The ITO, Ward-6(2),, Surat v. Gujarat Angadia Services,, Surat

ITA 2918/AHD/2008 | 2005-2006
Pronouncement Date: 22-01-2010 | Result: Dismissed

Appeal Details

RSA Number 291820514 RSA 2008
Assessee PAN AACFG3537A
Bench Ahmedabad
Appeal Number ITA 2918/AHD/2008
Duration Of Justice 1 year(s) 5 month(s) 11 day(s)
Appellant The ITO, Ward-6(2),, Surat
Respondent Gujarat Angadia Services,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-01-2010
Date Of Final Hearing 20-01-2010
Next Hearing Date 20-01-2010
Assessment Year 2005-2006
Appeal Filed On 11-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER DATE OF HEARING : 20/01/2010 DRAFTED ON: 20/01 /2010 ITA NO.2918/AHD/2008 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER WARD-6(2) SURAT VS. M/S.GUJARAT ANGADIA SERVICES BLUE DIAMOND BUILDING TARATIA HANUMAN SHERI NAKA HARIPURA SURAT PAN/GIR NO. : AACFG 3537 A (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI C.K. MISHRA SR. D.R. RESPONDENT BY: SHRI MITISH S.MODI A.R. O R D E R PER BHAVNESH SAINI JUDICIAL MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.CIT(APPEALS)-IV SURAT DATED 10/06/2008 PASSED FOR ASSESSMENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDI TION OF RS.60 418/- ON ACCOUNT OF VAKIL FEES AND RS.1 19 41 5/- ON ACCOUNT OF PRINTING & STATIONARY U/S 40A(IA). [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD.CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.95 355/- MADE ON ACCOUNT OF BONUS EXPENSES. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.1 31 910/- MADE ON ACCOUNT OF EMPLOYEES SALARY. ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 2 - [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.4 20 102/- MADE ON ACCOUNT OF VARI EXPENSES. [5] ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD.CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.62 990/- MADE ON ACCOUNT OF UNDISCLOSED INCOME F ROM OTHER SOURCES U/S 68 OF THE ACT. [6] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-IV SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [7] IT IS THEREFORE PRAYED THAT THE ORDER O F THE LD. CIT(A)-IV SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH TH E PARTIES PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. 4. ON GROUND NO.1 ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD CLAIMED ADVOCATE FEES AMOUNTING TO RS.65 460/- AND STATIONERY AND PRINTING EXPENSES OF RS.1 19 415/-. HE WAS OF THE VIEW THAT THE ABOVE PAYMENTS SHOULD HAVE BEEN MADE AFTER TDS AND THERE FORE NON-DEDUCTION OF THE TAX WOULD ATTRACT THE PROVISIONS OF SECTION 40A(IA) OF THE I.T. ACT 1961. THE LEARNED CIT(APPEALS) CONSIDERED THE SUB MISSIONS OF THE ASSESSEE IN WHICH IT WAS POINTED OUT THAT PROVISION S OF TDS ARE NOT APPLICABLE BECAUSE PAYMENT WAS MADE LESS THAN RS.20 000/- AND THAT THEY ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 3 - WERE REIMBURSEMENT OF THE EXPENSES ALSO. THE LEARN ED CIT(APPEALS) CONSIDERING THE DETAILS FURNISHED NOTED THAT NO SIN GLE BILL IS RAISED FOR AMOUNT THEREFORE PROVISIONS OF SECTION 40A(IA) OF THE I.T. ACT 1961 ARE NOT APPLICABLE. THE LEARNED CIT(APPEALS) ALSO NOT ED THAT PROVISIONS ARE NOT APPLICABLE IN THIS CASE AND ADDITIONS WERE ACCO RDINGLY DELETED. 5. AFTER HEARING RIVAL SUBMISSIONS AND PERUSAL OF M ATERIAL AVAILABLE ON RECORD WE DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE LEARNED CIT(APPEALS). THE LEARNED DEPARTMENTAL RE PRESENTATIVE MERELY RELIED UPON THE ORDER OF THE ASSESSING OFFIC ER BUT HAS NOT REBUTTED THE FINDING OF THE LEARNED CIT(APPEALS) THROUGH ANY MATERIAL ON RECORD. SINCE LEARNED CIT(APPEALS) HAS GIVEN SPECIFIC FINDI NG THAT AMOUNTS WERE PAID LESS THAN RS.20 000/- AND NO SINGLE BILL IS RA ISED ON THE GROSS AMOUNT AND THEY WERE REIMBURSEMENT OF THE EXPENSES THEREF ORE PROVISIONS OF SECTION 40A(IA) WOULD NOT APPLY IN THIS CASE. IN THIS VIEW OF THE MATTER WE DO NOT FIND ANY MERIT IN GROUND NO.1 OF APPEAL OF THE REVENUE THE SAME IS ACCORDINGLY DISMISSED. 6. ON GROUND NOS.2 3 & 4 THE ASSESSING OFFICER OB SERVED THAT EXCESS EXPENDITURE COMPARED TO LAST YEAR WAS INCURRED ON ACCOUNT OF BONUS PAYMENT. REGARDING SALARY PAYMENT IT WAS SEEN TH AT PAYMENT REGISTER OF ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 4 - MARCH REVEALED THAT THE SIGNATURE OF THE SAME PERSO NS DIFFERED IN THE VERY NEXT MONTH. THE SALARY PAYMENT WAS ALSO INCREASED AS COMPARED TO LAST THREE MONTHS. AS REGARDS VARI EXPENSES THE SAM E ARE EXCESSIVE AS COMPARED TO EARLIER YEARS. ADDITIONS WERE ACCORDI NGLY MADE BEING EXPENDITURE EXCESSIVE AND UNREASONABLE. 30% OUT O F THE EXPENDITURE HAVE BEEN DISALLOWED. IT WAS SUBMITTED BEFORE THE LEARNED CIT(APPEALS) THAT BONUS WAS PAID EVEN TO THE EMPLOYEES WHO WERE EMPLOYED FOR LESS THAN A YEAR AND THAT COMPLETE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND ASSESSEE ALSO OFFERED TO PRODUCE THE EM PLOYEES BEFORE THE ASSESSING OFFICER. AFFIDAVITS OF TWO OF THE EMPLOY EES WERE FURNISHED BEFORE THE ASSESSING OFFICER ON A SAMPLE BASIS. I T WAS CLAIMED THAT ALL THE EXPENSES WERE SUPPORTED BY VOUCHERS BILLS TRAVELL ING BILLS AND ENTIRE DETAILS OF THE EMPLOYEES WERE PRODUCED. IT WAS AL SO SUBMITTED THAT FOR ANGADIA SERVICES EVEN SUNDAY AND HOLIDAYS WERE WOR KING DAYS WHEN THE EMPLOYEES HAD TO BE PAID ALLOWANCES IF THEY WERE O N TOUR TO A PARTICULAR STATION FOR BUSINESS PURPOSE. ALL SALARY REGISTERS ALONGWITH VOUCHERS WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE LEARNED CIT(APPEALS) CONSIDERING THE EVIDENCES AND MATERIAL ON RECORD S PECIFICALLY NOTED THAT ALL EVIDENCES VOUCHERS AND DETAILS WERE PRODUCED O N RECORD TO JUSTIFY THE PAYMENTS OF THESE EXPENDITURE. THE LEARNED CIT(AP PEALS) ALSO NOTED ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 5 - THAT ASSESSEE HAS FURNISHED STATEMENT OF BRANCH-WIS E SHOWING VARI EXPENSES. THE LEARNED CIT(APPEALS) NOTED THAT SINC E ALL THE EXPENDITURE ARE SUPPORTED BY PROPER VOUCHERS AND DETAILS THERE FORE ADDITION ON THESE HEADS ARE CLEARLY UNJUSTIFIED. THE LEARNED CIT(APP EALS) ACCORDINGLY DIRECTED TO DELETE THE ADDITIONS ON ACCOUNT OF SALA RY BONUS AND VARI EXPENSES. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED U PON THE ORDER OF THE ASSESSING OFFICER. HOWEVER NO MATERIAL IS PRO DUCED BEFORE US TO REBUT THE FINDING OF THE LEARNED CIT(APPEALS) THROU GH ANY MATERIAL. THE LEARNED CIT(APPEALS) SPECIFICALLY NOTED THAT ALL TH E PAYMENTS AND THE EXPENDITURE ARE SUBJECTED TO VOUCHERS AND SUPPORTED BY EVIDENCES. THEREFORE ADDITIONS HAVE BEEN DELETED. HON'BLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. SINNAR BIDI UDYOG LTD. (2002) 2 57 ITR 216 (BOM.) HELD THAT EX-GRATIA PAID TO THE EMPLOYEES OF OTHER CONCERNS ON CONSIDERATION OF BUSINESS/COMMERCIAL EXPEDIENCY AND LEGITIMATE EXPECTATION OF THE EMPLOYEES IS A REVENUE EXPENDIT URE. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SIVANANDHA MILLS LTD. (1985)156 ITR 629 (MAD.) HELD THAT EXCESSIVE BONUS PAID TO THE EMPLOYEES CAN BE ALLOWED AS REVENUE EXPENDITURE. HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. U.P.SALES & SERVI CE LTD. (2006) 281 ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 6 - ITR 203 (ALL.) HELD THAT EXCESS INCENTIVES/BONUS PA ID TO THE EMPLOYEES ARE ALSO ALLOWABLE AS DEDUCTION. IN THIS VIEW OF THE MATTER AND CONSIDERING THE FINDINGS OF THE CIT(APPEALS) THAT ALL EXPENDITU RE ARE MADE FOR BUSINESS PURPOSES AND SUPPORTED BY EVIDENCES AND VOUCHERS W E DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(APPEALS). WE CONFIRM HIS FINDINGS AND DISMISS THESE GROUNDS OF APPEAL OF THE REVENUE. AS A RESULT THESE GROUNDS ARE DISMISSED. 8. ON GROUND NO.5 THE ASSESSING OFFICER MADE ADDIT ION OF RS.62 990/- U/S.68 OF THE I.T. ACT 1961. THE ASSE SSING OFFICER OBSERVED THAT THE EXPENDITURE ARE UNEXPLAINED ON ACCOUNT OF SEVERAL ITEMS BUT THE ASSESSEE EXPLAINED THAT THE EXPENDITURE ARE MADE OU T OF BANK ACCOUNT FOR RE-PAYMENT OF CAR LOAN AND PURCHASE OF SCOOTER. TH E LEARNED CIT(APPEALS) NOTED IN THE IMPUGNED ORDER THAT BANK STATEMENT IS FILED IN WHICH ALL THE PAYMENTS ARE DULY REFLECTED. THEREF ORE PAYMENTS MADE FOR MEETING OUT THE EXPENDITURE WOULD NOT ATTRACT THE P ROVISIONS OF SECTION 68 OF THE I.T. ACT 1961. THE ADDITION IS ACCORDINGL Y DELETED BECAUSE THE EXPENDITURE COULD NOT BE TREATED AS THE INCOME OF T HE ASSESSEE. 9. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSAL OF THE MATERIAL AVAILABLE ON RECORD WE DO NOT FIND ANY MERIT IN T HIS GROUND OF APPEAL OF ITA NO .2918/AHD/2008 ITO VS. M/S.GUJARAT ANGADIA SERVICES ASST.YEAR 2005-06 - 7 - THE REVENUE. THE LEARNED CIT(APPEALS) SPECIFICALLY DEALT WITH THE ISSUE AND NOTED THAT THE EXPENDITURE ARE MADE OUT OF THE BANK ACCOUNT THEREFORE HE WAS JUSTIFIED IN HOLDING THAT EXPENDITURE WAS DU LY REFLECTED IN THE BANK ACCOUNT WOULD NOT THE INCOME OF THE ASSESSEE AND WO ULD NOT ATTRACT THE PROVISIONS OF SECTION 68 OF THE I.T. ACT 1961. WE CONFIRM THE ORDER OF THE LEARNED CIT(APPEALS) AND APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22 /01 /2010 SD/- SD/- ( A.N. PAHUJA ) ( BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 01 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(APPEALS)-IV SURAT 5. THE DR AHMEDABAD BENCH. 6. THE GUARD F ILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD