DCIT, Central Circle - XVII, Kolkata, Kolkata v. M/s. Quality Tea & Producing Co. Pvt. Ltd., Kolkata

ITA 570/KOL/2010 | 2006-2007
Pronouncement Date: 23-07-2010

Appeal Details

RSA Number 57023514 RSA 2010
Bench Kolkata
Appeal Number ITA 570/KOL/2010
Duration Of Justice 4 month(s) 4 day(s)
Appellant DCIT, Central Circle - XVII, Kolkata, Kolkata
Respondent M/s. Quality Tea & Producing Co. Pvt. Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 23-07-2010
Assessment Year 2006-2007
Appeal Filed On 19-03-2010
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA () . . .!'. #$ [BEFORE SRI B. R. MITTAL JM & SRI C. D. RAO AM] % % % % / ITA NO.570 /KOL/2010 &'( )* &'( )* &'( )* &'( )*/ // / ASSESSMENT YEAR : 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX -VS- M/S. QUA LITY TEA PRODUCING CO. PVT. LTD. CIRCLE-XVII KOLKATA (PA NO.AAACQ 0459 J) ( - / APPELLANT ) (./ -/ RESPONDENT ) C.O. NO. 36/KOL/2010 IN % % % % / ITA NO.570 /KOL/2010 &'( )* &'( )* &'( )* &'( )*/ // / ASSESSMENT YEAR : 2006-07 M/S. QUALITY TEA PRODUCING CO. PVT. LTD. VS- DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-XVII KOLKATA. (CROSS OBJECTOR) (RESPONDENT) FOR THE APPELLANT: : 0 /SRI B. R. PUROKAYASTHA FOR THE RESPONDENT 0 /SRI S. D. VERMA #1 / ORDER PER B. R. MITTAL ( . . . . . . . . ) : THE DEPARTMENT HAS FILED THE APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST THE ORDER OF LD. CIT(A) DATED 18 TH DECEMBER 2009 ON THE FOLLOWING GROUND : 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF NON-BUSINESS EXPENDITURE OF RS.6 3 6 917/- BEING CESS PAYABLE ON CULTIVATION OF GREEN LEAVES. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION TAK ING THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT(A) CENTRAL-1 WAS NOT JUSTIFIE D IN CONFIRMING THE DISALLOWANCE OF RS.3 85 934/- BEING THE AMOUNT OF EMPLOYEES CONTR IBUTION TO P.F WHICH WAS PAID BY THE ASSESSEE COMPANY BEFORE DUE DATE OF SUBMISSION OF INCOME TAX RETURN. 2. THAT THE LD. CIT(A) CENTRAL-1 WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF A SUM OF RS.56 895/- BEING 50% OF ELECTRICITY EXPENSES TO WARDS PERSONAL USE OF THE DIRECTORS OF THE ASSESSEE COMPANY. 2. IN RESPECT OF THE APPEAL FILED BY THE DEPARTMEN T WE OBSERVE THAT THE LD. CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AFT INDUSTRIES LTD. 270 ITR 169. THE LD. DR HAS NOT DISPUTED 2 THE ABOVE FACT SAVE AND EXPECT RELYING ON THE ORDER OF THE AO. ON THE OTHER HAND THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT(A). 3. SINCE THE LD. CIT(A) HAS DECIDED THE ISSUE BY FO LLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WE FIND NO INFI RMITY IN THE ORDER OF THE LD. CIT(A). HENCE WE UPHOLD THE ORDER OF THE LD. CIT(A) AND RE JECT THE GROUND OF APPEAL TAKEN BY THE DEPARTMENT. 4. NOW COMING TO THE CROSS OBJECTION TAKEN BY THE ASSESSEE IN RESPECT OF GROUND NO. 1 OF THE CROSS OBJECTION WE OBSERVE THAT THE L D. CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE ORDER OF THE SPECIAL BENCH ITAT KOL KATA IN THE CASE OF JCIT VS. ITC LTD. 115 TTJ 5 (SB) WHEREIN IT HAS BEEN HELD THAT THE EM PLOYEES CONTRIBUTION IS GOVERNED BY SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE I. T. ACT AND NOT BY SECTION 43B OF THE ACT. THE LD. AR COULD NOT CONTROVERT THE ABOVE FAC TS. HENCE WE UPHOLD THE ORDER OF THE LD.CIT(A) AND REJECT GROUND NO. 1 OF THE CROSS OBJE CTION TAKEN BY THE ASSESSEE. 5. IN RESPECT OF GROUND NO. 2 OF THE CROSS OBJECTIO N WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTIES AND HAVE CONSIDERED THE ORDER OF THE AUTHORITIES BELOW. WE OBSERVE THAT THE AO HAS STATED THAT TWO ELECTRICITY METERS BEARING CONSUMER NO. 900416006 AND 9004162003 WERE INSTALLED AT THE RESI DENCE OF THE DIRECTORS OF THE ASSESSEE COMPANY. THE AO HAS STATED THAT THE ENTIR E ELECTRICITY EXPENSES OF RS.1 13 790/- PERTAINING TO ABOVE TWO METERS COULD NOT BE SAID TO HAVE BEEN INCURRED WHOLLY EXCLUSIVELY AND NECESSARILY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE AO DISALLOWED 50% BEING RS.56 895/- AS PERSONAL EXPEN SES. IN THE FIRST APPEAL THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 6. WE OBSERVE THAT THE AUTHORITIES BELOW HAVE DISAL LOWED 50% OF THE EXPENSES CONSIDERING THAT THE SAME WERE FOR PERSONAL USE OF THE DIRECTORS. HOWEVER IT IS NOT DENIED THAT THE SAID PAYMENT HAS GENUINELY BEEN MAD E BY THE ASSESSEE COMPANY TOWARDS ELECTRICITY EXPENSES. WE ARE OF THE CONSIDERED VIEW THAT IF THE EXPENSES RELATE TO PERSONAL USE OF DIRECTORS IT WOULD CONSTITUTE PERQUISITE IN THE HANDS OF DIRECTORS BUT AS FAR AS ASSESSEE COMPANY IS CONCERNED THE EXPENSES INCURRE D BY IT ARE FULLY ALLOWABLE. IN THIS REGARD WE ARE SUPPORTED BY THE DECISION OF THE ITA T AHEMEDABAD BENCH IN THE CASE OF SAURASTRA SAMACHAR PVT. LTD. 60 TTJ 465. SIMILAR V IEW HAS ALSO BEEN TAKEN BY THE ITAT DELHI BENCH IN DCIT VS. HARYANA OXYGEN LTD. (2001) 76 ITD 32. THEREFORE WE HOLD THAT THE DISALLOWANCE OF RS. 56 895/- MADE BY THE A UTHORITIES BELOW ON ACCOUNT OF PERSONAL USE OF ELECTRICITY EXPENSES OF DIRECTORS I S NOT JUSTIFIED AND IN CASE THE SAID 3 EXPENSES ARE ATTRIBUTABLE TOWARDS PERSONAL USE OF E LECTRICITY OF DIRECTORS THE SAME COULD BE CONSIDERED AS PERQUISITE IN THE HANDS OF THE DIR ECTORS BUT NO DISALLOWANCE IS TO BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. HENCE GROUN D NO. 2 OF THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED IN PART. . ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010 SD/- SD/- . .. .!' !'!' !'. .. . #$ #$ #$ #$ . . . . . . . . (C. D. RAO) (B. R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER ( (( ('$ '$ '$ '$) )) ) DATED : 23 RD JULY 2010 23 &'45 &6 JD.(SR.P.S.) #1 7 .&&8 9#8):- COPY OF THE ORDER FORWARDED TO: 1. - /APPELLANT - DCIT CIRCLE-XVII KOLKATA 2 ./ - / M/S. M/S. QUALITY TEA PRODUCING CO. PVT. LTD. 6A /DR. RAJENDRA PRASAD SARANI KOLKATA-700 001.. 3. &1'/ THE CIT 4. &1' ()/ THE CIT(A) KOLKATA. 5. A&B .&' / DR KOLKATA BENCHES KOLKATA /8 .&/ TRUE COPY #1'C/ BY ORDER D 5 / DEPUTY REGISTRAR .