Income Tax Appellate Tribunal – Hyderabad
Jasper Auto Services Private … vs Deputy Commissioner Of Income … on 28 October, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES “A”: HYDERABAD
(THROUGH VIRTUAL CONFERENCE)
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
AND
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No. 705/H/2020
Assessment Year: 2014-15
Jasper Auto Services Pvt. Vs. Dy. Commissioner of
Ltd., Hyderabad. Income-tax,
Circle – 2(1), Hyderabad.
PAN – AACCB 0196P
(Appellant) (Respondent)
Assessee by: Shri P. Murali Mohan Rao
Revenue by: Smt. N. Swapna
Date of hearing: 09/09/2021
Date of pronouncement: 28/10/2021
ORDER
PER L.P. SAHU, A.M.:
This appeal filed by the assessee is directed against CIT(A) – 6,
Hyderabad’s order dated 01/08/2018 for AY 2014-15 involving
proceedings u/s 143(3) of the Income Tax Act, 1961; in short “the
Act on the following grounds of appeal:
”
1) The Ld. CIT(A) erred in dismissing the appeal
2) (a) The Ld. CIT(A) erred in confirming the addition of
Rs.3,68,33,000/-_ made towards Long Term Capital Gains.
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(b) The Ld. CIT(A) erred in holding that in the appellant’s case,
there was a slump sale within the meaning of section 2(42C) of
the Act attracting the provisions of section 50B of the Act.
(c)The Ld. CIT(A) erred in holding that the transfer of part of
the assessee’s assets as “slump sale” and that the provisions of
section 50B of the Act would attract.
(d) The Ld. CIT(A) ought to have appreciated that the sale of
assets of “Passengers Car Business” of the assessee is not in the
nature of “Slump Sale” .
(e) The Ld. CIT(A) ought to have appreciated that the
impugned sale of assets is an itemized sale and that it cannot
be treated as a “slump sale” within the meaning of section
2(42C) of the Act.
3 (a) The Ld. CIT(A) erred in confirming the disallowance 0
expenditure to the extent of Rs.12,14,253/-
(b) The ld. CIT (A) ought to have appreciated that the
agreement of the assessee’s AR for the disallowance of Rs.
12,14,253/-, during the course of assessment proceedings, has
not been authorised by the appellant.
4. The appellant may, add or alter or amend or modify or
substitute or delete and / or rescind all or any of the grounds
of appeal at any time before or at the time of hearing of the
appeal.”
2. We notice at the outset that assessee’s instant appeals suffer
from 753 days delay in filing before the ITAT. To this effect, the
assessee filed a petition along with an affidavit for condonation
of delay wherein it was inter-alia, affirmed that due to the papers
relating to appeal misplaced by one of office staff, caused the
impugned delay in filing of the instant appeals. Case law Collector
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Land Acquisition vs Mst. Katiji & Ors, 19 87 AIR 1353 (SC) and
University of Delhi Vs. Union of India, Civil Appeal No. 9488 &
9489/2019 dated 17 December, 2019, hold that such a delay;
supported by cogent reasons, deserves to be condoned so as to
make way for the cause of substantial justice. W e accordingly hold
that assessee’s impugned delay is neither intentional nor
deliberate but due to the circumstances beyond its control. The
same stands condoned. Case is now taken up for adjudication on
merits.
3. Briefly the facts of the case are that the assessee company,
engaged in the business of trading of automobiles and servicing of
motor vehicles, filed its return of income for the AY 2014 -15 on
30/09/2014 admitting loss of Rs. 4,08,54,293/- under normal
provisions and admitted book profit u/s 115JB of Rs. 36,28,980/-.
Subsequently, the case was selected for scrutiny through CASS and
statutory notices were issued, against which, the AR of the
assessee furnished the information as called for.
3.1 During the course of assessment proceedings, the AO
observed that the assessee company sold passengers car
dealership of TATA Motors business in three districts of Andhra
Pradesh to M/s. Jasper Automobiles Private Limited (JAPL) for a
consideration of Rs 14,00,00,000/-. Further, the AO examined the
agreement dated 28.03.2014 entered in to between the assessee
and JAPL and found that as per clause (3) of the agreement, the
assessee sold business of dealership of passenger cars, supply of
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spare parts and service of vehicles as a going concern to JAPL·
Accordingly, the AO opined that the transaction is in the nature of
slump sale as envisaged u/s. 5OB of the Act and proposed to add a
sum of Rs.3,68,33,000/-, being the difference between total sale
consideration received of Rs.l4,00,00,000/- and net worth of the
company of Rs.10.32 Cr. as LTCG. In this regard, the assessee was
offered to file its objections and in response, vide its letter dated
15.01.2016, made certain written submissions objecting to the
proposed addition treating the transaction as slu mp sale. The gist
of the assessee’s objections is given below.
” 1. The difference between the sale consideration and net
worth of the company of Rs.3,68,33,000/- is received towards
transfer of goodwill of the company and, therefore. the same is
in the nature of loss of profit to the company. Thus, the same is
not taxable.
2. The sale of assets of the company to JAPL is not in the nature
of slump sale since there are still some assets continuing in the
balance sheet of the company generating income. Accordingly,
the provisions of section 5OB of the Act are not applicable.
3.2 After having considered the objections of the assessee, the
AO did not accept the same on the ground that the assessee sold
the business for a lump sum consideration without there being any
itemized sale of assets and, therefore, the provisions of section
50B of the Act are squarely applicable. Accordingly, the AO brought
the difference amount of Rs.3,68,33,000/– to tax as LTCG.
4. Aggrieved by the order of the AO, the assessee preferred an
appeal before the CIT(A).
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5. During the course of the appellate proceedings, it was
contended by the assessee that the sale of asse ts of passenger car
business of the assessee is not in the nature of slump sale as all the
assets were not transferred and there was an itemized sale of
assets.
6. After considering the submissions of the assessee, referring
to the provisions of section 50B and considering the decisions of
the Hon’ble Supreme Court, the CIT(A), confirmed the action of the
AO, inter-alia, observing as under:
” 7.6.14 In the instant case, there is no dispute with regard to
quantum of LTCG computed. On the other hand, the only,
contention of the assessee is that certain assets still exist in its
balance sheet after the sale, I have examined the same and
found that such assets have no nexus with the transf er of the
business of passenger car dealership of TATA motors of the
assessee inasmuch as all the assets pertaining to that business
have been transferred to JAPL as evidenced by MOU and the
agreement (supra). At this juncture, it is also important to note
that the assessee is carrying on other business activities i.e.,
supporting & auxiliary transport activities and activities of
travel agencies, and by virtue of which the assessee is deriving
income, even after transfer of business of passenger car
dealership of TATA motors to JAPL. Accordingly, the assessee
company is having certain assets relating to such existing
business. However, the important fact to be noticed is that all
the assets pertaining to business of passenger car dealership of
TATA motors have been transferred to JAPL on a going concern
basis. In view of this, the assessee cannot argue that the
provisions of section SOB of the Act are not applicable since
certain assets exist in its balance sheet.
7.6.15. It is also contended by the assessee that it was an
itemized sale, but the same is baseless and devoid of merits
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inasmuch as, as clearly mentioned in the agreement (supra)
there is no itemized sale attributing value to each asset of the
business transferred to JAPL and the assessee has re ceived a
lump sum amount of Rs. 14,00,00,000/- towards the transfer of
all the assets of the business of passenger car dealership of
TATA motors.
7.6.16 In view of the above factual matrix, interpretation of the
provisions of the Act and settled provisions of the law as per
the judicial precedents, in the instant case, there was in fact a
slump sale within the meaning of section 2(42C) of the Act
attracting the provisions of section SOB of the Act. Thus, 1 do
not find fault with the order of the AO in invoking the
provisions of section 50B of the Act and taxing LTCG of Rs
3,68,33,000/-. Accordingly, the grounds of appeal raised by the
assessee on this issue are dismissed.
7.7 TAXABILITY OF CONSIDERATION RECEIVED TOWARDS
SALE OF GOODWILL AS INCOME:
Alternatively, if the difference between sale consideration
and net worth of the company is considered as
consideration received towards the sale of goodwill,
whether such goodwill is taxable as per the provisions of
the Act?
7.7.1 Coming to the second contention raised by the assessee
before the AO i.e., the difference between the sale consideration
and net worth of the company of Rs.3,68,33,000/ – is received
towards transfer of goodwill of the company and, therefore, the
same is in the nature of loss of profit to the company and not
taxable as per the provisions of the Act. Further in the grounds
of appeal and the statement of facts, the assessee has once
again reiterated the said argument that Rs.3,68,33,000/ – is
received towards transfer of goodwill of the company and,
therefore, the same is in the nature of loss of profit to the
company. In view of this, I would like to adjudicate the same as
under.
7.7.2 As contended by the assessee, the assessee has received
Rs.3,68,33,000/- towards transfer of goodwill of the company.
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As such, there is no dispute that the difference amount of
Rs.3,68,33,000/- has been received towards sale/transfer of
goodwill. But, the only contentious issue is whether
consideration received towards sale/transfer of goodwill is
taxable as per the provisions of the Act or not. In this regard, it
is worthwhile to examine the legislative history on taxability of
goodwill.
7.7.3 The Hon’ble Supreme Court, in the case of CIT Vs B.C.
Srinivasa Setty [1981J 128 ITR 294 has held that goodwill
generated in a business cannot be described as an “asset”
within the meaning of section 45 of the Act and, therefore, the
transfer of goodwill initially generated in a business doesn’t
give rise to a capital gain for the purposes of Income Tax.
While doing so, the Hon’ble Supreme Court has observed that
the cost of acquisition of a self generated asset is
indeterminate and, therefore, capital gains cannot be
computed when a self generated asset is transferred.
7.7.4 However, it is interesting to note that the ratio laid down
by Hon’ble Supreme Court in the case of CIT Vs B.C.Srlnlvll$a
Setty (supra) has been overruled by the legislature by way of
amending the provisions of section 55 of the Act. To be precise,
clause ( a) to sub-section 2 of section 55 of the Act was inserted
in the statute by the Finance Act,1994, w.e.f 01.04.1995 i.e., AY
1995-96 onwards wherein cost of acquisition with regard to
self generated goodwill shall be taken to be NIL. The relevant
portion of the statute in this regard is reproduced below for
ready reference:
“Meaning of “adjusted”, “cost of improvement” and “cost of
acquisition”.
55. (2) For the purposes of sections 48 and 49, “cost of
acquisition “,-
(a) in relation to a capital asset, being goodwill of a business
or a trade mark or brand name associated with a business or
a right to manufacture, produce or process any article or thing
or right to carryon any business [or profession tenancy rights,
stage carriage permits or loom hours,-
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(i) in the case of acquisition of such asset by the assessee by
purchase from a previous owner, means the amount of the
purchase price; and
(ii) in any other case [not being a case falling under
sub-clauses (i) to (iv) of sub-section (1) of section 49/, shall be
taken to be nil;”
7.7.5 As such, subsequent to insertion of clause (a) to
sub-section 2 of section 55 of the Act w.e.f AY 1995 -96 onwards
the consideration received on transfer of goodwill is liable to
tax under the head capital gains. In view of this, the alternative
contention of the assessee that the difference amount between
the lump sum consideration received of Rs.14,OO,Oo,OOO/ – and
net worth of the company quantified at Rs.3,68,33,OOO/ – is in
the nature of consideration received towards tr:msfer of self
generated goodwill and, therefore, the same is not taxable is
untenable and liable for dismissal. Thus, the grounds of appeal
raised by the assessee on the issue are dismissed.
7. Aggrieved by the order of CIT(A), the assessee is in appe al
before the ITAT.
8. Before us, the ld. AR of the assessee drew our attention to the
agreement for transfer of business, which is placed at pages 39 to
48 to submit that the details of individual assets have been
described in Annexure – A at page 48 of the paper book, the details
of which are as under:
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Accordingly, the net considerations have been worked out as cited
supra. Therefore it is outside the purview of U/s 50B of the Income
Tax Act.1961.
8.1 In support of assessee’s case, the ld. AR relied on the
following case law:
1. Vatsala Shenoy Vs. JCIT, [2017] 80 Taxmann.com
351(SC)
2. Shiva Distilleries Ltd., [2020] 116 Taxmann.com 929
3. Sanmar Speciality Chemicals Ltd., Tax case (Appeal) No. 42
of 2018.
4. DCIT Vs. Tongani Tea Co. Ltd., [2015] 63 Taxmann.com 149
5. Vegetable Products Ltd., [1973] 88 ITR 192 (SC)
9. The ld. DR, on the other hand, relied on the orders of revenue
authorities.
10. We have considered the rival submissions and perused the
material on record as well as gone through the orders of revenue
authorities. We find that as per the agreement, the price
consideration for the undertaking and assets to be bought and sold
(business) is Rs. 14,00,00,000/- as set out in the schedule attached
as annexure “A” quoted supra. Therefore, the case in hand is
squarely covered by the judgment of the Hon’ble Supreme Court in
the case of Vatsala Shenoy Vs. JCIT, 80 taxmann.com 351 (SC)
wherein the Hon’ble Supreme Court has held as under:
“It was noticed that the firm was dissolved on 6 -12-1987 by
efflux of time. This event happened as per the terms stipulated in
the partnership deed itself. The necessity for filing the petition
under the Companies Act arose because of differences between
the erstwhile partners that had erupted, pertaining to the affairs
of the firm. No doubt, in the said petition interim order was
passed by the High Court permitti ng the group of persons (seven
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in number), having controlling interest in the firm, to continue
the business. However, this was done as an interim arrangement
till the completion of winding up proceedings. Pertinently,
insofar as the firm is concerned, it did not carry on business
thereafter as an existing firm. On the contrary, few ex -partners
with controlling interest were allowed to continue the business
activity in the interregnum as a stopgap arrangement. Another
important fact which needs a mention is that, insofar as the firm
is concerned, it did not file income tax returns after the date of
dissolution. Obviously so, as it stood dissolved and was no more
in existence. Precisely for this reason, the income that was
generated from the business, after the dissolution, was assessed
by the income tax authorities in the hands of such erstwhile
partners as an AOP. It is this AOP which was filing the returns
and getting the same assessed in that capacity and paying the
income tax thereupon. Further, in the or ders passed by the High
Court from time to time in the said petition, insofar as the firm is
concerned, it has always been described as ‘the dissolved
partnership firm’. Thus, the assets which were sold ultimately
were of a dissolved partnership firm, thou gh as a going concern.
[Para 22]
At this stage, one more factual aspect needs to be clarified.
During the pendency of the winding up petition before the High
Court, the High Court had passed various orders which included
an order for valuation of the assets of the firm. This valuation
was done to enable the Court to fix the reserve price for the
purpose of inter se bidding between the erstwhile partners and/or
association of erstwhile partners. The Chartered Accountants
had done the valuation and submitted reports on the basis of
which base price was fixed at Rs. 30 crores taking into account
the value of various assets. These assets valued at Rs. 30 crores
are sold for Rs. 92 crores. Thereafter, AOP -3, the successful
bidder, deposited the amount of bid in respect of the share of
nine other partners and a settlement was also prepared
recording the value of the assets of the firm after deducting the
liability of the said nine partners. The net value of the assets so
arrived at was distributed among the nine p artners. [Para 23]
What follows from the aforesaid facts is that the firm stood
dissolved with effect from 6-12-1987; the company petition had
to be filed by two partners in view of eruption of disputes among
the partners; the business was carried on by t he partners with
controlling interest as an interim arrangement; the income was
assessed in their hands as AOP and not in the hands of the firm
which had already been dissolved; assets of the company were
put to sale in accordance with clause 16 of the Par tnership Deed
of a dissolved firm, though as a going concern; and outgoing
partners (assessees herein) received their net share of the value
of the assets of the firm out of the amount received by way of sale
of the assets of the firm as per clause 16 of t he Partnership
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Deed. On the aforesaid facts, it becomes clear that asset of the
firm that was sold was the capital asset within the meaning of
section 2(14). It is not even disputed. Once it is held to be the
capital asset, gain therefrom is to be treated as capital gain
within the meaning of section 45. [Para 24]
The assessees, however, are attempting the wriggle out from
payment of capital gain tax on the ground that it was a slump
sale within the meaning of section 2(42C) and there was no
mechanism at that time as to how the capital gain is to be
computed in such circumstances, which was provided for the first
time by section 50B with effect from 1 -4-2000. However, this
argument fails in view of the fact that the assets were put to sale
after their valuation. There was a specific and separate valuation
for land as well as building and also machinery. Such valuation
has to be treated as that of a partnership firm which had already
stood dissolved. [Para 25]
As per the definition of section 2(42C) , sale in question could be
treated as slump sale only if there was no value assigned to the
individual assets and liabilities in such sale. This has obviously
not happened. It is stated at the cost of repetition tha t not only
value was assigned to individual assets, even the liabilities were
taken care of when the amount of sale was apportioned among
the outgoing partners, i.e., the assessees herein. Once it is held
that the sale in question was not slump sale, obvio usly section
50B also does not get attracted as this section contains special
provision for computation of capital gains in case of slump sale.
[Para 26]
In the aforesaid scenario, when the Official Liquidator has
distributed the amount among the nine par tners, including the
assessees hereinafter deducting the liability of each of the
partners, the High Court has rightly held that the amount
received by them is the value of net asset of the firm which would
attract capital gain. Scope of section 45 was exp lained in CIT v.
Ghanshyam (HUF) [2009] 315 ITR 1/182 Taxman 368 (SC)
wherein the Court stated that capital gains under section 45 are
not income accruing from day-to-day. It is deemed income which
arises at a fixed point of time, viz. on the date of transfer. [Para
27]
On applying the said legal principle to the facts of the instant
case, it is found that the partnership firm had dissolved and
thereafter winding up proceedings were taken up in the High
Court. The result of those proceedings was to sell the assets of
the firm and distribute the share thereof to the erstwhile
partners. Thus, the ‘transfer’ of the assets triggered the
provisions of section 45 and making the capital gain subject to
the payment of tax under the Act. [Para 28]
Insofar as argument of the assessees that tax, if at all, should
have been demanded from the partnership firm is concerned, it
may be stated that on the facts of this case that may not be the
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situation where the firm had dissolved much before the transfer
of the assets of the firm and this transfer took place few years
after the dissolution, that too under the orders of the High Court
with clear stipulation that proceeds thereof shall be distribu ted
among the partners. Insofar as the firm is concerned, after the
dissolution on 6-12-1987, it had not filed any return as the same
had ceased to exist. Even in the interregnum, it is the AOP which
had been filing the return of income earned during the s aid
period.The High Court has touched upon this aspect in greater
detail and held that the order passed by the Assessing Authority
confirmed in the first appeal and by the Tribunal (Special Bench)
holding that the assessee’s as erstwhile partners are liabl e to pay
capital gain on the amount received by them towards the value of
their share in the net assets of the firm are liable for payment of
capital gains under section 45. The said finding is justified.
[Para 29]
Next it is argued that insofar as income of the firm in the
assessment year in question is concerned, it could not be taxed at
the hands of the assessees. This submission is agreeable. [Para
32]
First, and pertinently, it is an admitted case that 40 per cent of
the said income was allowed by th e High Court to be retained by
the successful bidder (AOP-3) precisely for this very purpose.
This 40 per cent represented the tax which was to be paid on the
income generated by the ongoing concern being run by the
Association of Persons, as authorised by the High Court.
Secondly, in the previous years, the Department had taxed the
AOP and this procedure had to continue in the Assessment Year
in question as well. From the judgment of the High Court, it is
found that this aspect has been dealt with very cur sorily, without
taking into consideration the aforesaid aspects as highlighted.
The entire discussion on this issue is that the concurrent finding
on question of fact that value of profit received during
interregnum period for a period of 234 days is to be treated as
revenue income having regard to the reasons assigned that said
profit is calculated on the basis of notional profit calculated on
two years average profit and from this average 40 per cent was
to be deducted and the net amount was to be paid, t he finding is
unassailable. The aforesaid discussion of the High Court deals
how the business income/revenue income is to be
treated/calculated, but the question of taxability at the hands of
the assessees has not been touched upon at all. [Para 33]
The upshot of the aforesaid discussion is that the appeals are
allowed partly only to the extent that business income/revenue
income in the assessment year in question is to be assessed at the
hands of AOP-3, in terms of the orders of the High Court, as
AOP-3 retained the tax amount from the consideration which was
payable to the assessees herein and it is AOP -3 which was
supposed to file the return in that behalf and pay tax on the said
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revenue income. [Para 34]
10.1 As per the definition of section 2(42C), sale in question
could be treated as slump sale only if there was no value assigned
to the individual assets and liabilities in such sale. This has
obviously not happened. It is stated that at the cost of repetition
the value was assigned to individual assets, as per Annexure A,
which is placed at page No. 48 of the paper book and liabilities
were taken over by the purchaser. It is important to refer to the
agreement made between the parties dated 28 th March 2014 placed
at paper book page No. 39 to 48 of para No. 3 ” Transfer” , which is
as under:
3.1 The Transferee agrees to buy and the Transferor agrees
to sell to the Transferee as a going concern all the undertaking
and assets owned by the Transferor in connection with t he
Business carried on by the Transferor as on the Transfer Date
including without limiting the generality to the foregoing:
a) All Land and Building including leasehold improvements
{except land and buildings situated at Benz circle R.S.No.
122 and R.S. No. 120/5 situated at Patamata village,
Vijayawada and at D.No. 54-15-5, Srinivas Nagar, Bank
Colony, N.H-5, Gundala, Vijayawada), all plant and
machinery, furniture & fixtures, office equipment, capital
work in progress, office vehicles and all other fixed assets.
b) All stock of spare parts and supplies relating to the business
other than fiat car parts and supplies.
c) Debtors and loans & advances 3except for insurance and
finance commission receivable and claims receivable from
Tata Motors Ltd.
d) Intangible assets including software licenses etc.
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e) Current assets other than unsold vehicle stocks as on the
transfer date.
f) Current liabilities other than liabilities relating to the
purchase of vehicles made up to the transfer date by the
transferor.
The value of the asset so transferred to the transferee are
detailed in Annexure A of this agreement.
3.2 The following assets are expressly excluded from the
transfer of business:
– Land and buildings situated at Benz Circle. R.S.No. 122
and R.S. No. 120/5 situated at Patamata Village,
Vijayawada and at D.No. 54-15-5, Srinivasa Nagar, Bank
Colony, N.H.-5, Gundala, Vijayawada and
– Leasehold improvements carried out in the premises at
D.No. 54-15-5, Srinivasa Nagar, Bank Colony, N.H.-5,
Gundala, Vijayawada
– Stock in trade as on the transfer date i.e. the cars
bought by the transferor in its own name from Tata
Motors Ltd.
– Cash on hand and bank balances.
3.3 The transferee agrees and undertakes to take over and
continue the existing secured loan facility provided to
Transferor by Tata Capital Financial Services Ld. It is also
clearly agreed that all the assets hypothecated to TFCSL as
security for the loan facility will also get transferred to the
Transferee Company.
10.2 It is clear that the value of assets has been clearly mentioned
as per Annexure – A and the assets which have not been taken over
is mentioned as above at para No. 3.2. Therefore, considering the
facts of the present case, it is held that the sale in question is not
slump sale, obviously, section 50B also does not get attracted as
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this section contains special provision for computation of capital
gains in case of slump sale. Respectfully following the above
judgement of the Hon’ble Supreme Court, we set aside the order of
the CIT(A) and direct the AO to delete the addition of Rs.
