M/S MOUNTAIN STEEL PVT. LTD.,CHANDIGARH vs. ITO, W-1(3), CHANDIARH

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ITA 1714/CHANDI/2017Status: DisposedITAT Chandigarh26 September 2018AY 2012-133 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal deleted the disallowance of EPF/ESI as it was paid before the return filing due date. It also deleted the disallowance of car expenses, finding no evidence of non-business use. The enhancement of income for AY 2014-15 was also held invalid as the transaction was completed in the same year.

What were the facts?

The assessee appealed against the CIT(A)'s order concerning disallowances of club membership, EPF/ESI, and car expenses. The CIT(A) also directed an enhancement of income for a subsequent assessment year based on an advance payment.

What were the issues?

Whether EPF/ESI payments made before the return filing due date are allowable expenses, and whether disallowance of car expenses is justified when used for business. The issue also includes the correct assessment year for an advance payment when goods were supplied in the same year.

Which sections of the Income-tax Act were involved?

Section 43B(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH’B’, CHANDIGARH

Before: SHRI. SANJAY GARG & DR. B.R.R. KUMAR

For Appellant: Shri. T.N. Singla
For Respondent: Smt. Manjeet Singh
Hearing: 21/08/2018Pronounced: 26/09/2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH’B’, CHANDIGARH BEFORE SHRI. SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.1714/Chd/2017 Assessment Year: 2012-13

M/s Mountain Steel Pvt. Ltd. Vs. The ITO # 268, Sector-9C, Ward-1(3) Chandigarh Chandigarh

PAN No. AADCM7597A

(Appellant) (Respondent)

Assessee By : Shri. T.N. Singla Revenue By : Smt. Manjeet Singh

Date of hearing : 21/08/2018 Date of Pronouncement : 26/09/2018

ORDER PER DR. B.R.R. KUMAR, A.M:

The present appeal has been filed by the Assessee against the order of the Ld. CIT(A)-1 Chandigarh dt. 29/09/2017.

2.

In the present appeal Assessee has raised following grounds:

1.

That the order of Hon’ble CIT(A) is bad, against the facts & Law.

2.

That the Hon’ble CIT(A) has wrongly upheld the disallowance of expenses of Rs. 20,000/- paid for club membership and subscription.

3.

That the Hon’ble CIT(A) has wrongly upheld disallowance of EPF and ESI expenses of Rs. 32,139/-

4.

That the Hon’ble CIT(A) has wrongly disallowed part of the expenses incurred on running and maintenance of car.

5.

That the Hon’ble CIT(A) has wrongly given direction to enhance the income of A.Y. 2014-15 by Rs. 5,51,000/- without appreciation of facts and without giving any show caused in this regard.

3.

Ground no. 1 is general in nature.

4.

Ground no. 2 not pressed.

5.

Ground no. 3 relates to addition of Rs. 32,139/- on account of non-

payment of EPF and ESI in the respective accounts. The Ld. AR submitted that it

was paid before the due date of filing of the return. Hence as per provision to

the Section 43B(b) this addition made by the Assessing Officer is not warranted

and hence hereby directed to be deleted.

6.

Ground no. 4 pertains to disallowance of expenses of Rs. 1,91,626/- on

account of Car maintenance. The Ld. AR submitted that the payment of the car

was made from the funds of the company and used by the company though

the RC shows the name of the Director. All the running expenses were for the

business of the company and claimed in the books of accounts and so as the

depreciation.

7.

Ld. DR relied on the order of the Ld. CIT(A) who restricted the

disallowance to 1/5th of the total expenses.

8.

Since the Car was purchased and used by the company wholly for the

business purpose and Revenue has not brought anything on record to prove the

non business use of the car, no disallowance is called for.

9.

Ground No. 5 relates to enhancement of income for the A.Y. 2014-15. Brief

facts of the issue are that the assessee has received advance payment from

one entity namely Laxmi Trading Co. of Rs. 5,51,000/- on 01/02/2011 vide

Cheque No. 463496 and the material was dispatched to Laxmi Trading Co. on

03/02/2011 through Shauryaveer Enterprises vide Bill No. 1366 and Vehicle No.

H.P. 12C 2335 weighing 14.10 Tons. The documents pertaining to the transport of

goods were produced and were accepted by the Revenue the fact of which

was accepted by the Ld. CIT(A) also.

10.

However, the Ld. CIT(A) directed that since the amount was squared off

on 31/03/2014 with Shauryaveer Enterprises in 2014 it should be assessed in the

A.Y. 2014-15. It was submitted before us, that the advance has received, and

the material was supplied through the sister concern Shauryaveer Enterprise in

the same year no addition was called for in the subsequent years. The assessee

produced the ledger copies of Shauryaveer Enterprise in the books of account

of the assessee, ledger copy of the assessee and the books of account of

Shauryaveer Enterprise, and also copy of account of Laxmi Trading Co. in the

books of the assessee which proves the completion of the transaction to the hilt.

Hence the directions of the Ld. CIT(A) are found to be invalid.

11.

As a result, the appeal of the Assessee is allowed.

Order pronounced in the open Court.

Sd/- Sd/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated : 26/09/2018 AG Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) The DR 5.

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