Sh. Krishan Gopal Ice & Cold Storage, Agra v. I.T.O.-4(4), Agra

ITA 477/AGR/2011 | 2007-2008
Pronouncement Date: 24-02-2011 | Result: Partly Allowed

Appeal Details

RSA Number 47720314 RSA 2011
Assessee PAN AAMFS7795N
Bench Agra
Appeal Number ITA 477/AGR/2011
Appellant Sh. Krishan Gopal Ice & Cold Storage, Agra
Respondent I.T.O.-4(4), Agra
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 24-02-2012
Date Of Final Hearing 15-02-2012
Next Hearing Date 15-02-2012
Assessment Year 2007-2008
Appeal Filed On 27-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH SMC AGRA BEFORE SHRI A.L. GEHLOT ACCOUNTANT MEMBER ITA NO.477/AGR/2011 ASSESSMENT YEARS: 2007-08 SHRI KRISHAN GOPAL ICE & COLD STORAGE VS. INCOME T AX OFFICER KHASRA NO.116/199 KHANDOULI AGRA. AGRA. (PAN: AAMFS 7795 N). ( APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHESH AGARWAL C.A. RESPONDENT BY : SHRI. SOHAIL AKHTAR JR. D.R. DATE OF HEARING : 16.02.2012 DATE OF PRONOUNCEMENT : 24.02.2012 ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-II AGRA DATED 12.10.2011 FOR THE ASSESSMENT YEAR 2007- 08. 2. THE ASSESSEE IN ITS APPEAL RAISED AS MANY AS 7 G ROUNDS. HOWEVER AT THE TIME OF HEARING THE LD. AUTHORISED REPRESENTATIVE SUBMI TTED THAT GROUND NOS.1 5 6 & 7 ARE GENERAL GROUNDS. THEREFORE NO FINDING IS REQU IRED ON THOSE GROUNDS. ITA NO.477/AGR/2011 A.Y. 2007-08 2 3. GROUND NO.4 OF THE APPEAL IS IN RESPECT OF DISAL LOWANCE OF DONATION OF ` 1 501/-. THIS GROUND HAS NOT BEEN PRESSED BY THE L D. AUTHORISED REPRESENTATIVE THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. 4. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IN I TS GROUND NO.2 IS IN RESPECT OF DISALLOWANCE OF RS.1 26 444/- OUT OF REPAIR & MAINT ENANCE EXPENSES. 5. THE BRIEF FACTS OF THIS GROUND ARE THAT THE ASSE SSEE COMPANY DERIVES INCOME FROM COLD STORAGE. DURING THE ASSESSMENT PROCEEDIN GS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED REPAIR & MAIN TENANCE EXPENSES WHICH INCLUDES LABOUR EXPENSES OF ` 2 60 400/- AND MATERIAL PURCHASE OF ` 4 46 520/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPE NDITURE ON LABOUR FOR CIVIL CONSTRUCTION RANGES FROM 25% TO 40% OF THE COST OF MATERIAL WHEREAS THE ASSESSEE HAS CLAIMED LABOUR EXPENSES AT 58% OF THE COST OF M ATERIAL. THE ASSESSING OFFICER ACCORDINGLY CONSIDERED LABOUR EXPENSES 30% OF COST OF MATERIAL OF WHICH CALCULATION COMES TO ` 1 33 956/- AS GENUINE AND BALANCE AMOUNT OF ` 1 26 444/- HAS BEEN DISALLOWED ON ACCOUNT OF EXCESS CLAIM NOT FULLY VERIFIABLE. THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE CIT(A). ITA NO.477/AGR/2011 A.Y. 2007-08 3 6. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE MAINTAINS REGULAR BOOKS OF ACCOUNTS WHICH IS SUBJECT TO AUDIT. THE AUDITOR DID NOT MAKE ANY ADVERSE COMMENTS ON THE BOOKS OF A CCOUNTS. THE ASSESSING OFFICER DID NOT REJECT THE BOOKS OF ACCOUNTS. UNDE R THESE CIRCUMSTANCES THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ADDITI ON MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) MAY BE DELETED. 7. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND RELIED UPON THE ORDER OF THE REVENUE AUTHORITIES. 8. I HAVE HEARD THE LD. REPRESENTATIVES OF THE PART IES AND PERUSED THE RECORDS. SECTION 30 OF THE INCOME TAX ACT 1961 PROVIDES THA T REPAIRING EXPENSES IS ALLOWABLE AS REVENUE EXPENSES. SECTION 37(1) OF TH E INCOME TAX ACT 1961 REQUIRES THAT ANY EXPENDITURE NOT BEING CAPITAL IN NATURE OR PERSONAL EXPENDITURE OF THE ASSESSEE LAID OUT OR EXPENDED WHOLLY AND EXCLUS IVELY FOR THE PURPOSES OF BUSINESS SHALL BE ALLOWED IN COMPUTING THE INCOME C HARGEABLE UNDER THE HEAD PROFITS & GAINS OF BUSINESS OR PROFESSION. ON A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER I NOTICED THAT THE ASSESSING OFF ICER HAS DISALLOWED THE REPAIRS & MAINTENANCE EXPENSES MERELY ON THE BASIS OF PRESUMP TIONS THAT IN CASE OF CIVIL WORKS THE RATIO OF LABOUR IS 25% TO 40%. IT IS NO T THE CASE OF THE ASSESSING ITA NO.477/AGR/2011 A.Y. 2007-08 4 OFFICER THAT THE EXPENDITURE WAS NOT INCURRED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. IT IS NOT THE CASE OF THE AS SESSING OFFICER THAT THE SAID EXPENDITURE WHICH IS CAPITAL IN NATURE. THE ASSESS ING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE EXPENSES ARE EXCESSIVE AND ARE NOT FULLY VERIFIABLE. BUT IN THIS REGARD THE ASSESSING OFFI CER DID NOT POINT OUT ANY SPECIFIC ITEM OF EXPENDITURE. IN THE LIGHT OF THE ABOVE DIS CUSSIONS AND UNDER THESE FACTS AND CIRCUMSTANCES I NOTICE THAT THE EXPENDITURE INCURR ED OR LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS IS ALLOWAB LE EXPENSES. IN THE ABSENCE OF CONTRARY MATERIALS TO THE ABOVE PRINCIPLE I AM OF THE CONSIDERED OPINION THAT THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE EXPENSES ON PRESUMPTION BASIS CANNOT BE SUSTAINED. THEREFORE THE ADDITION OF ` 1 26 444/- MADE BY THE ASSESSING OFFICER IS DELETED. 9. GROUND NO.3 OF THE APPEAL IS IN RESPECT OF DISAL LOWANCE OF ` 49 148/- OUT OF LOADING AND UNLOADING CHARGES. THE ASSESSING OFFIC ER DISALLOWED 5% LOADING AND UNLOADING EXPENDITURE ON THE GROUND THAT THE EXPEND ITURES WERE UNVERIFIABLE. THE ASSESSING OFFICER NOTED IN HIS ORDER THAT AS PER TH E ORDER SHEET ENTRY DATED 21.12.2009 AND LOOKING TO THE NATURE OF BUSINESS U NVERIFIABLE LOADING AND UNLOADING EXPENSES THE AMOUNT EQUAL TO 5% OF EXPEN DITURE OF WHICH CALCULATION COMES TO ` 45 148/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE TO ITA NO.477/AGR/2011 A.Y. 2007-08 5 PLUG POSSIBLE LEAKAGE. THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER HAS BEEN CONFIRMED BY THE CIT(A). 10. I HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORDS. AS PER DETAILED DISCUSSIONS MADE WHILE DECIDING THE GROUND NO.2 ABOVE I NOTICE THAT THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSES OF BUSINESS IS ALLOWABLE. ONCE IT IS FOUND THAT THE EXPENDITURE H AS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS NO ADHOC DISALLOWANCE CAN BE MADE. UNDER THESE CIRCUMSTANCES THE ADDITION OF ` 49 148/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NOT SUSTAINA BLE. HOWEVER THIS ADDITION OF ` 49 148/- IS DELETED SUBJECT TO VERIFICATION OF CONT ENTS OF ORDER SHEET ENTRY DATED 21.12.2009 AS THE RELEVANT ENTRY OF ORDER SHEET DAT ED 21.12.2009 IS NOT ON RECORD. THE ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER IN THE SAID ORDER SHEET DATED 21.12.2009 THE ASSESSEE HAS ADMITTED SUCH DISALLOWA NCE. IF IT IS FOUND THAT THE ASSESSEE HAS HIMSELF ADMITTED SUCH ADHOC DISALLOWAN CE THEN THE AGITATION OF THE ASSESSEE AGAINST THE ADDITION IS NOT CORRECT AS THE RE WAS NO GRIEVANCES TO THE ASSESSEE AND IN SUCH CIRCUMSTANCES THE ADDITION B E TREATED AS CONFIRMED. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE ENTRY I N THE ORDER SHEET AS DISCUSSED ABOVE AND DECIDE ISSUE ACCORDINGLY. ITA NO.477/AGR/2011 A.Y. 2007-08 6 11. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER DATE: 24 TH FEBRUARY 2012 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R. ITAT AGRA BENCH AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY