Gujarat High Court
Commissioner Of Income Tax I vs Facets Polishing Works Pvt ... on 13 April, 2015
Bench: M.R. Shah, S.H.Vora
O/TAXAP/200/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 200 of 2015
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COMMISSIONER OF INCOME TAX I....Appellant(s)
Versus
FACETS POLISHING WORKS PVT LTD....Opponent(s)
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Appearance:
MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE S.H.VORA
Date : 13/04/2015
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the order dated 26.09.2014 passed by the learned Income Tax Appellate Tribunal, Ahmedabad - D Bench (hereinafter referred to as "ITAT") in ITA No.309/AHD/2009 for the Assessment Year 200506, the Revenue has preferred the present Tax Appeal to consider the following questions of law.
"[A] Whether on the facts and circumstances of the case and law, the ITAT was justified in deleting the disallowance of Rs.2,28,64,310/ made by the A.O. by invoking the provisions of section 40(a)(ia) of the Act holding that the payments made by the Assessee is not of commission but Rent thereby ignoring the facts regarding the commission as mentioned in para 3 of the agreement (JBA)?
[B] Whether on the facts and circumstances of the case and law, the ITAT was justified in deleting the disallowance made by the A.O. out of Travelling, Conveyance & Vehicle Expenses thereby ignoring the failure of the assessee to justify its claim regarding such huge expenses and applicability of the decision of the Hon'ble Apex Court in the case of L.H. Sugar Factory & Oil Mills Pvt. Ltd. vs. CIT (1960) 125 ITR 293 (SC)?"
Page 1 of 3O/TAXAP/200/2015 ORDER [2.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of the Revenue. Present Tax Appeal is ADMITTED to consider the following substantial question of law No.[A] only.
"[A] Whether on the facts and circumstances of the case and law, the ITAT was justified in deleting the disallowance of Rs.2,28,64,310/ made by the A.O. by invoking the provisions of section 40(a)(ia) of the Act holding that the payments made by the Assessee is not of commission but Rent thereby ignoring the facts regarding the commission as mentioned in para 3 of the agreement (JBA)?"
[3.0] Now, so far as the proposed question of law No.[B] reproduced herein above with respect to the traveling, conveyance and vehicle expenses is concerned, it is required to be noted that the assessee claimed the disallowance of Rs.40,83,886/ towards traveling, conveyance and vehicles expenses. The Assessing Officer made an adhoc disallowance of Rs.4,08,388/ being 10% of the expenses for which the claim was made by the assessee. On an appeal, the learned CIT(A) has deleted the said disallowance of Rs.4,08,388/ by observing that the said adhoc disallowance was without any books and there was no material on record to support the disallowance. On an appeal by the Revenue before the learned ITAT, the learned ITAT has confirmed the said deletion by observing that that the learned AO made the disallowance of the expenditure to the extent of Rs.4,08,388/ without pointing out any defect in vouchers or completeness of the vouchers for expenses maintained by the assessee and therefore, the disallowance made was unsustainable. Apart from the fact that the amount involved which was disallowed was of Rs.4,08,388/ only, even on merits also, we concur with the findings recorded by the learned CIT(A) as well as the learned ITAT that there was no basis and/or material before the learned AO on the basis of which such an adhoc disallowance was made by the learned AO. As rightly observed by the learned ITAT, the learned AO did not point out any defect in the accounts/vouchers for the expenses Page 2 of 3 O/TAXAP/200/2015 ORDER maintained by the assessee.
[4.0] Under the circumstances, no substantial question of law arises so far as proposed question No.[B] is concerned. Hence, the present Tax Appeal is dismissed qua proposed question No.[B].
As observed hereinabove, present Tax Appeal is ADMITTED to consider the substantial question of law No.[A], which is reproduced herein above.
(M.R. SHAH, J.) (S.H. VORA, J.) Ajay Page 3 of 3