M/S SEAWARD EXPORTS P LTD,, Kota v. ASSISTNT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA

ITA 840/JPR/2017 | 2010-2011
Pronouncement Date: 25-11-2019 | Result: Allowed

Appeal Details

RSA Number 84023114 RSA 2017
Assessee PAN AAFCS7423M
Bench Jaipur
Appeal Number ITA 840/JPR/2017
Duration Of Justice 2 year(s) 15 day(s)
Appellant M/S SEAWARD EXPORTS P LTD,, Kota
Respondent ASSISTNT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-11-2019
Last Hearing Date 02-01-2018
First Hearing Date 02-01-2018
Assessment Year 2010-2011
Appeal Filed On 10-11-2017
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S A JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA AM & SHRI VIJAY PAL RAO JM VK;DJ VIHY LA-@ ITA NO. 840/JP/2017 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 M/S SEAWARD EXPORTS PVT. LTD. 5-L-22 MAHAVEER NAGAR-III KOTA. C UKE VS. A.C.I.T. CIRCLE-2 KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAFCS 7423 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 891/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2012-13 M/S SEAWARD EXPORTS PVT. LTD. 5-L-22 MAHAVEER NAGAR-III KOTA. C UKE VS. A.C.I.T. CIRCLE-2 KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAFCS 7423 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SIDDARTH RANKA (ADV) JKTLO DH VKSJ LS@ REVENUE BY: SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/11/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/11/2019 VKNS'K@ ORDER PER: R.C. SHARMA A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE SEPARATE ORDERS OF LD.CIT(A) KOTA DATED 04/08/2017 AND 29/0 3/2018 RESPECTIVELY FOR THE A.Y. 2010-11 AND 2012-13 IN TH E MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT 1961 (IN S HORT THE ACT). ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 2 2. IN BOTH THESE APPEALS THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE LD. CIT(A) FOR UPHOLDING PART OF THE DISALLOWAN CES OF EXPENSES MADE BY THE A.O. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF PROCESSING AND TRADING OF MARBLES. DURING THE COURSE OF SCRUTINY A SSESSMENT THE A.O. MADE VARIOUS DISALLOWANCES I.E. ON ACCOUNT OF CASH SHORTAGE LEGAL AND PROFESSIONAL CHARGES DIWALI EXPENSES LABOUR WELFA RE AND STAFF WELFARE EXPENSES LOSS BY ACCIDENT SALES AND BUSINESS PROM OTION EXPENSES UPLOADING EXPENSES AND CONSUMABLE AND MATERIAL SHIF TING EXPENSES. DISALLOWANCES HAVE BEEN BASICALLY MADE ON THE PLEA THAT THE SUPPORTING EVIDENCES WERE NOT FILED OR PAYMENTS WER E MADE THROUGH SELF MADE VOUCHERS. BY THE IMPUGNED ORDER THE LD. CIT(A) UPHELD PART OF THE DISALLOWANCES AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 4. IN THE A.Y. 2010-11 THE A.O. FOUND THAT THERE WAS SHORTAGE OF CASH OF RS. 2000/- AGAINST WHICH THE A.O. MADE ADDI TION OF RS. 4 000/- WHICH WAS CONFIRMED BY THE LD. CIT(A). FROM THE REC ORD WE FOUND THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 2 000/- ON ACCOUNT OF SHORTAGE OF CASH. SHORTAGE OF CASH WAS CLAIMED BECA USE CASH WAS WITHDRAWN FROM THE BANK AND WERE USED FOR PETTY BUS INESS EXPENSES. THIS FACT WAS DISCLOSED BY THE ASSESSEE BY CLAIMING THE SAME IN THE ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 3 P&L ACCOUNT. HOWEVER THE A.O. ADDED RS. 4 000/- AG AINST THE EXPENDITURE OF RS. 2 000/- CLAIMED WE DO NOT FIND ANY MERIT IN THE ADDITION SO MADE BY THE A.O. IN SO FAR AS THE SHORT AGE OF CASH WAS NOT DISPUTED BY THE A.O. AND THE SAME WAS GENUINELY CLA IMED AS EXPENSES IN THE P&L ACCOUNT. ACCORDINGLY WE DIRECT THE A.O. TO DELETE THE SAME. 5. THE A.O. HAS ALSO DISALLOWED LEGAL AND PROFESSIO NAL EXPENSES TO THE TUNE OF RS. 83 197/- IN THE A.Y. 2010-11. BY TH E IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O