Kamat & Co v. The Assistant Commissioner Of Income-Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 336 OF 2006 Kamat & Co. ...Appellant Versus The Assistant Commissioner of Income-tax, Range-12(1), Mumbai, & Anr. ...Respondents Mr. Deepak Tralshawala with Mr. V.S. Hadade for the Appellant Mr. Vinod Gupta for the Respondents. CORAM:B ILAL NAZKIand S.S. SHINDE, JJ. DATE: JUNE 27, 2008 P.C.:- Heard the learned counsel for the parties. 2.Following questions have been framed:- “(a) On the facts and in the circumstances of the case,whether the Income-tax Appellate Tribunal was justified inlaw in estimating the disallowance at 25% of the claim asagainst the CIT(A)'s estimate of 10%? (b) On the facts and in the circumstances of the case,whether the Income-tax Appellate Tribunal was justified inlaw in estimating the disallowance at 25% of the claim asagainst the CIT(A)'s estimate of 10% by brushing aside thereasons recorded by the CIT(A)? (c) On the facts and in the circumstances of the case and inlaw, whether there was any material before the Tribunal todisagree with the CIT(A) and estimate the disallowance at25% of the claim? (d) On the facts and in the circumstances of the case,whether the Tribunal misdirected itself in law in basing itsconclusion on some evidence ignoring other essentialmaterials on record? 3.All questions relate to the facts whether disallowance at 25% of the claim was justified or disallowance at 10% was justified.Basically, this is a question of fact. The Tribunal, in paragraph 7 of itsorder, has discussed it in detail. The assessee had claimed expenditureof Rs.29,17,430/-, but it had not kept or placed before the authoritiesany evidence that it had actually incurred this expenditure. Although itstated that it had paid coollies and labour through supervisor orMukadam, to whom the payment was made, but even it did not produceany receipts from either a supervisor or a Mukadam. Therefore, theTribunal was justified in not allowing deduction at the rate of 50%. 4.The learned counsel for the appellant, however, hassubmitted that in earlier years and in subsequent years to the assessment in question, the appellant was allowed deduction fully.Therefore, the order needs to be re-considered. We feel that therestriction to a certain percentage in disallowance would depend on theevidence produced, and the expenditure actually incurred in differentyears of assessment could be different. Therefore, if a disallowance isallowed at a particular rate in a particular year, that cannot be taken asprecedent for other years. 5.The learned counsel for the appellant has relied on ajudgment of the Madras High Court in Commissioner of Income-tax v.South India Corporation (Agencies) Ltd., reported in [2007] 293 ITR 237,where the assessee claimed disallowance of 50%. The High Courtconsidered an earlier case, and found that the assessee had a lot ofdishonest transactions with its subsidiary, and was carrying on variousactivities through the subsidiary, and, therefore, it was not possible tohave the evidence to prove the actual expenditure. This case can bedistinguished on the ground that the appellant itself claimed that it paidthe money through supervisor, but did not produce any proof therefor.Therefore, the questions raised are purely factual, and cannot be goneinto. 6.The appeal is dismissed. BILAL NAZKI, J. 4 S.S. SHINDE, J.