Bhatia Corporation Pvt. Ltd. , Kota vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 417/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

The A.C.I.T. cuke M/s Bhatia Corporation Pvt. Ltd. Circle-1, Kota. Vs. 23-24-B, Small Scale Industrial Area, Opp- Rajasthan Patrika, Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCB 8402 C vihykFkhZ@Appellant izR;FkhZ@Respondent

izR;k{ksi.k@C.O. No. 42/JP/2012 (Arising out of vk;dj vihy la-@ITA No. 417/JP/2012)

M/s Bhatia Corporation cuke The A.C.I.T. Pvt. Ltd. 23-24-B, Small Vs. Circle-1, Kota. Scale Industrial Area, Opp- Rajasthan Patrika, Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACCB 8402 C izR;k{ksid@Objector izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Shri Ajay Malik (Addl.C.I.T.) fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (C.A.)

lquokbZ dh rkjh[k@ Date of Hearing : 24/11/2014 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 16/01/2015 2 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

The appeal by revenue and cross objection by assessee arise

from the order dated 29/02/2012 of Ld. CIT (A), Kota for A.Y. 2008-09.

Respective grounds of appeal as well as C.O. are as under:-

Grounds in Revenue Appeal.

"On the facts and in the circumstances of the case, the Learned CIT(A) has erred in:-

(i) restricting the disallowance to Rs. 72,377/- as against Rs. 1,44,755/- on account of showroom expenses;

(ii) restricting the disallowance to Rs. 1,25,000/- as against Rs. 2,02,102/- on account of repair and maintenance;

(iii) deleting the disallowance of Rs. 8,44,216/- on account of unexplained, unvouched incentive and remuneration paid to the customers;

(iv) the appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing."

Grounds in Cross Objection "1. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming disallowance of Rs. 61,783/- incurred on foreign travelling expenditure of director's employees by holding that the employee's are director's wives who travelled with the directors due to their personal relations.

3 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

2. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming ad hoc disallowance out of various expenditures as under:-

Staff welfare Expenses Rs. 19,038/- Show Room Expenses Rs. 72,378/- Business Promotion Expenses Rs. 42,361/- Repair & Maintenance Expenses Rs.1,25,000 /-

3. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming disallowance of Rs. 58,315/- out of depreciation on vehicles by holding that the vehicles are not allowed to be used without insurance which was done after the end of the year ignoring that the vehicles were registered by RTO as on 31/3/2008 and thus were used during the year.

4. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming disallowance of Rs. 11,200/- out of payment of Rs. 55,105/- of road tax for trucks by treating the same as prepaid expenditure and not allowing the deduction for same U/s 43B.

5. The assessee craves right to add, alter, amend and modify any of the ground of appeal.

6. Necessary cost be awarded to the assessee."

2. The assessee derived income from authorized dealer for sale of

vehicles, spare parts and accessories of M/s Maruti Udyog Ltd. for

repairs. The assessment proceedings was completed U/s 143(3) of the

Income Tax Act, 1961 (hereinafter referred as the Act) on 26/12/2010

by the learned Addl. CIT, Range-1, Kota making the total taxable 4 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

income of the assessee at Rs. 1,16,22,904/-. Following additions were

made by the Assessing Officer, which is as under:-

1. Disallowance out of dealer Conference and traveling expenses Rs. 1,73,613/-

2. Disallowance out of staff welfare Expenses Rs. 19,038/-

3. Disallowance out of showroom Expenses Rs. 1,44,755/-

4. Disallowance out of business Promotion. Rs. 42,361/-

5. Disallowance out of repair and Maintenance expenses Rs. 2,02,102/-

6. Disallowance out of Commission Expenses Rs. 1,35,564/-

7. Disallowance out of depr. On Vehicles (8,020+50,295) Rs. 58,315/-

8. Disallowance out of Entertainment expenses Rs. 6,980/-

9. Disallowance out of Truck Expenses Rs. 11,200/-

10. Disallowance out of Incentive & Remuneration Rs. 8,44,216 Rs. 16,38,144/-

paid to customers Assessed Income Rs. 1,16,22,904/-

Rounded off Rs. 1,16,22,900/-

The learned Assessing Officer observed that the assessee had

confirmed Rs. 14,47,551/- under the head showroom expenses. The

learned Assessing Officer gave reasonable opportunity of being heard to

assessee to furnish the details. The assessee had filed required details

and copy of ledger account. On verification of details, it was found that

most of expenses were incurred in cash on the basis of self made 5 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

vouchers, therefore, a lump sum addition of Rs. 1,44,755/- being 10%

of total claim was disallowed by the Assessing Officer.

Under the head repair and maintenance, the assessee had

claimed expenses of Rs. 20,21,020/- in P&L account. On verification of

details filed, it was found by the Assessing Officer that a bill dated

06/8/2007 of Rs. 32,412/- issued by Frig Care Centre and payment of

Rs. 54,140/- to JVVN Ltd. were included therein. Month wise salary

payment had also been included. The assessee was also failed to

produce all the bills and vouchers related to repair and maintenance

expenses. Therefore, he presumed that the entire expenses were not

related to the business activities of the assessee company. Thus, a lump

sum disallowance of Rs. 2,02,102/- being 10% was disallowed and

added to the total income of the assessee.

Further the Assessing Officer verified the incentive and

remuneration paid to the customers, which had been debited in total at

Rs. 23,85,961/- in P&L account. On verification of detail, the learned

Assessing Officer found that an amount of Rs. 11,07,092/- had been

claimed as paid to the customers, Rs. 7,52,466/- had been debited as

service tax expenses and Rs. 5,26,403/- had been paid to the

employee. He further found that out of total incentive received from 6 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

M/s Sundaram Finance Ltd., 7,89,279/- was paid to customers and Rs.

1,10,763/- had been paid against the service tax. However, in other

cases, no such evidence was found. The finance company had decided

its terms with the Assessee Company and customers mutually. The

Assessing Officer treated the assessee as a facilitator in this case,

intends to give any further benefit over and above the benefit being

given by the finance company, they should get reflected in the

documents prepared by the financial company as well as was found in

case of Sunderam Finance because the dealer was sharing liability of

customer in repayment of loan take. No such evidence was found in

other cases except self prepared documents by the assessee company.

Nevertheless, the benefit of service tax paid was given in other cases as

well. Thus, total addition of Rs. 8,44,216/- was made to the total

income for want of proper verification of the evidences maintained in

this regard.

3. Being aggrieved by the order of the Assessing Officer, assessee

carried the matter before the learned CIT(A), who had allowed the

appeal partly after considering the assessee's reply i.e. the learned

Assessing Officer made ad hoc/lump sum addition out of expenses

claimed by the appellant. He had not been pointed out any specific item 7 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

of expenses which had not been incurred wholly and exclusively for

business purposes. The cash payment permitted under the law for

expenses cannot be basis of addition. The learned CIT(A) had found

that these disallowances excessive, therefore, he restricted the addition

to 5% of total expenses.

For repair and maintenance, learned CIT(A) observed that most

of the expenses were supported by bills and vouchers, some

disallowance was considered justified. After considering the fact that

part of the expenses are fully vouched and supported by the third party

voucher, the disallowance was restricted to Rs. 1,25,000/- and deleted

the remaining addition of Rs. 77,102/-.

Under the head incentive and remuneration paid to the

customers, it has been observed by the learned CIT(A) that this

expenditure can be summarized as under:-

i) Paid to customers Rs. 11,07,092/-

ii) Service Tax Rs. 07,52,466/-

iii) Paid to employees Rs. 05,26,403/-

Total Rs. 23,85,961/-

The assessee had received incentive from Sunderam Finance at

Rs. 7,89,279/-. Remaining incentive was received from various banks 8 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

i.e. Rs. 3,17,813/-, which has also been passed on to the customers.

