANEOUS EXPENSES AND CELLULAR PHON E EXPENSES AFTER OBSERVING THAT THEY ARE NOT RELATED TO BUSINE SS AND CERTAIN PERSONAL ELEMENT IS ALSO INVOLVED IN THE SAID EXPEN SES. ON APPEAL THE CIT(A) RESTRICTED THE DISALLOWANCE TO 5 % OF THE EXPENSES WHICH HAS BEEN CHALLENGED BEFORE US BY THE REVENUE. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD WE FIND THAT THIS BENCH OF THE TRIBUNAL HAD AN OCCASION TO DEAL WITH SIMILAR ISSUE IN THE APPEAL FILED BY T HIS VERY ASSESSEE ITA NO 1279/PN/2009 TATA FICOSA AUTOMOTIVE A.Y. 2006-07 2 IN ITA NO. 1422/PN/2009 DATED 12-7-2010 FOR SAME AS SESSMENT YEAR I.E. 2006-07 WHEREIN THE TRIBUNAL HAS CONFIRME D THE DECISION OF THE CIT(A) IN RESTRICTING THE CLAIM TO 5% OF THE EXPENSES. FOR THE SAKE OF COMPLETENESS THE OBSERV ATIONS AND FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER: RELEVANT FACTS AND THE DECISION OF THE REVENUE ARE NARRATED IN PARA 4 OF THE IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE THE SAME ARE PRODUCED AS UNDER. 4. THE SECOND THIRD AND FOURTH GROUNDS OF APPEAL ARE AGAINST DISALLOWANCES OF RS.7 69 946 RS.30 000 AN D RS.90 000 OUT OF TRAVELING EXPENSES MISCELLANEOUS EXPENSES AND CELLULAR PHONE EXPENSES. 4.1. THE AFORESAID DISALLOWANCES HAVE BEEN MADE BY THE ASSESSING OFFICER AFTER OBSERVING THAT EXPENDITURE NOT RELATED TO BUSINESS INCLUDING SOME SITE SEEING EXPE NSES WERE ALSO INCLUDED IN THE TRAVELING EXPENSES AND CE RTAIN PERSONAL EXPENSES ARE INCLUDED IN MISCELLANEOUS EXP ENSES AS WELL AS CELLULAR PHONE EXPENSES. 4.2 AGITATING AGAINST THE ACTION OF THE ASSESSING O FFICER THE APPELLANT SUBMITTED THAT THE EXPENSES ARE INCUR RED ON TRAVELING BY THE EMPLOYEES OF THE APPELLANT COMPANY PURELY OUT OF BUSINESS EXPEDIENCY AND WHOLLY AND EXCLUSIVE LY FOR THE PURPOSES OF ITS BUSINESS. SIMILARLY THE EXPEN SES INCURRED ON COMMUNICATION ARE WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSES OF ITS BUSINESS TO FACILITATE THE EMPL OYEES TO WORK IN DIFFERENT TIME ZONES AND FACILITATE ITS JOI NT VENTURE COMPANY VENDORS AND CUSTOMERS TO STAY IN TOUCH CONSTANTLY AND AS AN EFFECTIVE EXPENSE CONTROL MEAS URES. THE APPELLANT SUBMITTED THAT SAME ISSUES CAME UP FO R CONSIDERATION IN THE CASE OF THE APPELLANT COMPANY FOR A.Y. 2003-04 BEFORE THE CIT(A) WHEREIN FULL RELIEF WAS A LLOWED TO THE APPELLANT COMPANY. 4.3 I HAVE CAREFULLY CONSIDERED THE APPELLANTS SUB MISSION AND I AM NOT INCLINED TO ACCEPT IT. IT IS SEEN FRO M THE ASSESSMENT ORDER THAT CERTAIN VOUCHERS RELATING TO EXPENSES DEBITED UNDER THESE HEADS WERE NOT PRODUCED BY THE ASSESSEE COMPANY AND THEREFORE THE EXPENSES COULD NOT BE PROPERLY VERIFIED BY THE ASSESSING OFFICER. THE AP PELLANT COMPANY HAS ALSO NOT REFUTED THE OBSERVATION MADE B Y THE ASSESSING OFFICER ON THE BASIS OF VOUCHER NO.T50031 5 DATED 29.6.2005 THAT THE EXPENDITURE DEBITED THROUGH THIS ITA NO 1279/PN/2009 TATA FICOSA AUTOMOTIVE A.Y. 2006-07 3 VOUCHER HAD AN ELEMENT OF NON-BUSINESS EXPENDITURE. AS THE ASSESSING OFFICER COULD NOT PROPERLY VERIFY THE EXPENSES ON ACCOUNT OF ASSESSEES FAILURE TO PRODUCE THE VOU CHERS IN MY OPINION THE ASSESSING OFFICER IS JUSTIFIED IN M AKING PART DISALLOWANCES OUT OF THESE EXPENSES. HOWEVER THE DISALLOWANCE MADE @ 10% OF THE EXPENSES DEBITED UND ER THIS HEAD APPEARS TO BE ON HIGHER SIDE AND THE SAME IS REDUCED TO 5% ONLY. TO THIS EXTENT RELIEF IS ALLOW ED TO THE APPELLANT. 