Commissioner Of Income Tax,Faridabad v. M/S. Gemi Motors India Ltd.faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 130 of 2011Date of decision: 25.5.2011 Commissioner of Income Tax,Faridabad --- Appellant Versus M/s. Gemi Motors India Ltd.Faridabad --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELACTING CHIEF JUSTICEACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Yogesh Putney, Senior Standing Counselfor the appellant-Revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against theorder dated 20.8.2010, passed by the Income Tax Appellate TribunalDelhi Bench ‘C’, New Delhi (in short “the Tribunal”) in ITA No.3050/Del/2008, relating to the assessment year 2002-03. 2.The following substantial questions of law have been claimed for determination of this Court: “1. Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming the ordercase, the Ld. ITAT was right in law in confirming the order of the Ld. CIT(A) in deleting the addition of Rs. 8,28,512/-made by the Assessing Officer on account of staff welfareexpenses disregarding the fact that the expenditure wasnot incurred wholly and exclusively for the businesspurpose? 2. Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming the orderof the Ld. CIT(A) in deleting the addition of Rs. 3,31,539/-made by the Assessing Officer on account of sales &business promotion expenses even though there was noevidence to the effect that the amounts debited under thishead are wholly and exclusively for business purposesand are not personal in nature as such it would meet theends of justice to disallow 10% of the expenditure underthis head? 3. Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming the orderof the Ld. CIT(A) in deleting the addition of Rs. 3,62,175/-made by the Assessing Officer on account ofdisallowance out of vehicle and telephone expenses eventhough the assessee had failed to establish that the samewere incurred wholly & exclusively for the businesspurposes and the possibility of personal use cannot beruled out and in contravention of the decision of Hon’bleMadras High Court in the case of CIT vs. Chitram andCo. (P) Ltd. 191 ITR 92 and CIT vs. Madura Coats Ltd.263 ITR 241?” 3. The facts, in brief, necessary for adjudication as narratedin the appeal, are that the respondent-assessee filed return for theassessment year 2002-03 on 31.12.2002, declaring income of Rs.17,97,99,180/-. The assessment was, however, completed on30.3.2005 vide order passed under Section 143(3) of the Act at anincome of Rs. 19,59,12,430/- wherein certain additions anddisallowances were made by the assessing officer. 4.The assessee preferred appeal before the Commissionerof Income-tax (Appeals) [in short “CIT(A)”]. The assessee wasgranted relief by the CIT(A) vide order dated 31.7.2008 of an amountof Rs. 15,28,846/-. The disallowance made by the assessing officerof an amount of Rs. 9,28,512/- on account of staff welfare expenseswas restricted to Rs.1,00,000/- and accordingly, addition of anamount of Rs. 8,28,512/- was deleted. The CIT(A) restricteddisallowance under the head ‘Sales and Business Promotion’ to Rs.1,00,000/- and deleted balance disallowance of Rs. 3,31,539/-. TheCIT(A) also deleted the addition of Rs. 3,62,175/- that had beenmade by the assessing officer after disallowing the expendituredebited towards ‘Vehicle and Conveyance expenditure’ and‘Residential and mobile phone’ expenses. 5.Not satisfied with the order of the CIT(A), the Revenuefurther took the matter in appeal before the Tribunal. The Tribunalvide the order under appeal upheld the order of the CIT(A). Hencethis appeal. 6.We have heard learned counsel for the appellant-revenueand have perused the record. 5.Not satisfied with the order of the CIT(A), the Revenuefurther took the matter in appeal before the Tribunal. The Tribunalvide the order under appeal upheld the order of the CIT(A). Hencethis appeal. 6.We have heard learned counsel for the appellant-revenueand have perused the record. 7. In the present appeal, the additions/disallowances on the following three counts are involved: (a)Expenses amounting to Rs. 8,28,512/- under the head‘staff welfare expenses’. ‘staff welfare expenses’. (b)Allowance of Rs.3,31,539/- under the head “sales andbusiness promotion expenses” business promotion expenses” (c)Deletion of addition of Rs.3,62,175/- made by theassessing officer on account of personal use of vehiclesand telephone expenditure.assessing officer on account of personal use of vehiclesand telephone expenditure. 8. Learned counsel for the Revenue fairly accepted that so far as the questions (a) and (c) are concerned, the Tribunal hadrelied upon its earlier orders against which were challenged by theDepartment by filing Income Tax Appeal Nos. 288, 387 and 439 of2009 (Commissioner of Income Tax, Faridabad vs. M/s. G.E.Motors (I) Pvt. Ltd. (Now GEMI Motors (I) Pvt. Ltd.) decided on25.1.2011 and the said questions were held not to be substantialquestions of law. Accordingly, in view of the aforesaid decision of thisCourt, the questions (a) and (c) noticed above, are held not to besubstantial questions of law. 9.Adverting to the question at (b) mentioned above, it maybe noticed that the CIT(A) while delving thereon passed the followingorder: “I have considered the facts and the submissions of theLd. A.R. and also perused the order of the AO and I tendto agree with the contentions of the appellant that nospecific instance of the expenditure was brought outwhere it was not supported by the necessary evidence.Ld. A.R. and also perused the order of the AO and I tendto agree with the contentions of the appellant that nospecific instance of the expenditure was brought outwhere it was not supported by the necessary evidence. However, still, if any disallowance has to be made, thedisallowance of 10% of total expenditure is on a higherside and the ends of justice would be served if thedisallowance is restricted to 1.00 lac. The balancedisallowance of Rs. 3,31,539/- is, therefore, deleted.” 10. A perusal of the aforesaid order shows that the CIT(A) did not agree with the plea raised on behalf of the Revenueregarding adhoc 10% disallowance claimed by it on account of salesand business promotion expenses. The CIT(A) on appreciation ofmaterial on record, however, restricted the disallowance to anamount of Rs. 1,00,000/- and deleted the balance amount. Thisfinding of the CIT(A) was affirmed by the Tribunal on appeal carriedby the Revenue. 11.Learned counsel for the Revenue was unable to point outany illegality or perversity in the findings recorded by the authoritieson the aforesaid issue which may warrant interference by this Court.No substantial question of law, thus, arises in the appeal that mayrequire adjudication by this Court. 12.In view of the above, the appeal fails and is accordinglydismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) ACTING CHIEF JUSTICE