IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `SMC', NEW DLEHI
BEFORE : SMT. DIVA SINGH, JUDICIAL MEMBER
ITA No.999/Del/2019
Assessment Year: 2015-16
AD 2C (India) Pvt. Ltd., vs. ACIT, Circle 1(1),
601-612, 6th Floor, JMD Megapolis, Gurgaon.
Sector-48, Sohna Road, Gurgaon
PAN : AAJCA 7779A
(Appellant) (Respondent)
Appellant by : None
Respondent by: Ms. Rinku Singh, Sr. DR.
Date of hearing : 04.02.2020
Date of Pronouncement : 06.02.2020
ORDER
The present appeal has been filed by the assessee, wherein correctness
of the order dated 30.11.2018 of CIT(A), Gurgaon pertaining to 2015-16
assessment year is assailed on the following grounds :
"1. On the facts and in the circumstances of the case and in law, the
CIT(A) erred in sustaining addition in respect of Service Tax paid in a sum
of Rs.11,97,876, wherein CENVAT credit could not be availed.
2. On the facts and in the circumstances of the case and in law, the
CIT(A) erred in sustaining addition in respect of various expenses
incurred under the head "Other Minor Miscellaneous Advances Written
off Rs.294025".
2. At the time of hearing, no one was present on behalf of the assessee. It
is seen that the appeal was filed on 07.02.2019 and came up for hearing on
03.09.2019. On the said date, the assessee remained un-represented.
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Thereafter, the appeal came up for hearing again on 12th December, 2019. On
the said date the assessee was represented by Sr. Manager Saras Kumar.
However, no submissions were advanced on behalf of the assessee and time
appears to have been taken, which was granted. Thereafter, the appeal came
up for hearing on 04.02.2020, but assessee again remained un-represented.
The appeal was passed over, but none was present on behalf of the assessee.
In the circumstances, it was deemed appropriate to proceed ex parte qua
assessee appellant on merits.
3. The ld. DR relies on the impugned order. The assessee, as per record, is
shown to be engaged in the business of mobile advertisement and declared
income at Rs. Nil. The Assessing Officer required the assessee to explain the
allowability of following expenditure u/s. 37(1) of the Act :
Provision for doubtful receivables :Rs.11,67,087/-
Bad Debts :Rs.29,55,869/-
Advances written off :Rs.29,55,189/-
Ultimately, the Assessing Officer disallowed the amount of Rs.29,55,189, the
details of which are as under :
(i). Debit notes pertaining to volume discounts written off
Rs.14,63,288/-
(ii). Service tax which could not be claimed as CENVAT Rs.11,97,876/-
(iii). Other minor miscellaneous advances written off.
4. The issue was challenged in appeal before the ld. CIT(A) who granted
part relief holding as under :-
"Each of the aforesaid amounts is being discussed as under: -
(i) Debit notes pertaining to volume discounts written off Rs.
14,63,288/-
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It is seen from the documents filed by the appellant that the appellant
had reduced Rs. 88,21,352/- out of its operating expenses during the
year 13-14 relevant assessment year 14-15. It is further seen that the
appellant had debited the accounts of the various parties against whom
the debit notes were raised during the year 13- 14. It is therefore seen
that these amounts were not advances but in the nature of debits on
account of debit notes pertaining to volume discount raised by the
appellant. Evidently, the expenditure had been reduced during the
financial year 13-14 by this amount, implying thereby that these
amounts had been included in the income of the appellant in the
immediately preceding year. Any adjustment with regard to these
volume discounts and debit notes would therefore be allowable
expenditure. The addition made by the AO to this extent is deleted.
Service tax which could not be claimed as CENVAT Rs. 11,97,876/-
As regards the amount of ^ 11, 97 876 paid towards the service tax for
the services received by the company when the services offered were in
the negative list of the service tax, it is evident from the submissions of
the appellant that these amounts were paid by the appellant although
the same were not payable. Merely because the vendors failed to
provide the supplementary bills because of which the appellant failed to
take the CENVAT credit does not imply that the amounts would be
allowable as business expenditure. The disallowance made by AO to this
extent is confirmed.
(iii) Other minor miscellaneous advances written off.
7. As regards the various expenses under this head, it is seen that all
these amounts were paid by the appellant although these amounts
were not payable or these amounts were paid in excess. As such, these
expenses do not partake the character of business expenses. It cannot
be said that these expenses were incurred fully and exclusively for the
purposes of the business of the appellant. The addition made with
regard to these miscellaneous expenses is confirmed."
5. On a reading of the above, it is seen that the reasoning and conclusions
arrived at on facts appear to be justified. In the absence of any material to
show any infirmity in the same brought on record, I find no good reason to
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interfere with the impugned order. The additions sustained by the ld. CIT(A)
are, accordingly, upheld.
5. In the result, the appeal of the assessee is dismissed.
Order was pronounced in the open court at the time of hearing itself.
Sd/-
(DIVA SINGH)
JUDICIAL MEMBER
Dated: 06/02/2020
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