M/s N.D.Metal Industries Ltd, Mathura v. ITO, Mathura

ITA 172/AGR/2009 | 2005-2006
Pronouncement Date: 27-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 17220314 RSA 2009
Assessee PAN AAACN1538R
Bench Agra
Appeal Number ITA 172/AGR/2009
Duration Of Justice 1 year(s) 3 month(s) 27 day(s)
Appellant M/s N.D.Metal Industries Ltd, Mathura
Respondent ITO, Mathura
Appeal Type Income Tax Appeal
Pronouncement Date 27-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 27-08-2010
Date Of Final Hearing 23-07-2010
Next Hearing Date 23-07-2010
Assessment Year 2005-2006
Appeal Filed On 30-04-2009
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.172/AGR/2009 ASST. YEAR: 2005-06 N.D. METAL INDUSTRIES LIMITED VS. THE INCOME-TA X OFFICER 3(3) 64/71 DAMPIER NAGAR MATHURA. MATHURA. (PAN : AAACN 1538 R). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.M. AGARWAL C.A. RESPONDENT BY : SHRI VINOD KUMAR JR. D.R. ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 18.02.2009 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- (1) BECAUSE THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OUT OF CAR EXPENSES DE PRECIATION ON VEHICLE AND TELEPHONE EXPENSES IGNORING THAT SUCH DISALLOWANCE COULD NOT BE MADE IN THE HANDS OF COMPANY SPECIALLY IN THE CIRCUMSTANCES THA T THERE WAS NO EVIDENCE ON RECORD OF ANY PERSONAL USE OF CAR AND TELEPHONE BY THE DIRECTORS OR THEIR RELATIVES. (2) BECAUSE WITHOUT PREJUDICE TO GROUND NO.1 THE LEARNED CIT (APPEALS) HAS ERRED IN NOT APPRECIATING THAT DISALLOWANCE OF RS.5 5 746/- OUT OF CAR EXPENSES AND OF RS.75 846/- OUT OF TELEPHONE EXPENSES AS MADE BY THE LEARNED AO WAS EXCESSIVE AND UNREASONABLE. 2 2. THE A.O. HAD DISALLOWED A SUM OF RS.55 746/- OUT OF THE CAR EXPENSES AND DEPRECIATION TOWARDS PERSONAL USE AND RS.75 846/- OUT OF TELEPHO NE EXPENSES. THE A.O. OBSERVED THAT THE ASSESSEE HAD DEBITED RS.2 96 837/- UNDER THE HEAD M OTOR CAR EXPENSES AND RS.2 60 622/- ON ACCOUNT OF DEPRECIATION TOTALING RS.5 57 459/-. TH E A.O. DISALLOWED 1/10 TH OF THE TOTAL EXPENSES DEBITED BY THE ASSESSEE UNDER THESE HEADS AS THE AS SESSEE COULD NOT EXPLAIN WITH DOCUMENTARY EVIDENCE THAT THESE EXPENSES WERE INCURRED WHOLLY A ND EXCLUSIVELY FOR THE BUSINESS PURPOSES. WHEN THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE DISPUTE RELATES TO THE DISALLOWANCE TOWARD S PERSONAL USER OF THE CAR BY THE DIRECTORS AND THEIR FAMILY MEMBERS. THE CIT(A) CONFIRMED THE DIS ALLOWANCE. 3. BEFORE US THE LD. A.R. CONTENDED THAT THE DISAL LOWANCE HAS BEEN MADE FOR PERSONAL USE OF THE CAR AND SINCE THE ASSESSEE IS A LIMITED COMPANY THEREFORE NO DISALLOWANCE CAN BE MADE FOR THE PERSONAL USE AS THERE CANNOT BE ANY PERSONAL US E BY A LIMITED COMPANY. 4. LD. D.R. ON THE OTHER HAND CONTENDED THAT FROM THE ASSESSMENT ORDER THE DISALLOWANCE HAS NOT BEEN MADE FOR PERSONAL USER OF THE CAR BUT THE DISALLOWANCE HAS BEEN MADE AS THE ASSESSEE COULD NOT PROVE THAT ALL THE EXPENSES WERE INCURRED FOR THE PURPOSES OF BUSINESS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. WE NOTED THAT IT IS NOT A CASE WHERE THE DISALLOWANCE HAS BE EN MADE BY THE A.O. FOR THE PERSONAL USER OF THE CAR BY THE DIRECTORS OR THEIR FAMILY BUT THE DI SALLOWANCE HAS BEEN MADE BY THE A.O. AS THE ASSESSEE COULD NOT PROVE THAT THE EXPENSES HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. THE DISALLOWANCE HAS BEEN MADE ON ESTIMATE BASIS. KEEPING IN VIEW THE 3 FACTS THAT THE DISALLOWANCE HAS BEEN MERELY MADE ON ESTIMATE BASIS AND THE A.O. HAS ACCEPTED THIS FACT BY ALLOWING 90% OF THE EXPENDITURE THAT PART OF THE EXPENSES HAS BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. WE THEREFOR E IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES ARE OF THE OPINION THAT AN ESTIMATE IS ALWAYS AN ESTIMATE AND ACCORDINGLY WE DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE TO RS.30 000/ - IN RESPECT OF THE CAR EXPENSES AND RS.40 000/- IN RESPECT OF THE TELEPHONE EXPENSE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 27 TH AUGUST 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY