Hindustan Everest Tools Ltd., New Delhi v. ITO, Ward- 11(3), New Delhi

ITA 7012/DEL/2017 | 2014-2015
Pronouncement Date: 22-03-2021 | Result: Allowed

Appeal Details

RSA Number 701220114 RSA 2017
Assessee PAN AAACH2937C
Bench Delhi
Appeal Number ITA 7012/DEL/2017
Duration Of Justice 3 year(s) 3 month(s) 29 day(s)
Appellant Hindustan Everest Tools Ltd., New Delhi
Respondent ITO, Ward- 11(3), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-03-2021
Assessment Year 2014-2015
Appeal Filed On 23-11-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SH. KUL BHARAT JUDICIAL MEMBER DR. B. R. R. KUMAR ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 7012/DEL/2017 : ASSTT. YEAR : 2014-15 HINDUSTAN EVEREST TOOLS LTD. 403 DOHIL CHAMBERS 46 NEHRU PLACE NEW DELHI-110019 VS INCOME TAX OFFICER WARD-11(3) NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. A A ACH2937C ASSESSEE BY : SH. S. KRISHNAN CA REVENUE BY : SH. BHOPAL SINGH CIT DR DATE OF HEAR ING: 17 . 0 3 .20 2 1 DATE OF PRONOUNCEMENT: 22 .03 .20 2 1 ORDER PER DR. B. R. R. KUMAR ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-4 NEW DELHI DATED 22.0 9.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: IT IS HUMBLY SUBMITTED THAT ASSESSMENT ORDER DATED NOVEMBER 29 2016 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (THE ACT) BY THE LEARNED INCOME-TAX OFFICER WARD 11(3) AND AS UPHELD BY COMMISSIONER OF INCOME-TAX (APPEALS)- IV DELHI UNDER PROVISIONS OF SECTION 250 IS ERRONEOUS AND NOT IN ACCORDANCE WITH PROVISIONS OF LAW INTER- ALIA ON THE FOLLOWING GROUNDS WHICH ARE WITHOUT PREJUDICE TO EACH OTHER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV DELHI (HEREINAFTER REFERRED AS LEARNED CIT-A) HAS GROSSLY ERRED IN FACTS AND ITA NO. 7012/DEL/2017 HINDUSTAN EVEREST TOOLS LTD. 2 CIRCUMSTANCES OF THE CASE TO UPHOLD THE ACTION OF THE INCOME-TAX OFFICER WARD 11(3) [HEREINAFTER REFERRED AS LEARNED AO] TO PARTLY UPHOLD THE ADHO C DISALLOWANCE OF 10% OF THE EXPENDITURE INCURRED UNDER THE HEAD SALES PROMOTION EXPENSES WITHOUT ANY JUSTIFICATION AND CONTRARY TO HIS FINDINGS AS STATED IN PARA 5.2 OF THE APPEAL ORDER. 2. THE LEARNED CIT(A) HAS GROSSLY ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE TO UPHOLD THE ACTION OF THE LEARNED AO OF MAKING A DISALLOWANCE OF 10% UNDER THE HEAD SALES PROMOTION WITHOUT APPRECIATING THE FACT THAT NO SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNTS SO PRODUCED BY THE APPELLANT WERE BROUGHT ON RECORD BY THE LEARNED AO. THE ACTION OF THE LEARNED AO IS ARBITRARY AND BASED ON HIS WHIMS & FANCIES WHICH DESERVE TO BE DELETED. 3. THE LEARNED CIT-A HAS ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE BY NOT APPRECIATING THAT THE PROVISION FOR GRATUITY AMOUNTING TO RS 171 311 AS DEBITED IN THE BOOKS OF THE ACCOUNTS IS AN ASCERTAINED LIABILITY AND THEREFORE IS NOT TO BE ADDED BACK FOR DETERMINATION OF BOOKS PROFITS AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT; RELIANCE IN THIS REGARD IS PLACED ON THE JUDGMENT O F THE HONBLE SUPREME COURT IN THE CASE OF METAL BOX CO. OF INDIA LTD. V. THEIR WORKMEN [1969] 73 ITR 53 (SC) AND BHARAT EARTH MOVERS V. CIT [2000] 245 ITR 428; 4. THE LEARNED CIT-A HAS GROSSLY ERRED IN FACTS AND IN LAW IN RESTRICTING THE DEDUCTION ON ACCOUNT OF BROUGHT FORWARD BOOK LOSS OR DEPRECIATION TO RS 5 30 848 BY CONSIDERING THE BUSINESS LOSS AS PER BOOKS AT RS 5 30 848 AGAINST THE ACCUMULATED BOOK LOSS OF RS. 12 2% 529 AS CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME; 3. GROUND NOS. 1 & 2 DEALS WITH DISALLOWANCE OF 10% UNDER THE HEAD SALES PROMOTION WITHOUT APPRECIATING THE FACT THAT NO SPECIFIC DISCREPANCY IN THE BOOKS OF ACCOUNTS PRODU CED BY THE ASSESSEE WERE BROUGHT ON RECORD BY THE ASSESSING OF FICER. ITA NO. 7012/DEL/2017 HINDUSTAN EVEREST TOOLS LTD. 3 4. WE FIND THAT THE AO DISALLOWED 20% OUT OF THE SA LES PROMOTION EXPENSES AS THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING EVIDENCES WITH REGARD TO THE CLAIM. 5. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER AND ALSO RESTRICTED THE DISALLOWANCE FROM 2 0% TO 10% HOLDING THAT THE ASSESSEE FAILED TO PRODUCE ANY EVI DENCES. 6. THE LD. AR ARGUED THAT NO SPECIFIC INSTANCES FOR MAKING THE ADHOC DISALLOWANCE HAVE BEEN POINTED OUT AND ONLY G ENERAL OBSERVATIONS HAVE BEEN MADE. 7. ON THE OTHER HAND THE LD. DR ARGUED THAT THE DI SALLOWANCE IS MADE OWING TO NOT PRODUCTION OF EVIDENCES AND AN Y EXPENDITURE TO BE ALLOWED BY THE AUTHORITIES. IT IS INCUMBENT UPON THE ASSESSEE TO GIVE SUFFICIENT SUITABLE EVIDE NCES TO CLAIM THE EXPENDITURE. WE FIND THAT THE DISALLOWANCE HAS BEEN MADE OWING TO NON-FURNISHING OF EVIDENCES BEFORE THE REV ENUE AUTHORITIES. THE ASSESSEE IS HEREBY GIVEN ANOTHER O PPORTUNITY TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER TO CL AIM THE BENEFIT OF ALL THE EXPENSES INCURRED. 8. WITH REGARD TO GROUND NO. 3 WHEREIN THE GRATUITY AMOUNT OF RS.1 71 311/- WHICH WAS ADDED BACK FOR DETERMINI NG THE BOOK PROFIT WAS IN FACT AN ASCERTAINED LIABILITY AN D THEREFORE THE SAME MAY NOT BE CONSIDERED FOR DETERMINATION OF PROFITS U/S 115JB OF THE INCOME TAX ACT 1961. THE SUB-CLAUSE ( C) TO EXPLANATION 1 TO SECTION 115JB ENVISAGES THAT NO AS CERTAINED LIABILITIES NEED TO BE ADDED BACK FOR THE PURPOSE O F THAT SECTION. HENCE WE DIRECT THE AUTHORITIES TO GIVE REMISSION TO THE EFFECT ITA NO. 7012/DEL/2017 HINDUSTAN EVEREST TOOLS LTD. 4 OF RS.1 71 311/- BEING AN ASCERTAINED LIABILITY WHI LE COMPUTING THE BOOK PROFITS. 9. WITH REGARD TO GROUND NO. 4 REGARDING RESTRICTIO N OF DEDUCTION ON ACCOUNT OF BROUGHT FORWARD BOOK LOSS O R DEPRECIATION TO RS.5 30 848/- BASED ON THE REQUEST OF THE LD. AR WE DIRECT THE ASSESSING OFFICER TO VERIFY THE Q UANTUM AND COMPUTE THE CORRECT AMOUNT. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/03/2021. SD/- SD/- (KUL BHARAT) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 22/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR