The Principal Commissioner Of Income Tax-2 v. M/S Kunj Infrastructure Pvt. Ltd

C/TAXAP/213/2020 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 213 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 Versus M/S KUNJ INFRASTRUCTURE PVT. LTD. ========================================================== Appearance:MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1========================================================== CORAM: HONOURABLE MR. JUSTICE R.M.CHHAYAand HONOURABLE MR. JUSTICE ILESH J. VORA Date : 21/09/2020 ORAL ORDER (PER : HONOURABLE MR. JUSTICE R.M.CHHAYA) 1. Heard Mr. Manish Bhatt, learned Senior Counsel assisted byMrs. Mauna M. Bhatt, learned counsel for the Appellant –Revenue through Video Conferencing. Mrs. Mauna M. Bhatt, learned counsel for the Appellant –Revenue through Video Conferencing. 2. By this appeal under section 260-a of the income tax act,1961 (hereinafter referred to as “the act” for short), theappellant has challenged the impugned judgment and orderdated 04.12.2019 passed by the learned tribunal in ITA No.2891/AHD/2016 and order passed by CIT(A) – Ahmedabaddated 22.08.2016 for assessment year 2010-11. 1961 (hereinafter referred to as “the act” for short), theappellant has challenged the impugned judgment and orderdated 04.12.2019 passed by the learned tribunal in ITA No.2891/AHD/2016 and order passed by CIT(A) – Ahmedabaddated 22.08.2016 for assessment year 2010-11. 3. It is the case of the respondent - assessee, inter alia, that,the respondent is engaging in the business of constructionand it had filed income tax return on 14.10.2010 declaringthe respondent is engaging in the business of constructionand it had filed income tax return on 14.10.2010 declaring total income as ‘Nil’ for Assessment Year 2010-11. Theoriginal assessment under Section 143 (3) of the Act wasmade determining total loss of Rs.68,02,400/-. Thereafter,the appellant - Revenue in exercise of powers underSection 147 of the Act reopened the same anddetermined total loss of Rs.63,67,400/- and it disallowedan amount of Rs.4,35,000/- under Section 40A (3) of theAct. The said amount relates to cash payment on accountof legal expenses paid to learned Solicitor viz. M/s.C.C.Gandhi & Co., Advocates. 4. Being aggrieved by the said order of reassessment, therespondent – assessee preferred an appeal before theCIT (A). The CIT (A) considered the submissions made bythe respondent assessee and also considered the factthat, the professional fees paid to the said learnedSolicitor. The CIT (A) after appreciating the provisions ofSection 40 (A)(3) of the Act, as amended by Finance Act,2002 w.e.f. assessment year 2008-09, verified the copy ofthe bill of the ld. Solicitor submitted by the respondentassessee and considering the evidence on record,allowed the appeal and disallowance made by theassessing officer under Section 40 (A) (3) of the Act cameto be deleted. However, the Tribunal was pleased to partlyallow the appeal filed by the respondent assessee on theground of interest and also on the ground that, no appeallies against the initiation of penalty under Section 271 (1)(c) of the Act. 5. Being aggrieved by order of CIT(A)2, Revenue preferredan appeal before the Tribunal.an appeal before the Tribunal. 6. Considering the findings of the Appellate Authority, CIT(A) was pleased to dismiss the appeal filed by theappellant – Revenue. (A) was pleased to dismiss the appeal filed by theappellant – Revenue. 7. The appellant – Revenue has raised the followingsubstantial questions of law in this appeal :substantial questions of law in this appeal : 5. Being aggrieved by order of CIT(A)2, Revenue preferredan appeal before the Tribunal.an appeal before the Tribunal. 6. Considering the findings of the Appellate Authority, CIT(A) was pleased to dismiss the appeal filed by theappellant – Revenue. (A) was pleased to dismiss the appeal filed by theappellant – Revenue. 7. The appellant – Revenue has raised the followingsubstantial questions of law in this appeal :substantial questions of law in this appeal : (i)Whether the Appellate Tribunal has erred in lawand on facts in confirming the decision of CIT (A)deleting the disallowance of Rs.4,35,000/- madeunder Section 40A(3) of the Act ?and on facts in confirming the decision of CIT (A)deleting the disallowance of Rs.4,35,000/- madeunder Section 40A(3) of the Act ? (ii)Whether the Appellate Tribunal has erred in lawand on facts in holding that the payments werecovered by Rule 6DD(b) although the paymentswere made by the assessee to M/s. C.C.Gandhi &Co. and not to the Government ?and on facts in holding that the payments werecovered by Rule 6DD(b) although the paymentswere made by the assessee to M/s. C.C.Gandhi &Co. and not to the Government ? (iii)Whether the Appellate Tribunal has erred in lawand on facts by referring to the written submissionof the assessee (reproduced on page 7 of the CIT(A)’s order), which relies on Rule 6DD(j) althoughRule 6DD(j) was deleted w.e.f. 01.12.1995 ?and on facts by referring to the written submissionof the assessee (reproduced on page 7 of the CIT(A)’s order), which relies on Rule 6DD(j) althoughRule 6DD(j) was deleted w.e.f. 01.12.1995 ? Though above substantial questions of law have beenraised in this appeal, all three questions of law relate tothe payment made in cash to the ld. Solicitor by theassessee. Having considered the concurrent findings, we do not find that, the Tribunal has erred in law and on factsin confirming the decision of CIT (A) deleting thedisallowance of Rs.4,35,000/- made under Section 40A(3)of the Act. Hence, we find that, both the authorities havecorrectly deleted disallowance made by the assessingofficer. No interference is called for. Therefore, we are notinclined to admit this appeal. Questions raised in theappeal are decided against the revenue and in favour ofthe assessee. The appeal is hereby dismissed. (R.M.CHHAYA, J) DRASHTI K. SHUKLA (ILESH J. VORA,J)