ITO, Udupi v. M/s Century Comforts (P) Ltd.,, Manipal

ITA 661/BANG/2010 | 2007-2008
Pronouncement Date: 06-01-2011 | Result: Dismissed

Appeal Details

RSA Number 66121114 RSA 2010
Bench Bangalore
Appeal Number ITA 661/BANG/2010
Duration Of Justice 7 month(s) 24 day(s)
Appellant ITO, Udupi
Respondent M/s Century Comforts (P) Ltd.,, Manipal
Appeal Type Income Tax Appeal
Pronouncement Date 06-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 06-01-2011
Date Of Final Hearing 04-01-2011
Next Hearing Date 04-01-2011
Assessment Year 2007-2008
Appeal Filed On 13-05-2010
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE DR. O.K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI JUDICIAL MEMBER ITA NO. 661/BANG/2010 (ASST. YEAR 2007-08) THE INCOME-TAX OFFICER WARD-1 UDUPI. . APPELLANT VS. M/S CENTURY COMFORTS (P) LTD. SHENOY BLDG. ANANTHA NAGAR MANIPAL. . RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI ADDL. COMMISSIONER OF INCOME-TAX RESPONDENT BY : SHRI K SRINIVAS SHENOY CHARTERE D ACCOUNTANT O R D E R PER DR. O.K NARAYANAN VICE PRESIDENT THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVA NT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A) AT MANGALORE DATED 12.03.2010. THE AP PEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOM E-TAX ACT 1961. ITA NO.661/B/10 2 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS EXTRACTED BELOW : THE LEARNED CIT(A) FAILED TO CONSIDER THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAD INCURRED EXPENSES OF RS.10 50 694/- WHOSE PAYMENT WERE PASSED THROUGH THE DAY BOOK OF THE FY 2006-07 AND DEBITED AGAINST THE ACCOUNTS OF SVM CO. LTD. THE FACT THAT SVM CO. HAS NOT CONFIRMED THE PAYMENT COMPOUNDED WITH THE FINDINGS BY THE AO THAT THESE EXPENSES WERE INCURRED BY THE ASSESSEE DURING THE CURRENT FINANCIAL YEAR SQUARELY SUPPORTS THE INFERENCE DRAWN BY THE AO THAT THE EXPENDITURE FALLS WITHIN THE PURVIEW OF SEC. 69C. 3. THE ADDITION OF RS.10 50 694/- HAS BEEN MADE BY THE ASSESSING AUTHORITY ON THE GROUND THAT THE AMOUNT OF BALANCE SHOWN IN THE BOOK OF THE ASSESSEE AND THE CORRESPONDING BALANCE SHOWN IN THE BOOKS OF M/S SHANKAR VITTAL MOTOR COMPANY LTD. (SVMCL) DO NO T TALLY BY THE ABOVE DIFFERENTIAL AMOUNT. THE ASSESSING OFFICER H ELD THAT THIS DIFFERENCE IN THE ACCOUNT BALANCE REPRESENTED UNEXP LAINED EXPENDITURE INCURRED BY THE ASSESSEE. ITA NO.661/B/10 3 4. THE COMMISSIONER OF INCOME-TAX (APPEAL) HELD THA T IT IS NOT A CASE OF EXPLAINING THE SOURCE OF EXPENDITURE BUT ON THE OTHER HAND THE QUESTION IS OF DIFFERENCE IN PERSONAL ACCOUNT. THE COMMISSIONER OF INCOME-TAX (APPEAL) FURTHER HELD THAT ANY OF THE PO RTION OF THE DIFFERENCE AMOUNT HAS NOT BEEN CLAIMED BY THE ASSES SEE AS EXPENDITURE/DEDUCTION. HE FOUND THAT THE ASSESSEE AS WELL M/S S.V.M.C.L DO HAVE RUNNING ACCOUNT ON ACCOUNT OF REGULAR TRANSACTIONS AND THEREFORE NON RECONCILIATION OF PERSONAL ACCOUNTS ON A PARTICULAR DATE DOES NOT MAKE OUT A CASE OF UNEXP LAINED EXPENDITURE. HE ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ACCOUNTS BETWEEN THE ASSESSEE AND OTHER AUTHORITIES HAVE NOT BEEN SE TTLED AS ON DATE OF THE CLOUSURE OF THE PREVIOUS YEAR AND THE EXPENSES INCURRED BY THE ASSESSEE OF RS.10 50 694/- ON BEHALF OF M/S S.V.M.C .L HAS NOT BEEN ACCEPTED BY THAT PARTY AND HENCE THE DIFFERENCE. I N THE LIGHT OF THE ABOVE FINDINGS THE COMMISSIONER OF INCOME-TAX (APP EAL) DELETED THE ADDITION. 5. WE HEARD BOTH SIDES IN DETAIL AND CONSIDERED THE MATTER. THE ASSESSEE HAD ENTERED INTO AN IMMOVABLE PROPERTY TRA NSACTION WITH M/S S.V.M.C.L. THERE WAS ALSO UNDERSTANDING THAT THE A SSESSEE WOULD UNDERTAKE NECESSARY REPAIR AND RENOVATION WORK OF T HE BUILDING ON ITA NO.661/B/10 4 BEHALF OF THE SELLER M/S S.V.M.C.L AND THE EXPENSES INCURRED BY THE ASSESSEE WOULD BE SETTLED WHILE MAKING THE PAYMENT OF CONSIDERATION FOR THE TRANSACTION. ON THE BASIS OF THE ABOVE AGR EEMENT THE ASSESSEE HAD ALREADY INCURRED EXPENDITURE IN ORDER TO EXECUT E THE REPAIR AND RENOVATION WORKS OF THE BUILDING. BUT AS THERE WAS DISPUTE ON RS.10 50 694/- SPENT BY THE ASSESSEE THE AMOUNT RE MAINED FOR RECONCILIATION. 6. WE DO NOT FIND ANY REASON TO DISBELIEVE THE ABOV E PLAUSIBLE EXPLANATION OFFERED BY THE ASSESSEE ON THE BASIS OF ITS BOOKS OF ACCOUNTS. THE AMOUNT HAS BEEN SPENT BY THE ASSESSE E BY AVAILING ITS BANK FACILITIES. THE SOURCE OF THE FUNDS SPENT BY THE ASSESSEE IS NOT DISPUTED. THE WITHDRAWALS HAVE BEEN REFLECTED IN T HE BANK ACCOUNT AS WELL AS IN ASSESSEES LEDGER ACCOUNT. THEREFORE T HERE CANNOT BE ANY ALLEGATION AGAINST THE SOURCE. ONCE THE ASSESSEE H AS EXPLAINED THE SOURCE BY PRODUCING EVIDENCE THE NEXT QUESTION IS HOW IT WAS EXPENDED? THE ASSESSEE HAS NOT CLAIMED ANY PORTION OF THAT AMOUNT BY WAY OF EXPENDITURE. IN SUCH CIRCUMSTANCES IF T HE AMOUNT OF DIFFERENCE IS EXPLAINED OR NOT EXPLAINED DOES NOT I N FACT EFFECT THE COMPUTATION OF TAXABLE INCOME IN THE HANDS OF THE A SSESSEE. AS FAR AS THE ASSESSEE IS CONCERNED IT WAS A CASE OF CAPITAL/ CONTRACTUAL ITA NO.661/B/10 5 EXPENDITURE. IF THE GENUINENESS OF THAT EXPENDITURE IS NOT PROVED THE MAXIMUM DAMAGE THAT COULD BE INFLICTED ON THE ASSES SEE WOULD BE THE FIXATION OF THE COST OF ACQUISITION OF THE ASSET BY ADJUSTING THIS DIFFERENTIAL AMOUNT OF RS.10 50 694/-. ANY HOW THA T IS NOT AN ISSUE RELEVANT FOR COMPUTING INCOME IN THE PRESENT CASE. 7. THEREFORE WE FIND THAT THE ORDER PASSED BY THE CIT(A) ON THIS ISSUE IS JUST PROPER AND LAWFUL. THE APPEAL FIELD THE REVENUE IS WITHOUT MERIT AND LIABLE TO BE DISMISSED. 8. IN RESULT THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON THURSDAY THE 6TH DAY OF JANUARY 2011 AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) (DR. O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR I TAT BANGALORE.