M/s Vital Therapeutics Limited, Hyderabad v. ACIT, Hyderabad

ITA 163/HYD/2010 | 2002-2003
Pronouncement Date: 02-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 16322514 RSA 2010
Assessee PAN AABCV1543M
Bench Hyderabad
Appeal Number ITA 163/HYD/2010
Duration Of Justice 1 month(s)
Appellant M/s Vital Therapeutics Limited, Hyderabad
Respondent ACIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 02-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 02-03-2010
Date Of Final Hearing 02-03-2010
Next Hearing Date 02-03-2010
Assessment Year 2002-2003
Appeal Filed On 01-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMEBR ITA NO.163/HYD/10 (ASSESSMENT YEAR 2002-03) M/S. VITAL THERAPEUTICS PVT. LTD. HYDERABAD. ( PAN AABCV 1543 M ) V/S. ASST. COMMISSIONER OF INCOME- TAX CIRCLE 1(8) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.VASANT KUMAR RESPONDENT BY : SHRI H.PHANI RAJU DR O R D E R PER CHANDRA POOJARI ACCOUNTANT MEM BER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A) IV HYDERABAD DATED 13.11.2009 FOR THE ASSE SSMENT YEAR 2002-03. 2. ASSESSEE RAISED THE FOLLOWING GROUNDS '1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS B OTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE O F FOREIGN TRAVEL EXPENDITURE INCURRED BY THE DIRECTOR OF APPELLANT COMPANY. CIT(A) FAILED TO APPRECIATE THA T THE ITA NO.163/HYD/10 M/S. VITAL THERAPEUTICS PVT. LTD. HYDERABAD. 2 EXPENDITURE WAS INCURRED FOR PROMOTING THE BUSINES S OF THE APPELLANT AND THEREFORE IS AN ALLOWABLE EXPENDI TURE. 3. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF ALLEGED UNEXPLAINED CASH CREDITS. THE CIT(A) FAILED TO APPRECIATE THAT THE A MOUNT OF RS.39 000/- PERTAIN TO THE LOANS TAKEN BY THE APPELLANT FROM THREE PERSONS WHICH AT ANY RATE DID NOT FALL DURING THE PERIOD RELEVANT TO THE ASSESSMENT Y EAR UNDER CONSIDERATION. 4. THE CIT(A) ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED BY THE APPELLANT IN SUPPORT OF THE EXPENDITUR E INCURRED BY THE APPELLANT ON THE FOREIGN TRAVEL OF ONE OF ITS DIRECTOR AND THE CASH CREDITS. ' 3. AT THE OUTSET THE LEARNED AUTHORISED REPRESENTA TIVE FOR THE ASSESSEE SUBMITTED THAT IN THE COURSE OF APPELLATE PR OCEEDINGS BEFORE THE CIT(A) ASSESSEE PRODUCED COPY OF THE INVITAT ION RECEIVED FROM ABROAD TO ESTABLISH THAT DIRECTOR OF THE ASSESSEE-CO MPANY WENT ABROAD ON BUSINESS TRIP AND REQUESTED THE CIT(A) TO AD MIT THE SAME AS ADDITIONAL EVIDENCE. THE CIT(A) HAS NOT ACCEPTED THE SAME AS ADDITIONAL EVIDENCE AND WITHOUT APPRECIATING THE SAME DISMISSED THE GROUND RELATING TO THE ALLOWABILITY OF EXPENDITURE ON DIRECTOR'S FOREIGN TRIP TO CHINA AND HONGKONG. HE DREW OUR ATTENTION TO A COPY OF THE INVITATION LETTER PLACED AT PAGES 38 AND 39 OF THE P APER-BOOK. FURTHER ON THE ISSUE RELATING TO THE ALLOWABILITY OF PAYMENT OF INTEREST ON UNSECURED LOANS HE SUBMITTED THAT THE CONFIRMATION LETT ERS FROM THE THREE PARTIES NAMELY SHRI J. SHANKAR REDDY SHRI C H.KRISHNA REDDY AND SHRI V. LAKHSMIPATHY CONFIRMING LENDING OF MON IES BY THEM WERE ALSO SUBMITTED BEFORE THE CIT(A) BUT THE SAME WE RE NOT CONSIDERED BY THE CIT(A) ON THE GROUND THAT THEY CONSTI TUTED ITA NO.163/HYD/10 M/S. VITAL THERAPEUTICS PVT. LTD. HYDERABAD. 