Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: cpt :: VAT Audit :: Central Excise rule to resale the machines to a new company :: TDS :: empanelment :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD
 
 
From the Courts »
  Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 CIT vs. Greenfield Hotels & Estates Pvt. Ltd (Bombay High Court)
 IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)
 Maharao Bhim Singh of Kota vs. CIT (Supreme Court)
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)

S.V.Business Pvt. Ltd., C/o Shankarlal Jain 12, Engineer Building, 265, Princess street, Mumbai-400002 Vs. Dy. Commissioner of Income Tax, Central Circle-39, Mumbai
May, 19th 2014
                    ,                  ""          
      IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI

        BEFORE S/SHRI P.M.JAGTAP (AM) AND VIVEK VARMA, (JM)
         .. ,      ,      

            ./I.T.A.No.7019,7020 and 7054/Mum/2010
      (   / Assessment Years- 2006-07, 2007-08 & 2008-09)

     S.V.Business Pvt. Ltd., /            Dy. Commissioner of Income
     C/o Shankarlal Jain and  Vs.         Tax, Central Circle-39,
     Associates,                          Mumbai
     12, Engineer Building,
     265, Princess street,
     Mumbai-400002
          . /   . /PAN/GIR                No. :    AAECS1117M
          ( /Appellant)      ..           (    / Respondent)



            / Appellant by            :   Shri S.L.Jain
              /Respondent by :            Shri K C P Patnayak


                / Date of Hearing
                                               : 7.5.2014
             /Date of Pronouncement : . 5.2014

                                  / O R D E R

PER P.M.JAGTAP,AM:

      These three appeals filed by assessee against the three separate orders
of ld. CIT(A)-41, Mumbai for assessment years 2006-07, 2007-08 and 2008-09
have been heard together and are being disposed off by a single consolidated
order, for the sake of convenience.


2.    Out of these three appeals, two appeals filed by the assessee for
assessment year       2006-07 and 2007-08 being I.T.A.No.7019,7020 and
7054/Mum/2010, which are directed against the         orders of   ld. CIT(A)-41,
Mumbai both dated 30.8.2010, involve a         solitary issue relating   to the
disallowance made by AO and confirmed by ld. CIT(A) on account of brokerage
claimed to be paid by the assessee to Shri Ishwarchand Goel .
3.    The assessee in the present case is a company which is engaged in the
business of processing and sale of fabrics. It belongs to JIMTEX GROUP.       A
                                        2       I.T.A.No.7019,7020 and 7054/Mum/2010



search and seizure action under section 132 of the Income Tax Act, 1961 (the
Act) was conducted in the premises belonging to JIMTEX Group including the
case of the assessee.   Pursuant to the search, notice under section 153A of the
Act was issued by the AO, in response to which the assessee filed its return of
income for both years under consideration i.e. AYs 2006-07 and 2007-08 on
12.01.2009 declaring     total income of Rs.6,28,580/- and Rs.1,04,59,364/-
respectively.   During the course of assessment proceedings, it was noticed by
the   AO that   the assessee has claimed to have paid       brokerage charges of
Rs.1,30,625/- and Rs. 57,757/- to one       Shri Ishwarchand Goel in the previous
year relevant to assessment year 2006-07 and 2007-08 respectively. Since the
similar claim made by assessee on account of brokerage charges paid to Shri
Ishwarchand Goel was disallowed in AY-2005-06 in the assessment completed
u/s 143(3) of the Act and the said disallowance was accepted by the assessee,
the   AO disallowed the brokerage claim to be paid by the assessee to Shri
Ishwarchand Goel in both the years under consideration.





4. The disallowance made by AO on account of brokerage charges paid to Shri

Ishwarchand Goel was disputed by assessee in the appeals filed before the ld.

CIT(A) and after considering the submissions made by the assessee as well as

material available on record, the ld. CIT(A) confirmed the disallowance made by

AO on account of brokerage charges paid to Shri Ishwarchand Goel for both the

years under consideration i.e. assessment years 2006-07 and 2007-08 for the

following identical reasons given in para 1.3 of his impugned orders:

       "1.3 I have considered the submissions of the appellant , order of the
       AO and facts of the case that the appellant has made payment brokerage
       to Shri Ishwarchand Goel for the AY 2006-07 and 2007-08. It is pertinent
       to note that in the AY 2005-06 the appellant has shown the brokerage
       payment to Shri Ishwarchand Goel           the same person which was
       disallowed because he has failed to prove the genuineness of this
       expenditure that it was incurred for the purposes. During the year under
       consideration the appellant has failed to furnish any evidence before the
       AO to prove that this expenditure was wholly and exclusively incurred for
       the business purpose and any services rendered by Shri Ishwarchand
       Goel. Therefore, the AO has made disallowance in these years also
       Before me the appellant has submitted that the payment was made by
                                       3        I.T.A.No.7019,7020 and 7054/Mum/2010



      cheque and TDS was deducted was deducted but no evidence was
      submitted to prove any services rendered by the broker. Consequently the
      appellant has failed to submit any evidence to prove that this expenditure
      was wholly and exclusively incurred for the business purpose and what
      services rendered by Shri Ishwarchand Goel to whom the brokerage
      payment was made . The onus is always on the assessee to submit
      evidence before the AO before claiming any deduction as held by the
      Hon'ble Supreme Court in the case of CIT V/s Calcutta Agencies 19 ITR
      119. In the present case the appellant has failed to submit any
      documentary evidence to prove the services rendered by                Shri
      Ishwarchand Goel to whom the brokerage payment was made and
      consequently to prove that this expenditure was incurred wholly and
      exclusively for the business purpose of the appellant company'"


5.    We have heard the arguments of both the sides and also perused the

relevant material available on record. Although the ld. counsel for the assessee

has invited our attention to the relevant documentary evidence placed in his

paper book to show that the payment of brokerage               was made to Shri

Ishwarchand Goel by cheques after deduction of TDS and that the said person

was not related to the assessee company, he has not been able to explain on

evidence the exact nature of services rendered by Shri Ishwarchand Goel for

the purposes of assessee's business.   As rightly held by ld. CIT(A), the onus in

this regard is on the assessee to establish that the expenditure on payment of

brokerage charges was wholly and exclusively incurred for the purposes of its

business and since the assessee has failed to discharge the said onus, we find

no justifiable reasons to interfere with the impugned        orders of ld. CIT(A)

confirming the disallowance made by        AO on account of brokerage      paid by

assessee to Shri Ishwarchand Goel for both the years under consideration. The

same are therefore upheld and the appeals for the assessment years 2006-07

and 2007-08 are dismissed.
                                          4      I.T.A.No.7019,7020 and 7054/Mum/2010



6.     In   the   appeal   for    assessment     year     2008-09     being      ITA

No.7054/Mum/2010, which is directed against the order of ld.             CIT(A)-41,

Mumbai dated 30.8.2010, the solitary issue raised by the assessee relates to

disallowance of   Rs.3,10,800/- made by        AO and confirmed by ld. CIT(A) on

account of depreciation on building.


7.     During the course of search, certain loose papers inventorised as pages

7 to 16 were found and seized from the possession of the assessee showing

receipts in cash aggregating Rs.40,06,000/-.     In the statement recorded during

the course of search u/s 132(4) of the Act, the assessee explained that the

transactions reflected in the said lose papers          as that of sale of     scrap

comprising of drums, screens, nickel, plastic bags, damaged motors, damaged

fabrics etc. He also agreed that the said transactions were not recorded in the

regular books of account and        offered an amount of     Rs.40,06,000/- as the

additional income for assessment year 2007-08. In the statement, it was stated

on behalf of the assessee that out of the amount of Rs.40,06,000/-, the sum of

Rs.31,08,000/- was utilized for additional construction of the existing factory

building at MIDC, Dombivili. In his books of account, entries were recorded by

the    assessee    showing an amount of Rs.31,08,000/- spent on additional

construction of factory building and depreciation thereon was claimed by the

assessee in the return of income filed for the year under consideration i.e.

assessment year 2008-09.         AO however, disallowed the claim of the assessee

for the said depreciation on the ground that no documentary evidence was

produced by the assessee in support of its claim for the said expenses incurred

on construction of factory building.
                                          5      I.T.A.No.7019,7020 and 7054/Mum/2010



8.      The disallowance made by the AO on account of its claim for depreciation

on     additional factory building was disputed by assessee in the appeal filed

before the ld.     CIT(A) and after considering the submissions made by the

assessee and material available on record, the ld. CIT(A) confirmed the

disallowance made by AO on account of depreciation for the following reasons :

         "1.4 I have considered the submissions of the appellant, order of the AO
        and facts of the case carefully. It is noticed that the appellant has claimed
        an amount of Rs.31,08,000/- incurred for addition to the factory building.
        The AO has cleared for the details and bills etc to prove the genuineness
        of the expenses incurred for the addition to the factory building.
        However, the appellant has failed to submit any evidence to substantiate
        its claim except the argument that the amount in addition of the building
        was incurred out of the additional income declared on account of sale of
        scrap and waste in AY 2007-08. As per the provision of the Income Tax
        Act to the onus us on the assessee to prove the documentary evidence
        before the AO before claiming any deduction. The Hon'ble Supreme
        Court in the case of CIT V/s Calcutta a Agency 19 ITR 119 has held that
        the onus is on the assessee to prove the genuineness of the expenditure
        before claiming any deduction"

9.      We have heard the arguments of both the sides on the issue involved in

the appeal filed for the assessment year 2008-09 and also perused the relevant

material on record. The ld. Counsel for the assessee has invited our attention

to the relevant seized documents placed at pages 24 to 31 of his paper book to

point out that the fact of having spent/utilized the sales proceeds of scrap for

building work was clearly mentioned in the said documents. He has also invited

our attention to the copy of the statement of the assessee recorded during the

course of search placed at pages 11 to 20 of his paper book and pointed out

that    in reply to question No.5, it was clearly stated by the       assessee that

unaccounted sales proceeds of scrap        to the extent of    Rs.31,08,000/- were

utilized for the construction of factory building in MIDC, Dombivili. Relying on

the decision of a Co-ordinate Bench of Tribunal in the case of Biren V.Savla
                                          6     I.T.A.No.7019,7020 and 7054/Mum/2010






V/s ACIT (2006) 100TTJ (Mumbai) 1006 and the decision of the Hon'ble Kerala

High Court in the case of CIT V/s P D Abraham Alias Appachan and Anr (2012)

252 CTR (Ker) 407, he has contended that the statement of the assessee as

well as contents of the relevant documents cannot be accepted in part and

rejected in part.


10.    The ld. DR, on the other hand, strongly relied on the orders of authorities

below in support of the Revenue's case.


11.    After considering the rival submissions and on perusal of            relevant

material on record, we find no infirmity in the        impugned order of ld. CIT(A)

confirming the disallowance made by       AO on account of assessee's claim for

depreciation on additional construction of factory building in MIDC, Dombivili.

Although     it was indicated in the relevant seized           documents that the

unaccounted sales proceeds of scrap were partly used for building purposes and

the assessee also reiterated    this position in his statement recorded under

section 132(4), we are of the view that the same by itself was not sufficient to

establish that the amount of Rs.31,08,000/- was incurred by the assessee on

the construction of additional factory building in MIDC, Dombivili. The onus in

this regard was on the assessee to substantiate its claim for the expenditure

incurred on the construction of additional building by producing the relevant

documentary evidence such as bills, vouchers etc. Even if such bills /vouchers

were not maintained by the assessee in support of expenditure incurred outside

the books of account, the assessee could have and should have substantiated

its case by producing valuation report or building plans showing that the

additional construction was indeed made       at its     factory building situated in
                                        7       I.T.A.No.7019,7020 and 7054/Mum/2010



MIDC, Dombivali. The statement of the assessee and        indication in the relevant

seized documents      was not sufficient to establish that         the amount      of

Rs.31,08,000/- was incurred by assessee on account of construction                 of

additional factory building and that     too to its existing building       in MIDC,

Dombivali. In our opinion, it is thus not a case where the statement or relevant

seized documents are partly accepted and partly rejected by the authorities

below as sought to be contended by the ld counsel for the assessee.          It is the

case where the said statement and the relevant seized documents were not

sufficient to establish the case of the assessee of having spent an amount of

Rs.31,08,000/- for the construction of additional factory building and the claim

of the assessee for depreciation on such additional building was disallowed by

the authorities below on the ground that the assessee failed to substantiate the

said claim by bringing any documentary evidence.           We therefore, find no

infirmity in the orders of authorities below in disallowing the assessee's claim of

depreciation and confirming the said disallowance, we dismiss the appeal of the

assessee for the assessment year 2008-09.

12.   In the result, all the three appeals of the assessee are dismissed.

      Order pronounced in the open court on     th     May, 2014

                                                  th     May, 2014    




  (  /VIVEK VARMA)                                     (.. / P.M.JAGTAP)
     / JUDICIAL MEMBER                             / ACCOUNTANT MEMBER

  Mumbai:
                  on this      th day of May, 2014
                                      8      I.T.A.No.7019,7020 and 7054/Mum/2010




. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant /Applicant
2.  / The Respondent.
3.      () / The CIT(A)-
4.       / CIT
5.       ,     ,         /
      DR, ITAT, Mumbai
6.      / Guard file.
                                                            / BY ORDER,

                                                     (Asstt. Registrar)
                                      ,  /ITAT, Mumbai



                                                   Date        Initials
1.     Draft dictated on                           7.5.2014               SPS
2.     Draft placed before author                  9.5.2014               SPS
3.     Draft proposed & placed before the Second                          JM
       Member
4.     Draft discussed/approved by Second Member                          AM
5.     Approved Draft comes to the Sr. PS                                 SPS
6.     Kept for pronouncement on                                          SPS
7.     File sent to the Bench Clerk                                       SPS
8.     Date on which file goes to the Head Clerk
9.     Date on which file goes to A.R.
10.    Date of dispatch of order

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Internet Marketing Website Marketing Internet Promotion Internet Marketing India Website Marketing India Internet Promotion India Internet Marketing Consultancy Website Marketing Consulta

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions