Tca/896/2013 Of Commissioner Of Income Tax v. The Lakshmi Vilas Bank Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated :16.04.2014 Coram The Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Mr.Justice T.S.SIVAGNANAM Tax Case (Appeal) No.896 of 2013 Commissioner of Income TaxChennai.... Appellant-vs- The Lakshmi Vilas Bank Ltd.,Kathaparai, Karur...Respondent Prayer: Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Madras "C" Bench dated 22.03.2013 passed in I.T.A.No.1401/Mds/2010for the assessment year 2004-05. ITA 1401/mds/2012: this appeal isfiled against order dated 25.5.2012 passed by the commissioner of IT(A) Tiruchirappali passed in ITA.689/06-07 for the asseessment year2004-05 against the assessment order dated 29.12.2006 passed by theAdditinal Commissioner of IT, Company Circle I, Tiruchirappali. For appellant: Mr.J.Narayanasamy Standing Counsel for Income Tax Department JUDGMENT (The Judgment of the Court was made byCHITRA VENKATARAMAN.J.,) Revenue seeks admission of the Tax Case (Appeal) relating to theassessment year 2004-05 raising the following question of law: "Whether on the facts and in the circumstances of thecase the Tribunal was right in deleting the disallowance of10% of the assessee's claim of other expenses amounting toRs.84,33,561/- on the ground that there is no specificrejection of details placed by the assessee on record whenthe assessee had not produced any vouchers in support ofthe claim?" https://hcservices.ecourts.gov.in/hcservices/ 2. The assessee is a banking company. While completing theassessment under Section 143(3), the Assessing Officer found that theassessee had claimed deduction of a sum of Rs.8,43,35,691/-. Theassessee explained that the expenditure is of petty cash nature likedata entry charges at some of the branches, ticket collectioncharges, branch cleaning charges, wax, candle, paper cups, plates,bags for carrying cheque/cash etc., which could not included underthe other broad heads. The bank has 224 branches, 8 divisionaloffices and Head Office and the amount per branch/office would beinsignificant. The Assessing Officer considered this claim anddisallowed 10% of the total expenditure claimed holding that it wouldbe of personal nature not exclusively necessary for business. Thus asum of Rs.84,33,569/- was disallowed on estimated basis and added tothe total income of the assessee. Aggrieved by this the assesseewent on appeal before the Commissioner of Income Tax (Appeals) whoconfirmed the order of the Assessing Officer. The Commissionerpointed out that the authorised representative could not produce anyvouchers or account for the expenditure maintained at the branchlevel or head office level. In the circumstances, the Commissionerconfirmed the disallowance. Aggrieved by this, the assessee went onappeal before the Income Tax Appellate Tribunal. Allowing theappeal, the Tribunal pointed out that while disallowing 10%, theFirst Appellate Authority and the Assessing Officer held that thepossibility of personal expenditure could not be ruled out. TheTribunal held that neither the Assessing Officer nor the Commissionerof Income Tax (Appeals) had any material on record to reject theclaim of the assessee. Once the Assessing Officer held that 90% ofthe expenditure of this nature was liable to be accepted, there wasno reason for restricting the claim to 90% alone and disallow 10%.Thus, the Income Tax Appellate Tribunal accepted the case of theassessee and allowed the appeal.Hence the present appeal by theRevenue seeking admission on the question of law stated above. 3. We do not find any ground to admit this Tax Case (Appeal)since the issue herein is purely a factual one. It is not denied bythe Revenue that the assessee has 24 branches, 8 divisional officeand a head office. The expenditure claimed by the assessee relatedto petty cash expenditure and when the Revenue had thought fit toallow 90% of the claim, there was no reason to reject the balance 10%attributing it to the possibility of having the shade of a personalexpenditure. Except for this reasoning, we do not find anyjustification in the Revenue's contention that the disallowance of10% is warranted in the facts of the case, which, being a purefactual issue, we reject the appeal at the admission stage itself. https://hcservices.ecourts.gov.in/hcservices/ 4. In the result, the Tax Case (Appeal) is dismissed. No costs. Sd/-Assistant Registrar(CS-V)dt. 23.04.14 /True Copy/Sub. Assistant Registrarvj2To 1. The Assistant Commissioner of Income Tax, Company Circle I, Tiruchirapalli2. The Commissioner of Income Tax (Appeals) Tiruchirapalli3. The Income Tax Appellate Tribunal, Chennai "C" Bench.+ 1 cc to Mr.J. Narayanasamy Standing Counsel Sr.18688Tax Case (Appeal) No.896 of 2013GGK(CO)EU 28.4.14