CHAWLA OILS P. LTD, MUMBAI v. ACIT CIR 10, NAVI MUMBAI

ITA 3478/MUM/2009 | 2002-2003
Pronouncement Date: 30-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 347819914 RSA 2009
Assessee PAN AAACC9608B
Bench Mumbai
Appeal Number ITA 3478/MUM/2009
Duration Of Justice 10 month(s) 2 day(s)
Appellant CHAWLA OILS P. LTD, MUMBAI
Respondent ACIT CIR 10, NAVI MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 30-03-2010
Assessment Year 2002-2003
Appeal Filed On 28-05-2009
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH: C BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND SHRI V.DURGA RAO JUDICIAL MEMBER ITA NOS.3478 3479 & 3480(MUM)/2009 (ASSESSMENT YEARS: 2002-03 2003-04 & 2007-08) M/S.CHAWLA OILS PVT. LTD. 5A HANSRAJ LANE BEHIND BYCULLA POLICE STATION BYCULLA (E) MUMBAI-4000 027. PAN: AAACC9608B APPELLANT VS. ASST. COMMISSIONER OF INCOME-TAX CIRCLE 10 MUMBAI. RESPONDENT APPELLANT BY : SHRI S.S.PHADKAR. RESPONDENT BY : SHRI YESHWANT V.CHAVAN. O R D E R PER V.DURGA RAO JM: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT(APPEALS)-II MUMBAI DATED 5-3-20 09 FOR THE RESPECTIVE ASSESSMENT YEARS 2002-03 2003-04 AND 20 07-08. AS COMMON ISSUES ARE INVOLVED ALL THESE CASES WERE HEA RD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SA KE OF CONVENIENCE. 2. THE ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING AND TRADING IN EDIBLE OIL OIL AND OI L PRODUCTS. DURING THE FINANCIAL YEARS RELEVANT TO ASSESSMENT Y EARS 2001-02 ITA 3478 TO 3480/MUM/2009 PAGE 2 OF 6 2002-03 AND 2003-04 THE ASSESSEE CARRIED OUT REPAIR S AND RENOVATION OF EXISTING FURNITURE AND FIXTURES IN IT S OFFICE AND BUSINESS PREMISES AND DEBITED A SUM OF RS.5 32 151/ - FOR ASSESSMENT YEAR 2002-03 AND RS.6 92 388/- FOR ASSES SMENT YEAR 2003-04 ON REVENUE COUNT. THE AO CALLED FOR DETAILS OF THE REPAIRS AND RENOVATION EXPENSES CLAIMED AS REVENUE EXPENDITURE. HOWEVER ON GOING THROUGH THE SAME T HE AO WAS THE OPINION THAT THE SAID EXPENSES WERE CAPITAL IN NATURE AND ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE AS REVENUE EXPENDITURE. ON APPEAL THE CIT(APPEALS) CONFIRMED THE DISALLOWANCE. BEING AGGRIEVED ASSESSEE IS IN SECO ND APPEAL BEFORE THIS TRIBUNAL FOR THE ASSESSMENT YEARS 2002- 03 AND 2003- 04. 3. LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSEE IS CARRYING ON BUSINESS FOR THE 20 YEARS A ND NO REPAIRS WERE CARRIED OUT IN THE SAID PREMISES. THE REPAIRS WERE NECESSITATED BY THE EFFLUX OF TIME. THE ASSESSEE H AD ALSO INCURRED EXPENDITURE ON REPAIRS OF EXISTING FURNITU RE AND OTHER SUNDRY REPAIRS FOR DAY TO DAY WORKING OF FACTORY. HE FURTHER SUBMITTED THAT THAT THE EXPENDITURE HAS NOT BROUGHT ANY NEW ASSETS INTO EXISTENCE AND THE IDENTITY OF THE ARTIC LES REMAINS THE SAME. HE THEREFORE PRAYED FOR A DIRECTION THAT TH E EXPENDITURE BE ALLOWED AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT FOR THE ASSESSMENT YEAR 200 1-02 SIMILAR DISALLOWANCE WAS MADE BY THE AO. ON APPEAL THE ITA 3478 TO 3480/MUM/2009 PAGE 3 OF 6 CIT(APPEALS) RESTRICTED THE DISALLOWANCE MADE BY TH E AO TO 25% AND THE SAME MAY BE FOLLOWED FOR SUBSEQUENT ASSESSM ENT YEARS. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH SIDES AND PERUSED MATERIAL ON RECORD. THE CIT(APPEALS) HAD OBSERVED THAT FOR THE ASSESSMENT YEAR 2002-03 THE ASSESSEE HAD SPENT A SUM OF RS.1 08 737/- FOR PURCHASE OF PLYWOOD RS.19 002/- FOR PURCHASE OF EL ECTRICAL ITEMS LIKE LIGHTS BULBS ETC. AND RS.1 07 525/- TOTALING RS.2 35 264/-. FROM THE PERUSAL OF VOUCHERS SUBMITTED FOR ASSESSME NT YEAR 2003-04 THE CIT(APPEALS) OBSERVED THAT THE ASSESSE E HAD PURCHASED PLYWOOD AND COMPLETE INTERIOR WORK OF THE OFFICE WAS CARRIED OUT VIDE VOUCHER DATED 7-6-2002 BILLS FOR PAINTING AND POLISHING WORK WOODEN FLOOR TABLES SIDE TABLES HALF PARTITION PLYWOOD FALSE CEILING FIXING OF FLOORING TILES ETC . WERE DONE VIDE VOUCHER DATED 7-6-2002. THE CIT(A) FOLLOWING THE JU DGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF BALLIMAL NAVALKISHORE VS. CIT (224 ITR 414) CONCLUDED THAT ALL THESE EXPENDITURE INDICATE THAT THE ASSESSEE HAS CONSTRUCTED NEW OFFI CE CHAMBER AND PURCHASED NEW FURNITURE AND THE EXPENDITURE OF RS.5 32 151/- FOR ASSESSMENT YEAR 2002-03 AND RS.6 92 388/- FOR ASSESSMENT YEAR 2003-04 IS A CAPITAL EXPENDITUR E AND NOT AN EXPENDITURE ON CURRENT REPAIRS. THE CIT(APPEALS) WITHOUT CONSIDERING THE ORDER OF THE CIT(APPEALS) FOR ASSES SMENT YEAR 2001-02 DISALLOWED THE ENTIRE EXPENDITURE. WHEN T HE ASSESSEE HAD INCURRED EXPENDITURE OF SIMILAR NATURE IN EARLI ER YEAR THE ITA 3478 TO 3480/MUM/2009 PAGE 4 OF 6 CIT(APPEALS) HAD ALLOWED THE SAME AND NO APPEAL WAS PREFERRED AGAINST THAT ORDER DISALLOWING THE TOTAL EXPENDITU RE IN SUBSEQUENT YEAR WITHOUT FOLLOWING THE ORDER FOR EAR LIER YEAR IS NOT JUSTIFIED. TAKING INTO CONSIDERATION SUBMISSI ON OF THE ASSESSEE WE FIND THAT THAT MOST OF THE WORK DONE BY THE ASSESSEE IS FOR THE PURPOSE OF REPAIRS SUCH AS PAIN TING AND POLISHING TO THE PROPERTY WHICH IS IN EXISTENCE FOR THE LAST 20 YEARS WE ARE OF THE CONSIDERED OPINION THAT DISALL OWANCE OF 25% FOR ASSESSMENT YEARS 2002-03 AND 2003-04 WOULD MEET THE ENDS OF JUSTICE. IT IS ORDERED ACCORDINGLY. 5. IN THE RESULT APPEALS FOR ASSESSMENT YEARS 2002 -03 AND 2003-04 ARE PARTLY ALLOWED. 6. ITA NO.3480(MUM)/2009 (ASSESSMENT YEAR: 2007-08) : THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS WHET HER THE AUTHORITIES BELOW ARE JUSTIFIED IN MAKING ADDITION OF RS.99 430/- AS UNEXPLAINED INVESTMENT IN UNACCOUNTED STOCK. AN ACTION 132 OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED T O AS THE ACT] WAS CONDUCTED IN THE GROUP CASES OF WHICH THE ASSES SEE IS A MEMBER. THE PREMISES OF THE ASSESSEE WERE ALSO COV ERED U/S 132 OF THE ACT. SIMULTANEOUSLY A SURVEY ACTION U/S 133A WAS CARRIED OUT IN THE ASSESSEES OFFICE PREMISES AT BYCULLA. DURING THE SURVEY CONDUCTED ON 14-6-2006 IN THE FACTORY PR EMISES AT BYCULLA INVENTORY OF STOCK HAS BEEN TAKEN ACCORDIN G TO WHICH STOCK VALUED WAS AT RS.19 90 600/-. IN ADDITION TO THE INVENTORY OF LOOSE OIL STOCK CONTAINING 29 ITEMS AS WELL AS STOCK OF EMPTY BOXES TINS AND BOTTLES WERE ALSO MADE BUT VALUE OF WHICH WAS ITA 3478 TO 3480/MUM/2009 PAGE 5 OF 6 NOT INCLUDED IN THE VALUE OF STOCK AT RS.19 90 600/ -. DURING THE COURSE OF POST SEARCH THE ASSESSEE SUBMITTED PROVI SIONAL PROFIT AND LOSS ACCOUNT FOR THE PERIOD 1-4-2006 TO 14-6- 2006 TO THE INVESTIGATION WING SHOWING CLOSING STOCK OF RS.61 9 0 267/-. IN VIEW OF THE SAME THE ASSESSEE WAS ASKED TO PROVIDE DETAILS OF STOCK POSITION AS ON 14-6-2006. AS PER THE DETAILS FURNISHED IT WAS NOTICED BY THE AO THAT STOCK VALUED AT RS.99 42 6/- WAS FOUND EXCESS. TO A QUERY BY THE AO THE ASSESSEE C LARIFIED THAT STOCK DIFFERENCE IS DUE TO DIP MEASUREMENT IN TANKS AND NOT ACTUAL DIFFERENCE AND HENCE THE SAME SHOULD BE IGNO RED. IT WAS FURTHER STATED THAT THE DIFFERENCE IN QUANTITY IS H ARDLY 1 TO 1.5% OF THE TOTAL STOCK. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND MADE ADDITION OF RS.99 430/- AS UN EXPLAINED INVESTMENT OF THE ASSESSEE IN STOCK AND ACCORDINGLY ADDED TO THE TOTAL INCOME. ON APPEAL THE CIT(APPEALS) CONFIRMED THE ADDITION. BEING AGGRIEVED ASSESSEE IS IN SECOND A PPEAL BEFORE THIS TRIBUNAL. 6.1 LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE STOCK VALUED AT RS.99 430/- FOUND EXCESS BY THE AO WAS DUE TO DIP MEASUREMENT OF TANKS AND NOT ACTUAL DIFFERENCE. ON THE OTHER HAND LEARNED DR SUPPORTED THE ORDERS OF THE AO AND THE CIT(APPEALS). 6.2 . WE HAVE HEARD BOTH SIDES AND PERUSED RECORDS. THE ONLY DISPUTE BETWEEN THE AO AND THE ASSESSEE IS ABO UT THE STOCK VALUED AT RS.99 426/-. IT WAS EXPLAINED BY THE ASSE SSEE THAT THE DIFFERENCE WAS DUE TO DIP MEASUREMENT IN THE TANKS AND NOT ITA 3478 TO 3480/MUM/2009 PAGE 6 OF 6 ACTUAL DIFFERENCE. WE ARE OF THE OPINION THAT WHILE TAKING MEASUREMENTS IN THE TANKS THERE IS EVERY POSSIBILIT Y OF HUMAN ERROR. TAKING INTO CONSIDERATION THE TOTAL TURNOVER OF THE ASSESSEE AND THE EXPLANATION OF THE ASSESSEE THAT T HE DIFFERENCE IN THE QUANTITY IS BETWEEN 1 AND 1.5% OF THE TOTAL STOCK WE HOLD THAT THE ADDITION MADE ON THIS ACCOUNT IS NOT JUSTI FIED. THEREFORE WE DELETE THE ADDITION MADE ON THIS ACCOUNT. THIS GROUND OF APPEAL IS ALLOWED. 7. IN THE RESULT THE APPEAL FOR ASSESSMENT YEA R 2007-08 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH M ARCH 2010. SD/- SD/- (T.R.SOOD) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED : 30TH MARCH 2010. EKS* TRUE COPY COPY TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. CIT- CONCERNED 4. CIT(A)- CONCERNED 5. DEPARTMENTAL REPRESENTATIVE C BENCH BY ORDER ASST REGISTRAR ITAT MUMBAI