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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY
आदेश / ORDER
PER R.S.SYAL, VP :
This appeal by the Revenue arises out of the order passed by the CIT(A)-2, Nashik on 17-06-2016 in relation to the assessment year 2011-12.
The first issue raised in this appeal is against the deletion of addition of Rs.75,000/- on account of Professional charges. The Assessing Officer (AO) has recorded in Para No.4.5 of the
2 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
assessment order that the assessee paid a sum of Rs.75,000/- to
two persons viz., Mr. K. R. Ananthanarayan – Rs.65,000/- and
Mr. P. V. Lele – Rs.10,000/- . The AO disallowed the same
by observing that the assessee could not establish any nexus of
payment with the services. The ld. CIT(A) deleted the
addition by observing that all the details were furnished and
similar addition was deleted by him for the A.Y. 2009-10.
We have heard both the sides and gone through the
relevant material on record. It has been aptly recorded that
similar addition was made by the AO in his order for the A.Y.
2009-10, which stood deleted at the hands of the ld. CIT(A). It
is noticed that the Revenue appealed against such order
passed by the ld. CIT(A). Vide order dated 09-02-2018, the
Tribunal in ITA No.177/PUN/2014 etc. has upheld the first
appellate authority’s view in deleting the disallowance of
Professional charges. Since the facts and circumstances of the
instant ground are similar to those of the preceding year,
respectfully following the precedent, we uphold the deletion of
addition.
Next ground is against deletion of addition on account of
Services charges and Commission paid at Rs.27,84,960/-.
3 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
The AO discussed this issue in Para No.4.2 of his order.
He made addition of Rs.27.84 lakhs towards service charges
and commission by observing that, except for invoices, there
was no other evidence to substantiate the involvement of the
persons in fetching the business. The ld. CIT(A) deleted such
addition by relying on his order for A.Y. the 2009-10.
We have gone through the order passed by the Tribunal
in assessee’s own case for the A.Y. 2009-10 (supra) in which
this issue has been discussed at Para No.28 onwards and
eventually the ground of the Revenue was dismissed. Since
facts and circumstances of the ground for the instant year are
similar to those of the assessment year 2009-10, respectfully
following the precedent, we uphold the deletion of addition.
The next ground is against the deletion of addition of
Rs.1,20,93,770/- made by the AO on account of excess
remuneration paid to Directors.
The facts of this ground as recorded in Para No.4.9 of the
assessment order are that the assessee paid remuneration to its
two Directors at Rs.1.56 crore. The AO observed that
although the turnover of the company for the instant year got
4 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
reduced but the Directors’ remuneration was increased by
Rs.30.71 lakh. Allowing deduction for a sum of Rs.36 lakh,
the AO made disallowance of Rs.1,20,93,770/- u/s.40A(2)(a)
of the Act. The ld. CIT(A) deleted the addition.
We have heard the rival submissions and gone through
the relevant material on record. It is seen that the assessee
effected turnover of Rs.14.13 crore for the A.Y. 2009-10 and
remunerated its Directors by Rs.1.36 crore. As against this,
for the year under consideration, the assessee effected sales of
Rs.17.40 crore and remunerated its Directors by Rs.1.56 crore.
The addition made under similar circumstances for the A.Y.
2009-10 has been deleted. As there is an increase in the volume of turnover vis-à-vis the amount of remuneration to the
Directors with reference to the A.Y. 2009-10, we are of the
considered opinion that no disallowance is called for
u/s.40A(2)(a) of the Act. It is further a matter of record that
the amount of remuneration in the hands of the Directors has
also been taxed at the maximum marginal rate. In that view of
the matter also, the disallowance is not sustainable. We,
therefore, uphold the deletion of addition.
5 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
Ground No.4 is against deletion of addition on account
of excess interest payment of Rs.4,26,767/-.
The AO has discussed this issue in Para No.4.10 of his
order. He noticed that the assessee paid interest to its
depositors at Rs.21,33,833/- calculated @15% (sic 18%). All
the persons to whom interest was paid were covered u/s.
40A(2)(b) of the Act. He restricted the interest payment at
12% and made disallowance for the remaining 3%, which
came to Rs.4,26,767/-. The ld. CIT(A) deleted such addition.
After hearing the rival submissions and perusing the
relevant material on record, we find from page 17 of the paper
book, which is a copy of account statement issued by State
Bank of India. Such statement depicts charging of interest
from the assessee at Rs.15.75%. Since the assessee has paid
interest to its depositors at the lower rate of 15%, in our
considered opinion, no fault can be found by the ld. CIT(A) in
deleting this addition.
Last ground of the Revenue’s appeal is against deletion
of addition made on account of Foreign Travel Expenses.
6 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
The assessee incurred Foreign Travel expenses at
Rs.11,93,992/-. The AO disallowed the entire sum by holding
that the assessee did not furnish any evidence to prove that the
expenditure was incurred for the purpose of business. The ld.
CIT(A) examined the details and came to hold that the
assessee had furnished the evidence. He further noticed that
the foreign travel expenses were incurred in respect of
business visits undertaken by the Directors and other
executives of the assessee company and no family member of
such employees accompanied them on foreign visits. He,
ergo, deleted the addition. This is how, the Revenue has come
up in appeal before the Tribunal.
Having heard both the sides and gone through the
material on record, it is observed from the factual position
narrated in the impugned order that the foreign visits were
undertaken only by the Employees/Directors of the assessee
company for business purpose and no family member of such
executives accompanied them. This has not been controverted
on behalf of the Revenue. The Tribunal vide its aforesaid order
for the preceding year has sustained the addition in respect of
family members accompanying the Employees/Directors of
the company. In so far as the other expenses towards foreign
7 ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
visits of the Directors/Employees are concerned, the same
stood allowed. Since no family member of the
Directors/Employees of the assessee company accompanied
such visiting persons, in our considered opinion, no
disallowance is warranted. The same is held to have been
rightly deleted.
In the result, the appeal is dismissed.
Order pronounced in the Open Court on 07th February, 2019.
Sd/- Sd/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 07th February, 2019 सतीश
आदेश क� आदेश आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत
अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / 3. The CIT (Appeals)-2, Nashik 4. The Pr.CIT-2, Nashik िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “ए” / DR 5. ‘A’, ITAT, Pune; गाड� फाईल / Guard file. // True copy // 6.
आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
ITA No. 1914/PUN/2016 M/s. Associated Dairy Fab Pvt. Ltd.,
Date 1. Draft dictated on 06-02-2019 Sr.PS 2. Draft placed before author 06-02-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *