SUNIL HEALTHCARE LTD.,ALWAR vs. ACIT, ALWAR
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the ad-hoc disallowances for legal & professional charges and sales promotion expenses were not sustainable as no specific expenses were found to be unvouched or not for business purposes. The Tribunal also allowed the ground regarding delayed payment of employee's contribution to ESI & PF, relying on Rajasthan High Court decisions.
What were the facts?
The assessee debited expenses under 'Legal and Professional Charges' and 'Sales Promotion Expenses'. The Assessing Officer made ad-hoc disallowances of Rs. 70,000 and Rs. 50,000 respectively, citing self-made vouchers and cash payments without pointing to specific unsupported expenses. The assessee also contested disallowance of employee's contribution to ESI & PF due to delayed payment.
What were the issues?
Whether ad-hoc disallowances of expenses without specific findings are valid, and whether delayed deposit of employee's contribution to ESI & PF before year-end attracts disallowance.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(3)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. State Bank of Bikaner & Jaipur524 citing363 ITR 70 · 2014 · HC · Read judgment
- Commissioner of Income-Tax v. Udaipur DugdhUtpadakSahakari Sangh Ltd.326 citing366 ITR 163 · 2014 · HC
- 411/225 Taxman 6 (Mag.) (Raj.) and CIT v. Jaipur Vidhut Vitaran Nigam Ltd.115 citing363 ITR 307 · 2014 · HC
Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1099/JP/2016
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1099/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke Sunil Health Care Ltd. The A.C.I.T., Vs. 17-18, Old Industrial Area Circle-1, Alwar Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCS9198Q vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal jktLo dh vksj ls@ Revenue by : Shri R.A.Verma lquokbZ dh rkjh[k@ Date of Hearing : 06/04/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/04/2017 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of Ld. CIT(A) Alwar dated 04.11.2016 for A.Y. 2012-13. The grounds of appeal taken by the assessee are as under:- “ 1. The ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the adhoc disallowance out of following expenses:- Legal & Professional Charges Rs. 70,000/-
ITA No.1099/JP/2016 2 Sunil Health Care Ltd. Vs.A.C.I.T.,Circle-1, Alwar Sales Promotion Expenses Rs. 50,000/-
The Ld. AO has erred on facts and in law in confirming
disallowance of Rs. 1,48,476/- (42,731 + 1,05,745) u/s 36(1) (va) r.w.s
2(24)(x) on account of delayed payments of employee’s contribution
towards ESI & PF ignoring that the same is deposited before the end of
the year and the issue is covered by the decision of Rajasthan High
Court in case of CIT vs. State Bank of Bikaner & Jaipur 363 ITR 70,CIT
Vs. Jaipur Vidyut Vitran Nigam Ltd. 363 ITR 307 and CIT Vs. Udaipur
Dugdh Utpadak Sahakari Sangh Ltd. 366 ITR 163.”
Regarding Ground No. 1, the brief facts of the case are that the
assessee has debited a sum of Rs. 23,47,751/- in the year under
consideration under the head ‘Legal and professional charges’ in
comparison to last year’s charges of Rs. 23,54,398/-. The assessee was
asked to furnish details of legal and professional charges along with
vouchers for verification indicating the purpose and the business
exigency. In response, the assessee produced the date-wise details of
Legal & Professional Charges as admitted by the Assessing Officer. At
the same time, Assessing Officer held that there were certain payments
through self-made vouchers and it was fair and just to make a
ITA No.1099/JP/2016 3 Sunil Health Care Ltd. Vs.A.C.I.T.,Circle-1, Alwar disallowance of Rs. 70,000/- in this regard. On similar basis, the AO has
disallowed Rs. 50,000/- out of Rs. 24,15,534/- incurred the assessee
under the head “sale promotion” stating that though the assessee has
produced date-wise details of sales promotion, however, there are
certain payments which were made in cash or through self-made
vouchers and it was fair & just to make a disallowance of Rs. 50,000/-
on this account.
2.1. Being aggrieved, the assessee carried the matter in appeal before
the ld. CIT(A) and submitted that the assessee is maintaining day to day
books of account and the expenses are booked on the basis of
bills/vouchers and other supporting papers which are duly checked and
approved by the competent officers/executives.The expenses under this
head are mainly related to Legal & Professional fees paid to various
professionals, legal experts, Certification fees etc. which are properly
vouched. The complete details of Legal & Professional charges were
submitted to the A.O and all bills/vouchers etc. supporting the expenses
were produced for verification as also stated by the A.O in his
assessment order at page no. 2. The details of the expenses are
enclosed herewith at P.B. 01-15. The expenses in the ledger account
shows the nature of expense and are properly supported. The assessee
ITA No.1099/JP/2016 4 Sunil Health Care Ltd. Vs.A.C.I.T.,Circle-1, Alwar has also deducted TDS wherever applicable. The A.O has not pointed
out any specific expense item which is not supported or in which the
assessee has booked excess expense. The A.O. has made ad-hoc
disallowance without any basis but only on the doubts and surmises. On
similar basis, the assessee has contested the disallowance of sales
promotion expenses before the ld CIT(A).
2.2. The ld. DR. is heard who has relied on the orders of the lower
authorities.
2.3. We have heard the rival contentions and pursued the material
available on record. In the assessment order, the AO has stated that
the assessee has produced data-wise details of Legal & Professional
charges and sales promotion expenses and on perusal of those details
submitted by the assessee, the AO has disallowed Rs. 70,000/- under
the head Legal & professional and Rs. 50,000/- under the head ‘Sales
promotion’ expenses. No specific expenses have been highlighted by
the Assessing Officer which has not been incurred by the assessee for
the purposes of business or which has been wrongly claimed by the
assessee. It is a clear case of an adhoc disallowance which cannot be
sustained in the eyes of law. In the result, ground No. 1 of the assessee
is allowed.
ITA No.1099/JP/2016 5 Sunil Health Care Ltd. Vs.A.C.I.T.,Circle-1, Alwar 3. Regarding ground No. 2, it is admitted position that payment of
employee’s contribution towards ESI and Employees Provident Fund has
been deposited before the end of the financial year. In light the decision
of the Hon’ble Rajasthan High Court in case of CIT vs. State Bank of
Bikaner & Jaipur and others, the ground taken by the assessee is
allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 10/04/2017.
Sd/- Sd/- ¼dqy Hkkjr ½ ¼foØe flag ;kno½ (Kul Bharat) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 10/04/2017. *Ganesh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Sunil Health Care Ltd., Alwar 2. izR;FkhZ@ The Respondent- The A.C.I.T., Circle-1, Alwar 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File {ITA No. 1099/JP/2016}
vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत
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