Income Tax Appellate Tribunal - Ahmedabad
The Acit, Circle-1,, Surat vs M/S. Dewshree Network Pvt.Ltd.,, Surat on 17 November, 2017
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*Mh* अहमदाबाद ।
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
" D " BENCH, AHMEDABAD
सव ी izeksn dqekj, लेखा सद
य एवं महावीर साद, या यक सद
य के सम ।
BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER And
SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
आयकर अपील सं./I.T.A.No.635/Ahd/2013
( नधा रण वष / Assessment Year : 2009-10)
The ACIT, बनाम/ M/s. Dewshree
Circle-1, Vs. Network Pvt.Ltd.
Room No.108, 157-158, Ground
Aayakar Bhavan, Floor,
Majura Gate, Patel Park Apartment,
Surat - 395 001 Kuber Nagar Katargam
Darwaja, Surat.
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AABCD 7299 J
(अपीलाथ" /Appellant) .. ( #यथ" / Respondent)
अपीलाथ" ओर से /Appellant by : Shri V. K. Singh, Sr. D.R.
#यथ" क% ओर से/Respondent by : Shri M. J. Shah, A.R.
ु वाई क% तार*ख /
सन Date of Hearing 17/11/2017
घोषणा क% तार*ख /Date of Pronounce ment 17/11/2017
DICTATED ORDER
PER PRAMOD KUMAR, ACCOUNTANT MEMBER :
By way of this appeal, the Assessing Officer has challenged correctness of the order dated 07/12/2012 passed by the ld. CIT(A)-I, Surat in the matter of assessment under section 144 of the Income Tax Act, 1961 for Assessment Year (A.Y.) 2009-10.
ITA No.635/Ahd/2013The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -2-
2. In the first Ground of appeal, the Assessing Officer has raised the following grievance: -
"1. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition made of Rs.49,31,040/- on account of disallowance of placement expenses inspite of the fact that the assessee failed to prove any nexus between them and the parties in whose names expense were claimed."
3. Briefly stated the relevant facts of the case are during the course of assessment proceedings the Assessing Officer noted that the assessee has incurred expenditure of Rs.1,64,36,800/- on account of placement expenses. This expenditure was very high comparable to the similar expenditure incurred in the immediately preceding year at Rs.17,79,992. The Assessing Officer was of the view that as the assessee has not given any justification for the increase in expenditure or any supporting evidences like bills/vouchers in respect of the same, it is a fit case to disallow 30%, on estimate basis, for want of verification. Accordingly, disallowance of Rs.49,31,040/- was made.
4. Aggrieved by the stand so taken by the Assessing Officer, assessee carried the matter in appeal before the ld. CIT(A). During the course of proceedings before the ld. CIT(A), it was pointed out that non compliance before the Assessing Officer was attributable to the authorized representative then handling the case which was negligent in his professional work. The entire relevant details were produced before the ld. CIT(A) who then called for remand report on the same. In the remand report, the Assessing Officer heavily relied on the assessment order u/s.143(3) in the case of M/s. S. D. Enterprises, the organization, which has rendered placement services, ITA No.635/Ahd/2013 The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -3- wherein a finding was given that no work was actually done by M/s. S. D. Enterprises. Ld. CIT(A) then took note of the appellate order passed by the ld. CIT(A) in the case of M/s. S. D. Enterprises, wherein, the disallowance was restricted to 15%. Considering the submissions of the A.O. and the remand report given by the A.O. in the case of M/s. S. D. Enterprises, the CIT(A) was of the opinion that clearly work was done by M/s. S. D. Enterprises and the mere fact that a part of expenditure incurred by M/s. S. D. Enterprises was disallowed. It is not the mere fact that the expenditure was deductable u/s.38(1) of the I.T. Act, ld. CIT(A) also noted that so far as the partial disallowance of expenses incurred by the M/s. S. D. Enterprises is concerned, it will have no impact in the case of the assessee since that is necessary for the purpose of the assessee, whether the work actually done by M/s. S. D. Enterprises. On the basis of this reasoning, the ld. CIT(A) deleted the impugned disallowance of Rs.49,31,040/-. The Assessing Officer is aggrieved and is in appeal before us.
5. We have heard the rival submissions and perused the material on record.
6. When this appeal was called out for hearing, our attention was invited to the decision dated 11/04/2014 of a co-ordinate bench of this Tribunal in the case of M/s. S. D. Enterprises vs. ACIT and vice versa (ITA No.2618/Ahd/2012 & 2794/Ahd/2012), wherein, the stand of the CIT(A) upholding the claim made by the assessee that expenditure was actually incurred was upheld. It was thus contended that once the services were ITA No.635/Ahd/2013 The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -4- provided and the Tribunal has reached a categorical finding that services were rendered, there cannot be any occasion to uphold the disallowance in the case of the organization availing this service i.e. the assessee before us on the services rendered. When the Assessing Officer simply placed his reliance on the stand of the Assessing Officer, we see merits in the plea taken by the ld. Counsel. It is a settled factual finding of the Tribunal that the service was rendered by the Enterprises. We have to essentially hold that the disallowance in the present case, which rests on the contention that no such services rendered, ceases to be sustainable in law. In this view of the matter, we urge to uphold the action of the ld. CIT(A) and decline to interfere in the matter. Ground No.1 is thus dismissed.
7. In the second Ground of appeal, the Assessing Officer has raised the following grievance :
"2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition made of Rs.13,77,755/- on account of disallowance of cable maintenance charges to Rs.1,44,664/- inspite of the fact that the assessee failed to prove any nexus between them and the parties in whose names the expenses were claimed."
8. So far as this grievance of the Assessing Officer is concerned, the relevant material facts are like this. During the course of assessment proceedings, the Assessing Officer noted that there is an unusual increase in the cable maintenance charges in the current year, which is Rs.45,92,515/-, comparing to Rs.4,44,998/- shown in the immediately preceding year. In the absence of details & evidences, the expenses could not be verified fully. The A.O. thus disallowed 30% of the expenditure so claim by the assessee.
ITA No.635/Ahd/2013The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -5- Accordingly Rs.13,77,755/-, being 30% of the expenditure of Rs.45,92,515/-, was disallowed. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A). Upon perusal of the details furnished by the assessee and examining the remand report submitted by the Assessing Officer, ld. CIT(A) noted that out of the entire amount of Rs.45,92,515/-, Rs.41,09,200/- was paid to the M/s. S. D. Enterprises. Ld. CIT(A) was of the view that in the light of the fact, the expenditure is accepted to have been incurred by M/s. S. D. Enterprises, there cannot be any question about deductibility of this amount of Rs.41,09,200/-. As regards the remaining amount which is Rs.4,82,214/-, following the partial disallowance @ 30% adopted by the Assessing Officer, the CIT(A) computed the disallowance of Rs.1,44,664/-. It was on the basis of line of reasoning that the disallowance was made out of Rs.1,44,664/-. The A.O. is aggrieved of the relief given by the ld. CIT(A) and is in appeal before us.
9. We have heard the rival submissions and perused the material on record.
10. So far as the deletion of disallowance, in respect of the expenditure incurred by making payment to M/s. S.D. Enterprises is concerned, there cannot be any dispute. Following the view so taken while dealing in ground no.1 of this appeal, the deletion is to be upheld. As regards the remaining expenditure of Rs.4,82,214/-, ld. Departmental Representative's contention is that this amount has been remained completely verified and thus the amount should be deleted in this case. Ld. Counsel for the assessee contents that the ITA No.635/Ahd/2013 The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -6- A.O. himself has disallowed only 30% of the expenditure, it would not be appropriate for us to increase the proportionate disallowance. In our considered view, the mere fact that Rs.4,82,214/- is paid by the assessee to a concern other than M/s. S. D. Enterprises by itself cannot be reason enough to disallow the entire payment. In view of this discussion, we uphold the findings of the ld. CIT(A) and decline to interfere in the matter. Therefore, ground no.2 is dismissed.
11. In third Ground of appeal, the Assessing Officer has raised the following grievance:-
"3. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in restricting the addition made of Rs.3,66,872/- on account of disallowance of cable maintenance charges claimed under the head 'repairs and maintenance' to Rs.1,82,936/- as the assessee failed to substantiate its claim with bills/vouchers.
12. So far this grievance of the assessee is concerned, it is sufficient to take note of the fact that during the course of assessment proceedings, the Assessing Officer disallowed a sum of Rs.3,65,782/-, being 20% of the expenditure incurred on account of want of verification and in the absence of evidences. When the matter travelled in appeal before the ld. CIT(A), the ld. CIT(A) restricted the disallowance to 10% by observing that the Assessing Officer has not pointed out any specific defects in the books of account and has made disallowance in general manner. The A.O. is aggrieved and is in appeal before us.
ITA No.635/Ahd/2013The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10 -7-
13. We have heard the rival submissions and perused the material on record.
14. We find that ld. CIT(A) has not given any reason for restricting the disallowance and stated that the Assessing Officer has not pointed out any specific defects in the books of account. Ld. CIT(A) has overlooked the fact that no details were ever produced before the Assessing Officer. In these facts, the relief granted by the Assessing Officer is restored i.e. Rs.3,65,782/-. To this extent we uphold the grievance of the Revenue. Ground No.3 is thus allowed.
15. In the result, appeal filed by the Revenue is partly allowed.
This Order dictated and pronounced in Open Court on 17/11/2017
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( MAHAVIR PRASAD ) (PRAMOD KUMAR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 17/11/2017
ITA No.635/Ahd/2013
The ACIT vs. M/s. Dewshree Network Pvt. Ltd.
Asst.Year -2009-10
-8-
आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :
1. अपीलाथ" / The Appellant
2. #यथ" / The Respondent.
3. संबं0धत आयकर आयु2त / Concerned CIT
4. आयकर आय2
ु त(अपील) / The CIT(A)-I, Surat.
5. 5वभागीय त न0ध, आयकर अपील*य अ0धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER, स#या5पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy
1. Date of dictation 17/11/2017 (dictation-pad 7 pages attached at the end of this appeal-file)
2. Date on which the typed draft is placed before the Dictating Member 22/11/2017
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S.......
7. Date on which the file goes to the Bench Clerk.....................
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................