M/s. Shroff Eye Centre, New Delhi v. ACIT, New Delhi

ITA 6/DEL/2013 | 2007-2008
Pronouncement Date: 28-10-2016 | Result: Allowed

Appeal Details

RSA Number 620114 RSA 2013
Assessee PAN AABFS6789D
Bench Delhi
Appeal Number ITA 6/DEL/2013
Duration Of Justice 3 year(s) 9 month(s) 26 day(s)
Appellant M/s. Shroff Eye Centre, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 28-10-2016
Date Of Final Hearing 26-10-2016
Next Hearing Date 26-10-2016
Assessment Year 2007-2008
Appeal Filed On 01-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI G.D. AGRAWAL VICE PRESIDENT AND SHRI KULDIP SINGH JUDICIAL MEMBER ITA NO.6/DEL./2013 (ASSESSMENT YEAR : 2007-08) SHROFF EYE CENTRE VS. ACIT CIRCLE 37(1) A 9 KAILASH COLONY NEW DELHI. NEW DELHI 110 048. (PAN : AABFS6789D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. YADAV ADVOCATE REVENUE BY : SHRI N.K. BANSAL SENIOR DR DATE OF HEARING : 26.10.2016 DATE OF ORDER : 28.10.2016 O R D E R PER KULDIP SINGH JUDICIAL MEMBER : THE APPELLANT SHROFF EYE CENTRE (HEREINAFTER REFER RED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.10.2012 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-XXVI NEW DELHI QUA THE ASSESS MENT YEAR 2007-08 ON THE GROUNDS INTER ALIA THAT :- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS AGAINST FACT AND LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ITA NO.6/DEL./2013 2 DISALLOWANCE OF RS.91 286 OUT OF STAFF WELFARE EXPENSES. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF FOLLOWING OUT OF VEHICLE REPAIRS & MAINTENANCE EXPENSES. I) RS.44 031/- BEING CNG KIT. II) RS.1 31 668/- BEING FOR PERSONAL USE. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE RS.98 679/- OUT OF TELEPHONE EXPENSES. 5. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE RS.64 500/- OUT OF BUSINESS PROMOTION EXPENSES. 6. THAT THE FURTHER GROUNDS SHALL BE SUBMITTED AT T HE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : RETU RN OF INCOME FILED BY THE ASSESSEE DECLARING INCOME AT RS.2 44 3 6 761/- QUA ASSESSING YEAR 2007-08 WAS SUBJECTED TO SCRUTINY. ASSESSEE PUT IN APPEARANCE THROUGH HIS AUTHORIZED REPRESENTATIVE. ASSESSEE IS INTO THE PROFESSION AS A MEDICAL PRACTITIONER IN TH E NAME AND STYLE OF SHROFF EYE CENTRE. 3. ASSESSEE CLAIMED STAFF WELFARE EXPENSES TO THE T UNE OF RS.3 04 286/- OUT OF WHICH AO DISALLOWED 30% I.E. R S.91 286/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PRODUCE VOUCHERS/BILLS EXCEPT PHOTOCOPIES OF SAMPLE VOUCHER. ITA NO.6/DEL./2013 3 4. ASSESSEE ALSO CLAIMED DEPRECIATION ON CARS TO TH E TUNE OF RS.6 62 492/- AND VEHICLE REPAIRS AND MAINTENANCE E XPENSES TO THE TUNE OF RS.6 54 188/- OUT OF WHICH AO DISALLOWED AN AMOUNT OF RS.44 031/- INCURRED ON CNG KIT FOR CARS AND RS.1 3 1 668/- ON ACCOUNT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES ON THE GROUND THAT THE EXPENSES ON CNG KIT ARE REVENUE IN NATURE AND ASSESSEE HAS FAILED TO PRODUCE LOGBOOK AND ELEMENT OF PERSONAL USE OF VEHICLES CANNOT BE RULED OUT. ASSESSEE ALSO CLA IMED TELEPHONE EXPENSES TO THE TUNE OF RS.9 86 794/- OUT OF WHICH THE AO DISALLOWED AN AMOUNT OF RS.98 679/- I.E. 10% ON THE GROUND OF ELEMENT OF PERSONAL USE. 5. ASSESSEE FURTHER CLAIMED BUSINESS PROMOTION EXPE NSES TO THE TUNE OF RS.6 45 000/- OUT OF WHICH AO DISALLOWED RS .1 07 500/- AGAIN ON GROUND OF PERSONAL ELEMENT. HOWEVER LD. CIT (A) RESTRICTED THE ADDITION MADE BY THE AO TO 10% OF TH E TOTAL EXPENSES AND EXTENDED THE RELIEF OF RS.43 000/- AND NET DISALLOWANCE CAME TO BE RS.64 500/-. CONSEQUENTLY AO ASSESSED THE TOTAL INCOME AT RS.2 53 38 745/-. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS PARTLY ALLOWED THE APPEAL . FEELING AGGRIEVED THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.6/DEL./2013 4 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 8. GROUNDS NO.1 & 6 ARE GENERAL IN NATURE HENCE NE ED NO ADJUDICATION. GROUND NO.2 9. AO DISALLOWED 30% OF THE TOTAL EXPENSES OF RS.3 04 286/- CLAIMED ON ACCOUNT OF STAFF WELFARE EXPENSES ON AD HOC BASIS ALSO SUSTAINED BY THE LD. CIT (A). 10. THE SOLE REASON FOR DISALLOWING THE STAFF WELFA RE EXPENSES BY 30% OF THE TOTAL EXPENSES BY AO/CIT(A) IS EXORBITAN T INCREASE IN THE EXPENSES IN THE MONTH OF MARCH 2007. HOWEVER PERUSAL OF PAGE 5 OF THE PAPER BOOK WHICH IS PART OF THE SUBM ISSIONS MADE BY THE ASSESSEE BEFORE THE LD. CIT (A) APPARENTLY SHO WS THAT THE AO HAS BEEN MADE AWARE AS TO THE FACTUAL POSITION OF S TAFF WELFARE EXPENSES; THAT IN THE MONTH OF MARCH 2007 STAFF WEL FARE EXPENSES WERE SHOWN AT RS.1 19 122/- OUT OF WHICH RS.94 128/ - WAS ON ACCOUNT OF REIMBURSEMENT OF THE MEDICAL EXPENSES OF THE STAFF FOR THE WHOLE YEAR AND STAFF WELFARE EXPENSES FOR THE M ONTH OF MARCH WAS AT RS.24 994/-. THIS FACT GOES TO PROVE THAT THE AO AS WELL AS ITA NO.6/DEL./2013 5 CIT (A) WITHOUT VERIFYING THE FACTUAL POSITION RUSH ED TO DISALLOW THE STAFF WELFARE EXPENSES BY 30% ON THE BASIS OF W HIMS AND FANCIES. MORE SO THE STAFF WELFARE EXPENSES INCUR RED BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT ARE LESS BY 1.3% THEN THE PRECEDING YEAR IN WHICH NO DISALLOWANCE WAS MAD E WHILE COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT. N OT ONLY THIS FBT HAS BEEN DULY PAID ON THIS EXPENDITURE AS IS E VIDENT FROM PAGES 88 TO 91 OF THE PAPER BOOK. CONSEQUENTLY DI SALLOWANCE ON ACCOUNT OF STAFF WELFARE EXPENSES BY MAKING ADDITIO N OF RS.91 286/- IS HEREBY DELETED. SO GROUND NO.2 IS DETERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.3 (I) 11. SO FAR AS INCURRING THE AMOUNT OF RS.44 031/- B Y THE ASSESSEE ON AFFIXING THE CNG KIT IN THE VEHICLES IS CONCERNE D IT CANNOT BE TREATED AS REVENUE EXPENSES BY ANY STRETCH OF IMAGI NATION FOR TWO REASONS : (I) CNG KITS GOT FITTED IN THE CAR USED FOR BUSINES S PURPOSE REDUCED THE PETROL EXPENSES OF THE VEHICLE WITHOUT MAKING ANY FURTHER INVESTMENT ON THE VEHICL E WHICH COULD FURTHER ACCELERATE BUSINESS OF THE ASSESSEE; AND ITA NO.6/DEL./2013 6 (II) THAT CNG KIT HAS EXTENDED THE LIFE AND VALUE O F THE VEHICLE BEING USED BY THE ASSESSEE FOR BUSINESS PURPOSE AND IT HAS ALSO REDUCED THE VEHICLE POLLUTI ON LEVEL IN GENERAL. 12. SO THE DISALLOWANCE OF RS.44 031/- ON ACCOUNT OF FITTING OF CNG KIT IN OLD VEHICLE IS NOT SUSTAINABLE IN THE EY ES OF LAW. HENCE GROUND NO.3(I) IS HEREBY DETERMINED IN FAVOUR OF AS SESSEE. GROUND NO.3 (II) 13. SO FAR AS QUESTION OF DISALLOWANCE OF RS.1 31 6 68/- OUT OF RS.13 16 680/- ON ACCOUNT OF VEHICLE RUNNING AND MA INTENANCE EXPENSES FOR PERSONAL USE IS CONCERNED THERE IS NO T AN IOTA OF EVIDENCE ON THE FILE TO WORK OUT AS TO HOW THE VEHI CLES HAVE BEEN USED FOR PERSONAL USE. WHEN WE LOOK AT THE TRADING RESULTS I.E. INCOME AND PROFIT DECLARED BY THE ASSESSEE DURING T HE YEAR UNDER ASSESSMENT WHICH IS RS.2 44 36 761/- AN INCREASE OF 2.79% IT IS BEYOND COMPREHENSION THAT HOW ASSESSEE AND HIS STAF F MEMBERS HAD THE TIME AND OCCASION TO USE THE STAFF CARS FOR PERSONAL USE. MOREOVER THE ASSESSEE HAS PAID FBT ON THESE EXPENS ES AS IS EVIDENT FROM ANNEXURE-II AVAILABLE AT PAGE 90 & 91 OF THE PAPER BOOK AND ASSESSEE HAS HIMSELF DISALLOWED RS.68 400 /- ON ACCOUNT OF PERSONAL USE OF THE VEHICLES. IN THESE CIRCUMST ANCES WE ARE ITA NO.6/DEL./2013 7 UNABLE TO SUSTAIN THE ORDER PASSED BY AO/CIT(A) HE NCE DISALLOWANCE OF RS.1 31 668/- ON ACCOUNT OF VEHICLE REPAIR AND MAINTENANCE EXPENSES IS HEREBY DELETED AND GROUND N O.3(II) IS DETERMINED IN FAVOUR OF THE ASSESSEE. GROUND NO.4 14. ASSESSEE CLAIMED TELEPHONE EXPENSES TO THE TUNE OF RS.9.87 LAKHS OUT OF WHICH THE AO DISALLOWED RS.98 679/- ON ACCOUNT OF PERSONAL USE. HOWEVER COORDINATE MUMBAI BENCH H OF THE TRIBUNAL IN CASE OF HANSRAJ MATHURADAS VS. ITO (ITA NO.2397 OF 2010 DECIDED ON 16.09.2011) BY REFERRING TO THE CIRCULAR OF THE BOARD VIS--VIS PROVISION OF FBT HELD THAT NO FURTHER DISALLOWANCE IS WARRANTED WHERE FBT IS PAID . EVEN OTHERWISE NO SUCH EXPENSES HAVE BEEN DISALLOWED BY THE REVENU E DURING THE PRECEDING YEARS IN WHICH ASSESSMENT HAS BEEN COMPL ETED U/S 143 (3) OF THE ACT. SO WHEN THE FBT ON THESE TELEPHON E EXPENSES IS PAID THEN FURTHER DISALLOWANCE ON ACCOUNT OF PERSON AL USE IS NOT PERMISSIBLE. HENCE GROUND NO.4 IS DETERMINED IN F AVOUR OF THE ASSESSEE. GROUND NO.5 15. ASSESSEE CLAIMED DEDUCTION OF RS.6.45 LAKHS ON ACCOUNT OF BUSINESS PROMOTION EXPENSES OUT OF WHICH AO MADE AN AD HOC DISALLOWANCE OF 1/6 TH BY DISALLOWING A SUM OF RS.1 07 500/- ON ITA NO.6/DEL./2013 8 WHICH THE CIT (A) EXTENDED THE RELIEF OF RS.43 000/ - AND AFFIRMED THE REMAINING DISALLOWANCE OF RS.64 500/- 16. UNDISPUTEDLY BUSINESS PROMOTION EXPENSES TO TH E TUNE OF RS.11.14 LAKHS IN THE PRECEDING ASSESSMENT YEAR 200 6-07 WAS ALLOWED U/S 143(3). WHEN THE EXPENDITURE OF RS.6.4 5 LAKHS ON ACCOUNT OF BUSINESS PROMOTION EXPENSES QUA THE YEAR UNDER ASSESSMENT IS EXAMINED IN THE LIGHT OF PROFIT DECLA RED IN AY 2007- 08 WHICH IS 20.89% AS COMPARED TO 18.10% IN AY 2006 -07 THE DISALLOWANCE IS NOT SUSTAINABLE. MOREOVER ASSESSE E HAS ALSO PAID FBT ON THESE EXPENSES AS PER DETAIL GIVEN IN ANNEXU RE II AVAILABLE AT PAGE 90 & 91 OF THE PAPER BOOK. IN VI EW OF THE JUDGMENT HANSRAJ MATHURADAS (SUPRA) WHEN FBT ON THESE EXPENSES IS PAID NO FURTHER DISALLOWANCE IS PERMIS SIBLE. SO WE HEREBY DELETE THE DISALLOWANCE OF RS.64 500/- OUT O F BUSINESS PROMOTION EXPENSES CLAIMED BY THE ASSESSEE. 17. IN VIEW OF OUR FINDINGS ON THE AFORESAID GROUND S WE HEREBY ALLOW THE APPEAL FILED BY THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY 28 TH OF OCTOBER 2016. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 28 TH DAY OF OCTOBER 2016 TS ITA NO.6/DEL./2013 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-VII NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.