The assessee received incentive from Maruti Insurance amounting to

Rs. 89,76,823/-. The assessee paid to the employee out of this

incentive at Rs. 4,47,726/- and only Rs. 21,058/- was passed on to the

customers. Accordingly he held that incentive paid to the employees

was reasonable and no disallowance is called for.

4. Now the Revenue is in appeal as well the assessee is in C.O.

before us. The learned D.R. vehemently supported the order of the

Assessing Officer and argued that the expenses incurred by the

assessee either in cash was not supported with proper bills or vouchers,

therefore, he prayed to confirm the order of the learned Assessing

Officer.

5. At the outset, the learned A.R. for the assessee submitted that

expenditure incurred is wholly and exclusively for the purpose of the

business and duly supported with proper supportings and bills. The

nature of these expenses are such that pakka bills are not possible and

few payments are to be made in cash. However, payment in cash does

not mean that the expenses are not genuine. Each cash payment is

supported by the signature of the recipient on the vouchers. Hence,

simply because the payment is in cash no adverse inference is called 9 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

for. The expenses are reasonable considering the volume of business of

the assessee. The lower authorities have not pointed out any specific

payment which is not verifiable. It is not the case of the lower

authorities that expenses are inflated or fake. Thus, expenses are fully

verifiable.

In respect of few instances of expenditure of Rs. 64,980/- under the

head business promotion & Rs. 86,552/- under the head repair &

maintenance pointed out by the AO is concerned, it is to be noted as

under:-

- Rs. 64,980/- incurred towards marriage & birthday gifts to the family members of the staff is a normal business/courtesy expenditure incurred in the course of running the business. The same is to maintain cordial relations with the staff of the company with whose efforts assessee was able to achieve sales target fixed by M/s Maruti Udyog Ltd., thereby receiving incentives.

- Rs. 32,412/- was incurred on purchase of electric wires & cables from M/s Fridge Care Centre. The same were used for replacement of electric wiring at assessee's city office at New Colony, Kota & at workshop at 13-16B, Industrial Area, Kota. Copy of voucher & bills is at. The same were also submitted during the course of assessment proceedings vide letter dt. 09.12.2010.

- The total amount paid to JVVNL was Rs. 80,840/- out of which Rs. 18,200/- was towards security deposits, Rs. 8,500/- was towards fixed & other charges & Rs. 54,140/- was for 11KW line 10 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

charges. Thus, the amount of Rs. 54,140/- was the expenditure incurred for increasing the power load which relates to the business of the assessee.

Thus, the expenditure incurred by assessee is necessarily and

exclusively for the purpose of business. The learned CIT(A) has also

accepted the explanation of the assessee but still without any basis

confirmed the disallowance of Rs. 19,038/- & Rs. 42,361/- out of staff

welfare & business promotion expenses respectively & restricted the

disallowance out of showroom expenses to Rs.72,377/- & repair &

maintenance expenses to Rs. 1,25,000/-. No disallowance can be made

just for the sake of disallowance. Hence, the entire disallowance be

deleted.

Reliance is also placed on the following case laws:-

(i) Widex India (P) Ltd. Vs. DCIT 66 DTR 57 (Del.)(Trib.)

(ii) CIT Vs. Oracle India (P) Ltd. 199 Taxman 181 (Del) (HC) (Mag.)

(iii) Arthur & Anderson & Co. Vs. ACIT (2010- TIOL-416-ITAT)

(iv) Seasons Catering Services (P) Ltd. Vs. DCIT 43 DTR 397 (Del) (Trib)

He further submitted that the assessee has received gross

commission/incentive of Rs. 2,67,51,209/- from various banks/finance

companies/insurance companies against which it has incurred expenses

of Rs. 23,85,961/- towards service tax & incentive paid to

11 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

customers/employees. In course of assessment proceedings, assessee

has furnished the finance/bank wise details of the gross commission

received & incentive/service tax paid. In respect of service tax paid,

complete details were furnished which was accepted by the AO. In case

of incentive given to the customers/employees, sample copy of the

customer ledger account, copy of invoice, customer payment details,

letter from the finance company containing details of the amount

passed on to customers in respect of finance through Sundram Finance

Ltd. , SBI , ICICI Bank & HDFC Bank was filed. The learned AO

accepted the incentive passed on to the customer in respect of finance

through Sundaram Finance Ltd. but without any basis ignored the

similar incentive passed on to the customer where finance is obtained

from other banks. In case of incentive paid to the employees/adjusted

in customer account against the Maruti Insurance Remuneration,

sample vouchers were furnished where the detailed calculation of the

incentive & its payment by cheque is indicative. The learned CIT(A),

considering these evidences, have, therefore, rightly allowed the

incentive passed on to the customers/employees in respect of other

banks/insurance companies. In view of above, the ground of the

assessee be allowed by dismissing the ground of the Department.

12 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

6. We have heard the rival contentions of both the parties and

perused the material on record. The appellant had not reverted the

finding given by the learned CIT(A) with respect to showroom

expenses, therefore, we confirm the addition made by the learned

CIT(A). He was reasonable to accept the assessee's submission,

therefore, revenue's appeal is dismissed on this ground. The

disallowance confirmed under the head repair and maintenance

expenses, the assessee's arguments has been found convincing. He also

furnished copy of evidence at page Nos. 17 to 19 of paper book, which

has also been submitted before the Assessing Officer, which shows that

the assessee had purchased the cable from Frig Care Centre, 7,

Aerodrame Circle, Kota vide bills No. 1133 dated 06/8/2007 and 1117

dated 04/8/2007, Rs. 80,840/- paid to JVVN Ltd. as per paper book

page No. 20-21. However, expenditure incurred by the assessee under

this head at Rs. 20,21,020/-. The Assessing Officer disallowed 10% out

of total expenses at Rs. 2,02,102/-, which was restricted by the

Assessing Officer at Rs. 1,25,000/-. The learned A.R. has not

controverted the findings given by the learned CIT(A) as well as the

Assessing Officer that the assessee was unable to produce the complete

bills and vouchers related to repair and maintenance. Therefore, he was 13 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

reasonable to restrict the disallowances at 5%. Accordingly, the

revenue's appeal as well as C.O. of the assessee are dismissed on this

ground. The learned CIT(A) allowed the full expenses under the head

incentive and remuneration paid to the customers after verifying each

item, which has not been controverted by the learned DR, therefore,

we dismiss the revenue's appeal on this ground.

7. Now, we are taking remaining grounds of C.O. of the assessee. In

the first ground of the C.O. the appellant had challenged the

disallowance of Rs. 61,783/- incurred on foreign traveling expenditure

of directors, employees by holding that the employees were directors'

wives, who travelled with the directors due to their personal relation.

The learned Assessing Officer observed that the assessee incurred

expenditure on travelling at Rs. 8,83,522/-. It is found that Rs.

1,37,598/- and Rs. 1,66,598/- were incurred on account of foreign

travelling of director's family members alongwith Shri Ram Bhatia and

his family members on various dates. The expenses of Rs. 68,000/- and

Rs. 1,04,814/- were incurred on foreign travelling of children and wives.

The assessee failed to justify such foreign travelling for business

purposes, therefore, he held that the expenses of Rs. 1,73,613/- was

not incurred wholly and exclusively for business purposes. The learned 14 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

CIT(A) verified the expenditure, which was found at Rs. 1,66,598/- in

place of Rs. 1,73,613/- and held that none of the employee other than

the family members of directors went on tour to China and Athens and

travelled for their personal relation not as an employee of the company.

Accordingly, he held personal expenditure incurred by the company. He

confirmed the addition of Rs. 1,04,814/- and deleted the balance

addition of Rs. 68,799/-.

The learned AR argued that salaries of Smt. Jaya Bhatia and Smt.

Shalini Bhatia were allowed by the learned Assessing Officer as

employees. This itself establishes that although they were director's

wives but they were working in their capacity as an employee of the

company and therefore the expenditure incurred on their foreign

travelling is necessarily and exclusively for the purpose of business and

qualify for deduction u/s 37(1) of the Act. He relied upon the following

case laws:

i) Mahesh Chand Jain Vs. ACIT 108 TTJ 190 (Del.)(Trib.).

ii) DCIT vs. Parekh Plast India (P.) Ltd. 137 ITD 208 (Mum.) (Trib.)(2012)

iii) CIT & Anr. Vs. Luwa India Ltd. 75 DTR 367 (Kar.)(HC) (2012)

iv) Rahuljee & Co. (P) Ltd. Vs. ITAT & Ors. 73 DTR 89 (Del.) (HC) (2012) Therefore, he prayed to delete the addition confirmed by the learned

CIT(A).

15 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

The learned D.R. vehemently supported the order of the learned

CIT(A) and argued that the director's wives were not gone to any

business purposes to foreign.

After considering both the sides and case laws referred by the

learned A.R., which are not squarely applicable on the case of assessee

as the relative in all the case laws referred by the assessee were on

foreign tour related to business purposes. However, in case of assessee,

no evidence was produced before the lower authorities as well as

before us that purpose of the directors as well as their wives and

directors employees was for business. Therefore, we confirm the order

of the learned CIT(A).

8. The first point of second ground of assessee's C.O. is against

confirming the ad hoc disallowance under the head Staff Welfare

Expenses. The staff welfare expenses claimed by the assessee at Rs.

1,90,382/-, the learned Assessing Officer disallowed Rs. 19,038/- being

10% of total expenses claimed on the ground that the expenses were

not wholly and exclusively incurred for business purposes and on self

made vouchers , which has been confirmed by the learned CIT(A) by

observing that the disallowances were having personal nature and

claimed on self made vouchers. The learned AR reiterated the same 16 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

arguments that no specific defects had been pointed out by the learned

Assessing Officer and the learned CIT(A) except claimed on self made

vouchers. He further submitted that Rs. 64,980/- was incurred towards

marriage and birthday gifts to the family members of the staff is a

normal business/courtesy. The expenditure incurred in course of

running the business for maintenance of cordial relation with the staff.

After considering the assessment order as well as finding given by the

learned CIT(A) we hold that no specific defects had been pointed out by

the lower authorities except holding that they were claimed on self

made vouchers. The assessee had incurred these expenses on staff

welfare, which are required to maintain the cordial relation with the

staff, so that the company's target can be achieved. We find that these

expenses were incurred wholly and exclusively for the business

purposes, therefore we delete the addition confirmed by the learned

CIT(A) on this ground. Accordingly, this ground of assessee's C.O. is

allowed.

9. The third ground of assessee's C.O. is against disallowance of Rs.

58,315/- out of depreciation on vehicles by holding that the vehicles are

not allowed to be used without insurance, which was done after the end

of the year ignoring that the vehicles were registered by the RTO as on 17 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

31/3/2008. The learned Assessing Officer observed that the assessee

had claimed depreciation on Demo motor car for Rs. 8,03,951/-. During

the year, the assessee added Alto of Rs. 2,51,400/-, Swift of Rs.

7,16,983/- and Wagon-R of Rs. 3,79,209/- in this list of assets on

31/3/2008, which was the last day of financial year. The R.C. of Wagon-

R and Alto had been issued on 31/3/2008 and insurance was taken on

2/4/2008. It has been held by the Assessing Officer that uninsured

motor vehicles cannot be used for the purpose of transportation.

Accordingly he disallowed the depreciation on Wagon-R and Alto at Rs.

50,295/-, which has been confirmed by the learned CIT(A) by observing

that no vehicle is allowed to use without insurance, which was taken

after the end of the year.

The learned A.R. for the assessee submitted that the motor cars

were used by the assessee for the purpose of business. He also

submitted that details of additions showing bill date, registration date,

insurance date and put to use date was submitted during the course of

assessment proceedings vide letter dt. 09.12.2010, which proved that

Wagon R & Alto were registered on 31.03.2008 and as soon as they

were registered and placed at the showroom of assessee for

demonstration, the same are put to use. The subsequent insurance on 18 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

02.04.2008 has thus no relevance in so far as the ownership and the

use of the demo cars are concerned. There is no law that without

insurance, a vehicle cannot be used. The assessee has, thus, satisfied

the condition of section 32(1) and therefore entitled to depreciation

thereon. He relied upon the decision in the case of Goverdhan Prasad

Singhal Vs. ITO & Anr. 27 DTR 1 (Jpr.)(Trib.) for the car taken on the

basis of delivery note on 31/3/2003 and Ajay Goyal Vs. ITO 99 TTJ 164

(Jod.)(Trib.) and prayed that the addition confirmed by the CIT(A) may

be deleted.

The learned D.R. supported the order of the learned CIT(A). After

considering the facts of the case, we hold that both the vehicles were

registered on 31/3/2008 and vehicles were used for Demo purposes

which can safely be placed at the business premises for the purpose of

Demo. Even on Demo vehicles, the insurance is required but the

assessee had placed these vehicles in its showroom for Demo purposes,

which proved that the assets were used on last date for the purpose of

business, accordingly, depreciation claimed by the assessee is justified.

Therefore, we allow this ground of assessee's C.O.

10. The 4th ground of the assessee's C.O. is against confirming the

disallowance of Rs. 11,200/- out of payment of Rs. 55.105/- of road tax 19 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

for trucks by treating the same as prepaid expenditure. The learned

Assessing Officer found that the assessee had claimed Rs. 1,84,758/-

under the head truck expenses. On verification of details, it was found

by the Assessing Officer that Rs. 55,105/- was paid/deposited on

account of road tax on 25/3/2008, which included a sum of Rs. 11,200/-

as prepaid road taxes, which pertained to next financial year. Thus, he

made addition of Rs. 11,200/- in the income of the assessee, which was

confirmed by the learned CIT(A) by observing that as per Section 43B

of the Act, the expenses is allowable if the same is allowable otherwise.

This expense of Rs. 11,200 is not allowable otherwise as pertained to

next year.

The learned AR submitted that as per Section 43B, a deduction

otherwise allowable under this Act, is allowable in the previous year in

which such sum is actually paid. The road tax is expenditure allowable

under the Act and therefore the same is to be allowed on actual

payment basis even if a part of it relate to the subsequent year. He

relied upon the following case laws:-

(i) Paharpur Cooling Towers Pvt. Ltd. Vs. CIT 61 DTR 309 (Cal.)(HC)

(ii) DCIT Vs. Glaxo Smithkline Consumer Health Care Ltd. 107 ITD 343 (Chd.)(SB)

(iii) K.C.P. Ltd. Vs. ITO 38 ITD 15 (Hyd.)(SB)

(iv) CIT Vs. Southern Roadways Ltd. 265 ITR 404 (Mad.)(HC)

20 ITA 417/JP/2012 & C.O. 42/JP/2012_ ACIT Vs Bhatia Corp. Pvt. Ltd.

(v) CIT Vs. Modipon Ltd. 205 Taxman 79 (Del.)(HC)(Magz.)

The learned D.R. has vehemently supported the order of the

learned CIT(A). After considering the submissions of both the parties

and the case laws cited by the assessee, we find that the payment of

road tax in advance is allowance U/s 43B even pertained to subsequent

year. Accordingly, the assessee's C.O. is allowed on this ground.

11. In the result, the revenue's appeal is dismissed and C.O. of the

assessee is partly allowed.

Order pronounced in the open court on 16/01/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated 16th January, 2015. *Ranjan.

vkns'k dh izfrfyfi vxzsf'kr@Copy of the Order forwarded to:

1. vihykFkhZ@The Appellant- The ACIT, Circle-1, Kota.

2. izR;FkhZ@ The Respondent- M/s Bhatia Corporation Pvt. Ltd., Kota.

3. vk;dj vk;qDr¼vihy½@The CIT(A),Kota

4. vk;dj vk;qDr@ CIT, Jaipur

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA 417/JP/2012 & C.O. 42/JP/2012).

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar