Income Tax Appellate Tribunal - Delhi
Spinks India, Delhi vs Assessee on 21 October, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'G' : NEW DELHI)
BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER
and
SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No.647/Del./2013
(Assessment Year : 2009-10)
Spinks India, vs. JCIT, Range 39,
19, Rani Jhansi, New Delhi.
Motia Khan,
New Delhi - 110 055.
(PAN : AABFS0535R)
(Appellant) (Respondent)
Assessee by : Shri M.K. Bhatt, CA
Revenue by : Shri B.R.R. Kumar, Senior DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
This appeal filed by the assessee emanates from the order of the CIT(Appeals)-XXVIII, New Delhi dated 03.12.2012 for the Assessment Year 2009-10.
2. The assessee is a partnership concern carrying on the business of sale, purchase of inks. Printing machine etc. on wholesale and retail basis and also manufacturing printing pads, plates and other allied activities. The return of income was filed on 27.09.2009 declaring income of Rs.69,76,557/-. The grounds of appeal taken by the assessee read as under :-
2 ITA No.647/Del/2013
"1. The impugned order passed by the learned CIT (Appeals) confirming the order of the Learned Assessing officer is in mechanical manner, without even considering the submission made before her during the course of appeal by the appellant and is totally bad in law and wrong on facts. The CIT (Appeals) has only gone by surmises, conjuncture and guess work in drawing inference and in recording her conclusion. In the absence of any cogent material to support her findings, the same being based on conjuncture and surmises cannot be upheld.
2. The CIT (Appeals) has erred in law and on facts in confirming the disallowing of Rs.100000/- on estimation basis without any adverse findings from the expenses claimed under the head Business Promotion, Telephone, Tour & Travelling Expenses and Running & Maintenance expenses. Despite being paid FBT on such above expenses, the addition so made is against the spirit of the act.
3. The CIT (Appeals) has erred in law and wrong on the circumstances of the case to confirm the disallowance the amount of the commission Rs. 108311/- just because of the non furnishing the PAN particulars, despite submitting the confirmation, Addresses of all persons to whom commission was paid along with the other particulars. In all such cases the payment was made through the Banking Channel and tax has deducted on source on such amount where ever applicable.
4. The CIT (Appeals) has once again confirmed the disallowance of the 5% of Genset Running expenses which is completely wrong on facts and circumstances of the case and in hypothetical manner and without recording any specific adverse finding.
5. The CIT (Appeals) has erred in confirming the disallowance 5% of Job work and Labour charges ignoring the submission of the appellant that basis of comparison made by the Learned Assessing office was absolutely wrong on the fact.
6. The CIT (Appeals) wrongly confirmed the disallowance amounting to Rs.7,777.00 of Employee Contribution towards EPF just because the assessee had not deposited such an amount on or before the due date as per the 3 ITA No.647/Del/2013 relevant act, ignoring the recently amendment made by the Finance Act 2003 to allow the Employee contribution towards EPF is also allowable if it is deposited on or before the due date of the filling of return of income or date of filling the return of income whichever is earlier.
7. The CIT (Appeals) has erred in adding the difference of the amount of the turnover recorded in financial statement and VAT return amounting to Rs. 3488.00 ignoring the submission of the AR of the assessee being a clerical mistake."
3. Ground No.1 is general in nature and does not require any adjudication.
4. In the Ground No.2, the issue involved is against the confirmation of addition of Rs.1,00,000/-.
5. The assessee has claimed expenses of Rs.15,14,498/- on business promotion, Rs.12,56,207/- on telephone, Rs.14,98,901/- on tours & travelling, Rs.1,95,816/- on running & maintenance. The Assessing Officer held that it is a matter of common knowledge that all these expenses are element of personal nature. Moreover, the auditor in its audit report filed u/s 44AB of the Income-tax Act, 1961 has reported that these expenses may include some unascertainable amount of personal expenses by partners. The ld. AR submitted that the assessee has paid FBT on these expenses. Therefore, this amount should not be added to the income of the assessee. The CIT (A) has confirmed this disallowance considering the aspect of unascertainable personal expenses made by the partners and held that the disallowance is reasonable. 4 ITA No.647/Del/2013
6. We have heard both the sides on the issue. We find that the Assessing Officer has made this addition without pointing out any specific instances. The ground of common knowledge is appeared to be quite vague for making any addition, therefore, in our considered view, without any specific finding for debiting any personal expenses of the partners, no addition can be sustained or confirmed only on the basis of guesswork. Accordingly, the same is deleted.
7. Ground No.3 is against confirming the disallowance of commission expenses of Rs.1,08,311/- for not furnishing PAN numbers to whom the commission was paid. Out of this commission of Rs.1,08,311/-, Rs.18,000/- was disallowance on account of non-deduction of tax at source by invoking the provisions of Section 40(a)(ia) of the Act. After hearing both the sides, we find that deduction for such claim is made on the basis of taxes so deducted and paid in the Assessment Year, therefore, for this amount, we find no merits in the appeal of the assessee. 7.1 For remaining amount, we find that two amounts were less than Rs.5,000/-, therefore, being the petty amount, we find no merits in sustaining the same.
7.2 However, with regard to the other four amounts, i.e. Rs.6,247/- to Mr. Ajay, Rs.24,026 to Mr. J.P. Singh, Rs.4,320/- to Mr. Jagdish, Rs.32,171/- to Mr. J. Singh, Rs.21,240/- to Mr. Suresh Chander, we find it appropriate to remit the issue to the file of the Assessing Officer to be 5 ITA No.647/Del/2013 decided de novo after giving an opportunity of being heard to the assessee. Accordingly, this ground is partly allowed for statistical purposes.
8. In the ground nos.4 & 5, the issue involved is disallowance of 5% of the expenses debited for running genset and jobwork and labour charges. The Assessing Officer found that assessee has incurred expenses of Rs.34,11,532/- on account of jobwork and labour charges. The Assessing Officer also noted that in the preceding year, the debit under this head was only Rs.17,55,523/- and keeping in view the fact that the expenditure has doubled, however, the turnover has decreased, the Assessing Officer made disallowance of 5% on this amount being Rs.1,70,577/-. Similar addition of Rs.35,774/- was made out of total expenditure of Rs.7,15,480/- on account of genset running expenses.
9. We have heard both the sides on this issue. We find that the assessee has submitted the list of job charges and labour charges along with the names and addresses of the persons to whom the job charges and labour charges were made, PAN numbers were also provided to the Assessing Officer and amount of TDS deducted and details of net amount paid were also filed. Ld. AR also draw our attention that only Rs.600/- has been paid in cash otherwise, all the job charges and labour charges were paid through banking channels only. It was also submitted before us that ld. Assessing Officer's comparison that jobwork and labour 6 ITA No.647/Del/2013 charges has doubled and the turnover has decreased, is factually incorrect. In the assessment year 2008-09, these expenses were debited under two heads, i.e jobwork charges Rs.28,63,953/- debited in the trading account and Rs.17,55,523 on account of labour charges debited in the profit & loss account, therefore, the actual expenditure debited under this head for the Assessment Year 2008-09 were of Rs.46,09,475/-. However, in the Assessment Year under consideration, this amount was only Rs.34,11,532/-. On this comparative account also, we find force in the assessee's argument. Considering all these aspects, we delete this addition made by the Assessing Officer and allowed this ground of assessee's appeal.
10. In the ground no.6, the issue involved is sustaining the addition of Rs.7,777/- on account of employees contribution towards EPF as the same were not paid on or before the due date as per the relevant Act. Ld. AR submitted that this addition was sustained even by ignoring the amendment made by the Finance Act, 2003. As per this amendment, the employees contribution towards the EPF is allowable where such contributions towards the EPF are deposited on or before the due date of filing the return or date of filing the return of income, whichever is earlier. After hearing both the sides, we find that assessee's contention has force and in view of various decisions including CIT vs. Vinay Cement Ltd. - 213 CTR (SC) 268, CIT vs. Dharmendra Sharma - 213 7 ITA No.647/Del/2013 CTR (Delhi) 609 and CIT vs. P.M. Electronics Ltd. - 220 CTR (Delhi) 635, we find no merits in the addition and we direct to delete the same.
11. In the ground no.7, the issue involved is sustaining the addition of Rs.3,488/- made on account of the variation in the turnover recorded in the financial statement and VAT return. We have heard both the sides on the issue. After hearing, we find that there was a difference in the sales recorded in the VAT return and sales shown by the assessee and this addition of Rs.3,488/- was made. Ld. AR accepts that the tax effect is very small and he has no submissions on the merits of the addition. Considering these facts, we find no fault in the order of the CIT (A). Therefore, this ground of assessee's appeal is dismissed.
12. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in open court on this 21st day of October, 2014.
Sd/- sd/-
(I.C. SUDHIR) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 21st day of October, 2014
TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-XXVIII, New Delhi.
5.CIT(ITAT), New Delhi. AR/ITAT