Income Tax Appellate Tribunal - Indore
Rajendra Prasad Dua, Indore vs Acit 4(1), Indore on 6 January, 2017
Rajendra prasad Dua
ITA No.877/Ind/2016
आयकर अपील
य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
ी डी.ट
.गरा सया, या यक सद य तथा
ी ओ.पी.मीना, लेखा सद य के सम%
BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER
AND SHRI O.P. MEENA, ACCOUNTANT MEMBER
आ.अ.सं./I.T.A. No.877/Ind/2016
नधा रण वष /Assessment Year: 2012-13
Rajendra Prasad Dua
Indore
PAN - ABWPD - 7489B :: अपीलाथ /Appellant
Vs
ACIT 4(1)
Indore :: यथ /Respondent
नधा रती क ओर से/Assessee by Shri Hitesh Chimnani
राज व क ओर से/Revenue by Shri Mohd. Javed
सन
ु वाई क तार#ख 22.12.2016
Date of hearing
उ&घोषणा क तार#ख 6.1.2017
Date of pronouncement
आदे श /O R D E R
PER SHRI D.T. GARASIA, JM
This appeal has been filed by the assessee against the order of the learned CIT(A)-II, Indore, dated 31.5.2016. 1 Rajendra prasad Dua ITA No.877/Ind/2016
2. Ground no.1 of the appeal is that the learned CIT(A) was not justified in maintaining the interest expenses at 15% as against the average rate of 17%.
3. The short facts of the case are that the assessee has taken loan in the firm at the rate ranging between 15% to 18% whereas in personal capacity the loans were taken @ 12% to 13%. The Assessing Officer, therefore, disallowed Rs.4,47,000/- being the deferential interest. On appeal, the learned CIT(A) restricted the interest at 15% as against the average rate of 17% with the direction to the Assessing Officer to delete the resultant addition. Being dissatisfied with this, the assessee is in appeal before the Tribunal.
4. Before us, the learned counsel for the assessee submitted that the funds borrowed for the business purpose were borrowed with the understanding that the same were long term loan and lenders will not pressurise the assessee to repay the loan. The learned counsel for the 2 Rajendra prasad Dua ITA No.877/Ind/2016 assessee also submitted that the same Assessing Officer has restricted the interest to 15% in the assessment of proprietorship concern.
5. On the other hand, the learned DR relied on the order of the learned CIT(A) and submitted that the learned CIT(A) has rightly restricted the rate of interest to 15%.
6. Having heard both the sides, we find that since the Assessing Officer himself has restricted the addition to 15% in the preceding assessment year, as contended by the learned counsel for the assessee himself, in our opinion, the learned CIT(A) has rightly restricted the interest to 15%. In this view of the matter, this ground of appeal of the assessee fails and is dismissed.
7. Ground no. 2 is that the learned CIT(A) was not justified in maintaining partial addition of Rs.2,00,000/- as 3 Rajendra prasad Dua ITA No.877/Ind/2016 made by the Assessing Officer u/s 40A(2)(b) of the Act on account of salary paid to related parties.
8. The short facts of the case are that the assessee paid huge salary amounting to Rs.8,16,000/- to three relatives, viz. Kiran Kumar Dua, Rajesh Dua and Rakesh Dua. The total payment made on account of salary was Rs.28.98 lacs. The Assessing Officer observed that the highest and lowest salary paid to non-relative employees were Rs. 1.32 lacs and Rs. 48,000/- respectively. The Assessing Officer, therefore, restricted the salary of the above three persons at Rs. 1.32 lacs each and the balance amount of Rs. 4.20 lacs was added u/s 40A(2)(b) of the Act. On appeal, the learned CIT(A) restricted the addition to Rs. 2 lacs as against Rs. 4.20 lacs as made by the Assessing Officer. Still being dis-satisfied, the assessee is in appeal before the Tribunal.
4 Rajendra prasad Dua ITA No.877/Ind/2016
9. Before us, the learned counsel for the assessee submitted that the relatives of the assessee were actively involved in the business of the assessee and they were looking after day to day activities of the business. The learned counsel for the assessee also submitted that they are also assessed to income tax. The learned counsel for the assessee, therefore, prayed that the salary paid to relatives may kindly be accepted.
10. On the other hand, the learned DR relied upon the order of the learned CIT(A) with the submission that the learned CIT(A) has rightly restricted the addition to Rs.2 lacs which finding of the may kindly be sustained.
11. We have considered the submissions of both the sides. We find that the learned CIT(A) has rightly pointed out that the salary paid to the relatives was on higher side. However, taking into consideration the involvement of relatives in day to day activities in the business of the 5 Rajendra prasad Dua ITA No.877/Ind/2016 assessee, the learned CIT(A) has restricted the addition to Rs. 2 lacs by granting relief of Rs.2.20 lacs to the assessee. In our opinion, since the learned CIT(A) has decided the issue only after considering all the aspects of the matter, we sustain the order of the learned CIT(A) and dismiss this ground of appeal of the assessee.
12. Ground no. 3 is that the learned CIT(A) has erred in maintaining ad hoc disallowance to the extent of Rs.41,306/- out of various expenses on account of shop rent, conveyance expenses, telephone expenses and travelling expenses.
13. The short facts of the case are that on perusal of the P&L account it was seen by the Assessing Officer that the following expenses were not properly vouched :-
S.No. Head Amount (Rs.)
1. Shop expenses 2,38,374
2. Conveyance 1,99,756
3. Telephone expenses 1,05,293
6
Rajendra prasad Dua
ITA No.877/Ind/2016
4. Travelling expenses 2,82,763
The Assessing Officer also held that the assessee failed to establish that the above expenditure was incurred exclusively for the purpose of business entity. The Assessing Officer, therefore, disallowed 10% of such expenses. On appeal, the learned CIT(A) reduced the disallowance to 5%. Now the assessee is in appeal before the Tribunal.
14. Having heard both the sides, we find that the learned CIT(A) has rightly restricted the disallowance to 5% of the above expenses claimed by the assessee. We, therefore, find no infirmity in the finding of the learned CIT(A) and accordingly dismiss this ground of appeal.
15. Ground no.4 relates to maintaining the partial disallowance of Rs. 5,78,845/- on account of commission paid.
7 Rajendra prasad Dua ITA No.877/Ind/2016
16. During the course of assessment proceedings the Assessing Officer found that the assessee has claimed commission expenses of Rs. 20,92,154/- as against an amount of Rs. 7,47,571/- for the assessment year 2011-12 which meant increase of 280% whereas the turnover during the relevant assessment year has gone up by only 123%. The Assessing Officer, therefore, restricted the commission expenses to 123% and the balance expenditure of Rs. 11,57,690/- was disallowed. On appeal, the learned CIT(A) restricted the addition to 50%. Still dissatisfied, the assessee is in appeal before the Tribunal.
17. Before us, the learned counsel for the assessee submitted that the assessee maintains day to day financial record/books of accounts which are audited and all the relevant bills/vouchers and details of commission were maintained. The learned counsel for the assessee further submitted that the Assessing Officer did not point out any 8 Rajendra prasad Dua ITA No.877/Ind/2016 specific defect in maintenance of books of accounts nor the same were rejected u/s 145 of the Act and as such without rejecting the books of accounts, no disallowance could be made. The learned counsel for the assessee, therefore, submitted that the commission expenses claimed by the assessee may kindly be allowed.
18. On the other hand, the learned DR supported the order of the learned CIT(A).
19. We have considered the submissions of both the sides. We find that the assessee has neither been able to justify the commission expenses before the authorities below nor the same could be explained before us. The assessee has also not been able to explain steep increase in commission expenditure as compared to increase in the turnover. We, therefore, find no infirmity in the finding of the learned CIT(A) and accordingly uphold the same. This ground is, therefore, dismissed.
9Rajendra prasad Dua ITA No.877/Ind/2016
20. Ground no. 5 relates to maintaining ad hoc disallowance to the extent of Rs.50,000/- out of freight and cartage expenses.
21. The short facts of the case are that during the assessment proceedings the Assessing Officer observed that some of the bills/vouchers were not traceable. He also found that some of the expenses were incurred in cash. He, therefore, disallowed Rs. 50,000/- towards freight and cartage expenses. On appeal, the learned CIT(A) confirmed the action of the Assessing Officer.
22. We have heard both the sides. We find that the Assessing Officer has made the disallowance of Rs.50,000/- towards freight and cartage expenses only after discussion with the learned counsel for the assessee. Since the assessee himself has agreed to the addition, we do not find any flaw in the orders of the authorities below. We, therefore, confirm the same.
10Rajendra prasad Dua ITA No.877/Ind/2016
23. In the result, the appeal of the assessee stands dismissed.
The order has been pronounced in open Court on 6th January, 2017.
Sd/- sd/-
(ओ.पी.मीना) (डी.ट
.गरा सया)
लेखा सद य या यक सद य
(O.P.Meena) (D.T.Garasia)
Accountant Member Judicial Member
(दनांक /Dated : 6th January, 2017
Dn/
11