ACIT, New Delhi v. M/s Richa & Company, New Delhi

ITA 3503/DEL/2009 | 2005-2006
Pronouncement Date: 26-04-2010 | Result: Dismissed

Appeal Details

RSA Number 350320114 RSA 2009
Assessee PAN AAAFR0114L
Bench Delhi
Appeal Number ITA 3503/DEL/2009
Duration Of Justice 8 month(s) 19 day(s)
Appellant ACIT, New Delhi
Respondent M/s Richa & Company, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 26-04-2010
Date Of Final Hearing 26-04-2010
Next Hearing Date 26-04-2010
Assessment Year 2005-2006
Appeal Filed On 07-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F BEFORE HONBLE PRESIDENT SHRI VIMAL GANDHI AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO.3502 & 3503/DEL/09 ASSTT.YEAR: 2004-05 AND 2005-06. ASSTT. C.I.T. VS M/S RICHA & COMPANY CIR. 27(1) ROOM NO. 218 2/2 WHS KIRTI NAGAR D-BLOCK VIKAS BHAWAN NEW DELHI. NEW DELHI. AND ITA NO. 4908/DEL/2009 ASSTT.YEAR: 2006-07 M/S RICHA & COMPANY ADDL. C.I.T. NEW DELHI. VS RANGE 27 NEW DELHI. (PAN/GIR NO. AAAFR0114L) (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI H.K.LAL SR. D.R ASSESSEE BY: DR. S.NARAYANAN A.R. O R D E R PER VIMAL GANDHI PRESIDENT TWO OF THESE APPEALS BY THE REVENUE FOR ASSESSMENT YEAR 2004-05 AND 2005-06 AND ONE BY THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 INVOLVE COMMON ISSUES AND THEREFORE WERE HEARD TOGETHER A ND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO. 3502 3503 & 4908/D/09 2 2. THE ASSESSEE IN THE RELEVANT PERIOD CARRIED ON B USINESS OF MANUFACTURE AND EXPORT OF READYMADE GARMENTS. IN THE RETURN ASS ESSEE SHOWED SUBSTANTIAL INCOME OF APPROXIMATELY 2 CRORES IN A.Y 2004-05 AND 1.36 CRORES IN A.Y 2005-06 AND RS 3 89 30 164 IN A.Y 2006-07. HOWEVER AFTER SCRUTINY OF ACCOUNTS THE ASSESSING OFFICER MADE CERTAIN DISALL OWANCES AND ADDITIONS DISCUSSED HEREINAFTER. ADDITION ON ACCOUNT OF SCRAP: 3. THE ASSESSING OFFICER ADDED RS 6 50 000/- FOR SA LE OF SCRAP IN ASSESSMENT YEAR 2004-05 WITH THE FOLLOWING OBSERVAT IONS: DURING THE YEAR ASSESSEE HAS MADE SALES OF RS 80 2 8 82 276/- TOWARDS EXPORTS AND THE SUM OF RS 18 78 980/- TOWAR DS DOMESTIC SALES. TOTAL RAW MATERIAL CONSUMED DURING THE YEAR WAS OF RS 40 29 95 556/- BUT ONLY RS 1 17 250/- WAS SHOWN AS WASTAGE/SCRAP SALES INCLUDED IN THE DOMESTIC SALES. CONSIDERING T HE NATURE OF MANUFACTURING ACTIVITY OF THE ASSESSEE AND PRACTICE PREVALENT WITH EXPORTERS IN SIMILAR BUSINESS AND LOOKING TO THE SI ZE OF TURNOVER GENERATION OF SCRAP MUST BE SUBSTANTIAL. THE SALE O F SCRAP/WASTAGE MATERIAL SHOWN BY ASSESSEE IS QUITE LOW HENCE A LUM P SUM OF RS 6 50 000/- IS BEING ADDED ON AD HOC BASIS TO THE IN COME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 3.1 IN ASSESSMENT YEAR 2005-06 ASSESSING OFFICER M ADE ADDITION OF RS 6 63 832/- FOR ALLEGED SALE OF SCRAP AFTER REJECTI NG ASSESSEES EXPLANATION DATED 22.11.2007 AND WITH THE FOLLOWING OBSERVATION S: WHILE MANUFACTURING THE GARMENTS IT IS TRUE THAT SOME SMALL SCRAP AND CUTTINGS ARE GENERATED AND THE SAME HAS NEGLIGI BLE VALUE AND IS NORMALLY DESTROYED BY US TO KEEP AND MAINTAIN SECRE CY AND TO AVOID THE LEAKAGE OF QUALITY AND DESIGNS OF THE FABRICS S O USED IN THE GARMENT. IN CASE IT IS SOLD THERE ARE CHANCES TO LOOSE OUR BUYER AS OUR OTHER COMPETITORS CAN TAKE THE ADVANTAGE FOR TH E SAME BY ITA NO. 3502 3503 & 4908/D/09 3 DEVELOPING OUR QUALITY AND DESIGNS OF THE FABRIC. A PART FROM ABOVE IT IS SUBMITTED THAT NO FURTHER GARMENTS CAN BE PREPAR ED OUT OF THE SCRAP SINCE THESE ARE SMALL PARTS AND CUTTINGS OF THE FAB RIC. DURING THIS YEAR SCRAP SALE OF RS 1 19 000/- IS MADE AS AGAINST RS 1 17 250/- OF LAST YEAR. CONSIDERING THE NATURE OF MANUFACTURING ACTIVITY OF THE ASSESSEE AND PRACTICE PREVALENT WITH EXPORTERS IN SIMILAR BUSINE SS AND LOOKING TO THE SIZE OF TURNOVER GENERATION OF SCRAP MUST BE SU BSTANTIAL. THE SALE OF SCRAP/ WASTAGE MATERIAL SHOWN BY ASSESSEE IS QUI TE LOW. IN THE ASSESSMENT ORDER OF LAST YEAR A LUMP SUM AMOUNT OF RS 6 50 000/- WAS ADDED TO THE INCOME OF THE ASSESSEE. CONSIDERING TH E BUSINESS OF ASSESSEE AND KEEPING IN VIEW THE PAST HISTORY OF TH E CASE THE SALE OF SCRAP/WASTE IS THUS ESTIMATED AT RS 8 00 000/-. 4. THE ASSESSEE IMPUGNED ABOVE ADDITIONS IN APPEAL AND CONTENDED THAT AD HOC ADDITION WAS WITHOUT ANY BASIS. THERE WAS NO THING TO SHOW THAT ANY SALE OF SCRAP OUTSIDE THE BOOKS OF ACCOUNT WAS MADE . RELIANCE WAS PLACED ON DECISION OF HONBLE SUPREME COURT IN THE CASE OF KACHWALA GEMS 288 ITR 10 F OR THE PROPOSITION THAT AUTHORITIES WHILE MAKING AS SESSMENT SHOULD MAKE AN HONEST AND FAIR ESTIMATE OF INCOME EVEN IN THE B EST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY. HAVING SEEN SALE OF SCRAP SHOWN BY THE ASSESSEE LEARNED CIT (APPEALS) HELD THAT ASSESSING OFFICER MADE OUT NO CASE FOR ANY SUPPRESSION OF VALUE OR SALE OF SCRAP. AD HOC ADDITION WAS WITHOUT ANY CORROBORATIVE PIECE OF EVIDENCE. ACCORD INGLY THE SAME WAS DELETED. THE DELETION OF THE ADDITION HAS BEEN CHAL LENGED BY THE REVENUE IN THEIR RESPECTIVE APPEALS. 