M/S R. S. SHETYE & BROTHERS,PANAJI vs. INCOME TAX OFFICER, WARD -1(3), PANAJI

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ITA 43/PAN/2019Status: DisposedITAT Panaji12 July 2023AY 2013-14Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI G.D. PADMAHSHALI (Accountant Member)8 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that neither the assessee nor the department had presented a complete case. Therefore, a lump sum disallowance of 25% of the disputed expenses was deemed appropriate, with the condition that it would not set a precedent.

What were the facts?

The assessee's appeals concerned disallowance of 50% of expenses incurred on maintaining mines for assessment years 2013-2014 and 2015-2016. The Assessing Officer and CIT(A) had disallowed these expenses.

What were the issues?

Whether the disallowance of 50% of mine maintenance expenses was justified, and if not, what would be a reasonable disallowance.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI BENCH : PANAJI

Before: SHRI SATBEER SINGH GODARA & SHRI G.D. PADMAHSHALI

Hearing: 10.07.2023Pronounced: 12.07.2023

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA.Nos.43 & 44/PAN./2019 Assessment Years 2013-2014 & 2015-2016 M/s. R.S. Shetye & Bros, Flat The Income Tax Officer, No.14, 1st Floor, Trionara Ward-1(3), “Aaykar Bhavan”, Apartments, Near Municipal Plot No.5, EDC Complex, vs. Market, Panaji, Goa – 403001 Patto Plaza, Panaji Goa PAN AABFR9785N PIN – 403 001. (Appellant) (Respondent) For Assessee : Shri Vinod Totekar, C.A. For Revenue : Shri N. Shrikanth Date of Hearing : 10.07.2023 Date of Pronouncement : 12.07.2023 ORDER PER BENCH :

These assessee’s twin appeals ITA.Nos. 43 & 44/ PAN./2019, for assessment years 2013-2014 and 2015-2016, arise against the CIT(A)-1, Panaji’s separate orders dated 10.01.2019 and 24.01.2019 passed in case Nos.CIT(A), PNJ-1/10496/2017-18 and CIT(A), PNJ-1/11070/2015-16, respectively, involving proceedings u/s.143(3) of the Income Tax Act, 1961 (in short "the Act").

Heard both the parties at length. Case files perused.

2.

We come to the “lead” assessment year 2013-14 involving the assessee’s appeal ITA.No.43/PAN./2019 raising the following substantive grounds :

2 ITA.Nos.43 & 44/PAN./2019 1. “On the facts and circumstances of the case, the learned CIT(A), Panaji-1 and the AO, erred in disallowing the 50% of the expenses incurred on maintaining the mines to the extent of Rs.1,99,52,610/- 2. On the facts and circumstances of the case, the CIT(A), Panaji-1 has passed an order without going into the order of the Supreme Court and Government Authorities.

3.

On the facts and circumstances of the case to leave, to add, alter, amend, modify and correct the grounds of appeal at or before the time of hearing.”

3. Both the parties next invited our attention to the CIT(A)'s detailed discussion upholding the Assessing Officer’s action as under :

3 ITA.Nos.43 & 44/PAN./2019 4 ITA.Nos.43 & 44/PAN./2019 5 ITA.Nos.43 & 44/PAN./2019 6 ITA.Nos.43 & 44/PAN./2019

4.

It is in this factual backdrop that both the learned representatives reiterated their respective stands before us against and in support of lower authorities action disallowing the assessee’s direct/indirect expenses @ 50%, coming to Rs.2,78,93,565/- in the “lead” assessment year 2013-2014.

5.

We have given our thoughtful consideration to the foregoing rival stands and find no merit in either parties vehement contentions in entirety. This is for the precise reason 7 ITA.Nos.43 & 44/PAN./2019 that neither the assessee has been able to explain the alleged unreasonable increase in various heads of expenditure involving de-watering, machinery hire, dumper, vehicle hire charges, freight, water-spraying, security charges along with afforestation, crop compensation, environmental monitoring, advertisement and miscellaneous expenses vis-à-vis preceding assessment years respective heads nor the department could categorically dispute the same in principle as the learned lower authorities have already accepted 50% component thereof as incurred wholly and exclusively for the purpose of business u/sec.37(1) of the Act. This is indeed coupled with the fact that the learned lower authorities have nowhere considered the crucial aspect of the assessee’s profit element going abnormally higher by virtue of 50% disallowance of the impugned expenses. Faced with the situation and in light of foregoing relevant facts, we deem it appropriate that a lump sum disallowance @ 25% than that in issue @ 50% would be just and proper with a rider that the same shall not be treated as a precedent in any other assessment year except those involved in the instant common order. Learned Assessing Officer shall accordingly frame his consequential computation as per law. The assessee’s “lead” appeal ITA.No.43/PAN./2019 is partly accepted in very terms.

8 ITA.Nos.43 & 44/PAN./2019 6. Next comes the assessee’s appeal ITA.No.44/ PAN./2019 wherein the disallowance @ 50% comes to Rs.2,78,93,565/- which is partly deleted in very terms.

7.

These assessee’s twin appeals are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 12.07.2023.

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