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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM
आदेश / ORDER PER S. S. GODARA, JM :
This assessee’s appeal for A.Y. 2013-14 is directed against the CIT(A) - 6, Pune’s order dated 15/05/2017 passed in case No. PN/CIT(A) -6/ITO, Wd. 10(2)/114/2016-17 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 ; in short “the Act”. Heard both the parties. Case file perused.
Sandhu Roadlines Pvt. Ltd 2. The assessee’s first and foremost substantive ground challenges correctness of both the lower authorities action disallowing its lease rent expenses of Rs.38,88,0000/-. The CIT(A)’s detail discussion affirming the Assessing Officer’s action to this effect reads as under.
“5.1 Lease rental expenses: The appellant had debited an amount of Rs.76,74,000/- towards lease rental for the trucks taken on lease from various parties during the year. The AO noticed that the appellant has shown creditors for lease rental to the tune of Rs.3,13,09,051/-. In view of this discrepancy, the AO made further inquiries and found that the expenses claimed of Rs.76,74,000/- during the year pertain to the persons covered u/s 40A(2). Mr. Harpeet Singh, had leased the Scorpio to the company and the lease rents were remained payable over the years. The AO holding that the use of Scorpio for the business purpose of the assessee was not established and therefore disallowed the same even though evidence in the form of income tax returns, showing the lease income was filed before the AO. The AO disallowed the lease expenses claimed in respect of Balwant Singh (Rs.13,44,000/-) and Kashmir Singh (Rs.25,44,000/-) as the parties did not file any returns and the appellant did not produce the RC books of the trucks taken on lease from them. As regards the lease rentals to M/s Patna Roadlines and M/s Sandhu Roadlines, the expenses were allowed as the returns of income filed by them were produced.
5.1.1. The appellant during the course of appeal proceedings produced the Income Tax return filed by Harpeet Sandhu. Though Scorpio may not be involved in the transportation of goods but it would still be needed for general purpose of transportation. Considering these facts, there is no substance or merit in denying the lease rentals. In respect of Mr. Balwant Singh, the appellant had filed a lease agreement for taking four of his vehicles on lease. The appellant also filed the revenue earned and expenses incurred on the vehicles taken on lease. It is a fact that the lease rentals are not being disbursed to the concerned vehicle owner for Sandhu Roadlines Pvt. Ltd years together and no returns are filed by Mr. Balwant Singh and Mr. Kashmir Singh took authenticate the lease rentals. In the absence of the income tax returns and also considering the fact that there is no actual disbursement of the rental amounts, the action of the AO has to be upheld in their cases. As a result, the addition of Rs.38,88,000/- is upheld and an amount of Rs.1,80,000/- is deleted.
The Assessee’s neat substantive grounds seeks to delete trip expenses, repairs/maintenance, tyre/tube, diesel/fuel expenses disallowance of Rs.32,37,945/-, Rs.88,72,680/-, Rs.26,95,515/- and Rs.1,17,69,147/-; respectively.
We have given our thoughtful consideration to the vehement rival pleadings and find from a perusal of the case records that there are recurring issues only. This tribunal’s coordinate bench’s order for A.Y.11-12 passed in asseesse’s appeal No.1153/PN/15 has already settled the issue against the department that it had indeed availed vehicles on lease involving related parties by way of agreement executed much earlier having continues operation all along. Learned co-ordinate bench further disallowed similar nature of expenditure at an estimated rate at 5% only. We conclude in this factual backdrop that the Assessing Officer had indeed found the assessee to have debited lease rentals on provisional basis representing unascertained liability. Case law Chainrup Sampatram v/s CIT (1953) 24 ITR 481 (SC) holds that an expenditure could very well be booked at its first sign based on reasonable certainty. Their lordships further hold in Bharat Earth movers v/s CIT 245 ITR 428 (SC) that such an item in the nature of a provision could very well be claimed as deduction; based on reasonable estimation(s),
Sandhu Roadlines Pvt. Ltd although it is actually paid on a future date. We accordingly delete the assessee’s first disallowance of Rs.38,88,000/-in issue.
The factual position is no different qua the assessee’s trip expenditure repair/maintenance, tyre/tube and fuel claims which are indeed a part of its day today transportation business. We therefore take cue from the learned co-ordinate bench’s very order(s) to estimate the impugned disallowance(s) @ 5% qua all these heads. Necessary computation shall follow as per law. It is further made it clear that wherever the CIT(A) has himself estimated or upheld 5% disallowance regarding these expenditure heads, the same shall stand confirmed with a rider that the impugned estimation shall not be treated as a precedent.
This assessee’s appeal is partly allowed in above terms. Order pronounced in the Open Court on this 12th day of May, 2022.