DCIT,, Panchkula v. M/s Surya Telecom Pvt. Ltd.,, Panchkula

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 181/CHD/2010 ASSESSMENT YEAR: 2005-06 THE DCIT VS. M/S SURYA TELECOM PVT LTD. CIRCLE PANCHKULA PANCHKULA PAN NO. AAHCS3041F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY: SHRI AJAY JAGGA & SHRI SANJAY ARORA ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A) PANCHKULA DATED 30.11.2009 RELATING TO ASSESSMENT Y EAR 2005-06 AGAINST THE ORDER PASSED UNDER SECTION 250(6) OF THE I.T. A CT. 2. THE GROUND NO.(I) RAISED BY THE REVENUE IS AGAIN ST THE DELETION OF ADDITION MADE OUT OF COMMISSION EXPENSES U/S 40A(IA ) OF THE INCOME TAX ACT . THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE SAID ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE CIT(A) VIDE ORD ER PASSED U/S 154 OF THE INCOME TAX ACT AGAINST WHICH NO APPEAL HAS BEE N FILED BY THE ASSESSEE AND THE GROUND RAISED BY THE REVENUE BECOM ES INFRUCTUOUS. CONSEQUENT TO THE ORDER OF THE CIT(A) PASSED U/S 15 4 OF THE ACT WE DISMISS THE GROUND NO.1 RAISED BY THE REVENUE AS I NFRUCTUOUS. 2 3. THE GROUND NOS. (II) TO (III) RAISED BY THE RE VENUE IS AGAINST THE DELETION OF ADDITION MADE IN RESPECT OF DEDUCTION C LAIMED U/S 80 IC OF THE ACT ON ACCOUNT OF FREIGHT INCOME RENTAL INCOME. T HE GROUND NO. (IV) RAISED IS AGAINST THE DELETION OF ADDITION U/S 40A( IA) ON ADVERTISEMENT EXPENSES. VIDE GROUND NOS. (II) TO (IV) THE REVEN UE HAS RAISED THE ISSUE OF NON ALLOWANCE OF OPPORTUNITY TO THE ASSESSING OF FICER AND ADMISSION OF ADDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A O F THE I.T. RULES. 4. THE LD. DR FOR THE REVENUE WAS ASKED TO POINT OU T THE ADDITIONAL EVIDENCE ADMITTED BY THE CIT(A) AGAINST WHICH THE R EVENUE IS AGGRIEVED. THE LD. DR FOR THE REVENUE REFERRED TO THE LEDGER A CCOUNT OF THE EXPENDITURE BEING THE ADDITIONAL EVIDENCE. THE L D. AR FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS BEING ALLOWED ON THE EXPLANATION OF THE ASSESSEE AND HENCE NO MERIT IN THE GROUND OF APPEAL RAISED BY THE REVENUE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CL AIMED DEDUCTION U/S 80 IC OF THE ACT. THE ASSESSING OFFICER TREATED THE F REIGHT INCOME AND RENTAL INCOME AS NOT INCIDENTAL TO THE BUSINESS AND HENCE NOT ENTITLED TO CLAIM OF DEDUCTION U/S 80 IC OF THE ACT. BEFORE THE CIT(A) THE CONTENTION OF THE ASSESSEE WAS THAT NO FREIGHT INCOME WAS EARNED AND THE AMOUNT WAS ONLY REIMBURSEMENT OF FREIGHT EXPENSES INCURRED AND CLAI MED FROM THE PARTIES TO WHOM SUPPLIES HAD BEEN MADE DURING THE YEAR. F URTHER PLEA OF THE ASSESSEE WAS THAT INSTEAD OF CREDITING THE REIMBURS EMENT IN THE FREIGHT EXPENSES ACCOUNT THE ASSESSEE HAD SHOWN THE REIMBU RSEMENT AS FREIGHT INCOME. THE CIT(A) ON THE PERUSAL OF THE LEDGER ACCOUNT OF THE ASSESSEE 3 HAD ALLOWED THE CLAIM OF THE ASSESSEE HOLDING THE S AME TO BE REIMBURSEMENT OF FREIGHT EXPENSES AND THERE IS NO J USTIFICATION IN REDUCING THE NET PROFITS FOR ARRIVING AT DEDUCTION U/S 80 IC OF THE ACT. SIMILARLY IN RESPECT OF RENTAL INCOME OF RS. 35 01 3/- THE CLAIM OF THE ASSESSEE WAS THAT IT WAS ON ACCOUNT INSPECTION FEE OF EQUIPMENTS SUPPLIED AND DIRECTLY RELATING TO THE BUSINESS ACTIVITY OF T HE ASSESSEE. THE CIT(A) ALLOWED THE ABOVE SAID CLAIM OF THE ASSESSEE ALSO A S THE INCOME WAS BOOKED UNDER A WRONG HEAD. THE REVENUE IS AGGRIEV ED BY THE ABOVE SAID ORDER OF THE CIT(A) BEING IN CONTRAVENTION TO THE P ROVISIONS OF RULE 46A OF THE I.T. RULES. THE CIT(A) WHILE DECIDING AN A PPEAL IS EMPOWERED TO ENTERTAIN ANY ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE IN ORDER TO ADJUDICATE UPON THE ISSUE RAISED BEFORE HIM. UNDER THE PROVISIONS OF RULE 46A OF THE I.T. RULES SUCH ADDITIONAL EVIDENCE FUR NISHED BY THE ASSESSEE BEFORE BEING ADMITTED BY THE CIT(A) IS TO BE CONFRO NTED TO THE ASSESSING OFFICER AND THEN A VIEW HAS TO BE TAKEN FOR ITS ADM ISSION. 6. IN THE PRESENT FACTS AND CIRCUMSTANCE OF THE CAS E WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE AS NO FRESH EVIDENCE HAS BEEN FURNISHED BEFORE THE CIT(A) EXCEPT FOR THE COP Y OF THE LEDGER ACCOUNT OF FREIGHT INCOME AS POINTED OUT BY THE LD. DR FOR THE REVENUE. ACCEPTING AN EXPLANATION OF THE ASSESSEE ON THE BAS IS OF ENTRIES IN THE BOOKS OF ACCOUNT DOES NOT TANTAMOUNT TO ADMISSION O F ADDITIONAL EVIDENCE BY THE CIT(A). FURTHER THE CLAIM OF ASSESSEE IN R ESPECT OF RENTAL INCOME WAS THAT IT IS ON ACCOUNT INSPECTION FEE OF EQUIPME NTS SUPPLIED WHICH WAS ACCEPTED BY CIT(A). WE FIND NO MERIT IN THE G ROUNDS OF APPEAL RAISED BY THE REVENUE AND HENCE GROUND NOS. (II) AN D (III) RAISED BY THE REVENUE ARE DISMISSED. 4 7. THE ISSUE IN GROUND NO.(IV) IS ALSO AGAINST ADMI SSION OF ADDITIONAL EVIDENCE IN CONTRAVENTION TO PROVISION OF RULE 46A OF THE I.T. RULES. THE ASSESSEE HAD INCURRED ADVERTISEMENT EXPENSES TO THE TUNE OF RS. 1 30 679/- WHICH WERE DISALLOWED BY THE ASSESSING OFFICER ON T HE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON THE SAID EXPENSES AND HENCE DISALLOWABLE U/S 40A(IA) OF THE ACT. THE PLEA BE FORE THE CIT(A) WAS THAT NO PAYMENT OF RS. 50 000/- OR MORE WAS PAID TO ANY SINGLE PARTY AND FURTHER NO SINGLE PAYMENT WAS MORE THAN RS. 20 000/ - AND HENCE THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX U/S 194C OF THE ACT. THE COPY OF THE ACCOUNT OF THE ADVERTISEMENT EXPENSES WAS REFER RED TO BEFORE THE CIT(A). THE ADDITION IN THE CASE WAS DELETED AS T HERE WAS NO VIOLATION OF THE PROVISIONS OF SECTION 194C OF THE ACT. IN VIEW OF OUR OBSERVATIONS IN THE PARAS HEREINABOVE WHERE RELIEF HAS BEEN ON THE BASIS OF THE ENTRIES IN THE BOOKS OF ACCOUNT WE FIND NO MERIT IN THE GR OUND OF APPEAL RAISED BY THE REVENUE AND HENCE THE SAME IS DISMISSED 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH FEBRUARY 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 5