M/S. ARUN TRADE COMBINES, RAIPUR (CG) V. DY.CIT-1(1), RAIPUR (CG)

CO 3/BIL/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4132 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-11-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS ANUBHAA GOYAL
• Assessee Lawyers: R B DOSHI
• Keywords: Rule of consistency; Commercial expediency
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.119/RPR/2014 ASSESSMENT YEAR : 2010-11 DCIT- 1(1), RAIPUR (CG). VS. M/S. ARUN TRADE COMBINES, 101, DEOPURI, MANA ROAD, RAIPUR (CG). PAN : AAIFA3199E (APPELLANT) (RESPONDENT) C.O. NO.03/RPR/2014 (IN ITA NO.119/RPR/2014) ASSESSMENT YEAR : 2010-11 M/S. ARUN TRADE COMBINES, 101, DEOPURI, MANA ROAD, RAIPUR (CG). VS. DCIT- 1(1), RAIPUR (CG). PAN : AAIFA3199E (APPELLANT) (RESPONDENT) DEPARTMENT BY : MRS. ANUBHAA GOYAL, DR ASSESSEE BY : SHRI R. B. DOSHI, CA DATE OF HEARING : 07-08-2018 DATE OF PRONOUNCEMENT : 14-08-2018 O R D E R PER R. K. PANDA, AM : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 09.04.2014 OF CIT(A), RAIPUR (CG) RELATING TO ASSES SMENT YEAR 2010-11. THE ASSESSEE HAS FILED THE CROSS OBJECTION AGAINST THE APPEAL FILED BY THE REVENUE. 2 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. GROUND OF APPEAL NO.1 BY THE REVENUE READS AS UN DER :- 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.77,57,000/ - MADE BY THE A.O. ON ACCOUNT OF COMMISSION ON SALES ESPECIALLY WHEN THE ENTIRE COMM ISSION EXPENSES OF RS.77,57,000/- HAS BEEN DEBITED TO THE COMMISSION A CCOUNT ON 31 ST MARCH, 2010. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF SALE OF TRACTORS, EARTH MOVING MACHINE ACCESSORIES AND AGRICULTURAL IMPLEMENTS. IT FILED ITS RETURN O F INCOME ON 07.10.2010 DECLARING TOTAL INCOME OF RS.28,42,686/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE FIRM HAS DEBITED AN AMOUNT OF RS.77,57,000/- ON ACCOUNT OF COMMISSIO N ON SALES. ON BEING ASKED BY THE ASSESSING OFFICER TO FURNISH THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM SUCH COMMISSION IS CLAIMED TO HAVE BEEN PAID, THE ASSESSEE FILED THE REQUISITE DETAILS GIVING A LIST OF 41 PER SONS TO WHOM COMMISSION ON SALE HAD BEEN PAID BY IT DURING THE YEAR. THE ASSE SSEE ALSO FURNISHED DETAILS OF DATE-WISE COMMISSION PAID IN EACH CASE GIVING THE N AMES OF THE PERSON TO WHOM TRACTOR WAS SOLD AND AMOUNT OF COMMISSION PAID ON EACH TRACTOR SOLD BY IT. IN ORDER TO PROBE INTO THE VERACITY OF THE ASS ESSEE FIRMS CLAIM REGARDING PAYMENT OF COMMISSION, THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) ON RANDOM BASIS TO 10 PERSONS. IN THE SAID LETTER, HE ASKED THEM TO FURNISH AS TO 3 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 WHETHER THEY HAVE RENDERED ANY SERVICE TO M/S ARUN TRADE COMBINES. IF THE ANSWER IS YES THEN TO FURNISH THE (I) NATURE OF SER VICE RENDERED AND WHETHER ANY SUCH SERVICE HAS BEEN RENDERED TO ANY OTHER PERSON IN THE PAST OR SUBSEQUENT YEAR, (II) TOTAL AMOUNT OF MONEY RECEIVED FROM THE ASSESSEE, (III) MODE OF RECEIPT OF MONEY AND COPY OF INCOME TAX RETURN FILED. OUT OF THE 10 PERSON TO WHOM SUCH NOTICES WERE ISSUED ONLY 7 PERSONS RESPONDED T O THE LETTER ISSUED U/S 133(6) OF THE I.T. ACT. HOWEVER, 3 PERSONS NAMELY (I) MR. SHAYAM KUMAR AGRAWAL, (II) MR. SANJAY AGRAWAL AND (III) MR. PRAKASH AGRAW AL DID NOT RESPOND TO THE LETTER ISSUED U/S 133(6). FROM THE REPLIES RECEIVE D FROM THE 7 PERSONS, THE ASSESSING OFFICER NOTED THAT ALTHOUGH THE SEVEN PER SONS HAVE ADMITTED TO HAVE RENDERED SERVICE TO THE ASSESSEE FIRM, HOWEVER, NON E OF THEM HAVE GIVEN A CATEGORICAL REPLY REGARDING THE NATURE OF SERVICE R ENDERED BY THEM. THIS ACCORDING TO THE ASSESSING OFFICER IS CONTRARY TO T HE ELABORATE DETAILS FURNISHED BY THE ASSESSEE IN RESPECT OF PAYMENTS OF COMMISSIO N ON THE BASIS OF TRACTOR SOLD. HE FURTHER NOTED THAT THE COMMISSION HAS BEE N PAID TO EACH OF THE PAYEE IN THE FORM OF ADVANCE ON AD-HOC BASIS EVERY MONTH BEARING NO RELATION