Income Tax Appellate Tribunal - Indore
Manish Kumar Lath Prop.Manish Udyog, ... vs Income Tax Officer, Burhanpur on 26 October, 2018
[ITA No.616/Ind/2017]
[Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur]
आयकर अपील
य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.616/Ind/2017
Assessment Year: 2012-13
Manish Kumar Lath CIT(A)-II
Prop. Manish Udyog बनाम/ Indore
New TIT Road, Burhanpur
Vs.
(Appellant) (Revenue )
P.A. No.AAMPL8724A
Appellant by Shri S.K. Deshpande, AR
Respondent by Shri Yogish Mishra, Sr.DR
Date of Hearing: 18.10.2018
Date of Pronouncement: 26.10.2018
आदे श / O R D E R
PER KUL BHARAT, J.M:
Appeal by the assessee is directed against order of the CIT(A)-II, Indore dated 12.7.2017 pertaining to the [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] assessment year 2012-13. The assessee has raised following grounds of appeal:
1. That on the facts and in the circumstances of the case, the learned CIT(A)-
II, Indore has erred in confirming the order pertaining to rejection of claim of Rs.23,79,120/- u/s 54F and also confirming the addition of Rs.23,79,120/- being capital gain arising from sale of plot.
2. That on the facts and in the circumstances of the case and law, the order dated 12.76.2017 as passed by the learned CIT(A)-II, Indore rejecting the claim of Rs.23,79,120/- u/s 54F of the I.T. Act and also confirming the addition of Rs.23,79,120/- is invalid and unlawful because while passing such order, the learned A.O. failed to consider the submission made by the appellant in course of appeal hearing.
3. That on the facts and in the circumstances of the case and law, the finding of the learned CIT(A) in his order are wholly wrong and injudicious and are opposed to the facts, and therefore, there is no justification in sustaining such assessment order.
4. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the action of the assessing officer and not allowing the expenses through credit card of Rs.5,22,614/- and out of which Rs.4,16,039/- has fully proved.
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[ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur]
5. That on the facts and in the circumstances of the case the learned CIT(A) failed to consider that these transactions were pertaining to the company and not to the appellant. Hence, the addition of Rs.5,22,614/- is unwarranted and deserves to be deleted.
6. The appellant craves leave to amend, alter or delete any of the above grounds of appeal.
2. The facts giving rise to the present appeal are that case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') was framed vide order dated 31.3.2015. The A.O. during the course of assessment noticed that assessee had sold two plots on 27.2.2012 for a sale consideration of Rs.30,00,000/-. It was noticed that these plots were purchased on 9.5.1995 for a sale consideration of Rs.2,22,250/-. The A.O. sought explanation of the assessee as to why the capital gain arising from these sale of plots was not offered for tax. The explanation given by the assessee was not acceptable by 3 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] the A.O. Therefore, he made addition of Rs.23,79,120/- on account of long term capital gain not offered for taxation. Before A.O., the explanation of the assessee was that the assessee is entitled for deductions u/s 54F of the Act. Therefore, no long term capital gain tax is payable by the assessee. The A.O. further made addition on account of credit card bills payment amounting to Rs.5,22,614/-. Against these two additions, the assessee preferred an appeal before the Ld. CIT(A), who did not interfere with the finding of the assessing officer and sustained both the additions. Now the assessee is in appeal before this Tribunal.
3. Ground Nos.1 & 2 are against denying the claim of deduction u/s 54F of the Act. Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. For the sake of clarity, the submissions of the assessee are reproduced as under:
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[ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] 5 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] 6 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] 7 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur]
4. In support of the contention that the assessee is entitled for deduction, the assessee has relied upon decision of the coordinate bench in ITA No.2692/Ahd/2014 dated 10.9.2015 in the case of Ashok Kapasiawala Vs. ITO in which one of us was the party. Ld. Counsel has also 8 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] placed reliance on the judgement of Hon'ble Guwahati High Court in the case of CIT Vs. Rajesh Kumar Jalan 286 ITR
274. Ld. Counsel has also placed reliance on the decision of the coordinate bench rendered in the case of ACIT Vs. Smt. Asha Ashok Boob 69 SOT 321. Decision of the coordinate bench in the case of Nipun Mahrotra Vs. ACIT 297 ITR 0110 (Bang. Trib). Ld. Counsel therefore vehemently argued that the assessee is entitled for deduction in the light of the case laws relied by him.
5. Per contra, Ld. D.R. opposed the submissions and submitted that there is no ambiguity under the law. He has taken us through the relevant provisions of law and submitted that where there is no ambiguity under the law, the law is to be applied in the strict sense. He submitted that the case laws as relied by the Ld. Counsel are distinguishable on the facts.
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[ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur]
6. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The claim of deduction was denied by the assessing officer on the basis that the assessee had filed its return of income on 29.9.2012 and plots were sold on 27.3.2012 for Rs.30 lakhs and the assessee had purchased residential flat in Mumbai on 3.12.2012 for a sum of Rs.2.57 crores. As per the provisions of the Act, the assessee was required to deposit the entire sale consideration in the claim of deposit of capital gain accounts on or before due date of filing of his return. This finding of the assessing officer is sustained by the Ld. CIT(A). Now moot question to be decided is whether the assessee would be entitled for benefit of section 54F of the Act even he does not deposit the sale consideration as contemplated u/s 54F(4) of the Act. The coordinate bench in the case of Ashok Kapasiawala Vs. ITO (supra) while 10 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] relying upon the judgement of the Hon'ble Karnataka High Court in the case of CIT Vs. K. Ramachandra Rao (2015) 56 taxamann.com 163 held as under:
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[ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur]
7. In the present case, the plot was sold on 27.2.2012. Due date of filing of return was 29.9.2012.
Payment made to builder of Rs.10 lakhs on 3.10.2012. Further payment made to the builder of Rs.15 lakhs on 2.11.2012 and agreement for purchase was registered on 3.12.2012. It is the case of the assessee that the sale consideration was utilised within one year from the date of sale of the original asset. Under these facts, it is argued 12 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] that in the light of the judgement of the Hon'ble Karnataka High Court and followed by the coordinate bench, the A.O. ought to have given benefit of the deduction u/s 54 of the Act. The revenue has not brought any contrary binding precedent in our notice, therefore, respectfully following the ratio laid down by the Hon'ble Karnataka High Court in the case of CIT Vs. K. Ramachandra Rao (supra), we direct the A.O. to allow deduction u/s 54F of the Act and delete the addition.
8. Ground Nos.3 & 4 are against sustaining the addition of Rs.5,22,614/- in respect of the payments made by cash credit card. Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. It is submitted that the assessing officer made addition of Rs.5,22,614/- being the credit card payments. It was submitted before the A.O. that the assessee is a Director of M/s. Ispat International Private Limited and the credit card 13 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] has been provided to meet the expenses. The A.O. disallowed the expenditure on the ground that the expenses are for the personal use. It is submitted that the credit card was allowed to be utilised by the Director of the company for the expenses to be incurred for and on behalf of the company. The complete details were filed. The expenses were debited in the books of the company. Since the amount has been paid by the company and debited in their books as the business expenditure, no addition can be made in the hands of the assessee. In support of this contention, a certificate from the company is also enclosed.
9. On the contrary, Ld. D.R. opposed the submissions and supported the order of the authorities below. He submitted that pre-condition for allowance of any expenditure is that the assessee is required to demonstrate that so incurred expenditure is related to business of the company. Merely, a statement by the 14 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] company that it has made the payments would not be sufficient. The assessee is required to prove such payments as business expenditure of the company with plausible evidences.
10. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. We find that the A.O. disallowed expenditure on the ground that expenses incurred do not relate to business of company. It may be true that on some occasions, the Director of the company incurs expenditure for and on behalf of the company but for allowance of such expenditure, it is incumbent upon the assessee to prove the nature of expenditure and purpose of the expenditure and correlate with the business of the company. In the present case, the assessee has merely made a bald statement. The ledger account belonging to the company so submitted speaks of cash credit which requires 15 [ITA No.616/Ind/2017] [Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] verification by the assessing officer, whether such expenditure had any link with the business of the company in which the assessee is a Director. We therefore, set aside this issue to the file of the A.O. for a limited purpose to verify the link between the expenses and the business of the company where the assessee is the Director. In the event if the A.O. finds that there is some relation with the business of the company and expenditure incurred by the assessee, he will allow such expenses and delete the addition to that extent. The ground Nos.3 and 4 of assessee's appeal are allowed for statistical purpose.
11. In the result, the appeal of the assessee is partly allowed.
Order was pronounced in the open court on 26 .10.2018.
Sd/- Sd/-
(MANISH BORAD) (KUL BHARAT)
ACCOUNTANT MEMBER JUDICIALMEMBER
Indore; दनांक Dated : 26/10/2018
VG/SPS
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[ITA No.616/Ind/2017]
[Manish Kumar Lath, Proposition,. Manish Udyog, Burhanpur] Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore 17