M/S. NIMBARK GEMS,, MUMBAI vs ACIT-16(3),, MUMBAI

The Income Tax Appellate Tribunal (ITAT) heard an appeal from Nimbark Gems regarding a disallowance of cash payments totalling £2,45,250 for factory expenses, representative charges, and foreign travel. The primary argument was that these expenses were capital in nature, not revenue, and therefore Section 40A(3) of the Income Tax Act should not apply. The ITAT noted that this crucial point might have been overlooked by the lower appellate authority and has restored the issue to the Commissioner of Income Tax (Appeals) for a proper adjudication.

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT),
”B” BENCH, MUMBAI
BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER
&
SHRI M.BALAGANESH, ACCOUNTANT MEMBER

ITA No. 58/Mum/2019
(Assessment Year :2009-10)

Nimbark Gems 6, Unity House, 8 
Mama Parmanand Marg,
Opera House Mumbai-400 004
(Appellant) . . 

Vs.

ACIT-16(3) Matru Mandir, Tardeo
Mumbai-400 007 PAN/GIR No.AAGFN2924G
(Respondent)

Assessee by None
Revenue by Smt. Kavita P. Kaushik, Sr.DR
Date of Hearing 14/10/2020
Date of Pronouncement 14/10/2020

O R D E R

PER S.S.GODARA (J.M):

This Assessee’s appeal for A.Y.2009-10 arises from Mumbai’s order of Commissioner of Income Tax (Appeals)-30, in case No.CIT(A)-30/ACIT 19(3)/277/2011-12 dated 30/11/2018, in proceedings u/s.143(3) of the Income Tax Act, 1961 [hereinafter referred to as Act].

2. None appears at the assessee’s behest. We have proceeded with the learned departmental representative’s arguments that both the lower authorities have rightly involved section 40A(3) disallowance after holding this tax payer to have made cash payments of factory premises expenses, representative charges and foreign travel expenses involving sums of Rs.1,81,600/-, Rs.30,000/-and Rs.33,650/-, respectively, totaling to Rs.2,45,250/-. The assessee’s first and foremost plea before the lower authorities was that impugned statutory provision does not apply in facts of the instant case since all these sums form part of the capital than revenue account. This aspect appears to have missed the learned lower appellate authority’s consideration as per its order under challenge. We therefore deem it appropriate to restore the issue back to CIT(A) for his appropriate adjudication as per law within three effective opportunities of hearing.

3. The assessee’s appeal is allowed for statistical purpose in above facts.

Order pronounced in the open court on this 14/10 /2020

Sd/-                                                                      Sd/-
(M.BALAGANESH)                                             (S.S.GODARA)
ACCOUNTANT MEMBER                                   JUDICIAL MEMBER

Mumbai; Dated 14/10/2020
Thirumalesh, sr.ps

Copy of the Order forwarded to :
BY ORDER,
(Asstt. Registrar)
ITAT, Mumbai
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.

//True Copy//