Akash Fashion Prints Pvt. Ltd.,, Ahmedabad v. The ACIT.,Circle-1,, Ahmedabad

ITA 790/AHD/2009 | 2004-2005
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 79020514 RSA 2009
Assessee PAN AABCA8319C
Bench Ahmedabad
Appeal Number ITA 790/AHD/2009
Duration Of Justice 3 year(s) 21 day(s)
Appellant Akash Fashion Prints Pvt. Ltd.,, Ahmedabad
Respondent The ACIT.,Circle-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 05-03-2012
Next Hearing Date 05-03-2012
Assessment Year 2004-2005
Appeal Filed On 09-03-2009
Judgment Text
ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AH MEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI A.M.) I.T.A. NO. 790 /AHD/2009 (ASSESSMENT YEAR: 2004-05 ) AKASH FASHION PRINTS PVT. LTD. 238 SAIJPUR GOPALPUR SHAHWADI OCTROI NAKA NAROL AHMEDABAD. (APPELLANT) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 PRATYAKASH BHAVAN NR.PANJARA POLE AMBAWADI AHMEDABAD. (RESPONDENT) I.T.A. NO. 504 /AHD/2009 (ASSESSMENT YEAR: 2005-06 ) AKASH FASHION PRINTS PVT. LTD. 238 SAIJPUR GOPALPUR SHAHWADI OCTROI NAKA NAROL AHMEDABAD. (APPELLANT) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1 PRATYAKASH BHAVAN NR.PANJARA POLE AMBAWADI AHMEDABAD. (RESPONDENT) PAN: AABCA 8319C APPELLANT BY : SHRI SANJAY R. SHAH. RESPONDENT BY : SHRI RAHUL KUMAR SR. D.R. ( )/ ORDER DATE OF HEARING : 5-3-2012 DATE OF PRONOUNCEMENT :30-3-2012 ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 2 PER: SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-VI AHMEDABAD VIDE ORDER NO. CIT (A)-VI /DCIT CIR.1/68/07- 08 DATED 24-12-2008 & NO. CIT (A)-VI/ADDL.CIT.CIR.1 /181/07-08 DATED 27-11-2008 FOR THE ASSESSMENT YEARS 2004-05 AND 200 5-06 RESPECTIVELY. 2. ITA. NO.790/AHD/2009 A.Y. 2004-05. THE ASSESSEE HAS RAISED EFFECTIVELY FOLLOWING GROUN DS BEFORE US. 1. THE FIRST GROUND OF APPEAL RELATES TO DISALLOWAN CE OF OFFICE EXPENSES TO THE TUNE OF RS. 2 57 312/-. 2. THE SECOND GROUND OF APPEAL RELATES TO DISALLOWA NCE OF DEPRECIATION OF RS.1 24 580/-. 3. THE THIRD GROUND OF APPEAL RELATES TO DISALLOWAN CE OF ELECTRICITY EXPENSES RS. 50 000/-. 4. THE FOURTH GROUND OF APPEAL RELATES TO DISALLOWA NCE OF RS.50 000/- BEING TELEPHONE EXPENSES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY ENGAGED IN THE BUSINESS OF CLOTH DYEING PRINTING AN D PROCESSING. IT OWNS A PROCESS HOUSE LOCATED AT AHMEDABAD. THE ASSE SSEE MAINLY DOES JOB WORK FOR ITS CUSTOMERS. THE ASSESSEE FILE D ITS RETURN OF ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 3 INCOME ON 1-11-2004 DECLARING TOTAL INCOME AT RS.1 25 68 738/- THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY. 4. VIDE ORDER DATED 21-12-2006 THE DY. COMMISSIONE R OF INCOME TAX (A.O) COMPLETED THE ASSESSMENT AND DETERMINED T OTAL INCOME AT RS.1 30 66 944/- BY MAKING THE FOLLOWING ADDITIONS TO THE TOTAL INCOME:- 1. OFFICE EXPENSES. RS. 2 57 312 2. DEPRECIATION ON OFFICE BUILDING RS. 1 24 58 0 3. SALES TAX PENALTY. RS. 830 4. ELECTRICITY EXPENSES. RS. 50 000 5. TELEPHONE EXPENSES RS. 50 000 6. INSURANCE. RS. 15 484 4.1. DURING THE COURSE OF ASSESSMENT THE AO OBSERVE D THAT 2 ENTITIES NAMELY LAXMI TEXTILES AND SARASWATI TEXTILE WERE AL SO OPERATING FROM THE ASSESSEES OFFICE PREMISES AT 93 NEW CLOTH MAR KET AHMEDABAD. ACCORDING TO THE A.O. SINCE THE PREMISES WAS ALSO U SED BY 2 OTHER ENTITIES HE DISALLOWED 1/3 