ACIT, Mangalore v. Sri. Devanand Shetty, Mangalore

ITA 593/BANG/2010 | misc
Pronouncement Date: 06-12-2010

Appeal Details

RSA Number 59321114 RSA 2010
Bench Bangalore
Appeal Number ITA 593/BANG/2010
Duration Of Justice 40 year(s) 11 month(s) 5 day(s)
Appellant ACIT, Mangalore
Respondent Sri. Devanand Shetty, Mangalore
Appeal Type Income Tax Appeal
Pronouncement Date 06-12-2010
Appeal Filed By Department
Assessment Year misc
Appeal Filed On 01-01-1970
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.593/2010 (ASSESSMENT YEARS : 2007-08) THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(1) BANGALORE APPELLANT VS SHRI DEVANANDA SHETTY PROP: M/S DIX SHIPPING CO. BEACH ROAD PANAMBUR MANGALORE RESPONDENT REVENUE BY : ASSESSEE BY : SHRI D.PRABHAKAR REDDY ADDL.CIT SHRI I.V.DAYAKAR RAU CA O R D E R PER SMT. P. MADHAVI DEVI JM THIS APPEAL IS BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(A) MANGALORE DATED 20-04-2010 RELATING TO ASSE SSMENT YEAR 2007- 08. IN THIS APPEAL THE REVENUE HAS RAISED THE FOL LOWING GROUNDS; 1. THE LD.CIT(A) ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF SPEED MONEY. 2. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THA T THE LABOURERS ARE EMPLOYED BY SOMEBODY ELSE FOR SERVICE S ITA NO.593(B)/2010 2 AND THERE IS NO NECESSITY OR OBLIGATION TO GIVE MON EY BY THE BUSINESSMEN AN INCENTIVES. 3. THE HONBLE ITAT MUMBAI BENCH IN APL INDIA (P) VS DCIT RANGE-8(1) 96 ITD HAS HELD THAT WHERE THE ASSESSEE FAILED TO ESTABLISH THAT ACTUALLY PAYMENT HAS BEEN MADE TO THE EXTENT INDICATED IN VOUCHERS 25% OF EXPENSES INCURRED BY WAS OF SPEED MONEY WAS TO BE DISALLOWED ON ESTIMATE BASIS. IN THE PRESENT CASE SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE SPEED MONEY HAS BEEN ACTUALLY RECEIVED BY THE LABOURERS THE AO HAS DISALLOWED IT WHICH THE LD. CIT(A)) HAS FAI LED TO APPRECIATE. 3.1 THE ASSESSEE CRAVES LEAVE TO ADD ALTER OR AME ND ALL OR ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TI ME OF HEARING. 3.2 FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE CIT(A) MAY BE CANCELLED AND THAT OF THE AO RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF CLEARING AND FORWARDING AGENT AT NEW MANGALORE PORT TRUST (NMPT). THE RETURN OF INCOME WAS FILED ON 31-10- 2007 DECLARING A TOTAL INCOME OF RS.91 01 150/-. D URING THE ASSESSMENT PROCEEDINGS U/S 143(3) THE AO OBSERVED THAT THE AS SESSEE HAS PAID AN AMOUNT OF RS.2 10 10 245/- AS SPEED MONEY TO 13 SUB -CONTRACTORS. HE ASKED THE ASSESSEE TO GIVE REASONS FOR EMPLOYMENT O F THESE SUB- CONTRACTORS. THE ASSESSEE SUBMITTED THAT IN HIS LIN E OF BUSINESS THIS IS A ITA NO.593(B)/2010 3 PRACTICE AND IN ORDER TO RUN THE BUSINESS SMOOTHLY THE LABOURERS ARE PAID THE EXTRA MONEY IN ADDITION TO THEIR WAGES FIX ED BY NMPT AND THIS IS KNOWN AS SPEED MONEY WHICH IS PAID THROUGH SUB-CONT RACTORS. THE AO DISALLOWED 25% OF THE SPEED MONEY BY HOLDING THAT T HE ASSESSEE HAS FAILED TO ESTABLISH THE ACTUAL PAYMENTS MADE TO THE EXTENT INDICATED IN VOUCHERS. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME BY FOLLOWING THE DECISION OF ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 AND RESTRICTED THE DISALLOWANCE TO RS.5.00 LACS. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR PLACED RELIANCE ON THE ORDER OF A O AND SUBMITTED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE PURPOSE FOR WHICH THIS MONEY HAS BEEN PAID TO THE SUB-CONTRACTORS AND ALSO THAT THE SUB- CONTRACTORS HAVE PAID THE SPEED MONEY TO THE LABOUR ERS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHE R HAND RELIED UPON THE ORDER OF THE CIT(A) AND ALSO PLACED BEFORE US A COPY OF THE ORDER IN ITA NO.8(B)/2010 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS KONKAN MARINE AGENCIES (2009) 313 ITR 308(KAR.) WHEREBY THE HONBLE HIGH COURT HAS RECOGNIZED THE PAYMENT OF SP EED MONEY AND HAS HELD THAT THE EXPENDITURE INCURRED IS IN THE COURSE OF BUSINESS AND THAT THE ASSESSEE IS ENTITLED TO DEDUCTION THE TRIBUNAL CONFIRMED THE ORDER OF ITA NO.593(B)/2010 4 THE CIT(A) IN THE AFORESAID CASE FOR THE ASSESSMENT YEAR 2006-07 AS REASONABLE AND JUSTIFIED. 6. AS THE FACTS AND CIRCUMSTANCES OF THE CASE FOR T HE ASSESSMENT YEAR 2006-07 ARE ALSO SIMILAR TO THE FACTS AND CIRC UMSTANCES OF THE CASE BEFORE US FOR THE ASSESSMENT YEAR 2007-08 AND ALSO AS THE CIT(A) HAD ONLY FOLLOWED THE ORDER OF ITAT IN THE ASSESSEES O WN CASE FOR THE ASSESSMENT YEAR 2006-07 WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE (A.MOHAN ALANKAMONY) (SMT . P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: BANGALORE DATED: 2010. AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR ITAT BANGALORE