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Income Tax Appellate Tribunal, DELHI BENCHES “A”: DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-27, New Delhi, Dated 21.12.2016 for the A.Y. 2012-2013, challenging the Order of the Ld. CIT(A) in allowing loss of Rs.2,93,40,625/-.
2 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi.
In this case, assessee filed e-return of income declaring loss of Rs.2,93,40,625/-. The A.O. noted that assessee attended the proceedings before him and filed reply and details. However, no books of account have been produced. The A.O. in the absence of books of account and bills/vouchers held that the results declared by assessee cannot be relied upon, therefore, loss claimed was disallowed. The A.O. further disallowed advertisement and sale promotion expenses in a sum of Rs.17,47,000/-, disallowed Rs.35,11,000/- being cost of chocolates purchased and also disallowed Rs.31,05,000/- on account of gratuity expenses etc.,
The assessee challenged these additions before the Ld. CIT(A). The Ld. CIT(A) deleted all the additions. The Revenue is in appeal only challenging the deletion of addition of business loss and other three additions on account of disallowance of expenses deleted by Ld. CIT(A) have not been challenged before the Tribunal.
3 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi.
The assessee submitted before the Ld. CIT(A) that A.R. of the Assessee attended the proceedings before A.O. from time to time and submitted details of sales/purchases GP/turnover ratio etc., The assessee also produced books of account along with bills and vouchers which have been examined by the A.O. The assessee appeared before A.O. on 19.01.2015 but A.O. was busy that day, therefore, assessee was asked to appear on 20.01.2015 along with books of account. On that date, for the reasons best known to the A.O. though the submission letter was taken and books of account were checked on test check, but, A.O. did not think it proper to discuss the facts with Assessee’s A.R. and write in the order sheet on 20.01.2015 which is against the norms and practice followed by the Department. Assessee has not been given fair opportunity. The Ld. CIT(A) called for the remand report from the A.O. part of which is reproduced in the appellate order in which the A.O. reported that his predecessor has sent an interim report dated 19.05.2016 in which it has been stated that assessee through his A.R. submitted its books of account and other records for 4 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi. perusal of the A.O. However, at that time, the then A.O. issued notice under section 133(6) of the I.T. Act to verify books of account, purchases and the examination/ verification of the books of account was remained pending which were required to be examined in relation to reply to the notice under section 133(6) of the I.T. Act. It was also explained that assessee did not produce the books of account at assessment proceedings. The Ld. CIT(A) considering the remand report and material on record, deleted the addition. His findings in para 5.6 of the Order is reproduced as under :
“5.6. I have considered the submissions of the appellant, observations of the ACIT in the remand report and the material produced during the remand proceedings and the appellate proceedings by the appellant. After the production of the books of account and bills and vouchers by the appellant and verification thereof by the ACIT in the remand proceedings and confirmations obtained from the suppliers under section 133(6) of the Act, there is no justification for the 5 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi. disallowance of the loss of Rs.2,93,40,625 made by the ACIT in the assessment order. Further, it is suggested by the ACIT in the remand report that the expenses on advertisement, publicity and brand promotion are of capital in nature more so when the appellant has opted to write them off in 10 years and hence the same should not be allowed as revenue expenditure as claimed by the appellant in the computation of income. In my considered view, the matter is covered by the judgment of Hon’ble Supreme Court in Taparia Tools Ltd. v. Joint Commissioner of Income Tax, Special Range I, Nasik in Civil Appeal Nos. 6366-6368 of 2003 and Civil Appeal Nos. 6946-6948 of 2004 decided on 23 March 2015 and other judgments of the jurisdictional High Court. Following the same, I have no hesitation in upholding the contention of the appellant.”
The Ld. D.R. relied upon the Order of the A.O.
On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the 6 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi. authorities below and submitted that assessee produced books of account at assessment stage but the order sheet is not allowed to be signed by the A.R. of the assessee. Copy of the order sheet is produced on record to show that on each day A.R. of the assessee signed the order sheet but only on 20.01.2015 A.R. of the assessee was not required to sign the order sheet. He has submitted that all the bills/vouchers and books of account were also produced before A.O. in the remand proceedings and confirmation from the parties were also obtained under section 133(6) of the I.T. Act, therefore, addition has been correctly deleted.
After considering the rival submissions, we do not find any merit in the departmental appeal. the Ld. CIT(A) called for the remand report from the A.O. The Ld. CIT(A) noted that assessee produced the material during the appellate proceedings and remand proceedings. The assessee produced books of account and other documents before A.O. in remand proceedings and confirmation from the parties have been obtained, therefore, there was no justification to disallow the losses. Further, the Ld. CIT(A) in 7 ITA.No.1403/Del./2017 M/s. Brentwoods International Ltd., New Delhi. the same reasoning deleted the other additions on which no appeal have been filed by the department. It would, therefore, support the finding of fact recorded by the Ld. CIT(A) that assessee produced books of account and other details before A.O. and as such, no interference is called for in the matter. The departmental appeal has no merit and the same is accordingly dismissed.
In the result, appeal of the Department dismissed.
Order pronounced in the open Court.