Income Tax Appellate Tribunal - Delhi
M/S. Richa Fashion (P) Ltd., New Delhi vs Dcit, New Delhi on 8 November, 2017
1 ITA No. 383/Del/2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'A' NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 383/DEL/2015 ( A.Y 2009-10)
Richa Fashion (P) Ltd. Vs DCIT
C/o. Mayank Jain, Advocate, Cirlce-15(1)
Jain Singh and Company, 2, Central New Delhi
Lane
(Basement), Bengali Market (RESPONDENT)
New Delhi
AAFCR1814B
(APPELLANT)
Appellant by Sh. Aditya Jain, Adv
Respondent by Sh. R. C. Dandey, SR. DR
Date of Hearing 28.09.2017
Date of Pronouncement 08.11.2017
ORDER
PER SUCHITRA KAMBLE This appeal is filed by the assessee against the order dated 10/12/2015 passed by CIT(A)-7, New Delhi.
2. The grounds of appeal are as under:-
"1. That the disallowances confirmed by the Ld. CIT(A) in the impugned order are unsustainable in law and facts and deserve to be deleted.
2. That the Ld.CIT(A) erred on law and facts in confirming the disallowance to the extent of Rs.1,75,000/- on account of 2 ITA No. 383/Del/2016 wages and overtime paid to the employees by the appellant.
3. That the Ld.CIT(A) erred on law and facts in confirming the disallowance of Rs.94,293/- out of foreign travel expenses and holding the same as expenses incurred for non- business purposes.
4. That the findings pertaining to the impugned disallowances are perverse in as much as they are arbitrary and ad hoc.
5. That the charge of interest u/s 234B & Section 234C of the Act is opposed to facts and law and in the alternate is excessive."
3. The assessee is engaged in the business of manufacturing and export of readymade garments. Return declaring taxable income of Rs.9,33,73,720/- was filed on 29/09/2012 . The case was selected for scrutiny. Notice u/s 143(2)/142(1) was issued to the assessee. The Assessing Officer made an addition of Rs.3.5 lakh in respect of employees benefit expenses and also addition of Rs.94,293/- u/s 37(1).
4. Being aggrieved by the same, the assessee filed appeal before the CIT(A). The CIT(A) restricted ad-hoc addition of Rs.3,50,000, to 50% of the disallowed amount and granted relief of Rs.1,75,000/- accordingly. The CIT(A) also confirmed the addition of Rs.94,293/- out of foreign travel expenses.
3 ITA No. 383/Del/20165. The Ld. AR submitted that as relates to ground No. 2, all the expenses were duly entered into books of accounts along with vouchers which were produced from time to time during the course of assessment proceedings and which were duly verified. The Ld. AR further submits that requisite details called for were also produced for examination/verification of the Assessing Officer. The Assessing Officer, however, arbitrarily and without appreciating the peculiar facts processed to make additions/disallowances and completed the assessment at an income of Rs.9,39,72,420/-. The CIT(A) ignored the fact that the vouchers relating to wages and over time paid to its employees were produced before the Assessing Officer. As relates to ground No. 3, the Ld. AR further submits that the foreign travel by the Director was for studying fashion trends and explore markets which is in relation to business of the assessee and for which details has been produced before the Assessing Officer as well as CIT(A).
6. The Ld. DR relied upon the order of the Assessing Officer and the CIT(A).
7. We have heard both the parties and perused the material available on record. Ground No. 1 is general. Hence do not require adjudication. As relates to Ground No. 2, from the records it emerges that over time payment through cash and cheques were duly entered into vouchers as well as in books of account by the assessee. These vouchers or books of accounts were never doubted by the Assessing Officer. Therefore, the addition sustained by the 4 ITA No. 383/Del/2016 CIT(A) on ad-hoc basis will not be permissible under the Act. Thus, Ground No. 2 is allowed.
8. As related to Ground No. 3, the foreign travel expenses were actually incurred for study of business trends in the market. The details were filed before the Assessing Officer as well as the CIT(A). Therefore, the same should have been allowed by the Assessing Officer as well as by the CIT(A). Ground No. 3 is allowed.
9. Ground No. 4 & 5 are consequential. Therefore, the same are also allowed.
10. In result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 08th November, 2017.
Sd/- Sd/-
(R. K. PANDA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 08/11/2017
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
5 ITA No. 383/Del/2016
Date
1. Draft dictated on 11/10/2017 PS
2. Draft placed before author 11/10/2017 PS
3. Draft proposed & placed before .2017 JM/AM
the second member
4. Draft discussed/approved by JM/AM
Second Member.
5. Approved Draft comes to the PS/PS
Sr.PS/PS 08 .10.2017
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk 08.10.2017 PS
8. Date on which file goes to the AR
9. Date on which file goes to the
Head Clerk.
10. Date of dispatch of Order.