Income Tax Appellate Tribunal - Mumbai
Ito 1(1)(1), Mumbai vs Asr Logistics (I) P.Ltd, Mumbai on 22 February, 2017
आयकर अपीलीय अिधकरण "ए" यायपीठ मुब ं ई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI सव ी राजे , लेखा सद य एवं संजय गग , याियक सद य Before S/Shri Rajendra, A.M. and Sanjay Garg,J.M. आयकर अपील सं./ITA ./ ./ No. 1197/Mum/2013, िनधा रण वष /Assessment Year: 2009-10 ITO-1 (1)(1) M/s. ASR Logistics (India) Pvt.Ltd.
Room No.534/579, Room No.26, Khandke Building,
Aayakar Bhavan, M.K. Road, Mumbai- Vs. Shahid Bhagat Singh Marg, Fort
400 020. Mumbai-400 001.
PAN: AAECA 9987 B
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: Shri S.K. Mishra
Assessee by: Shri Vipul Joshi
सुनवाई क तारीख / Date of Hearing: 07.02.2017
घोषणा क तारीख / Date of Pronouncement: 22.02.2017
आयकर अिधिनयम,
अिधिनयम , 1961 क धारा 254(1)के के अ तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
लेखा सद य,
सद य,राजे के अनुसार -Per Rajendra,AM:
Challenging the order,dated 19/11/2012,of the CIT(A)-1,Mumbai,the Assessing Officer(AO) has filed the present appeal.Assessee-company,engaged in the business of custom house agent, freight forwarders and clearing and forwarding agents,filed its return of income on 29/ 09/2009,declaring loss of Rs.44.50 lakhs. The AO completed the assessment,u/s.143 (3) r.w.s.147 of the Act,on 26/12/2011, determining its income at Rs. 87.10 lakhs.
2.Effective ground of appeal is about deleting the addition in respect of custom formality and custom expenses.During the assessment proceedings, the AO found that an action under section 133A was conducted at the office premises of the assessee on 07/03/2011, that it had debited a sum of Rs.10.14 lakhs under the head custom formality of,that as custom expenses it had claimed expenditure of Rs. 32.45 lakhs,that the expenses were not supported by documentary evidences, that the director of the company,in his statement, had admitted that there were no supporting bills and vouchers except the self made voucher of his employees to support the expenses,that all the expenses were incurred in cash and were not supported by third-party bills and vouchers. He held that assessee had not substantiated the expensive the supporting evidences is required under the Act, that the disputed expenses were not eligible for deduction and were to be disallowed in computing business income for the year under appeal. But,in a subsequent affidavit, dated 31/03/200,the director stated that only 25% of the expenses were offered for taxation and the balance was claimed a genuine business expenses. As the director had agreed to offer the whole expenses for taxation and his statement dated 1197/M/13-ASR Logistics (I)PL.(09-10) 07/03/2011,so,the AO disallowed the entire expenditure i.e. Rs. 46.59 lakhs (Rs. 10.14 lakhs+ Rs. 32.45 lakhs).
3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).Before him,it made elaborate submissions and relied upon the decision of Tribunal in the case of A.P.L.(India) Private Ltd. (97 TTJ187). After considering the available material,he held that the assessee was carrying on the business of clearing and forwarding agents,that cash payments were incurred at the port to expedite the process of cargo clearance, that the contention raised by the AO that the assessee had changed the statement recorded during the survey proceedings did not hold significant relevance, that in the statement recorded during survey operations the assessee had not accepted that these payments were not incurred for business purposes or that same were bogus or non-genuine transactions, that the director had confirmed that the payments were required to be incurred as business expediency for which no bills could be obtained,that the issue was to be decided not merely on the strength of the statement recorded during the course of survey only, that considering the nature of business of the assessee the necessity for such expenses could not be denied, that it had submitted documents that prove that to some extent those expenses were also recovered from the customers,that the recoveries were duly reflected in the income is offered for taxation, that when the income returns by the assessee form the business of clearing and forwarding had been accepted then the expenses incurred as per prevailing business practice had to be accepted, that the assessee had affirmed that expenses were required to be made in order to carry on its normal business of loading and unloading, that disallowance of entire expenditure was not justified, that the expenses were without any third-party affirmations, that entire expenses could not be accepted a genuine.Referring to the order of the A.P.L. India Private Ltd.(supra),he held that payments made to dockworkers expedite the loading and unloading was allowable as deduction u/s.37 of the Act, that the deduction was allowable because the payments were not illegal or proposed to public policy, that the Tribunal has restricted the disallowance, on estimate basis, 25% of the expenditure incurred. Finally, he held that disallowance of 25% offered by the assessee in the affidavit of the director, dated 31/03/2011 was reasonable.
4.During the course of hearing before us,the Departmental Representative(DR) stated that the director of the company in his statement recorded during the survey proceedings had retraction admitted to offer entire expenses for taxation, that filed by him was an afterthought, 2 1197/M/13-ASR Logistics (I)PL.(09-10) that the AO had rightly disallowed the entire expenditure.The Authorised Representative (AR) supported the order of the FAA.
5.We have heard the rival submissions and perused the material before us.We find that during the survey proceedings,the director of the company had admitted that company would surrender the entire expenditure claimed under the head custom expenses and custom formalities, that on 31/03/2007 he filed an affidavit and partially retracted his statement, that the FAA restricted the disallowance at the rate of 25% of the expenditure as against the 100% disallowance made by the AO. We find that the FAA had given a categorical finding of fact that in some cases the assessee had raised the bills against such expenditure in the names of the customers and had offered such receipts in its return of income. If any income has been offered for taxation corresponding expenditure has to be allowed, is the cardinal principle of tax-jurisprudence. The FAA has restricted the disallowance to 25% as against the 100% disallowance made by the AO. We find that similar issue was decided by the Tribunal in the case of APL India Private Ltd.(supra)and held that in the case of clearing and forwarding agents the disallowance should not exceed 25%.
Respectfully following the above judgment of the Tribunal,we hold that there is no need to interfere with the order of the FAA. Confirming the same, we decide the effective ground of appeal against the AO.
As a result, appeal filed by the AO stands dismissed.
फलतः िनधा रती अिधकारी ारा दािखल क गई अपील नामंजूर क जाती है.
Order pronounced in the open court on 22nd February, 2017. आदेश क घोषणा खुले यायालय म दनांक 22 फरवरी, 2017 को क गई ।
Sd/- Sd/-
(संजय गग /Sanjay Garg) (राजे / RAJENDRA)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; %दनांक/Dated : 22.02.2017.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent / यथ
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR " E " Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अ. याया.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
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