3. FROM THE ABOVE THE DISALLOWANCE OF AN ADHOC SUM S OF EXPENDITURE OUT OF THE TRAVELING MISCELLANEOUS EXP ENSES AND COMMUNICATION TO THE EXTENT OF RS. 3 84 973/- RS.15 000/- AND RS. 45 000/- RESPECTIVELY HAS BEEN THE BONE OF CONTENTION. WHILE THE AO MADE THE SAID DISALLOWANCE APPLYING THE SWEEPING RATE OF 10% OF T HE CLAIMS MADE BY THE ASSESSEE IN THE ACCOUNTS THE C IT(A) RESTRICTED THE SAME TO 5 % OF THE CLAIMS. IN THIS REGARD LD COUNSEL ARGUED STATING THAT THIS BEING THE COMPANY WHERE THERE IS INTERNAL AUDIT SYSTEM THERE CANNOT BE PER SONAL ELEMENT AND RELIED ON THE GUJRAT HIGH COURTS JUDGM ENT IN THE CASE OF M/S SAYALI . ON THE OTHER HAND THE L D DR MENTIONED THAT THE SAID JUDGMENT IS TOTALLY DISTING UISHABLE. FURTHER HE STATED THAT IN THE PRESENT CASE THE AS SESSEE FAILED TO PROVIDE THE BASIC DATA IE NAME AND ADDRE SSES OF THE PERSONS INVOLVED AND THE THIRD PARTY EVIDENCES FOR SUBSTANTIATING THE CLAIMS. WE FIND THAT THE ASSESS EE HAS NOT REFUTED THE OBSERVATION MADE BY THE ASSESSING O FFICER WITH EVIDENCES AT LEAST BEFORE IN CONNECTION WITH T HE DISCREPANCY RELATING TO THE VOUCHER NO.T500315 DATE D 29.6.2005 THAT THE EXPENDITURE DEBITED THROUGH THIS VOUCHER HAD AN ELEMENT OF NON-BUSINESS EXPENDITURE. WE HAVE ALSO ANALYZED THE FACTUAL MATRIX RELEVANT FOR THE CITED GUJRAT HIGH COURT JUDGMENT AND FIND THAT THE SAME I S DISTINGUISHABLE. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AS WELL AS THE CITATIONS RELIED UPON B Y THE PARTIES. FROM THE FACTS OF THE INSTANT CASE IT IS EVIDENT THE SELF MADE VOUCHERS ARE THE ONLY EVIDENCES TO SUPPOR T THE CLAIMS OF THE ASSESSEE AND THERE IS LACK OF THIRD P ARTY EVIDENCES IN RESPECT OF EXPENDITURE ON ACCOUNTS OF TRAVELING VEHICLE GUEST ENTERTAINMENT POSTAGE TELEPHONE. I T IS ALSO NOT THE CASE OF THE ASSESSEE THE VEHICLES AND TELEP HONES ARE AVAILABLE FOR USE BY THE DIRECTORS FOR PERSONAL USE AND THERE EXISTS WRITTEN TERMS AND CONDITIONS IN THIS REGARD AUTHORIZING FOR SUCH PERSONAL USE. IN ANY CASE THE CASE LAW ITA NO 1279/PN/2009 TATA FICOSA AUTOMOTIVE A.Y. 2006-07 4 IN THE CASE OF SAYAJI IRON AND ENGINEERING CO (253 ITR 749) IS KNOWN FOR THE FOLLOWING CONCLUSION AND THE SAME READ AS UNDER. ONCE THE DIRECTORS OF THE ASSESSEE COMPANY WERE ENTITLED TO USE THE VEHICLE OF THE COMPANY FOR THEI R PERSONAL USE AS PER THE TERMS AND CONDITIONS OF THE IR APPOINTMENT IT CANNOT BE SAID THAT THE ASSESSEE COMPANY INCURRED EXPENDITURE FOR THE PERSONAL USE B Y THE DIRECTORS AND THEREFORE DISALLOWANCE OF PART O F THE EXPENDITURE INCURRED BY THE COMPANY FOR THE MAINTENANCE OF THE VEHICLES WAS NOT JUSTIFIED. 5. THUS CONSIDERING THE ABOVE WE FIND THE ABOVE C ITATION HAS NO RELEVANCE TO THE FACTS OF THE CASE. IN THESE CIRCUMSTANCES OF NO THIRD PARTY EVIDENCES NO LOG B OOKS AND NON DISCHARGE OF ONUS BY THE ASSESSEE IN DEMONSTRAT ING THE GENUINENESS OF THE EXPENDITURE WE ARE OF THE OPINI ON THAT THE GUJARAT HIGH COURT JUDGMENT HAS NO APPLICATION AND AO DECISION TO RESORT TO ADHOC ESTIMATIONS IS IN OR DER. FURTHER WE FIND THE CIT(A) IS REASONABLE IN REDUCI NG THE ADDITION TO RS 30 000/-. THEREFORE WE FIND THERE IS NO NEED FOR INTERFERENCE IN THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY GROUND 2 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 4. IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE TO 5% OF THE EXPENSES. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 30 TH MARCH 2011 ANKAM ITA NO 1279/PN/2009 TATA FICOSA AUTOMOTIVE A.Y. 2006-07 5 COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CITIV PUNE 4. THE CIT(A)- III PUNE 4. THE D.R. A BENCH PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE