Shri Rajesh P.Shah, Ahmedabad v. The Income tax Officer,Ward-10(3),, Ahmedabad

ITA 465/AHD/2010 | 2006-2007
Pronouncement Date: 07-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 46520514 RSA 2010
Bench Ahmedabad
Appeal Number ITA 465/AHD/2010
Duration Of Justice 4 month(s) 26 day(s)
Appellant Shri Rajesh P.Shah, Ahmedabad
Respondent The Income tax Officer,Ward-10(3),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 07-07-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 07-07-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 2006-2007
Appeal Filed On 11-02-2010
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI D.C.AGRAWAL ACCOUNTANT MEMBER SHRI RAJESH P. SHAH A-101 INDRAPRASTHA-II NR. TULIP CITADEL SHREYAS TEKRA AMBAWADI AHMEDABAD. VS. INCOME-TAX OFFICER WARD 10(3) AHMEDABAD NARAYAN CHAMBERS ASHRAM ROAD AHMEDABAD. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI T. H. VASA AR REVENUE BY:- SHRI P. R. GHOSH DR O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING F OLLOWING GROUNDS :- (1) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ADDITIONS MADE LO THE INCOM E OF THE APPELLANT BY THE LEARNED A.O AND THEREBY CONFIRMING THE ASSESSED INCOME AT RS . 4 77 350 AGAINST INCOME RETURNED BY THE APPELLANT AT RS.2 81 190/- AND THE ORDER OF LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) ) IS AGAINST L AW FACTS AND EVIDENCE ON RECORD. (2) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNE D A.O OF RS.1 63 550/- BEING WHOLE OF THE EXPENDITURE INCURR ED FOR BUSINESS PROMOTION. THE SAID ADDITION IS AGAINST LA W FACTS AND EVIDENCE ON RECORD. (3) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) AND THE LEARNED A.O. BOTH FAILED IN CONSIDERING THE EXP LANATION ITA NO.NO.465/AHD/2010 ASST. YEAR :2006-07 2 GIVEN BY THE APPELLANT THAT BUSINESS PROMOTION EXPE NDITURE WAS ON HIGHER SIDE AS APPELLANT HAD TO INCUR MORE E XPENSES FOR FIRST TIME (4) THAT THE LEARNED COMMISSIONER OF INCOME-LAX (APPEAL S) AND THE LEARNED A O. BOTH DID NOT CONSIDER THE ACCOUNTS OF THE APPELLANT AND ALSO THE VOUCHERS IN SUPPORT OF EXPLA NATION PRODUCED BEFORE THEM AND SUMMARILY REJECTED THE EXPLANATION GIVEN BY THE APPELLANT. (5) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) HAS ERRED IN CONFIRMING THE ADDITION OF RS.32.605 OUT O F TELEPHONE; AND VEHICLE EXPENSES CONSIDERING THE SAM E AS NON-BUSINESS EXPENSES OF THE APPELLANT. THE CONFIRM ATION OF ADDITION MADE BY COMMISSIONER OF INCOME-TAX (APPEAL S) IS AGAINST LAW FACTS AND EVIDENCE ON RECORD. (6) THAI THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DID NOT CONSIDER THE SUBMISSIONS OF THE APPELLANT THAT THE BUSINESS PROMOTION EXPENDITURE WAS INCURRED WHOLLY FOR BUSINESS PROMOTION BY THE ASSESSEE AND THAT THE ASS ESSEE DERIVED BENEFIT DUE TO SUCH EXPENDITURE AND AS IT W AS INCURRED OUT OF COMMERCIAL EXPEDIENCY NO PORT OF T HEREOF SHOULD HAVE BEEN DISALLOWED (7) THE APPELLANT SUBMITS THAT THE INTEREST U/S 234B OF RS.6016/- HAS BEEN WRONGLY CHARGED AND HENCE THE SAME MAY KIN DLY BE DELETED NR REDUCED (8) THE APPELLANT SUBMITS THAT THE INTEREST U/S 244A OF RS.1525/- HAS BEEN WRONGLY WITHDRAWN AND HENCE THE SAME MAY K INDLY BE ALLOWED. (9) IN VIEW OF ABOVE AND OTHERS THAT MAY HE URGED AT THE TIME OF HEARING THE APPELLANT REQUESTS THAT A. DISALLOWANCE OF RS.1 63 550/- AND RS.32 605/-MA DE BY THE LEARNED AO AND CONFIRMED BY THE LEARNED COMMISSIONE R OF INCOME-TAX (APPEALS) MAY KINDLY BE DELETED. B. INTEREST CHARGED U/S 234B OF RS.6016/- MAY KI NDLY HE REDUCED 3 C. INTEREST WITHDRAWN U/S 244A OF RS.1525/-MAY KINDLY BE ALLOWED; AND D. SUCH OTHER FURTHER RELIEF AND REDUCTIONS HE ALLOWED AS THE FACTS AND CIRCUMSTANCES OF THE CASE SO REQUIRES . 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A LIC AGENT SHOWING INCOME FROM COMMISSION ON PREMIUM PAID BY THE POLIC Y HOLDERS. HE IS ALSO HOLDING AGENCY OF BAJAJ ALLIANCE OF GENERAL IN SURANCE CO. ON VERIFICATION OF PROFITS AND LOSS ACCOUNTS THE AO NO TICED THAT ASSESSEE IS CLAIMING BUSINESS EXPENSES OF RS.1 63 550/-. WHEN A SKED TO EXPLAIN THE CLAIM IT WAS SUBMITTED THAT THE AGENTS ARE TO PAY P ART OF THE AMOUNT OF FIRST YEAR COMMISSION ON THE PREMIUM PAID BY THE CL IENTS. THIS IS ALMOST ABOUT 50% AS PER BOARD CIRCULAR ISSUED IN RESPECT O F LIC AGENTS. THE AO DISALLOWED THE CLAIM BY HOLDING THAT SUCH PRACTI CE OF PROCUREMENT OF BUSINESS BY PAYING COMMISSION BACK TO THE POLICY HO LDERS ON THE PREMIUM PAID BY THEM IS PRIMA FACIE ILLEGAL AND UNF AIR. HE ACCORDINGLY DISALLOWED THE CLAIM AT RS.1 63 550/-. 3. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE ON THE SAME REASON AS GIVEN BY THE AO. 4. I HAVE HEARD THE PARTIES AND PERUSED THE MATERIA L ON RECORD. IN MY CONSIDERED VIEW THE LD. AR IS NOT ABLE TO SATISFY A S TO WHETHER THE ENTIRE EXPENDITURE WAS INCURRED FOR THE BUSINESS PURPOSES AND HE HAD ACTUALLY GIVEN SUCH MONEY TO THE POLICY HOLDERS FOR PROCURIN G BUSINESS. BUT IT IS ALSO A FACT THAT AGENTS HAVE TO INCUR SUCH EXPENDIT URE. THIS MAY NOT BE TREATED AS ETHICAL BIT CERTAIN NOT ILLEGAL AS THERE IS NO VIOLATION OF LAW. MERELY BECAUSE CERTAIN UNETHICAL PRACTICE ARE FOLLO WED IN THE BUSINESS IT CANNOT BE SAID THAT EXPENDITURE WAS NOT INCURRED FO R PROCURING BUSINESS. 4 CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE I RESTRICT THE DISALLOWANCE TO 50% OF WHAT IS CLAIMED. ACCORDI NGLY ASSESSEE GETS CONSEQUENTIAL RELIEF. THIS GROUND IS PARTLY ALLOWED . 5. SO FAR AS DISALLOWANCE OUT OF CLAIM OF TELEPHONE IS CONCERNED I BELIEVE THAT EXPENDITURE IS RESTRICTED TO 1/5 TH ON THE GROUND THAT THEY ARE NOT INCURRED FOR BUSINESS PURPOSES. CONSIDERING THE LACK OF EVIDENCE I CONFIRM THE ADDITION PROPOSED BY THE AO. THIS GROUN D IS DISMISSED. 6. AS A RESULT APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 7/7/2010 SD/- (D.C.AGRAWAL) ACCOUNTANT MEMBER AHMEDABAD DATED : 7/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD