Income Tax Appellate Tribunal - Ahmedabad
Gujarat Angadia Services,, Surat vs Department Of Income Tax on 20 January, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH " D "
Before Shri BHAVNESH SAINI, JUDICIAL MEMBER and
Shri A.N. PAHUJA, ACCOUNTANT MEMBER
Date of hearing : 20/01/2010 Drafted on: 20/01/2010
ITA No.2918/AHD/2008
Assessment Year : 2005-06
The Income Tax Officer Vs. M/s.Gujarat Angadia
Ward-6(2) Services
Surat Blue Diamond Building
Taratia Hanuman Sheri Naka
Haripura, Surat
PAN/GIR No. : AACFG 3537 A
(APPELLANT) .. (RESPONDENT)
Appellant by : Shri C.K. Mishra, Sr. D.R.
Respondent by: Shri Mitish S.Modi, A.R.
ORDER
PER BHAVNESH SAINI, JUDICIAL MEMBER:
This appeal by the Revenue is directed against the order of the Ld.CIT(Appeals)-IV, Surat dated 10/06/2008 passed for Assessment Year 2005-06 on the following grounds:-
[1] On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in deleting the addition of Rs.60,418/- on account of vakil fees and Rs.1,19,415/- on account of Printing & Stationary u/s 40a(ia).
[2] On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in deleting the addition of Rs.95,355/- made on account of Bonus Expenses.
[3] On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in deleting the addition of Rs.1,31,910/- made on account of employees salary.ITA No.2918/Ahd/2008
ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -2- [4] On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in deleting the addition of Rs.4,20,102/- made on account of Vari Expenses.
[5] On the facts and in the circumstances of the case and in Law, the Ld.CIT(A)-IV, Surat has erred in deleting the addition of Rs.62,990/- made on account of undisclosed income from other sources u/s 68 of the act.
[6] On the facts and in the circumstances of the case and in Law, the Ld. CIT(A)-IV, Surat ought to have upheld the order of the Assessing Officer.
[7] It is, therefore, prayed that the order of the Ld. CIT(A)-IV, Surat may be set-aside and that of the Assessing Officer restored.
2. We have heard Learned Representatives of both the parties, perused the findings of authorities below and considered the material available on record.
4. On ground No.1, Assessing Officer observed that assessee had claimed Advocate Fees amounting to Rs.65,460/- and stationery and printing expenses of Rs.1,19,415/-. He was of the view that the above payments should have been made after TDS and, therefore, non-deduction of the tax would attract the provisions of section 40a(ia) of the I.T. Act, 1961. The Learned CIT(Appeals) considered the submissions of the assessee in which it was pointed out that provisions of TDS are not applicable because payment was made less than Rs.20,000/- and that they ITA No.2918/Ahd/2008 ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -3- were reimbursement of the expenses also. The Learned CIT(Appeals) considering the details furnished noted that no single bill is raised for amount, therefore, provisions of section 40a(ia) of the I.T. Act, 1961 are not applicable. The Learned CIT(Appeals) also noted that provisions are not applicable in this case and additions were accordingly deleted.
5. After hearing rival submissions and perusal of material available on record, we do not find any justification to interfere with the order of the Learned CIT(Appeals). The Learned Departmental Representative merely relied upon the order of the Assessing Officer but has not rebutted the finding of the Learned CIT(Appeals) through any material on record. Since Learned CIT(Appeals) has given specific finding that amounts were paid less than Rs.20,000/- and no single bill is raised on the gross amount and they were reimbursement of the expenses, therefore, provisions of section 40a(ia) would not apply in this case. In this view of the matter, we do not find any merit in ground No.1 of appeal of the Revenue, the same is accordingly dismissed.
6. On ground Nos.2, 3 & 4, the Assessing Officer observed that excess expenditure compared to last year was incurred on account of bonus payment. Regarding salary payment, it was seen that payment register of ITA No.2918/Ahd/2008 ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -4- March revealed that the signature of the same persons differed in the very next month. The salary payment was also increased as compared to last three months. As regards, Vari expenses, the same are excessive as compared to earlier years. Additions were accordingly made being expenditure excessive and unreasonable. 30% out of the expenditure have been disallowed. It was submitted before the Learned CIT(Appeals) that bonus was paid even to the employees who were employed for less than a year and that complete details were produced before the Assessing Officer and assessee also offered to produce the employees before the Assessing Officer. Affidavits of two of the employees were furnished before the Assessing Officer on a sample basis. It was claimed that all the expenses were supported by vouchers, bills, travelling bills and entire details of the employees were produced. It was also submitted that for Angadia Services, even Sunday and holidays were working days when the employees had to be paid allowances, if they were on tour to a particular station for business purpose. All salary registers alongwith vouchers were produced before the Assessing Officer. The Learned CIT(Appeals) considering the evidences and material on record, specifically noted that all evidences, vouchers and details were produced on record to justify the payments of these expenditure. The Learned CIT(Appeals) also noted ITA No.2918/Ahd/2008 ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -5- that assessee has furnished statement of branch-wise showing Vari expenses. The Learned CIT(Appeals) noted that since all the expenditure are supported by proper vouchers and details, therefore, addition on these Heads are clearly unjustified. The Learned CIT(Appeals) accordingly directed to delete the additions on account of salary, bonus and Vari expenses.
7. The Learned Departmental Representative relied upon the order of the Assessing Officer. However, no material is produced before us to rebut the finding of the Learned CIT(Appeals) through any material. The Learned CIT(Appeals) specifically noted that all the payments and the expenditure are subjected to vouchers and supported by evidences. Therefore, additions have been deleted. Hon'ble Bombay High Court in the case of CIT vs. Sinnar Bidi Udyog Ltd. (2002) 257 ITR 216 (Bom.) held that ex-gratia paid to the employees of other concerns on consideration of business/commercial expediency and legitimate expectation of the employees is a "Revenue Expenditure". Hon'ble Madras High Court in the case of CIT vs. Sivanandha Mills Ltd. (1985)156 ITR 629 (Mad.) held that excessive bonus paid to the employees can be allowed as "Revenue Expenditure". Hon'ble Allahabad High Court in the case of CIT vs. U.P.Sales & Service Ltd. (2006) 281 ITA No.2918/Ahd/2008 ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -6- ITR 203 (All.) held that excess incentives/bonus paid to the employees are also allowable as deduction. In this view of the matter and considering the findings of the CIT(Appeals) that all expenditure are made for business purposes and supported by evidences and vouchers, we do not find any justification to interfere with the order of the Learned CIT(Appeals). We confirm his findings and dismiss these grounds of appeal of the Revenue. As a result, these grounds are dismissed.
8. On ground No.5, the Assessing Officer made addition of Rs.62,990/- u/s.68 of the I.T. Act, 1961. The Assessing Officer observed that the expenditure are unexplained on account of several items, but the assessee explained that the expenditure are made out of bank account for re-payment of car loan and purchase of scooter. The Learned CIT(Appeals) noted in the impugned order that bank statement is filed in which all the payments are duly reflected. Therefore, payments made for meeting out the expenditure would not attract the provisions of section 68 of the I.T. Act, 1961. The addition is accordingly deleted because the expenditure could not be treated as the income of the assessee.
9. After hearing the rival submissions and perusal of the material available on record, we do not find any merit in this ground of appeal of ITA No.2918/Ahd/2008 ITO vs. M/s.Gujarat Angadia Services Asst.Year - 2005-06 -7- the Revenue. The Learned CIT(Appeals) specifically dealt with the issue and noted that the expenditure are made out of the bank account, therefore, he was justified in holding that expenditure was duly reflected in the bank account would not the income of the assessee and would not attract the provisions of section 68 of the I.T. Act, 1961. We confirm the order of the Learned CIT(Appeals) and appeal of the Revenue is, accordingly, dismissed.
10. In the result, the appeal of the Revenue is dismissed.
Order signed, dated and pronounced in the Court on 22 /01 /2010
Sd/- Sd/-
( A.N. PAHUJA ) ( BHAVNESH SAINI )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 22/ 01 /2010
T.C. NAIR
Copy of the Order forwarded to :
1. The Appellant. 2. The Respondent
3. The CIT Concerned. 4. The ld. CIT(Appeals)-IV, Surat
5. The DR, Ahmedabad Bench. 6. The Guard File.
BY ORDER,
स×याǒपत ूित //True Copy//
(Dy./Asstt.Registrar), ITAT, Ahmedabad