The DCIT, Circle-4,, Baroda v. M/s. Unident Brushes Ltd.,,

ITA 2980/AHD/2008 | 2005-2006
Pronouncement Date: 30-09-2010 | Result: Dismissed

Appeal Details

RSA Number 298020514 RSA 2008
Assessee PAN AAACU2382A
Bench Ahmedabad
Appeal Number ITA 2980/AHD/2008
Duration Of Justice 2 year(s) 1 month(s) 8 day(s)
Appellant The DCIT, Circle-4,, Baroda
Respondent M/s. Unident Brushes Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-09-2010
Date Of Final Hearing 28-09-2010
Next Hearing Date 28-09-2010
Assessment Year 2005-2006
Appeal Filed On 21-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER DATE OF HEARING :28/09/2010 DRAFTED ON: 29/0 9/2010 ITA NO.2980/AHD/2008 ASSESSMENT YEAR : 2005-06 THE DY.CIT CIRCLE-4 BARODA VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P.LTD.) PLOT NO.210 LUNA TAL. PADRA DIST. BARODA PAN/GIR NO. : AAACU 2382 A ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI K.M. MAHESH SR. DR RESPONDENT BY: SHRI S.N. SOPARKAR O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE W HICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-III BARODA DATED 04/06/2008 PASSED FOR AY 2005-06. 2. GROUND NO.1 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN DELETING THE INTEREST DISALLOWED ON INTERE ST FREE ADVANCES OF RS.51 06 173/- GIVEN TO AMIGO SECURITIES PVT.LTD. RELYING UPON THE JUDGEMENT IN THE CASE OF S.A. BUILDERS LIMITED 288 ITR 1 (SC) OVERLOOKING THE FACT THAT THE FACTS OF THE PRESENT CASE ARE QUITE DISTINGUISHABLE. ITA NO. 2980/AHD/2008 DY.CIT VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P LTD.) ASST.YEAR - 2005-06 - 2 - 2.1. PARTIES HAVING APPEARED BEFORE US HAVE INFORME D THAT THE ISSUE AS RAISED BY THE REV HAS ALREADY BEE DECIDED IN ASSESS EES OWN CASE FOR AY 2004-05 BY ITAT AHMEDABAD BENCH C IN ITA NO.4185/ AHD/2007 ORDER DATED 04/06/2010 WHEREIN VIDE PARAGRAPH NO.5 IT WAS HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON . UNDISPUTEDLY THE ASSESSEE ADVANCED THE MONEY TO AS PL WITHOUT CHARGING ANY INTEREST IN TERMS OF AN AGREEM ENT SO AS TO ENABLE THE LATTER TO CONSTRUCT A BUILDING AND PR OVIDE USAGE RIGHT OF 7000 SQ FT. SPACE FULLY FURNISHED @ RS.24 /- PER SQW.FT. INTER ALIA THE ASSESSEE RETAINED THE OPTI ON OF CONVERTING THE LEASE INTO PURCHASE OF THE OFFICE PR EMISES. THUS THE ASSESSEE DERIVED COMMERCIAL ADVANTAGE AND ACCORDINGLY THE LD. CIT(A) DELETED THE INTEREST IN RELATION TO FUNDS ADVANCED TO ASPL. SINCE THE REVENUE HAVE NO T PLACED BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFER E. THIS VIEW OF OURS IS SUPPORTED BY A DECISION DATED 14-05-2010 OF A CO- ORDINATE BENCH IN THE CASE OF DCIT VS. ANIGO BRUSHE S PVT.LTD. IN ITA NOS.134 AND 158/AHD/2008 WHEREIN AFTER ANAL YZING SIMILAR TERMS & CONDITIONS OF AN MOU THE ITAT RELY ING INTER ALIA ON THE DECISION OF H APEX COURT IN THE CASE OF S.A.BUILDERS (SUPRA) CONCLUDED THAT THE AMOUNT ADVA NCED FOR OBTAINING THE PREMISES ON LEASE WAS FOR THE BUSINES S EXPEDIENCY. IN VIEW OF THE FOREGOING WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A). THE REFORE GROUND NO.1 IN THE APPEAL OF THE REVENUE IS DISMISS ED. 3. ONCE A VIEW HAS ALREADY BEEN TAKEN IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN THE PAST THEREFORE RESPECT FULLY FOLLOWING THE ITA NO. 2980/AHD/2008 DY.CIT VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P LTD.) ASST.YEAR - 2005-06 - 3 - SAID VIEW FOR THIS YEAR AS WELL THIS GROUND OF THE REVENUE IS HEREBY DISMISSED. 4. GROUND NO.2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE U/S.40A(2) OF RS.5 24 199/- WHICH IS 50% OF EXPENDITURE INCUR RED ON RENT RATES AND TAXES OVERLOOKING THE FACT THAT IT WAS INCURRED FOR OTHER THAN COMMERCIAL EXPEDIENCY. 