3 ADDITIONAL EVIDENCE. HE SUBMITTED THAT BOTH THE ISSUES MAY BE SET ASIDE FOR FRESH EXAMINATION BY THE LOWER AUTHORITIES. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUBMITTED THAT AMPLE OPPORTUNITIES WERE GIVEN B Y THE ASSESSING OFFICER TO THE ASSESSEE TO ADDUCE NECESSARY EVIDENCE AND SUBST ANTIATE ITS CLAIM WITH REGARD TO EXPENDITURE ON FOREIGN TRIP OF THE DIRECTOR AND THE INTEREST PAYMENTS. HENCE IT IS SUBMITTED THAT NO FU RTHER OPPORTUNITY NEEDS TO BE GIVEN TO THE ASSESSEE TO PUT FOR TH ITS CASE ON THE TWO ISSUES. HE RELIED IN THIS BEHALF ON THE JUDGME NT OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCO ME-TAX V/S. SAS EDUCATIONAL SOCIETY (319 ITR 65)-P&H. 5. WE HAVE HEARD BOTH THE PARTIES. ASSESSEE PRODUCED T HE INVITATION LETTER IN SUPPORT OF ITS CLAIM WITH REGARD TO FOREIGN TRIP OF THE DIRECTOR AND ALSO CONFIRMATION LETTERS FORM THE THREE PARTIES WHO LENT THE MONIES TO THE ASSESSEE IN SUPPORT OF ITS CLAIMS FOR EXP ENDITURE ON FOREIGN TRAVEL AND INTEREST PAYMENTS. THE CIT(A) HA S NOT ADMITTED THE SAME FOR THE REASON THAT THE ASSESSING OFFICER HAS GIV EN AMPLE OPPORTUNITIES TO THE ASSESSEE TO PRODUCE THE SAME. IN OU R OPINION AT THE TIME OF COMPLETION OF ASSESSMENT THESE DOCUMENTS WERE NOT WITH THE ASSESSEE AND THE ASSESSEE WAS HAVING A REASONABLE CAUSE FO R NOT PRODUCING THE SAME BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE INTERESTS OF JUSTICE THEREF ORE IN OUR OPINION THESE EVIDENCES HAVE TO BE APPRECIATED BY THE ASSESSING OFFICER IN VIEW OF THE DECISION OF THE APEX COURT IN T HE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. V/S. CIT (229 ITR 383 ). WE ITA NO.163/HYD/10 M/S. VITAL THERAPEUTICS PVT. LTD. HYDERABAD. 4 ACCORDINGLY SET ASIDE THE ORDERS OF THE LOWER AUTHORITIE S ON THESE TWO ISSUES AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. IF IT IS FOUND THAT THE EXPENDITU RE IN QUESTION IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS THE SAME HAVE TO BE ALLOWED. WE DIRECT ACCORDINGLY. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 2ND MARCH 2010 SD/- SD/- (G.C.GUPTA) (CHANDRA POOJARI) VICE PRESIDENT ACCOUNTANT MEMBER DT/- 2ND MARCH 2010 COPY FORWARDED TO: 1. M/S. VITAL THERAPEUTICS PVT. LTD. C/O. SHRI K.VASAN T KUMAR ADVOCATE 403 MANISHA TOWERS 10-1-18/31 SHYAM NAGAR HYDERABAD 500 004. 2. ASST. COMMISSIONER OF INCOME-TAX CIRCLE-1(3) HYDERA BAD . 3. COMMISSIONER OF INCOME-TAX(APPEALS) IV HYDERABAD 4. COMMISSIONER OF INCOME-TAX III HYDERABAD. 5 THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S.