WHATSOEVER TO THE NUMBER OF TRACTORS SOLD. THE VOU CHERS PRODUCED BY THE ASSESSEE DO NOT MENTION THE NUMBER OF TRACTORS, NAM E OF THE BUYER, SALE AMOUNTS ON THE BASIS OF WHICH THE COMMISSION HAS BEEN CLAIM ED TO HAVE BEEN PAID. FURTHER, ALL COMMISSION AGENTS HAVE SET OFF SUCH CO MMISSION INCOME AGAINST 4 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 VARIOUS EXPENSES AND HAVE DECLARED MEAGER INCOME FR OM COMMISSION AND IN CERTAIN CASES, SOME OF THE AGENTS HAVE CLAIMED REFU ND. HE, THEREFORE, DISBELIEVED THE COMMISSION PAID BY THE ASSESSEE AS GENUINE. FURTHER, THE ASSESSEE FIRM IS SELLING THE TRACTORS OF MAHINDRA & MAHINDRA COMPANY, WHICH IS AN ESTABLISHED BRAND IN THE MARKET AND AS SUCH SELL S LIKE HOT CAKES. THEREFORE, IT IS HIGHLY IMPROBABLE THAT THE ASSESSEE FIRM WOULD R EQUIRE TO SOLICIT THE PROSPECTIVE CUSTOMERS THROUGH COMMISSION AGENTS. R EJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND RELYING ON V ARIOUS DECISIONS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE EXPENSES CLAIMED BY IT THROUGH PAYMENT OF RS.77,57, 000/- PAID TO VARIOUS PERSONS AS COMMISSION ON SALE. HE, THEREFORE, DISA LLOWED THE SAME AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE RE IS HEAVY COMPETITION IN THE TRADE AND BUYERS ARE MOSTLY ILLITERATE FARMERS/ VILLAGERS WITH LIMITED BUYING CAPACITY AND IT BECOMES DIFFICULT TO CONVINCE THEM TO BUY A PARTICULAR PRODUCT. THERE ARE MORE THAN EIGHT TRACTOR SUPPLIERS IN THE CITY. THEREFORE, THERE IS A CONSTANT NEED TO TAP THE PROSPECTIVE BUYERS AFTER O BTAINING ALL DATA FROM THE VILLAGE SARPANCH. AGAIN CONTACTING THE BUYERS IS A LSO A DIFFICULT TASK AS THEY REQUIRED TO BE CONTACTED AT ODD HOURS LIKE 7.00 AM TO 8.00 AM AND AT REMOTE PLACES. THEREFORE, IN ORDER TO CATER BUSINESS, THE ASSESSEE IS FORCED TO EMPLOY 5 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 PERSONS AFTER GIVING INCENTIVES TO CONTACT THE PROS PECTIVE BUYERS AT ODD HOURS AND REMOTE PLACES. ALL NECESSARY DETAILS WERE MAIN TAINED AND AVAILABLE AND THE COMMISSION PAYMENTS ARE VERIFIABLE AND RELATABLE TO SALES. FURTHER, THE COMMISSION RECIPIENTS ARE ASSESSED TO INCOME-TAX AN D THE COMMISSION RECEIPTS WERE DULY REFLECTED IN THEIR RESPECTIVE INCOME-TAX RETURNS. PAYMENTS WERE MADE THROUGH BANKING CHANNELS AFTER MAKING TDS AND BECAU SE OF THIS, TURNOVER OF THE ASSESSEE ALSO INCREASED BY 18% THIS YEAR. IT WAS F URTHER SUBMITTED THAT SUCH COMMISSION PAYMENT WAS ACCEPTED IN REGULAR ASSESSME NT MADE IN THE PRECEDING ASSESSMENT YEARS. RELYING ON VARIOUS DECISIONS, IT WAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT J USTIFIED. 5. BASED ON THE ARGUMENTS ADVANCED BY THE LD. COUNS EL FOR THE ASSESSEE, LD. CIT(A) DELETED HE SAID ADDITION BY OBSERVING AS UND ER :- 3.3 I HAVE GONE THROUGH THE OBSERVATIONS OF THE A. O. AND SUBMISSIONS OF APPELLANT. THE UNDISPUTED FACTS IN THIS RESPECT AR E THAT THE APPELLANT IS AN AUTHORIZED DEALER OF MAHINDRA & MAHINDRA MAKE TRACTORS. IT HA S PAID THE ABOVE COMMISSION TO DIFFERENT PERSONS FOR PROMOTING SALES THROUGH BANKI NG CHANNELS AFTER MAKING TDS. DURING ASSESSMENT PROCEEDINGS IN RESPONSE TO 10 NOT ICES ISSUED, SEVEN PERSONS ATTENDED AND CONFIRMED THE TRANSACTIONS. THE COMMI SSION RECEIPTS ARE ALSO VERIFIABLE FROM INCOME-TAX RETURNS FILED BY THE RECIPIENTS. H AVING REGARD TO THE EXPLANATION OF THE APPELLANT, I AM SATISFIED THAT THE APPELLANT HA S ESTABLISHED JUSTIFICATION FOR COMMISSION PAYMENTS. SUCH COMMISSION PAYMENTS WERE EXAMINED IN SCRUTINY/ASSESSMENTS IN THE PAST AND WERE APPROVED. THE APPELLANT HAS MAINTAINED ALL NECESSARY DETAILS AND THE SAME ARE VERIFIABLE F ROM AND ATTRIBUTABLE TO THE SALES MADE BY THE APPELLANT. THERE IS NOTHING ON RECORD WHICH SHOWS THAT THE COMMISSION AGENTS DID NOT RENDER SERVICE. AS PER APPELLANT, T HERE ARE EIGHT OTHER TRACTOR DEALERS OF DIFFERENT BRANDS; HENCE THE NEED OF AGGRESSIVE S ALES STRATEGY BY CONTINUOUS PERSUASIONS CANNOT BE UNDERMINED. THE