5. IN ASSESSMENT YEAR 2006-07 THE ASSESSING OFFICE R FOR ALMOST SIMILAR REASONS MADE AD HOC ADDITION OF RS 8 75 188/- FOR S ALE OF SCRAP NOT DISCLOSED IN BOOKS OF ACCOUNT. THE ASSESSEE OBJECTED TO THE S AID ADDITION IN APPEAL BUT ITA NO. 3502 3503 & 4908/D/09 4 STRANGELY ENOUGH THE LEARNED CIT (APPEALS) IN THAT YEAR TOOK A CONTRARY VIEW AND UPHELD THE ADDITION WITH THE FOLLOWING REMARKS : 3.4 THE HONBLE ITAT IN VARIOUS CASES HAS DEALT WI TH THE ISSUE ELABORATELY. FOR EXAMPLE THE HONBLE ITAT DELHI H AS IN ITS ORDER DT. 28.3.2008 IN THE CASE OF M/S KRISHNA KUMAR AGGARWAL VS. ACIT IN ITA NO. 1187 & 3992/2006; HAS AFFIRMED ITS DECISION IN THAT PARTICULAR CASE FOR THE IMMEDIATE PRECEDING YEAR WH EREIN IT WAS HELD THAT ESTIMATION OF SCRAP IN THIS KIND OF TRADE CAN REASONABLY BE MADE AT 0.2% OF THE TURNOVER. HOWEVER THE AO HAS ESTIMA TED THE VALUE OF SCRAP GENERATED AT 11 00 000/- ONLY. THE ASSESSEE H AS BOOKED A SALES TURNOVER OF MORE THAN RS 148 CRORES. BY THE METHODO LOGY FOUND ACCEPTABLE BY THE HONBLE ITAT THE GENERATION OF S CRAP COMES TO ALMOST RS 30 LAKH. HOWEVER THE AO HAS ESTIMATED TH E SAME AT 11 LAKHS. TAKING CARE OF THE STAND OF THE HONBLE TRIB UNAL ON THIS ISSUE THE ESTIMATION MADE BY THE AO IS QUITE REASONABLE A ND VERY HUMBLE AT BEST. THE APPELLANT HAS NOT MADE OUT A CASE THAT IT WAS MAINTAINING ANY RECORD OF WASTAGE OR PERCENTAGE YIELD IN MANUFA CTURING ACTIVITY. THE AO HAS QUITE REASONABLY ESTIMATED THE SALE OF S CRAP AT 11 00 000/- WHICH IS ABOUT 0.06% I.E. 1/3 RD OF THE QUANTUM OF SCRAP ACCEPTED AS REASONABLE BY THE HONBLE ITAT IN THIS LINE OF TRADE. 6. THE ASSESSEE IS IN APPEAL CHALLENGING ADDITIONS SUSTAINED BY THE LEARNED CIT (APPEALS). 7. WE HAVE HEARD BOTH THE PARTIES AND WE HAVE EXAMI NED MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER IN THE T HREE YEARS HAS NOT FOUND ANY DEFECT IN THE BOOKS OF ACCOUNT. IT HAS NOT WORK ED OUT OR MADE ANY BASIS TO HOLD THAT GENERATION OF SCRAP AND ITS SALE IS NO T CORRECTLY AND PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS. THERE IS NO FIN DING THAT ASSESSEE SUPPRESSED PRODUCTION BY SHOWING EXCESSIVE WASTAGE OR EXCESSIVE GENERATION OF SCRAP. MANUFACTURING PRODUCTION AND TRADING ACCOUNTS HAVE BEEN DULY ACCEPTED. EVEN THEN AD HOC ADDITION HAS B EEN MADE IN THE THREE YEARS WITHOUT ANY LEGAL BASIS. THERE IS NO RULE THA T GENERATION OF SCRAP ITA NO. 3502 3503 & 4908/D/09 5 SHOULD BE 0.2% OF THE TURNOVER AS LEARNED CIT (APPE ALS) TRIED TO MAKE OUT IN ITS ORDER FOR ASSESSMENT YEAR 2006-07. ON FACTS WE DO NOT SEE ANY GOOD GROUND TO SUSTAIN ADDITION MADE FOR SALE OF SCRAP. IT HAS RIGHTLY BEEN DELETED BY THE LEARNED CIT (APPEALS) IN ASSESSMENT YEAR 200 4-05 AND 2005-06 AND ERRONEOUSLY SUSTAINED IN ASSESSMENT YEAR 2006-07. I T IS DIRECTED TO BE DELETED IN ALL THE THREE YEARS BEFORE US. DISALLOWANCE OF FOREIGN TRAVELING EXPENSES: 8. THE ASSESSING OFFICER MADE THE FOLLOWING DISALLO WANCES: I) RS 22 37 578/- FOR ASSESSMENT YEAR 2004-05; II) RS 11 14 390/- FOR ASSESSMENT YEAR 2005-06. 8.1 IN THE ASSESSMENT YEAR 2004-05 THE ASSESSEE HA D CLAIMED FOREIGN TRAVELING EXPENSES TO THE TUNE OF RS 1 07 77 727/- OUT OF WHICH RS 22 37 578/- WERE SHOWN TO BE RELATED TO FOREIGN TRA VELING OF PARTNERS AND EMPLOYEES OF THE FIRM TO HONGKONG DUBAI AND SINGAP ORE. VOUCHERS FOR AIRLINES TICKETS AND PURCHASE OF FOREIGN EXCHANGE W ERE AVAILABLE WITH THE ASSESSEE. HOWEVER COMPLETE DETAILS OF UTILIZATION OF FOREIGN EXCHANGE WAS NOT AVAILABLE TO ESTABLISH THAT IT WAS SPENT FOR PU RPOSES OF BUSINESS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THERE WAS N O EVIDENCE THAT ASSESSEE HAD ANY EXPORT BUSINESS IN THE ABOVE COUNTRIES. THE ASSESSEE WAS ACCORDINGLY ASKED TO JUSTIFY ABOVE EXPENDITURE. VID E LETTER DATED 13.12.2006 ASSESSEE EXPLAINED THAT EUROPEAN BUYERS OF THE ASSE SSEE WERE HAVING THEIR REGIONAL OFFICES AT HONGKONG AND SINGAPORE TO CONTR OL INDIAN TERRITORY FOR PURPOSES OF IMPORTING GOODS. CERTIFICATES FROM ABOV E OFFICES WERE PLACED ON RECORD. THE ASSESSING OFFICER HOWEVER REFUSED TO ACCEPT EVIDENCE PRODUCED BY THE ASSESSEE AS IT DID NOT PROVE THAT T HE COMPANIES WERE ITA NO. 3502 3503 & 4908/D/09 6 AUTHORIZED TO ISSUE SUCH CERTIFICATE ON BEHALF OF T HE FOREIGN COMPANIES. HE ACCORDINGLY CONCLUDED THAT NO EVIDENCE WAS AVAILABL E FOR EXPLAINING VISIT TO DUBAI HONGKONG AND SINGAPORE AND TO SHOW THAT THES E VISITS WERE FOR PURPOSES OF BUSINESS. THE ASSESSING OFFICER ALSO RE JECTED THE CLAIM OF THE ASSESSEE THAT PARTNERS OF THE ASSESSEE HAD VISITED HONGKONG AND SINGAPORE FOR IMPORT OF ACCESSORIES. THIS REJECTION OF CLAIM WAS MADE AS NO EVIDENCE OF WORK DONE BY PARTNERS WITH REGARD TO SUCH IMPORT WAS AVAILABLE. THE ASSESSING OFFICER ALSO REMARKED THAT ASSESSEE HAD F AILED TO PRODUCE ANY TOUR REPORT OR CORRESPONDENCE WITH BUYERS RELATING TO VI SITS TO HONGKONG SINGAPORE AND DUBAI. IT WAS HELD THAT EXPENSES OF R S 22 37 578/- IN THE FOREIGN TRAVEL ACCOUNT WERE NOT INCURRED FOR PURPOS ES OF BUSINESS. 8.2 IN THE ASSESSMENT YEAR 2005-06 THE ASSESSING O FFICER DISALLOWED RS 11 14 390/- I.E. 20% OF EXPENSES AS UTILIZATION OF FOREIGN EXCHANGE WAS NOT FOUND TO BE SUPPORTED BY RELEVANT BILLS AND VOUCHER S. THIS ACTION WAS JUSTIFIED ON THE BASIS OF DECISION OF HONBLE MADRA S HIGH COURT IN THE CASE OF SESHASAYEE BROTHERS LTD. VS. CIT 42 ITR 568 AND OF HONBLE BOMBAY HIGH COURT IN THE CASE OF COOPER ENGINEERING LTD. VS. CIT 135 ITR 597 (BOM.). 9. THE ASSESSEE IMPUGNED ABOVE DISALLOWANCES IN APP EAL. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE THE CIT (APPEALS) THAT ASSESSEE WAS IMPORTING ACCESSORIES FROM HONGKONG SINGAPORE AND DUBAI. THESE COMPRISED OF ZIPS LABELS HANGERS RIBBONS POLY B AGS TAGS BUTTONS LACE ETC. THESE ACCESSORIES ACCORDING TO THE ASSESSEE WERE BEST AVAILABLE IN THOSE MARKETS. IMPORTS MADE FROM ABOVE COUNTRIES WERE UTI LIZED IN PRODUCTION OF GARMENTS WHICH WERE EXPORTED. THUS VISIT TO ABOVE C OUNTRIES WAS DIRECTLY ITA NO. 3502 3503 & 4908/D/09 7 CONNECTED WITH BUSINESS OF THE ASSESSEE. IT WAS FUR THER POINTED OUT THAT ASSESSING OFFICER REJECTED CERTIFICATES OF CONCERNE D PARTIES IN HONGKONG SINGAPORE AND DUBAI ON SURMISES AND CONJECTURES. IN CASE HE HAD ANY DOUBT HE COULD HAVE ISSUED A COMMISSION OR SUMMONED PARTI ES U/S 131 OF THE INCOME-TAX ACT. IT WAS FURTHER POINTED OUT THAT EXP ORT BUSINESS PARTICULARLY IN READYMADE GARMENTS IS HIGHLY COMPETITIVE AND IT IS TOO MUCH TO EXPECT INVITATION FOR TRADE FAIR AND FASHION SHOWS. THE LE ARNED COMMISSIONER OF INCOME-TAX (APPEALS) ATTENTION WAS ALSO DRAWN TO P AGE 79 OF THE PAPER BOOK WHICH CONTAINED DETAIL OF PERSONS TRAVELED PL ACES VISITED COST OF TICKETS FOREIGN CURRENCY INVOLVED FOR THE PARTICUL AR VISIT OF PARTICULAR PERSONS. DETAIL ALSO SHOWED THAT TRAVELING WAS DONE BY PARTNERS AS WELL AS BY THE EMPLOYEES. FOREIGN EXCHANGE UTILIZATION OF EACH TRIP WAS ALSO SEPARATELY FURNISHED. WITHOUT VERIFICATION OF ANY DETAIL DISA LLOWANCE WAS MADE WHICH WAS WITHOUT ANY LEGAL JUSTIFICATION. 