5. A PRIMARY OBJECTION HAS BEEN RAISED FROM THE SID E OF THE RESPONDENT-ASSESSEE THAT FOR THE YEAR UNDER CONSIDE RATION I.E. FOR ASSESSMENT YEAR 2005-06 THE CIT(A) HAS FOLLOWED HI S EARLIER ORDER FOR ASSESSMENT YEAR 2004-05 DATED 22/08/2007 AND TH EREUPON DELETED THE IMPUGNED ADDITION. FOR THAT YEAR I.E. ASSESSMENT YEAR 2004-05 THE REVENUE HAS CONTESTED THE OTHER ISSUES BUT DECIDED NOT TO CONTEST THIS ISSUE AS IS EVIDENT FROM THE GROUND S OF APPEAL RAISED BEFORE THE TRIBUNAL; REPRODUCED IN THE BODY OF THE JUDGEMENT REFERRED SUPRA DATED 04/06/2010. EVEN THE LEARNE D DEPARTMENTAL REPRESENTATIVE WAS NOT ABLE TO GIVE ANY SATISFACTOR Y REPLY THAT WHY THE REVENUE HAS CHOSEN NOT TO CONTEST THIS ISSUE BE FORE THE TRIBUNAL IN THE PAST. BE THAT AS IT WAS FACTS OF THE CASE HAVE REVEALED THAT THE ASSESSEE HAS CLAIMED RS.10 48 398/- UNDER THE HEAD RENT RATES AND TAXES. THE EXPLANATION OF THE ASSESSEE WAS A S UNDER: ITA NO. 2980/AHD/2008 DY.CIT VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P LTD.) ASST.YEAR - 2005-06 - 4 - THE COMPANY HAD VERY SMALL OFFICE IN BARODA CITY A T SURYAKIRAN COMPLEX OLD PADRA ROAD BARODA. AS STA TED EARLIER THE COMPANY IS DEALING WITH MULTINATIONAL C OMPANIES AND WAS LOOKING FOR MORE SUCH CUSTOMERS THEREFORE IT WAS NECESSARY FOR THE COMPANY TO ESTABLISH A DECENT AND PRESTIGIOUS CORPORATE OFFICE. ACCORDINGLY THE COM PANY ACQUIRED 7000 SQ.FEET OF SPACE IN A PRESTIGIOUS AND DECENT COMMERCIAL COMPLEX HAVING ALL ULTRAMODERN FACILITIE S (INCLUDING THE ELECTRICITY SECURITY AND OTHER SERV ICES) FOR WHICH COMPANY PAID RENT OF RS.1 68 000 PER MONTH. THE ACCOUNT DEPT WHICH WAS WORKING AT THE FACTORY PREMI SES AT VILLAGE LUNA ABOUT 20 KMS. AWAY FROM THE BARODA CI TY WAS SHIFTED AT THE NEW CITY OFFICE FOR BETTER COORDINAT ION WITH BANKS GOVERNMENT DEPARTMENTS SUCH AS INCOME TAX S ERVICE TAX PROVIDENT FUND CENTRAL EXCISE SALES TAX ETC . 5.1. HOWEVER WITHOUT ASSIGNING ANY SPECIFIC REASON THE ASSESSING OFFICER HAS RESTRICTED THE CLAIM BY 50% BY INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE I.T.ACT. WHEN THE SAID ACTION WAS CHALLENGED BEFORE THE CIT(APPEALS) IT WAS HELD TH AT THE ASSESSEE HAD DERIVED CONSIDERABLE COMMERCIAL ADVANTAGE BY TA KING THE SAID PREMISES ON RENT AND THERE WAS NOTHING TO DEMONSTRA TE THAT THE SAID AMOUNT WAS UNREASONABLE OR EXCESSIVE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE NOT INCLINED TO DISTURB THE FINDINGS OF THE CIT(APPEALS) BECAUSE TH E ASSESSING OFFICER HAS UTTERLY FAILED TO PLACE ON RECORD THE B ASIS OF HIS OPINION THAT IS WHY SUCH AN EXPENDITURE WAS EXCESSIVE OR UN REASONABLE HAVING REGARD TO THE FAIR MARKET VALUE WHICH IS A FUNDAMENTAL INGREDIENT FOR INVOKING THE PROVISIONS OF SECTION 4 0A(2)(B) OF THE ITA NO. 2980/AHD/2008 DY.CIT VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P LTD.) ASST.YEAR - 2005-06 - 5 - I.T.ACT. IT HAS ALSO NOT BEEN DEMONSTRATED BY THE ASSESSING OFFICER THAT WHY HE HAD OPTED TO DISALLOW 50% OF THE TOTAL CLAIM. IN THE ABSENCE OF THESE TWO BASIC CONDITIONS WE HEREBY RE VERSE THE ACTION OF THE ASSESSING OFFICER AND AFFIRM THE FINDINGS OF THE CIT(APPEALS). THEREFORE BOTH THE GROUNDS ARE DIS MISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 30/ 09 /2010. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED / /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-III BARODA 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD 1. DATE OF DICTATION..28/09/2010 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/09/2010 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT ITA NO. 2980/AHD/2008 DY.CIT VS. M/S.UNIDENT BRUSHES (NOW KNOWN AS JEWEL CONSUMER CARE P LTD.) ASST.YEAR - 2005-06 - 6 - 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 30/09/2010 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/09/2010 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER