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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Ms. Aarti Vissanji Department by: Shri Vijay Kumar Soni सुनवाई क" तार"ख / Date of Hearing: 07.01.2016 घोषणा क" तार"ख /Date of Pronouncement: 11.05.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 02.09.20 13 passed by the Commissioner of Income Tax (Appeals)-4, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the assessment year 2009-10. ITA 6638/MUM/2013 A.Y.2009-10
2. The assessee filed the return of income on 29.09.2009 declaring total income of Rs.38,18,910/-. The return of income was processed u/s. 143(1) of the Income Tax Act. The case was selected for scrutiny under CASS. Statutory notices u/s. 143(2) and 142(1) were issued and served upon the assessee company within the stipulated time. Thereafter, the Assessing Officer disallowed the expenditure u/s. 14A read with rule 8D of the Income Tax Act, 1961( in short "the Act") and also disallowed the discount on flat beer to the tune of Rs.8,64,447/- and also disallowed the miscellaneous expenses to the tune of Rs.78,948 u/s. 37(1) of the Act and determined total income to the tune of Rs.51,14,458/-.Thereafter the assessee filed an appeal before learned CIT(A) and the learned CIT(A) dismissed the appeal therefore the assessee filed the present appeal before us.
Assessee has raised the following grounds of appeal:-
"1. In the facts and circumstances of the case and in law the Ld. CIT Appeal erred in:- 1.1 Confirming the impugned assessment order passed by the Assessing Officer, disallowing and adding certain items of expenditure incurred without considering the 2 ITA 6638/MUM/2013 A.Y.2009-10 records produced, the relevant information and papers submitted and the submissions made during the course of assessment proceedings. 1.2 Confirming the disallowance of RS.96,224/- u/s. I4A of the Income Tax act, 1961 r/w Rule 8D of the Income Tax Rules 1962 though however the appellant contended that it had not incurred any expenditure Pr earning the tax exempt income and therefore the provisions of Section 14A r/w. Rule 8D were not applicable. 1.3 Confirming the disallowance of Rs.8,64,447/- being flat beer discount though however the same was fully supported by the part- wise details and the same was given to the parties according to the trade usage and practice. 1.3.1 Further erred in holding that the claim for flat beer discount was not allowable u/s. 3 7(1) of the Act.
It is humbly prayed that the relief as prayed and such other and fur/her reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice, should be granted.
ISSUE NO. 1.1:- 4. The ground no. 1.1 was not pressed at the time of argument ITA 6638/MUM/2013 A.Y.2009-10 therefore this ground has been ordered to be dismissed being not pressed.
ISSUE NO. 1.2:- 5. Under issue no. 1.2 the assessee has challenged the disallowance of Rs.96,224/- u/s. 14A read with rule 8D of the Act on the ground that the assessee did not incur any expenditure upon the exempt income, therefore, the provision of section 14A read with rule 8D is not applicable. In support of his contention the learned representative of the assessee has placed reliance on the law settled in Commissioner of Income Tax Vs. Hero Cycles Ltd. [2010] 233 CTR (P&I-1) 74. The Assessing Officer has worked out the disallowance mentioned below:-
Directing Nil expenses Indirect Nil expenses Average Investments: Opening Investments 1,92,44,758/- Closing Investment 1,92,44,758/- Total 3,48,89,516/- Average Investment 1,92,44,758/- Average of total assets: Opening assets 10,87,01,335/- Closing assets 11,59,61,451/- ITA 6638/MUM/2013 A.Y.2009-10 22,46,62,786/- Average total assets 11,23,31,393/- Disallowance u/s. 14A read with Rule 8D @ 0.5% of average investment of Rs.1,92,44,758/-, which comes to Rs.96,224/-
However, the said disallowance has been confirmed by the ld. CIT(A). The above said figure clearly speaks that no direct or indirect expenditures were incurred by the assessee to earn the exempt income during the relevant assessment year. No doubt in the said circumstances the law relied by the learned representative of the assessee in Commissioner of Income Tax Vs. Hero Cycles Ltd. 120101 233 CTR (P&H) 74 is clearly applicable to the facts of the present case hence no disallowance is required to be made u/s. 14A read with Rule 8D. Accordingly, the finding on this point by the ld. CIT(A) to be set aside as the provision u/s 14A read with rule 8D is not applicable to the present case. Accordingly, this issue is decided in favour of the assessee and against the revenue.
ISSUE NO. 1.3:-
The issue no.1.3 deals with disallowance on flat beer disallowance to the tune of Rs.8,64,447/-. The learned representative of the assessee has contended that the business of the 4 ITA 6638/MUM/2013 A.Y.2009-10 assessee is in such a nature in which after certain period the beer became flat and became unuseful therefore the discount to the tune of Rs.8.64,447/- required to be allowed in the interest of justice. The learned representative of the assessee has placed reliance upon the law settled in Commissioner of Income Tax Vs. Dalmia Cement (B.) Ltd. On the other hand learned representative of the department has refuted the said circumstances. Before going further it is necessary to advert the finding of the learned Assessing Officer on record:-
"During the year under review, it is noted from the details submitted besides cash discount on IMFL of Rs.2,45,079/-, Scheme discount of Rs.19,140/-, cash discount on beer of Rs.1,06,93,497/-, other discount of Rs.322/-, breakage discount of Rs.7,34,591/-. Besides, all these discounts, the assessee company has claimed a new discount on flat beer of Rs.8,64,447/-, which discount was not claimed by the assessee in earlier years. If one looks at the previous years figures, the aggregate of sales as mentioned in the auditor’s report almost matches the figure claimed. But there is no claim of flat beer discount of Rs.8,64,447/- in earlier years. The total discount under various ITA 6638/MUM/2013 A.Y.2009-10 heads claimed by the assessee company during the year come to Rs. 1,25,84,073/- which is considered excessive and unreasonable in line with business of the assessee company. Further, apart from flat discount of Rs.8,64,447/-, the assessee company has claimed various other discounts such as cash discount running into crores of rupees, which is far excessive and exorbitant in this line of business. Mere filing of computerized ledger a/c copy for claim of flat beer discount of Rs.8,64,447/- could not absolve the assessee from its onus of claiming the same unless and until the assessee justify its claim by submitting other documentary details on the basis on which said discount was given. Moreover, it is not understandable how the auditor could report higher sales if discount given were also reflected in the same books which were audited by them.
In view of the above facts and circumstances of the case, the flat beer discount claimed amounting to Rs.8,64,447/- is not allowed and added to the total income of the assessee."
ITA 6638/MUM/2013 A.Y.2009-10
The finding of the learned CIT(A) in this regard also on record:-
"The learned Assessing Officer observed that for the first time during the previous relevant to A.Y.2009-10, the appellant has claimed a new discount of flat beer discount of Rs.8,64,447/- which was never claimed in the past by the appellant. The learned Assessing Officer asked the appellant to prove the genuineness of such new claim of flat beer discount which was in addition to earlier claims of cash discount on beer of Rs.1,06,93,497/- and other discount mentioned in the table depicted above. In response the appellant furnished a printout of its ledger account which mentioned certain names of restaurants, shops and wine stores etc. against which certain amount have been debited and certain closing balances have been shown. Apart from the said printout of ledger copy, no justification nor vouchers were produced before the learned Assessing Officer to prove that this new item of flat beer was wholly and ITA 6638/MUM/2013 A.Y.2009-10 exclusively incurred for the purpose of appellant's business. It was also not explained as to how this item of flat beer discount was different from discount on beer of Rs. 1,06,93,497/-. Even as per sec. 37 of the Act no expenditure shall be allowed unless it is duly supported by the relevant documentary evidences. Strong reliance is placed on the following decisions:
(i) L H Sugar Mills (P) Ltd. Vs. CIT 125 hR 293(SC) (ii) CIT Vs. Calcutta Agency 19 ITR 191 (SC) (iii) Laxmi Narayan Cotton Mills Vs. CIT 73 ITR 634 (SC)
Where an appellant claim a deduction, the onus is on the appellant to bring all material facts on record to substantiate the claim made by it."
5.3.3 Having regard to facts and circumstances of the case and in the light of the aforesaid decision of Supreme Court, the disallowance of new claim of flat beer discount disallowed by the Assessing ITA 6638/MUM/2013 A.Y.2009-10 Officer is confirmed. Ground no. 1.3 is dismissed.
By giving the careful thoughts to the contention raised by the learned representative of the parties and perusing the record carefully, it is observed that the learned CIT(A) has declined the flat beer discount of Rs.8,86,447/- on the ground of that the assessee has already claimed the cash discount on beer to the tune of Rs.1,06,93,497/- and the assessee claimed the expenditure on the basis of computer generated account which is not supported by any vouchers or other documents. Discount on cash beer to the tune of Rs.1,06,93,497/- is quite different with the discount of Rs.8,86,447/- which is claimed on the basis of flat beer discount. Considering both the discounts as similar and finding no vouchers in support of the claim of the assessee, the claim of the flat beer discount was declined. In support of the claim no doubt the assessee raised his claim on the basis of the copy of ledger produced before the Assessing Officer as well as learned CIT(A) and before us also. Copy of ledger speaks about the name of the parties, amount, date of flat beer discount and other material things. Name of the parties and date wise entries and account of credit and debit has also been shown in the statement. The Assessing Officer ITA 6638/MUM/2013 A.Y.2009-10 declined the claim on the basis of this fact that the claim raised by the assessee is based on the computer generated copy which is not supported by any other documents. Similar view has been taken by the learned CIT(A) but both the authorities below nowhere falsify these documents. No material of any kind was collected to which it can be said that the claim which has been raised by the assessee is false and frivolous. The nature of business is such a kind vide which the beers are being manufactured and no doubt after the manufacturing of the beers the expiry date always come. How the claim of the assessee is not justifiable is not on record. When the copy of ledger in which name of the parties has duly been reflected and the entries of the debit and credit of the flat beer account is there then in the said circumstances it is not understoodable how the claim on the flat beer discount has been declined without any reasons. Moreover, the entries which have been reflected in the ledger produced before us can be verified in view of the other accounts of the assessee as well as with the account of parties. Therefore in the said circumstances we are of the view that the learned CIT(A) has declined the claim of the assessee on the flat beer discount wrongly and illegally therefore finding in this case is not required to be upheld in accordance with law. Accordingly, we set aside the order ITA 6638/MUM/2013 A.Y.2009-10