10. THE LEARNED CIT (APPEALS) EXAMINED FACTS AND CI RCUMSTANCES OF THE CASE. HE NOTED THAT EXPENSES UNDER THE HEAD FOREIG N TRAVELING WERE INCURRED ON HIRING OF TAXIS AMOUNT SPENT ON HIRING OF PEOPLE AND OTHER INFRASTRUCTURE FOR TRADE FAIR HIRING OF SERVICES O F INTERPRETERS TEA COFFEE REFRESHMENTS ETC. EXPENSES WERE SUPPORTED WITH VO UCHERS. TOTAL EXPENDITURE WAS FOUND TO BE 1.33% OF THE TURNOVER. IT WAS SEEN THAT ASSESSEE HAD BUSINESS CONNECTION WITH HONGKONG SINGAPORE AN D DUBAI. IT WAS APPRECIATED THAT HUGE TURNOVER IN EXPORT WAS POSSIB LE ONLY WITH EFFORTS OF THE PARTNERS. THE CIT (APPEALS) HELD THAT FOREIGN TRAVE LING EXPENSES WERE INCURRED FOR WHOLLY EXCLUSIVELY AND FOR PURPOSES O F BUSINESS. THE LEARNED CIT (APPEALS) PLACED RELIANCE ON THE DECISION OF DE LHI HIGH COURT IN THE CASE OF CIT VS. DALMIA CEMENT (BHARAT) LTD. 254 ITR 377. RELIANCE WAS ITA NO. 3502 3503 & 4908/D/09 8 ALSO PLACED ON THE DECISION OF ITAT F BENCH IN TH E CASE OF RICHA KNITWEAR (SISTER CONCERN) WHEREIN SIMILAR DISALLOWANCE WAS M ADE BUT ON APPEAL IT WAS DELETED. HAVING REGARD TO MATERIAL B EFORE HIM THE CIT (APPEALS) HELD THAT EXPENSES CLAIMED BY THE ASSESSE E WERE QUITE REASONABLE AND IT WAS NOT SHOWN THAT FOREIGN EXCHANGE WAS UTIL IZED FOR PERSONAL PURPOSES. THE DISALLOWANCE MADE WAS ACCORDINGLY DEL ETED. 11. IN ORDER FOR ASSESSMENT YEAR 2005-06 THE LEARN ED CIT (APPEALS) NOTED UTILIZATION OF FOREIGN EXCHANGE BY THE ASSESS EE AS FURNISHED TO THE ASSESSING OFFICER IN LETTERS DATED 9.4.2007 19.10. 2007 01.11.2007 AND 15.11.2007 AND DETAIL FURNISHED THEREWITH. THE CIT (APPEALS) ALSO EXAMINED PURPOSE OF VISIT OF PARTNERS AND EMPLOYEES TO DIFFE RENT PLACES. HE ALSO NOTED THAT FOREIGN TRAVELING IN THE ASSESSMENT YEAR WERE ONLY 1.33% OF THE TOTAL TURNOVER WHICH WAS LESS THAN 1.34% OF LAST YEAR. TH E CIT (APPEALS) ALSO NOTED THAT ITAT IN THE CASE OF RICHA KNITWEAR (SIST ER CONCERN) F BENCH AND IN THE CASE OF CONTINENTAL CARRIERS PVT.LTD. VS . ACIT ITA NO. 5320/DEL/04 DEALT WITH THE SIMILAR ISSUE AND ALLOWE D SIMILAR EXPENSES. IN THE ULTIMATE ANALYSIS THE LEARNED CIT (APPEALS) OBSERV ED AS UNDER: 4.5 ADVERTING BACK TO THE FACTS OF THE CASE IT IS OBSERVED THAT THE APPELLANT HAS NOT MAINTAINED THE BILLS AND VOUCHERS FOR THE EXPENSES MADE OUT OF FOREIGN EXCHANGE. THE AO HAS DISALLOWED RS 11 14 390/- FOR NOT BEING INCURRED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF BUSINESS. IT IS A MATTER OF RECORD THAT THE PERCENT AGE OF THE EXPENDITURE MADE ON FOREIGN TRAVELING IS NOT HIGHER THAN THE PERCENTAGE OF IMMEDIATE PRECEDING YEAR. THE COUNSEL OF THE APPELLANT HAS SUBMITTED THAT MOST OF THE FOREIGN EXCHANGE IS SPENT ON EXPENSES FOR WHICH NO BILLS OR VOUCHERS COULD HAVE PRACTICAL LY BEEN PROCURED AND MAINTAINED. THE CONCERNED PERSONS WHO UNDERTOOK THE FOREIGN TRAVEL PREPARED THE SELF MADE VOUCHERS FOR SUCH EXP ENSES. THE APPELLANT HAS JUSTIFIED THE EXPENSES BY A COMPARATI VE CHART. THESE ITA NO. 3502 3503 & 4908/D/09 9 EXPENSES HAVE BEEN INCURRED IN THE COUNTRIES WHERE THE APPELLANT IS HAVING A BUSINESS CONNECTION. THE AO HAS NEITHER MA DE A CASE THAT THE FOREIGN EXCHANGE HAS BEEN UTILIZED FOR PERSONAL EXPENSES AND NOR HAS QUANTIFIED SUCH EXPENDITURE. THEREFORE RESPECT FULLY FOLLOWING THE OBSERVATIONS OF THE HONBLE ITAT IN THE CASE OF M/S RICHA KNITWEARS IN ITA NO. 1684/DEL/08 THE AD HOC ADDITION MADE BY THE AO IS HEREBY DELETED. WITH THE AFORESAID OBSERVATIONS THE DISALLOWANCE M ADE OUT OF FOREIGN TRAVELING EXPENSES WAS DELETED. 12. THE REVENUE BEING AGGRIEVED HAS BROUGHT THE ISS UE IN APPEAL IN THE TWO YEARS. WE HAVE HEARD BOTH THE PARTIES. EXCEPT F OR RELYING UPON THE OBSERVATIONS OF LEARNED ASSESSING OFFICER THE LEAR NED DEPARTMENTAL REPRESENTATIVE DURING THE COURSE OF HEARING COULD NOT PRODUCE ANY MATERIAL TO ESTABLISH ANY ERROR IN THE IMPUGNED ORDER OF LEA RNED CIT (APPEALS). ON FACTS WE FIND THAT LEARNED CIT (APPEALS) AFTER EX AMINING DETAILS OF FOREIGN TRAVELING EXPENSES HELD THAT EXPENSES CLAIMED WERE QUITE REASONABLE AND WERE INCURRED EVEN IN PLACES LIKE HONGKONG SINGAPO RE AND DUBAI FOR PURPOSES OF BUSINESS. WE FIND THAT THERE IS SUFFICI ENT MATERIAL ON RECORD TO SUPPORT ABOVE CONCLUSION. WE THEREFORE SEE NO JUS TIFICATION ON OUR PART TO INTERFERE WITH THE IMPUGNED ORDER ON FOREIGN TRAVEL ING EXPENSES. THESE ARE CONFIRMED. 13. IN APPEAL FOR ASSESSMENT YEAR 2004-05 AND 2005- 06 THE REVENUE HAS ALSO CHALLENGED DELETION OF DISALLOWANCE OF TELEPHO NE EXPENSES OF RS 48 018/- EACH. NO ARGUMENTS WERE ADDRESSED ON THIS GROUND DURING THE COURSE OF HEARING OF APPEAL. HAVING REGARD TO THE T URNOVER AND INCOME SHOWN BY THE ASSESSEE WE DO NOT SEE ANY JUSTIFICAT ION FOR DISALLOWING THE AMOUNTS IN QUESTION OUT OF THE TELEPHONE EXPENSES C LAIMED. DELETION OF ITA NO. 3502 3503 & 4908/D/09 10 DISALLOWANCE ON FACTS IS HELD TO BE FULLY JUSTIFIED . THIS GROUND OF APPEAL OF THE REVENUE IS REJECTED. 14. THE NEXT GROUND OF APPEAL RELATES TO DELETION O F ADDITION OF RS 1 97 773/- OUT OF JOB WORK INCOME. AT THE TIME OF HEARING BOTH THE PARTIES ACCEPTED THAT THIS GROUND OF APPEAL DOES NOT ARISE IN THE ASSESSMENT YEAR 2004-05. IN ASSESSMENT YEAR 2005-06 THE ASSESSING OFFICER FOUND THAT TDS CERTIFICATE SHOWED THAT ASSESSEE HAD CARRIED JOB WO RK OF VALUE OF RS 4 17 888/-. HOWEVER IN THE RETURN FOR THE RELEVANT YEAR IT HAD SHOWN RECEIPT OF RS 2 20 115/- ONLY. ACCORDINGLY RS 1 97 773/- WA S ADDED IN THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06. 15. ON APPEAL THE ASSESSEE EXPLAINED TO THE CIT (A PPEALS) THAT JOB WORK RECEIPT OF RS 1 97 773/- PERTAINED TO ASSESSMENT YE AR 2004-05 AND WAS DULY ACCOUNTED FOR IN THAT ASSESSMENT YEAR. THE ASSESSIN G OFFICER EXAMINED RELEVANT EVIDENCE AND FOUND CONTENTION OF THE ASSES SEE TO BE CORRECT. THE LEARNED CIT (APPEALS) FURTHER RECORDED THAT MERE FA CT THAT TDS FOR THE ENTIRE RECEIPT WAS CONSIDERED IN ASSESSMENT YEAR 2005-06 DID NOT MAKE ANY DIFFERENCE. 16. IN APPELLATE PROCEEDINGS IT WAS NOT DISPUTED B EFORE US THAT JOB RECEIPT OF RS 1 97 773/- WAS DULY SHOWN BY THE ASSESSEE IN THE ASSESSMENT YEAR 2004-05 AND THEREFORE COULD NOT BE ADDED AGAIN IN ASSESSMENT YEAR 2005- 06 MERELY BECAUSE TDS CERTIFICATE FOR THE ENTIRE RE CEIPT OF RS 4 17 888/- WAS CLAIMED IN THE PERIOD RELEVANT TO ASSESSMENT YE AR 2005-06. IT COULD NOT FOLLOW THAT PART OF RECEIPT MENTIONED IN THE TDS CO ULD BE DOUBLY ASSESSED. EVEN OTHERWISE TOTAL TDS CLAIM IS MERELY RS 8 738/ - AS IS EVIDENT FROM PAGE 32 OF THE PAPER BOOK. THERE IS HARDLY ANY NEED TO BIFURCATE THIS TAX INTO ITA NO. 3502 3503 & 4908/D/09 11 TWO ASSESSMENT YEARS AND ALLOW CREDIT ON PROPORTION ATE BASIS. THERE BEING NO JUSTIFICATION FOR THE ADDITION THE LEARNED CIT (APPEALS) HAS RIGHTLY DELETED THE SAME. WE CONFIRM HIS ACTION. 17. IN THE RESULT WHEREAS REVENUES APPEALS FOR AS SESSMENT YEAR 2004-05 AND 2005-06 ARE DISMISSED ASSESSEES APPEAL FOR AS SESSMENT YEAR 2006-07 IS ALLOWED IN TERMS STATED ABOVE. PRONOUNCED IN OPEN COURT DURING THE COURSE OF HEARI NG ON 26.04.2010. SD/- SD/- (SHAMIM YAHYA) (VIMAL GANDHI) ACCOUNTANT MEMBER PRESIDENT DATED: 26.04.2010 DRS COPY OF THE ORDER FORWARDED TO: 1. A.CIT CIR 27(1) ROOM NO. 218 D-BLOCK VIKAS BHAW AN NEW DELHI. 2. M/S RICHA & CO. 2/2 WHS KIRTI NAGAR NEW DELHI. 3. CIT 4. CIT(A)XXIV NEW DELHI. 5. DR DY.REGISTRAR ITAT