Commissioner Of Income Tax-I, Amritsar v. Shri Suresh Chander Mehra (Huf

IN THE PUNJAB & HARYANA HIGH COURT AT CHANDIGARH Date of Decision: 14.02.2013 ITA No.85 of 2012 (O&M) Commissioner of Income Tax-I, Amritsar ..Appellant versus Shri Suresh Chander Mehra (HUF) ..Respondent CORAM:HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present:Mr. Denesh Goyal, Advocate, for the appellant. Mr. S.K. Mukhi, Advocate, for the respondent. HEMANT GUPTA, J. (Oral) The Revenue is in appeal under Section 260A of the In-come Tax Act, 1961 (for short 'the Act') against the order dated08.06.2011 passed by the Income Tax Appellate Tribunal, AmritsarBench, Amritsar (for short 'the Tribunal) in ITA No. 355(Asr)/2010 inrelation to assessment year 2004-05 whereby the Tribunal confirmedthe order passed by the Commissioner of Income Tax (Appeals), Am-ritsar. The Revenue has claimed the following substantial questions oflaw: “(i) Whether the Hon'ble ITAT has erred in law indeleting the addition of Rs.32,35,509/- on accountof debit note dated 28.02.2004 issued by M/s Essma Textile Pvt. Ltd., Amritsar, which is relatedto the assessee, u/s 40A(2)(b) of the Income TaxtAct, 1961? (ii) Whether the Hon'ble ITAT has failed to appre-ciate that the assessee and M/s Essma Textile Pvt.Ltd. of whom the Karta of Suresh Chander MehraHUF (assessee) is director in his individual capac-ity, has adopted colorful device in revising the raterespectively to adjust the profits?” The assessee Hindu Undivided Family is a proprietor ofM/s Essma Woolen Mills. The gross profit rate declared by the asses-see in the year 2002-03 was 17.89%, 16.46% in the year 2003-04 and13.30% in the year 2004-05. During assessment proceedings, the As-sessing Officer found that the assessee debited an amount ofRs.52,35,509/- on 29.02.2004 on the basis of a debit note raised by thesupplier of goods i.e. M/s Essma Textiles Pvt. Ltd. The Assessing Of-ficer found that such debit note has been issued for the rate differenceof the goods sold by the company to the assessee after taking into ac-count the increased price of raw material and increase in the manufac-turing cost as agreed mutually. However, the learned Commissioner ofIncome Tax (Appeals), Amritsar set aside the findings recorded by theAssessing Officer and partly allowed the appeal and found that thetransactions of debit note is a genuine transaction and that it does notcall for addition to the extent made by the Assessing Officer. The saidorder has been affirmed by the Tribunal, vide order dated 08.06.2011(A-3). Learned counsel for the appellant has argued that in termsof Section 40A(2)(b) of the Act, any expenditure which is found bythe authorities under the Act to be excessive or unreasonable can bedisallowed as a deduction. Therefore, the findings recorded by the As-sessing Officer have been interfered with without any reasonablegrounds. We find Section 40A(2) authorizes the authorities underthe Act to disallow the deduction, if it is found that such expenditureis excessive or unreasonable. It will be a question of fact in each casewhether the expenditure claimed as a deduction is excessive or unrea-sonable. Though the Assessing Officer has found the expenditure asexcessive but not only the Commissioner of Income Tax (Appeals),Amritsar, but also the Tribunal did not found part of such expenditureas excessive or unreasonable. In view of the said fact, we find that the findings recordedby the Commissioner of Income Tax (Appeals), Amritsar and furtheraffirmed by the Tribunal are findings of fact, which do not given riseto any substantial question of law for consideration by this Court. Dismissed. (HEMANT GUPTA)JUDGE 14.02.2013G. Arora/Vimal (RITU BAHRI)JUDGE