GONE THROUGH THE DETAILS OF EXPENDITURE SO INCURRED WHICH PERTAINS T O EXPENSES INCURRED ON REVENUE STAMPS AND CHARGES FOR OBTAINING AND MAI NTAINING THE CASH CREDIT LIMITS FROM THE BANKS AND TO CARRY OUT DOCUM ENTATION WORK. THE PAYMENT SO MADE INCLUDED THE FEES GIVEN FOR PREPAR ING CMA DATA ETC. FROM EXPERTS FOR COMPLIANCE OF SALES TAX AND VAT RE TURN. IT WAS ALSO ARGUED BY THE LD AR THAT THESE EXPENSES WERE NECESS ARY FOR SMOOTH RUNNING OF THE CONCERN AND TIMELY COMPLIANCE OF EVE RY LEGAL OBLIGATION. IT APPEARS THAT BY WRONGLY APPLYING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT THE A.O. HAS DECLINED TH E ASSESSEES CLAIM. IN ALL FAIRNESS WE RESTORE THE ISSUE BACK TO THE FILE OF THE A.O. FOR DECIDING AFRESH BY CONSIDERING THE GENUINENESS OF EXPENSES A ND THE PURPOSE FOR WHICH IT HAS BEEN INCURRED. IF THE A.O. FINDS THAT THE EXPENDITURE IS ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 4 WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES TH EN THE SAME IS LIABLE TO BE ALLOWED. WE DIRECT ACCORDINGLY. 7. IN THE A.Y. 2012-13 THE LD. CIT(A) HAS CONFIRME D THE DISALLOWANCES OF SIMILAR EXPENSES TO THE EXTENT OF 9.29%. CONSIDERING THE REASONING GIVEN BY THE LD. CIT(A) WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 8. THE A.O. HAS ALSO DISALLOWED 25% OF DIWALI EXPEN SES BOTH IN THE A.Y. 2010-11 AND 2012-13. BY THE IMPUGNED ORDER TH E LD. CIT(A) HAS CONFIRMED THE DISALLOWANCES MADE BY THE A.O.. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE EXPENDITURE INCURRED ON DIWALI WERE DULY SUPPORTED BY THE VOUCH ERS AND THESE WERE THE FESTIVAL EXPENSES REQUIRED TO BE INCURRED SO AS TO MOTIVATE THE EMPLOYEES AND HELP IN STRENGTHENING THE BONDING WIT H ASSESSEE. LOOKING TO THE NUMBER OF EMPLOYEES THE EXPENDITURE SO INCURRED APPEARS TO BE VERY REASONABLE ACCORDINGLY WE DO NO T FIND ANY JUSTIFICATION FOR THE DISALLOWANCE OF RS. 4 879/- A ND RS. 5 124/- MADE BY THE A.O. FOR THE A.Y.2010-11 AND 2012-13 RESPECT IVELY. ACCORDINGLY THE A.O. IS DIRECTED TO DELETE THE SAME. 10. THE A.O. HAS ALSO DISALLOWED LABOUR AND STAFF W ELFARE EXPENSES TO THE TUNE OF 24.32% IN THE A.Y. 2010-11 AND 25.00 % IN THE A.Y. ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 5 2012-13. BY THE IMPUGNED ORDER THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE FOR THE A.Y. 2010-11 WHEREAS IN THE A. Y. 2012-13 HE HAS RESTRICTED THE DISALLOWANCE AT 10%. CONSIDERING THE REASONS GIVEN BY THE LD. CIT(A) IN THE A.Y. 2012-13 FOR UPHOLDING TH E ADDITION TO THE EXTENT OF 10% WE DIRECT THE A.O. TO RESTRICT THE D ISALLOWANCE OF SIMILAR EXPENDITURE FOR THE A.Y. 2010-11 TO THE EXTENT OF 1 0%. ACCORDINGLY WE HOLD THAT THE DISALLOWANCE OF 10% IN BOTH THE ASSES SMENT YEARS WILL SERVE THE END OF JUSTICE KEEPING IN VIEW THE OBSERV ATION OF THE LD. CIT(A) 11. IN THE A.Y. 2010-11 THE A.O. HAS MADE DISALLOW ANCE OF EXPENDITURE OF RS. 2 41 212/- CLAIMED UNDER THE HEA D LOSS BY ACCIDENT WHICH WAS CLAIMED BY THE ASSESSEE AT RS. 1 20 606/- IT MEANS THE A.O. HAS MADE 200% OF DISALLOWANCES WHAT HAS BEEN CLAIME D BY THE ASSESSEE IN HIS P&L ACCOUNT. BY THE IMPUGNED ORDER THE LD. CIT(A) UPHELD THE DISALLOWANCE TO THE EXTENT OF RS. 1 20 6 06/- AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE ITAT. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. HAS DISALLOWED LOSS BY ACCIDENT DEBITED IN THE P&L ACCO UNT TO THE TUNE OF RS. 1 20 606/- AND ALSO MADE FURTHER ADDITION OF RS . 1 20 606/- BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT. BY THE IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE DISALLOWANCE ON LY TO THE EXTENT OF ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 6 RS. 1 20 606/- BY OBSERVING THAT THE PROVISIONS OF SECTION 69C OF THE ACT IS NOT APPLICABLE AS THE CLAIM TO THAT EXTENT A LLOWED BY THE INSURANCE COMPANY WAS GENUINE EVEN IF THE ASSESSEE ASKED THE CLAIM AT HIGHER AMOUNT IT COULD BE DISALLOWED AS A BUSINE SS EXPENSES AS SUCH AND NOT COVERED AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. FROM THE RECORD WE ALSO FOUND THAT THERE IS EVIDENCE IN THE FORM OF INSURANCE CLAIM WHICH IS APPROVED TO THE EXTENT OF RS. 1 65 9 00/- ONLY OUT OF THE TOTAL CLAIM OF RS. 2 86 506/-. SINCE THE CLAIM IS O NLY HONOURED TO THAT EXTENT NO FURTHER CLAIM WAS TO BE ALLOWED ACCORDI NGLY WE CONFIRM THE ACTION OF THE LD. CIT(A) FOR RESTRICTING THE DISALL OWANCE AT RS. 1 20 606/- IN SO FAR AS THE ASSESSEE WAS UNABLE TO PRODUCE ANY EVIDENCE REGARDING SUCH LOSS OF GOODS LIKE BILLS I NSURANCE CLAIMS TRANSPORTATION DETAILS DAMAGE CERTIFICATE LEDGER ETC. EITHER BEFORE THE A.O. OR BEFORE THE LD. CIT(A). 13. IN THE A.Y. 2010-11 THE A.O. DISALLOWED SALES AND BUSINESS PROMOTION EXPENSES @ 25% WHICH WAS CONFIRMED BY THE LD. CIT(A). HOWEVER SIMILAR EXPENDITURE IN THE A.Y. 2012-13 WA S ALSO DISALLOWED BY THE A.O. TO THE EXTENT OF 25% WHICH WAS CONFIRME D BY THE LD. CIT(A) TO THE EXTENT OF 10%. CONSIDERING THE REASON ING GIVEN BY THE LD. CIT(A) FOR THE A.Y. 2012-13 FOR UPHOLDING THE DISAL LOWANCE TO THE EXTENT OF 10% WE DIRECT WE DIRECT THE A.O. TO REST RICT THE DISALLOWANCE ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 7 TO THE EXTENT OF 10% IN THE A.Y. 2010-11 ALSO. THUS WE DIRECT THE A.O. TO RESTRICT THE DISALLOWANCE IN BOTH THE YEARS TO T HE EXTENT OF 10%. 14. THE ASSESSEE IS ALSO AGGRIEVED FOR DISALLOWANCE OF CONSUMABLES AND MATERIAL SHIFTING EXPENSES TO THE EXTENT OF 5% FOR THE A.Y. 2012- 13. 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM THE RECORD THAT THE ASSESSEE HAS INCURRED RS.44 23 966/- ON AC COUNT OF CONSUMABLES AND MATERIAL SHIFTING EXPENSES. THE A.O . HAS DISALLOWED 10% OF SUCH EXPENSES ON THE PLEA THAT THE ASSESSEE HAS NOT FURNISHED COMPARABLE RATE OF FORWARDING EXPENSES INCURRED BY THE OTHER MARBLE TRADERS TO JUSTIFY THE EXPENDITURE SO INCURRED. BY THE IMPUGNED ORDER THE LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE TO TH E EXTENT OF 5%. 16. FROM THE RECORD WE FOUND THAT THE DISALLOWANCE OF 10% MADE BY THE A.O. IN THE A.Y. 2010-11 HAS BEEN DELETED BY TH E LD. CIT(A) IN THE ENTIRETY. HOWEVER IN THE A.Y. 2012-13 THE LD. CIT (A) HAS UPHELD THE DISALLOWANCE TO THE EXTENT OF 5% BY OBSERVING THAT SOME OF THE EXPENDITURE WAS FOR NON-BUSINESS AND UNVERIFIED OPE RATION IN THE TOTAL CLAIM. HOWEVER THE LD. CIT(A) HAS NOT POINTED OUT AS TO WHICH ARE THE EXPENSES DO NOT PERTAIN TO THE BUSINESS. LOOKING TO THE NATURE OF EXPENDITURE AND THE DETAILS SO FILED WE DO NOT FIN D ANY REASON FOR THE ITA NO. 840/JP/2017 (1) M/S SEAWARD EXPORTS PVT. LTD. VS ACIT 8 DISALLOWANCE SO MADE. SIMILAR DISALLOWANCE MADE IN THE A.Y. 2010-11 HAVE ALREADY BEEN DELETED BY THE LD. CIT(A). FOLLOW ING THE REASONING GIVEN BY THE LD. CIT(A) IN THE A.Y. 2010-11 WE DO NOT FIND ANY JUSTIFICATION FOR THE DISALLOWANCE UPHELD BY THE LD . CIT(A) TO THE EXTENT OF 5% FOR THE A.Y. 2012-13. ACCORDINGLY WE DIRECT THE A.O. TO DELETE THE ENTIRE ADDITION SO MADE. WE DIRECT ACCORDINGLY. 17. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH NOVEMBER 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH NOVEMBER 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S SEAWARD EXPORTS PVT. LTD. KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T. CIRCLE-2 KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR ITAT JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 840/JP/2017 AND 891/JP/2018) VKNS'KKUQLKJ @ BY ORDER LGK;D IATHDKJ @ ASST. REGISTRAR