RD PORTION OF OFFICE EXPENSES (RS.2 57 312/-) DEPRECIATION OF OFFICE BUILDING (RS.1 24 580/-). TH E A.O. FURTHER MADE ADHOC DISALLOWANCE OF ELECTRICITY EXPENSES (RS.50 0 00/-) AND OF TELEPHONE EXPENSES (RS.50 000/-) FOR THE REASON THA T THE ELECTRICITY BILLS AND TELEPHONE BILLS WERE NOT IN THE NAME OF T HE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A). CIT (A) GRANTED PARTIAL RELIEF TO THE ASSESSEE AND CONF IRMED THE ACTION OF A.O. OF DISALLOWING OFFICE EXPENSES OF RS.2 57 312/ - ADDITION ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 4 DEPRECIATION ON OFFICE BUILDING OF RS.1 24 580/- FO R THE REASON THAT 2 OTHER ENTITIES NAMELY LAXMI TEXTILE AND SARASWATI T EXTILE WERE OPERATING FROM THE SAME PREMISES AND WHOLE OF THE E XPENSES WERE DEBITED IN THE BOOKS OF ASSESSEE. CIT (A) ALSO CONF IRMED THE ADHOC DISALLOWANCE OF TELEPHONE AND ELECTRICITY EXPENSES OF RS.50 000/- EACH ON THE GROUND THAT THE BILLS FOR RESPECTIVE EX PENSES WERE NOT IN THE NAME OF THE ASSESSEE. 6. AGGRIEVED BY ORDER OF CIT (A) THE ASSES SEE IS IN APPEAL BEFORE US. 7. GROUND NO 1 AND 2 OF THE APPEAL ARE RELA TED AND THEREFORE THE SAME ARE TAKEN TOGETHER: 8. THE LD. A.R. STATED THAT THE ASSESSEE HAS ITS OFFICE AT 93 NEW CLOTH MARKET AHMEDABAD. TWO FIRMS NAMELY LAXMI TE XTILES AND SARASWATI TEXTILES WERE ALSO OPERATING FROM THE SAM E PREMISES. THESE FIRMS ARE MERE AGENTS OF THE COMPANY AND HAS A SITTING AND POSTAL ADDRESS. THESE FIRMS WERE NEITHER KEEPING TH EIR STOCKS AT THE OFFICE NOR WERE THEY OCCUPYING LARGE SPACE IN OFFIC E. THE FACILITIES USED BY THEM WERE ONLY A FRACTION OF THE TOTAL OFFI CE. A.R. FURTHER STATED THAT THE EXPENSES OF RS.3 85 927/- THAT HAS BEEN DEBITED TO OFFICE EXPENSES WAS INCURRED AT THE FACTORY PREMISE S OF THE COMPANY. NO PART OF THE EXPENSES WAS INCURRED FOR OFFICE LOC ATED AT NEW CLOTH MARKET. HE FURTHER STATED THAT THE A.O. HAS WRONGLY ASSUMED THAT THE FIRMS NAMELY LAXMI TEXTILE & SARASWATI TEXTILE WE RE DOING BUSINESS FROM THE OFFICE PREMISES OF THE COMPANY AT NEW CLOT H MARKET AND ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 5 THEREBY DISALLOWED 2/3 RD OF THE OFFICE EXPENSES. FOR THE SAME REASON HE DISALLOWED 2/3 RD OF THE DEPRECIATION ON OFFICE PREMISES. THE LD. A.R. CONTENDED THAT THE PRESUMPTION MADE BY THE A.O . IS WITHOUT ANY BASIS. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY TH E AO SO AS TO JUSTIFY THE DISALLOWANCE. THE A.O. HAS NOT ENQUIRED ABOUT THE ARRANGEMENT OF THE ASSESSEE HAD WITH THE FIRMS THE FACILITIES ENJOYED BY THEM THE SPACE OCCUPIED IN THE OFFICE PREMISES. THERE WAS ABSOLUTELY NO BASIS FOR MAKING THE DISALLOWANCE. LD . CIT (A) HAS ALSO NOT MADE ANY ENQUIRY ABOUT THE FACTUAL POSITION. HE HAS NOT PASSED A SPEAKING ORDER. THE DISALLOWANCE OF OTHER EXPENSES UPHELD BY CIT (A) WAS WITHOUT ANY BASIS. LD. D.R. ON THE OTHER HAND R ELIED ON THE FINDINGS OF THE ASSESSING OFFICER. 9. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT TWO FIRMS NAMELY LAXM I TEXTILES AND SARAWATI TEXTILES ARE USING THE OFFICE PREMISES OF THE ASSESSEE. THE A.O. HAS NOT MADE ANY SPECIFIC INQUIRY WITH REFEREN CE TO SPACE OCCUPIED BY THE ASSESSEE AND ITS SISTER CONCERNS AN D THE EXTENT OF FACILITIES USED BY EACH OF THE ENTITIES. SUCH INQUI RY HAS ALSO NOT BEEN MADE BY LD. CIT (A). AO HAS NOT GIVEN ANY FINDING ON THIS ISSUE. IN THE ABSENCE OF RELEVANT FACTS WE ARE ALSO NOT ABLE TO GIVE ANY FINDING ON THIS ISSUE. WE THEREFORE RESTORE THIS ISSUE TO THE FILE OF A.O. FOR PROPER CONSIDERATION AND VERIFICATION. THE A.O. SHO ULD GIVE PROPER OPPORTUNITY TO THE ASSESSEE BEFORE DECIDING THE ISS UE AND HE MUST BRING ALL RELEVANT FACTS ON RECORD. THEREFORE GROUN D NO 1 & 2 OF APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSE. ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 6 10. THE THIRD AND FORTH GROUND OF APPEAL PERTAIN TO THE DISALLOWANCE OF RS.50 000/- TOWARDS ELECTRICITY EXPENSES AND TEL EPHONE EXPENSES RESPECTIVELY. SINCE GROUND NO 3 AND 4 OF THE APPEAL ARE RELATED T HE SAME ARE TAKEN TOGETHER: 11. THE AO HAS DISALLOWED A SUM OF RS 50 000/- EACH OUT OF ELECTRICITY EXPENSES AND TELEPHONE EXPENSES ON THE GROUND THAT SOME OF THE BILLS WERE IN THE NAME OF ADVANCE SYNTHETICS MILLS. THE ASSESSEE INFORMED THE AO THAT THE ASSESSEE HAD ACQU IRED ITS OFFICE PREMISES AT NEW CLOTH MARKET FROM ADVANCE SYNTHETIC MILL GROUP. THE ASSESSEE DID NOT APPLY FOR CHANGE IN THE NAME WITH THE ELECTRIC SUPPLY COMPANY AND THE TELEPHONE DEPARTMENT AND THE REFORE THE BILLS WERE BEING RECEIVED IN THE NAME OF ADVANCE SY NTHETIC MILLS. THE ASSESSEE FURTHER STATES THAT THE PREMISES WERE EXCL USIVELY USED BY THE ASSESSEE FOR ITS BUSINESS AND THE ELECTRIC AND TELEPHONE WERE FOR THE USE BY THE ASSESSEE ONLY. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE THE A.O DISALLOWED ON ADHOC BASIS RS 50 0 00/- UNDER BOTH THE HEAD OF EXPENSE. 12. THE FACT THAT THE ASSESSEE IS THE OWNER OF THE PREMISES HAS NOT BEEN DISPUTED BY THE REVENUE. THE REVENUE HAS ALSO NOT BROUGHT ON RECORD THAT THE ELECTRICITY AND TELEPHONE EXPENSES HAVE NOT BEEN USED FOR THE BUSINESS OF THE ASSESSEE BUT IS USED F OR THE BUSINESS OF PREVIOUS OWNER. IN THE ABSENCE OF ANY FACTS TO THE CONTRARY WE ARE OF THE VIEW THAT THE A.O. WAS NOT RIGHT IN DELETING TE LEPHONE EXPENSES ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 7 AND ELECTRIC EXPENSES ON ADHOC BASIS. WE ACCORDINGL Y DELETE THE ADDITION MADE BY THE A.O. ON BOTH THESE COUNT. THE ASSESSEES APPEAL ON THESE GROUND IS ALLOWED. 13 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 14 . ITA NO.504/AHD/2009 A.Y. 2005-06. 1. THE FIRST GROUND OF APPEAL RELATES TO DISALLOWA NCE OF OFFICE EXPENSES TO THE TUNE OF RS. 1 69 609/-. 2. THE SECOND GROUND OF APPEAL RELATES TO DISALLOWA NCE OF DEPRECIATION OF RS. 1 12 124/-. 3. THE SECOND GROUND OF APPEAL RELATES TO DISALLOWA NCE OF ELECTRICITY EXPENSES RS. 50 000/-. 4. THE FOURTH GROUND OF APPEAL RELATES TO DISALLOWA NCE OF RS.50 000/- BEING TELEPHONE EXPENSES. 5. THE FIFTH GROUND OF APPEAL RELATES TO DISALLOWAN CE OF RS.2 35 925/- UNDER SECTION 2(24) READ WITH SECTION 36(I) (VA) OF THE ACT. 15. SINCE THE FACTS IN THE PRESENT APPEAL ARE IDENT ICAL TO THAT OF ITA NO.790/AHD/2009 FOR A.Y. 2004-05 DECIDED HEREINABOV E WE RESTORE GROUND NO 1 AND 2 OF THE APPEAL TO THE FILE OF A.O. FOR PROPER CONSIDERATION AND VERIFICATION. THE A.O. SHOULD GIV E PROPER OPPORTUNITY TO THE ASSESSEE BEFORE DECIDING THE ISS UE AND HE MUST BRING ALL RELEVANT FACTS ON RECORD. THEREFORE GROUN D NO 1 & 2 OF APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSE. ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 8 16. AS THE FACTS OF GROUND NO 3 & 4 ARE IDENTICAL T O THAT OF GROUND NO 3 & 4 DECIDED IN ITA NO 790/AHD/2009 HEREINABOVE WE DELETE THE ADDITION MADE BY THE A.O. ON BOTH THESE COUNT. THE ASSESSEES APPEAL ON THIS GROUND IS ALLOWED. 17. GROUND NO 5 OF THE APPEAL IS AGAINST THE ADDIT ION OF RS 2 35 925. TO THE INCOME OF AS THE ASSESSEE HAS FAILED TO PAY EMPLOYEES CONTRIBUTION BEFORE THE DUE DATE. 18. THE A.O HAD ADDED RS 2 35 925 TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF DELAY IN PAYMENT OF EMPLOYEES CONTRIBUTI ON BEFORE THE DUE DATE IN ACCORDANCE WITH SECTION 2(24) R.W.S. 36(I)( VA) OF THE ACT. 19. THE LD. AR OF THE ASSESSEE STATES THAT THE PAYM ENT WAS MADE BELATEDLY BUT BEFORE DUE DATE FOR FILING OF THE RET URN AND HENCE THE SAME SHOULD BE ALLOWED. 20. IT IS UNDISPUTED FACT THAT THERE IS DELAY IN MA KING PAYMENT OF EMPLOYEES CONTRIBUTION TO P.F. HOWEVER IT IS ALSO A FACT THAT ALL THE PAYMENTS HAVE BEEN MADE WITHIN THE YEAR END AND BEF ORE FILING OF THE RETURN OF INCOME. 21. IN THE CASE OF CIT VS. AIMIL LTD. & ORS. (2010) 321 ITR 508 (DEL) THE HBLE HIGH COURT HAS HELD AS UNDER AS SOON AS EMPLOYEES CONTRIBUTION TOWARDS PF OR ESI IS RECEIVED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTH ERWISE FROM THE SALARY/WAGES OF THE EMPLOYEES IT WILL BE TREAT ED AS INCOME ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 9 AT THE HANDS OF THE ASSESSEE. IT CLEARLY FOLLOWS TH EREFROM THAT IF THE ASSESSEE DOES NOT DEPOSIT THIS CONTRIBUTION WIT H PF/ESI AUTHORITIES IT WILL BE TAXED AS INCOME AT THE HAND S OF THE ASSESSEE. HOWEVER ON MAKING DEPOSIT WITH THE CONCE RNED AUTHORITIES THE ASSESSEE BECOMES ENTITLED TO DEDUC TION UNDER THE PROVISIONS OF S. 36(1)(VA). SEC. 43B(B) HOWEVE R STIPULATES THAT SUCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON AC TUAL PAYMENT. THIS IS THE SCHEME OF THE ACT FOR MAKING A N ASSESSEE ENTITLED TO GET DEDUCTION FROM INCOME INSOFAR AS EM PLOYEES CONTRIBUTION IS CONCERNED. DELETION OF THE SECOND P ROVISO HAS BEEN TREATED AS RETROSPECTIVE IN NATURE AND WOULD N OT APPLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATIO N OF THE FIRST PROVISO. IF THE EMPLOYEES CONTRIBUTION IS NOT DEPO SITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYE D PAYMENT BUT CAN INCUR PENALTIES ALSO FOR WHICH SPECIFIC PROVIS IONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. T HEREFORE THE ACTS PERMIT THE EMPLOYER TO MAKE THE DEPOSIT WITH S OME DELAYS SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS T HE IT ACT IS CONCERNED THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED. 22. RESPECTFULLY FOLLOWING THE DECISION OF HBLE D ELHI COURT IN THE CASE OF AIMIL (SUPRA) WE DELETE THE ADDITION MADE B Y THE ASSESSING OFFICER. 23. IN THE RESULT BOTH THE APPEALS ARE PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 30 -3 - 2012. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT ME MBER ITA 790 & ITA 504/AHD/09 ASSESSME NT YEAR 2004-05 & 2005-06.. 10 AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-VI AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR. ITAT AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD. 1.DATE OF DICTATION 5 - 3 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 26 / 3 / 2012 MEMBER.OTHER MEMBER . 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - - 2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..