3,68,33,000/- made by the AO treating the same as long term
capital gains. Accordingly, the ground Nos. 2(a) to (e) are
allowed.
11. As regards ground No. 3 (a) & (b) relating to the disallowance
of expenditure of Rs. 12,14,253/-, during the course of assessment
proceedings, the AO asked the assessee to produce bills and
vouchers in support of administrative and selling expenses debited
to the P&L Account. Accordingly, the assessee produced the same
for verification. After having examined the bills and vouchers
produced by the assessee, the AO found that the assessee could not
furnish bills and vouchers to the extent of . Rs. 12,14,253/-towards
administrative and selling expenses claimed in the return of
income filed. In view of this, the AO disallowed the same and added
back to the total income.
11.1 In this regard, the AO had recorded in the assessmen t
order that during the course of hearing conducted on 08.11.2016,
the AR of the assessee agreed for the said disallowance of Rs.
12,14,253/- and the same had been incorporated in the order sheet
noting dated 08.11.2016. The relevant portion of the assessm ent
order this regard is reproduced below for ready reference:
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Jasper Auto Services Pvt. Ltd., Hyd.
“During the course of scrutiny proceedings assessee was asked
to furnish bills and vouchers for administrative and selling
expenses. Ca verification of the same it was· found that bills .
and voucher are not available to the extent of’ Rs.12,14,253/ -.
Hence an amount of Rs. 12,14,253/- of administrative and
selling expenses is disallowed and added back to the income
returned. AR agreed for the same vide order sheet noting dated
08.11.2016.
12. Before the CIT(A), it was contended by the assessee that the
amount disallowed by the AO had been incurred in the normal
course of business and, therefore, it is an allowable deduction
u/s.37(1) of the Act.
13. The CIT(A) after considering the submissions of the assessee,
confirmed the disallowance made by the AO by holding that the AO
had made the said disallowance on agreed basis as the AR of the
assessee agreed for the same at the assessment stage.
14. We have considered the rival submissions and perused the
material on record as well as the orders of revenue authorities.
The revenue authorities have made the disallowance of Rs.
12,14,253/- on the ground that the AR of the assessee agreed for
the same during the course of assessment proceedings. W hereas,
the AR of the assessee submitted that the assessee has not
authorized its AR for agreed addition. In view of the contrary
submissions, we remit this issue to the file of the AO with a
direction to redecide the issue after examining the material
put-forth by the assessee before him in accordance with law after
providing reasonable opportunity of hearing to the assessee in the
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ITA No. 705/Hyd/2020
Jasper Auto Services Pvt. Ltd., Hyd.
matter. The assessee is directed to substantiate its claim by way of
documentary evidence at his own risk and responsibiliti es with
three effective opportunities of hearing. Therefore, the ground
raised by the assessee on this issue is allowed for statistical
purposes.
15. In the result, appeal of the assessee is partly allowed for
statistical purposes, in above terms.
Pronounced in the open court on 28 th October, 2021.
Sd/- Sd/-
(S.S. GODARA) (L. P. SAHU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 28 th October, 2021.
kv
Copy to :
1 M/s Jasper Auto Services Pvt. Ltd.,
C/o P. Murali & Co., CAs, 6-3-655/2/3, 1 st
Floor, Somajiguda, Hyderabad – 82
2 DCIT, Circle – 2(1), Hyderabad
3 CIT(A) – 6, Hyderabad
4 Pr. CIT – 2, Hyderabad
5 ITAT, DR, Hyderabad.
6 Guard File.
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ITA No. 705/Hyd/2020
Jasper Auto Services Pvt. Ltd., Hyd.
S.No. Details Date
1 Draft dictated on
2 Draft placed before author
Draft proposed & placed before the Second
3
Member
4 Draft discussed/approved by Second Member
5 Approved Draft comes to the Sr. PS/PS
6 Kept for pronouncement
7 File sent to Bench Clerk
8 Date on which the file goes to Head Clerk
9 Date on which file goes to A.R.
10 Date of Dispatch of order
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