APPELLANT HA S SUBMITTED COMPARATIVE DETAILS OF COMMISSION PAYMENTS AS PER WHICH THE PERCENTAGE OF COMMISSION WITH REFERENCE TO THAT OF A.Y. 2008-09. IT APPEARS THE A.O. WAS INFL UENCED BY THE FACT OF DEBITING OF THE EXPENDITURE AT THE END OF THE FINANCIAL YEARS. SOM E OF THE RECIPIENTS ALSO APPEARED TO HAVE NOT REPLIED TO THE A.O.S QUESTIONS UP TO HIS EXPECTATION. THEREFORE, HE INFERRED 6 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 THAT THE CLAIM OF EXPENDITURE WAS NOT GENUINE. HOW EVER, THE A.O. COULD NOT DEVELOP ANY BETTER CASE EVEN AT THE REMAND REPORT STAGE WIT H REFERENCE TO THE SUBMISSIONS MADE BY THE APPELLANT. IN THE CASE OF A.C. STRIPS (P) LTD. (SUPRA), THE HONBLE TRIBUNAL HAS DELETED SUCH DISALLOWANCE IN IDENTICAL CIRCUMSTANCES. FURTHER SINCE SUCH CLAIMS OF COMMISSION PAYMENTS WERE ACCEPTED IN REGULAR ASSESSMENTS IN THE PAST AND THE A.O. CANNOT LOOSELY DEVIATE FROM THE FUNDAM ENTAL ASPECT PERMEATING THROUGH DIFFERENT ASSESSMENT YEARS. THE APPELLANT HAS SUBS TANTIATED THE CLAIM OF COMMISSION AND HAS ALSO PROVED GENUINENESS THEREOF. IN VIEW O F THE ABOVE, I AM OF HE CONSIDERED OPINION THAT THE DISALLOWANCE OF RS.77,57,000/- MAD E BY THE A.O. IS NOT JUSTIFIED AND HENCE, DELETED. THIS GROUND OF APPEAL IS, THEREFOR E, ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. DR STRONGLY CHALLENGED THE ORDER OF THE LD. CIT(A). SHE SUBMITTED THAT THE ASSESSEE FAILED MISERABLY TO JUSTIFY THE G ENUINENESS OF SUCH COMMISSION PAYMENTS. SHE SUBMITTED THAT THE ENTIRE COMMISSION HAS BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT ON THE LAST DATE OF THE ACC OUNTING YEAR. THEREFORE, IT IS NOTHING BUT TO REDUCE THE TAX LIABILITY BY PAYING T HE COMMISSION TO DIFFERENT PERSONS. SHE FURTHER SUBMITTED THAT SUCH COMMISSIO N HAS BEEN PAID TO SOME OF THE EMPLOYEES OF THE FIRM AND FAMILY MEMBERS OF THE HUF. UNDER THESE CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) SHOULD B E REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 8. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND H EAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE BUYERS AR E MOSTLY FARMERS FROM RURAL AREAS AND ARE ILLITERATE PERSONS AND, THEREFORE, IT IS VERY DIFFICULT TO CONVINCE THEM. ON THE BASIS OF INFORMATION OBTAINED FROM TH E SARPANCH OF THE VILLAGES 7 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 ABOUT THE NEED OF THE FARMERS, THE COMMISSION AGENT S CONTACT THE PROSPECTIVE BUYERS. SINCE MORE THAN ONE VISIT IS REQUIRED TO C ONVINCE THE BUYERS AND MOST OF THE TIME MEETING WITH PROSPECTIVE BUYERS IS FIXE D AT ODD HOURS EARLY IN THE MORNING, BUYERS BEING FARMERS SOME OF THE EMPLOYEES ARE REQUIRED TO CONTACT THE PROSPECTIVE BUYERS. HE SUBMITTED THAT THIS IS A BUSINESS NECESSITY AND PAYMENT OF SUCH COMMISSION IS IN THE NATURE OF COMM ERCIAL EXPEDIENCY. HE SUBMITTED THAT SINCE THERE ARE VARIOUS DEALERS OF D IFFERENT COMPANIES, IT IS VERY DIFFICULT TO SURVIVE IN THE BUSINESS WITHOUT FOLLOW ING THIS METHOD. HE SUBMITTED THAT 7 OUT OF 10 COMMISSION AGENTS AGAINST WHOM ENQ UIRY WAS CONDUCTED ADMITTED TO HAVE RENDERED SERVICES AND SUCH COMMISS ION PAID BY THE ASSESSEE HAS BEEN REFLECTED BY THEM IN THEIR RESPECTIVE RETU RNS OF INCOME. THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT THE AGENTS HAVE NOT RENDERED ANY SERVICES. SUCH TYPE OF COMMISSION PAID IN THE PAST YEAR WERE ALLOWED IN THE ORDERS PASSED U/S 143(3) FOR ASSESSMENT YEAR 2008-09 AND 2009-10 AND ARE PLACED IN THE PAPER BOOK PAGES 157 TO 170. RELYING ON VARIOUS DECISION S, HE SUBMITTED THAT THE LD. CIT(A) HAS PASSED A SPEAKING ORDER WHILE DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER. HE ACCORDINGLY SUBMITTED THAT T HE ORDER OF THE LD. CIT(A) IS UPHELD. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSESSEE, DURING THE 8 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 IMPUGNED ASSESSMENT YEAR, HAS PAID AN AMOUNT OF RS. 77,57,000/- TO 41 PERSONS ON ACCOUNT OF COMMISSION ON SALE. WE FIND DURING T HE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 133(6) TO 10 PERSONS ON RANDOM BASIS OUT OF WHICH 7 PERSONS HAVE REPLIED AND CONFI RMED TO HAVE RECEIVED SUCH COMMISSION. HOWEVER, THE ASSESSING OFFICER DISBELI EVED THE GENUINENESS OF SUCH COMMISSION ON THE GROUND THAT NONE OF THE PERS ONS HAVE REPLIED REGARDING THE EXACT NATURE OF SERVICES RENDERED BY THEM ALTHO UGH THE ASSESSEE HAS GIVEN VOLUMINOUS VOUCHERS GIVING THE NAME OF THE PERSONS TO WHOM SUCH COMMISSION HAS BEEN PAID AND THE CHASSIS NUMBER OF TRACTORS SO LD ETC.. FURTHER, ACCORDING TO THE ASSESSING OFFICER, SUCH COMMISSION WAS PAID TO EACH OF THE PAYEE IN THE FORM OF ADVANCE BASIS EVERY MONTH BEARING NO RELATI ON WHATSOEVER TO THE NUMBER OF TRACTORS SOLD. THE VOUCHERS PRODUCED BY THE ASSESSEE DID NOT MENTION THE NUMBER OF TRACTORS, NAME OF THE BUYER O N THE BASIS OF WHICH THE COMMISSION HAS BEEN CLAIMED. HE, THEREFORE, DISALL OWED THE ENTIRE COMMISSION OF RS.77,57,000/-. WE FIND THE LD. CIT(A) DELETED SUCH DISALLOWANCE THE REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN T HE PRECEDING PARAGRAPH. WE FIND DURING THE YEAR THE TURNOVER OF THE ASSESSE E HAS GONE UP BY 18% AS COMPARED TO THE TURNOVER OF THE PRECEDING ASSESSMEN T YEAR. SUCH COMMISSION HAS BEEN PAID BY ACCOUNT PAYEE CHEQUE AND DUE TDS H AS BEEN DEDUCTED AND MOST OF THE PERSONS HAVE REFLECTED SUCH COMMISSION AS INCOME IN THEIR 9 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 RESPECTIVE INCOME TAX RETURNS. FURTHER, SUCH COMMI SSION HAS BEEN ACCEPTED IN THE PAST ASSESSMENT ORDERS PASSED U/S 143(3) AND NO DISALLOWANCE HAS BEEN MADE ON SUCH ACCOUNT. WE, THEREFORE, FIND MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE ENTIRE COMMISSION EXPENSES CLAIMED BY THE ASSESSEE DURING THE YEAR. HOWEVER, IT IS ALSO A FACT THAT CERTAIN AMOU NT OF COMMISSION HAS BEEN PAID TO CLOSE RELATIVES OF THE ASSESSEE OR THE EMPLOYEES OF THE FIRM. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS THE DISALLOWA NCE OF RS.3,00,000/- ON ESTIMATE BASIS WILL MEET THE ENDS OF JUSTICE. WE, THEREFORE, MODIFY THE ORDER OF THE LD. CIT(A) AND SUSTAIN AN AMOUNT OF RS.3,00,000 /- ON ACCOUNT OF SUCH COMMISSION PAID. THE GROUND RAISED BY THE REVENUE IS ACCORDINGLY PARTLY ALLOWED. 10. GROUND OF APPEAL NO.2 BY THE REVENUE AND THE ON LY GROUND BY THE ASSESSEE IN CROSS OBJECTION READ AS UNDER :- ITA NO.119/RPR/2014 : 2. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.52,26,090/ - MADE BY THE A.O. ON ACCOUNT OF FREE SERVICE EXPENSES AS THE FAILED TO ESTABLISH GE NUINENESS OF THE EXPENSES. C.O. NO.03/RPR/2014 : IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CI T(A) ERRED IN CONFIRMING DISALLOWANCE TO THE EXTENT OF RS.5,00,000/- OUT OF TOTAL DISALLOWANCE OF RS.52,62,090/- MADE BY THE A.O. OUT OF FREE SERVICE EXPENSES A/C. THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS NOT JUSTIFIED. 10 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 11. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSE E HAS CLAIMED AN AMOUNT OF RS.52,26,090/- AS FREE SERVICE EXPENSES. FROM THE EXAMINATION OF THE DETAILS FILED BY THE ASSESSEE, HE NOTED THAT THE ASSESSEE H AS PAID ON AN AVERAGE OF RS.3250/- TO EACH OF THE BUYER OF TRACTOR AS FREE S ERVICES CHARGE IN LIEU OF 10 FREE SERVICES. SINCE THE ASSESSEE INSTEAD OF GIVING ANY FREE SERVICES TO ANY OF THE BUYER OF THE TRACTOR MADE CASH PAYMENT OF RS.3250/- TO EACH OF THE BUYER AND SINCE THE MANUFACTURING COMPANY I.E. MAHINDRA & MAH INDRA HAS ISSUED 10 COUPONS OF RS.80/- EACH IN RESPECT OF EACH FREE SER VICE, THE ASSESSING OFFICER DOUBTED THE FREE SERVICE EXPENSES CLAIMED BY THE AS SESSEE AND ASKED THE ASSESSEE TO JUSTIFY THE SAME. HE FURTHER NOTED THA T THE ASSESSEE FIRM HAS GOT THE REIMBURSEMENT OF FREE SERVICE COUPONS AMOUNTING TO RS.16,00,685/- WHICH HAS BEEN ADJUSTED AGAINST THE TOTAL FREE SERVICE EXPENS ES AMOUNTING TO RS.68,26,775/- CLAIMED TO HAVE BEEN INCURRED ON ACC OUNT OF FREE SERVICES AND THE BALANCE OF RS.52,26,090/- HAS BEEN DEBITED TO T HE PROFIT AND LOSS ACCOUNT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASS ESSEE AND OBSERVING THAT THE ASSESSEE FIRM COULD NOT PRODUCE EVEN A SINGLE VOUCH ER TO SUPPORT ITS CLAIM INCURRED TO PAYMENT OF FREE SERVICE EXPENSES AS CLA IMED BY IT, THE ASSESSING OFFICER DISALLOWED THE ENTIRE AMOUNT OF RS.52,26,09 0/- TO THE TOTAL INCOME OF THE ASSESSEE. 11 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 12. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT MO ST OF THE CUSTOMERS ARE FARMERS/ VILLAGERS FROM DISTANT PLACES AND IT BECOM ES UNECONOMICAL FOR THEM TO BRING THEIR TRACTORS FOR AVAILING FREE SERVICE DUE TO TIME AND COST INVOLVED IN BRINGING THE VEHICLES TO THE CENTERS. THEREFORE, I N ORDER TO MEET OUT THE SITUATION, THE ASSESSEE USED TO REIMBURSE RS.3250/- AT THE RATE OF RS.325/- PER FREE SERVICE FOR TEN SERVICES. IT WAS FURTHER STAT ED THAT THE MANUFACTURERS ALLOW ONLY 8 FREE SERVICES. HOWEVER, IN THE INTEREST OF BUSINESS, THE ASSESSEE ALLOWS TWO ADDITIONAL SERVICES. IT WAS FURTHER CONTENDED THAT THE COMPANY REIMBURSED RS.250/- PER SERVICE AND NOT RS.80/- AS HELD BY THE ASSESSING OFFICER. COPY OF CREDIT NOTES ISSUED BY THE COMPANY WAS ALSO FILED. IT WAS SUBMITTED THAT SIMILAR EXPENSES WERE INCURRED IN THE PRECEDING ASSESSMENT YEAR AND WERE ALLOWED AFTER MAKING MINOR DISALLOWANCES. HENCE, THE PRESENT ACT ION OF THE ASSESSING OFFICER IS AGAINST RULE OF CONSISTENCY. IT WAS CON TENDED THAT THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE DID NOT CON DUCT ANY FREE SERVICES IS NOT CORRECT BECAUSE OUT OF 1623 TRACTORS SOLD DURING TH E YEAR, FREE SERVICES EXPENSES WERE REIMBURSED ONLY TO 1373 BUYERS AND ABOUT 250 B UYERS AVAILED FREE SERVICE. IT WAS ALSO CONTENDED THAT THERE IS NO LIMIT PRESCR IBED BY THE MANUFACTURER FOR FREE SERVICE EXPENSES BUT REIMBURSEMENT IS MADE ONL Y AT PARTICULAR RATE. THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS W HICH WERE AUDITED U/S 44AB OF THE ACT. NO ADVERSE COMMENTS WERE OFFERED IN THIS REGARD. IT WAS 12 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 FINALLY CONTENDED THAT THE EXPENDITURE WAS INCURRED AFTER CONSIDERING VARIOUS PRACTICAL ASPECTS AND WAS IN THE INTEREST OF BUSINE SS AND PREVAILING TRADE PRACTICE. 13. BASED ON THE ARGUMENT ADVANCED BY THE LD. CIT(A ) SUSTAINED AN AMOUNT OF RS.5,00,000/- ON ESTIMATE BASIS AND DELETED THE BALANCE AMOUNT BY OBSERVING AS UNDER :- 4.3 I HAVE GONE THROUGH THE OBSERVATIONS OF A.O. A ND SUBMISSIONS OF THE APPELLANT IN THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT FILED COPIES OF CREDIT NOTE, WHICH SUBSTANTIATE REIMBURSEMENT OF FREE SERVICE EXPENSES @ 250/- PER SERVICE AND NOT RS.80/- AS INFERRED BY THE A.O. THE APPELLANT IS P AYING ONLY RS.75/- PER SERVICE OVER AND ABOVE THAT WAS REIMBURSED BY THE COMPANY. IT I S IN LIEU OF ACTUAL SERVICE CENTER EXPENDITURE THAT WAS TO BE INCURRED BY THE APPELLAN T AGAINST FREE SERVICE FACILITY. IT IS TRITE LAW THAT ASSESSEE IS THE BEST JUDGE OF HIS BU SINESS AND THE EXPENDITURE INCURRED BY HIM IN BUSINESS INTEREST CANNOT BE DISALLOWED WI THOUT PROVING THAT THE CLAIM ITSELF WAS NOT GENUINE. COPIES OF SOME OF THE VOUCHERS FI LED WITH THE WRITTEN SUBMISSION SHOW THAT BILL NO. OF THE TRACTOR SOLD AND DATE ARE GIVEN AND OTHER DETAILS CAN BE VERIFIED FROM THE SALE BILL. THE A.O. DID NOT BRIN G FORTH ANY EVIDENCES TO SUPPORT HIS VIEW EVEN DURING REMAND STAGE. THE SALES FOR THE Y EAR UNDER CONSIDERATION HAVE INCREASED BY ABOUT 18% AND THE GP RATE HAS ALSO INC REASED FROM 4.18% TO 4.23%. THE APPELLANT HAS MAINTAINED REGULAR BOOKS OF ACCOU NTS, WHICH ARE AUDITED U/S 44AB. THERE ARE NO SIGNIFICANT ADVERSE COMMENTS OF THE A. O. IN HIS REMAND REPORT. UNDER THESE CIRCUMSTANCES, THE DISALLOWANCE MADE BY THE A .O. IS NOT FULLY JUSTIFIED. HOWEVER, LOOKING TO THE NATURE AND GAP BETWEEN THE AMOUNT REIMBURSED BY THE MANUFACTURING COMPANIES AND THE CASH EXPENDITURE IN CURRED IN LIEU OF FREE SERVICES, THE POSSIBILITY OF HIGHER CLAIM OF EXPENDITURE CANN OT BE RULED OUT. ACCORDINGLY, AFTER CONSIDERING THE NUMBER OF VEHICLES SOLD, THE NUMBER OF CASES WHERE CASH PAYMENT MADE IN LIEU OF FREE SERVICE COUPONS AND THE QUANTU M OF EXPENDITURE CLAIMED, AN AMOUNT OF RS.5,00,000/- IS DISALLOWED ON ESTIMATE B ASIS TO MEET THE ENDS OF JUSTICE. THIS APPEAL IS, THUS, PARTLY ALLOWED. 14. AGGRIEVED WITH SUCH PART RELIEF BY THE LD. CIT( A), THE REVENUE AS WELL AS THE ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL. 15. THE LD. DR STRONGLY OPPOSED THE ORDER OF THE LD . CIT(A). SHE FILED A CHART STATING THAT IF THE VERSION OF THE ASSESSEE A ND THE CIT(A) ARE ACCEPTED THAT 13 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 THE ASSESSEE WAS GETTING RS.250/- PER FREE SERVICE FROM THE COMPANY AS AGAINST RS.80/- AS HELD BY THE ASSESSING OFFICER, EVEN THEN AN AMOUNT OF RS.41,96,140/- IS REQUIRED TO BE CONFIRMED AS AGAINST RS.5,00,000/ - CONFIRMED BY THE LD. CIT(A). 16. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A) TO THE EXTENT HE HAS GIVEN RELIEF. HE SUBMITTED THAT THE 8 FREE SERVICES TO BUYERS ARE ALLOWED BY THE MANUFACT URER. SINCE MOST OF THE FARMERS ARE COMING FROM DISTANCE PLACES AND IT IS D IFFICULT TO BRING THEIR VEHICLES TO ASSESSEES SERVICE CENTER, THE ASSESSEE IN ORDER TO CONTINUE LOYALTY OF THE CUSTOMERS REIMBURSED AT RS.3250/- TO EACH CUSTOMER BEING 10 FREE SERVICES AT THE RATE OF RS.325/- FOR EACH SERVICE TO THE BUYERS WHO DID NOT AVAIL FREE SERVICES. THE EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE ON COMMERCIAL EXPEDIENCY. HE SUBMITTED THAT THE OBSERVATION OF T HE ASSESSING OFFICER ABOUT REIMBURSEMENT OF RS.80/- PER FREE SERVICES BY MANUF ACTURER IS INCORRECT SINCE THE REIMBURSEMENT IS RS.250/- PER SERVICE WHICH IS EVIDENCED FROM THE CREDIT NOTES ISSUED BY THE MANUFACTURER. SINCE THE AMOUNT OF REIMBURSEMENT OF MANUFACTURER IS NOT SUFFICIENT TO COVER THE ACTUAL EXPENDITURE, THEREFORE, THE ASSESSEE PAID RS.325/- PER FREE SERVICE CHARGES TO MEET THE COST. FURTHER IN THE PAST SUCH FREE SERVICE CHARGES CLAIMED WERE ALLOWED BY THE ASSESSING OFFICER WITH INSIGNIFICANT DISALLOWANCE. THEREFORE, THERE IS NO JUSTIFICATION FOR 14 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 DISALLOWING THE ENTIRE EXPENDITURE DURING THE YEAR. HE SUBMITTED THAT THE ENTIRE AMOUNT HAS BEEN INCURRED BY THE ASSESSEE FOR COMMER CIAL EXPEDIENCY AND THE ASSESSING OFFICER CANNOT SIT ON THE CHAIR OF THE BU SINESSMAN AND DICTATE THE ASSESSEE HOW TO CONDUCT HIS BUSINESS. HE ACCORDING LY SUBMITTED THAT NO DISALLOWANCE IS CALLED FOR. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE ASSESSEE IN THE INSTANT CASE HAS CLAIMED FREE SERVICE EXPENSES OF RS.52,26, 090/- AFTER REDUCING THE AMOUNT OF RS.16,04,685/- BEING REIMBURSEMENT OF FRE E SERVICES COUPON FROM THE TOTAL FREE SERVICE EXPENSES OF RS.68,26,775/-. WE FIND THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENDITURE ON THE GROUND THA T THE ASSESSEE COULD NOT SUBSTANTIATE THE GENUINENESS OF SUCH EXPENDITURE. WE FIND THE LD. CIT(A) SUSTAINED AN AMOUNT OF RS.5,00,000/- ON ESTIMATE BA SIS AND DELETED THE BALANCE AMOUNT, THE REASONS FOR WHICH HAVE ALREADY BEEN REP RODUCED IN THE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. DR THAT AS PER THE COMPUTATION FILED BY HER THE DISALLOWANCE COMES TO RS.41,96,140/-. I T IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE PAST SUCH TYPE OF EXPENSES WERE ALLOWED WITH MINOR DISALLOWANCE. FURTHER, THE BUYERS OF TR ACTORS ARE FROM DISTANT PLACES AND IT IS UNECONOMICAL FOR THEM TO COME TO THE PREM ISES OF THE ASSESSEE FOR GETTING FREE SERVICES. THEREFORE, THE ASSESSEE, TO MAINTAIN GOOD RELATIONSHIP 15 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 WITH THEM, REIMBURSES THE EXPENSES TO THEM SO THAT THEY CAN GET THE FREE SERVICES AT NEARBY PLACES. WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN ADMITTED FACT THAT IN T HE IMMEDIATELY PRECEDING ASSESSMENT YEAR SUCH FREE SERVICE EXPENSES WERE ALL OWED BY THE ASSESSING OFFICER WITH SOME MINOR DISALLOWANCE. IN THIS YEAR , THE LD. CIT(A) HAS DISALLOWED AN AMOUNT OF RS.5,00,000/- ON ESTIMATE B ASIS OUT OF SUCH FREE SERVICES. THE ORDER OF THE LD. CIT(A), IN OUR OPIN ION, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE IS A REASONED ONE WHICH, IN OUR OPINION, DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, WE UPHOLD T HE SAME AND THE GROUND RAISED BY THE ASSESSEE AS WELL AS REVENUE ARE DISMI SSED. 18. GROUND NO.3 BY THE REVENUE READS AS UNDER :- 3. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.92,99,855/ - MADE BY THE A.O. ON ACCOUNT OF OTHER INSURANCE EXPENSES AS THE ASSESSEE HAS FILED TO ESTABLISH GENUINENESS OF THE EXPENSES. 19. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSE E FIRM HAS CLAIMED AN AMOUNT OF RS.92,99,855/- ON ACCOUNT OF OTHER INSURA NCE EXPENSES. ON BEING QUESTIONED BY THE ASSESSING OFFICER IT WAS EXPLAINE D THAT THE SAME IS ON ACCOUNT OF REIMBURSEMENT OF INSURANCE EXPENSES IN RESPECT O F TRACTORS SOLD UNDER THE SCHEME ISSUED BY THE COMPANY FOR PROMOTION OF SALE OF TRACTORS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE LITERATUR E IN REGARD TO THE SCHEME 16 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 CLAIMED TO HAVE BEEN ISSUED BY THE MANUFACTURER COM PANY AND THAT THE ASSESSEE WAS UNDER OBLIGATION TO FOLLOW IT. SINCE THE ASSES SEE COULD NOT FILE ANY SUCH EVIDENCE IN SUPPORT OF THIS SCHEME UNDER WHICH THE INSURANCE EXPENSES ARE CLAIMED TO HAVE BEEN REIMBURSED TO VARIOUS BUYERS O F THE TRACTORS AND THERE WAS NO REFERENCE ON THE SALE BILL THAT REIMBURSEMENT HA S BEEN GIVEN TO THE BUYERS OF TRACTORS, THE ASSESSING OFFICER REJECTED THE EXPLAN ATION GIVEN BY THE ASSESSEE AND MADE ADDITION OF RS.92,99,855/- TO THE TOTAL IN COME OF THE ASSESSEE. 20. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED T HAT IN ORDER TO ACHIEVE TARGET FIXED BY THE COMPANY AND TO WITHSTAND PRESSU RE FROM THE MANUFACTURING COMPANY TO INCREASE THE SALES AND DEEMED FROM OTHER LOCAL DEALERS, THE ASSESSEE WAS FORCED TO GIVE SOME OFFERS TO THE CUSTOMERS. I T WAS CONTENDED THAT SUCH OFFERS WERE PUBLISHED IN THE NEWSPAPERS ON EACH AND EVERY DAY AS COMMON FEATURES AND IT DOES NOT NEED SEPARATE JUSTIFICATIO N. REFERRING TO COPIES OF LEAFLETS FILED AND NEWSPAPER ADVERTISEMENTS, THE AS SESSEE CONTENDED THAT IT HAS BECOME AN INDUSTRY PRACTICE NOW. IT WAS ALSO CONTE NDED THAT SUCH BENEFITS WERE OFFERED ONLY TO 972 VEHICLES SOLD OUT OF TOTAL 1623 TRACTORS SOLD DURING THE YEAR. THERE CANNOT BE ANY EVIDENCE FROM THE MANUFACTURER AS IT WAS THE ASSESSEES BUSINESS DECISION. THE LEAFLETS, VOUCHERS ETC. WER E NOT READILY AVAILABLE AT THE TIME OF ASSESSMENT AND THE ASSESSING OFFICER GAVE O NLY ONE DAY TIME TO PRODUCE THE SAME AND DUE TO DEATH OF FATHER OF ASSESSEES C OUNSEL THE SAME COULD NOT BE 17 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 PRODUCED. THE ASSESSEE CONTENDED THAT AS PER LAW L AID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT (2007) 288 ITR 1(SC), EVEN WHEN THE EXPENDITURE MAY NOT HAVE BEEN INCURRE D UNDER ANY LEGAL OBLIGATIONS STILL IT IS ALLOWABLE AS BUSINESS EXPEN DITURE ON THE GROUND OF COMMERCIAL EXPEDIENCY. THE ASSESSEE CONTENDED THAT ALL THE PAYMENTS WERE MADE THROUGH CHEQUES ISSUED IN FAVOUR OF THE INSURA NCE COMPANY AND GENUINENESS OF THE CLAIM CANNOT BE DISPUTED. IT WA S ALSO CONTENDED THAT OUT OF TOTAL EXPENDITURE OF RS.92,99,855/- AN AMOUNT OF RS .18,06,957/- RELATE TO TRANSIT INSURANCE INCURRED BY THE ASSESSEE. IT WAS ALSO CO NTENDED THAT SUCH EXPENDITURE INCURRED AND CLAIMED IN THE PRECEDING YEARS WERE AL LOWED IN REGULAR ASSESSMENTS. HENCE, THE PRESENT ACTION OF THE ASSE SSING OFFICER IS NOT JUSTIFIED. 21. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE , LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER :- 5.3 I HAVE GONE THROUGH THE OBSERVATIONS OF THE A. O. AND SUBMISSIONS OF THE APPELLANT. THE ENTIRE EXPENDITURE INCURRED UNDER T HIS HEAD WAS UNDISPUTEDLY PAID THROUGH CHEQUES ISSUED DIRECTLY IN FAVOUR OF INSURA NCE COMPANIES. I HAVE VERIFIED ON TEST BASIS SOME OF THE ENTRIES IN THE BANK STATEMEN TS ALSO. SO, THERE IS NO DISPUTE REGARDING GENUINENESS OF THE CLAIM. COPY OF THE SU BMISSION OF THE APPELLANT WAS ALSO FORWARDED TO THE A.O. FOR HIS COMMENTS. HOWEVER, T HE A.O. HAS NOT CONTRADICTED THE ASSERTIONS OF THE APPELLANT IN HIS REMAND REPORT. THE APPELLANT HAS SUCCESSFULLY DEMONSTRATED BEFORE ME THAT VARIOUS SCHEMES OF OFFE RS WERE BROUGHT OUT BY THE APPELLANT ON ITS OWN AND NOT BY THE MANUFACTURER CO MPANY AND SO THEY APPREHENSION OF THE A.O. IS PROPERLY EXPLAINED. THE ASPECT OF I NCURRING OF SUCH EXPENDITURE WITHOUT ANY LEGAL/CONTRACTUAL OBLIGATION IS COVERED BY THE ORDER OF HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD. (SUPRA). THE COPIES OF LEAFLETS PRODUCED SUBSTANTIATE THAT THE APPELLANT HAS OFFERED THE SCHEME IN GENERA L FOR THE PURPOSE OF BUSINESS PROMOTION, ACCORDINGLY, THE CLAIM OF THE APPELLANT DESERVES TO BE ALLOWED. IN THE REMAND REPORT OF THE A.O. HE HAS NOT DOUBTED THE GE NUINENESS OF THE LEAFLETS. THERE IS NO MATERIAL/EVIDENCE ON RECORD TO CONTROVERT THE SE EVIDENCES SUBMITTED BY THE APPELLANT. THIS GROUND OF APPEAL IS, THEREFORE, AL LOWED. 18 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 22. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 23. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WITHOUT ANY VALID REA SON HAS DELETED THE ENTIRE ADDITION WHICH DESERVES TO BE SET-ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 24. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT IT IS A MATTER OF COMMERCIAL EXPEDIENCY AND IS A NORMAL TRADE PRACTICE TO OFFER SUCH FREE INSURANCE. HE SUBMITTED THAT THE ENTIRE INSURANCE AMOUNT HAS BEEN PAID BY CHEQUE TO THE INSURANCE COMPANY AND THE INSURANCE PAPERS ARE WITH THE RESPECTIVE OWNERS OF THE TRACTORS. HE SUBMITTED THAT SINCE THE OFFER WA S MADE BY THE DEALER, THEREFORE, THERE IS NO EVIDENCE TO SUCH SCHEME OR O FFER FROM THE MANUFACTURER COMPANY. REFERRING TO COPIES OF VARIOUS OFFER LEAF LETS PLACED AT PAGE 212 TO 216 OF THE PAPER BOOK, HE SUBMITTED THAT THE ASSESSEE H AS FLOATED VARIOUS SCHEMES TO ATTRACT CUSTOMERS AND SUCH INSURANCE CHARGES HAS BE EN PAID FOR THE FIRST YEAR AS COMMERCIAL EXPEDIENCY. HE SUBMITTED THAT THERE ARE AROUND 8 DEALERS IN THE CITY AND THE ASSESSEE HAS TO COMPETE WITH THEM TO REMAIN IN BUSINESS FOR WHICH IT GIVES VARIOUS OFFERS FROM TIME TO TIME. HE SUBMITT ED THAT THE ORDER OF THE LD. CIT(A) IS SELF-EXPLANATORY AND, THEREFORE, THE SAME SHOULD BE UPHELD. 19 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 25. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE PAPER BOOKS FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.92,99,855/- ON ACCOUNT OF OTHER INSURA NCE EXPENSES WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND T HAT THE ASSESSEE FIRM WAS NOT UNDER ANY OBLIGATION TO REIMBURSEMENT OF SUCH I NSURANCE EXPENSES AND NO EVIDENCE REGARDING ANY SCHEME BY THE MANUFACTURER C OMPANY WAS FURNISHED TO SUPPORT ITS CLAIM. WE FIND THE LD. CIT(A) DELETED THE ADDITION, THE REASONS FOR WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPH. IT IS THE SUBMISSION OF THE LD. DR THAT IN ABSENCE OF SUPPORT ING EVIDENCES AND IN ABSENCE OF ANY OBLIGATION TO INCUR SUCH EXPENDITURE, THE OR DER OF THE LD. CIT(A) DELETING THE ADDITION IS NOT JUSTIFIED. IT IS THE SUBMISSIO N OF THE LD. COUNSEL FOR THE ASSESSEE THAT TO ATTRACT THE CUSTOMERS, THE ASSESSE E HAS FLOATED THE SCHEME OF GIVING FREE INSURANCE FOR THE FIRST YEAR AND IT WAS NOT AT THE BEHEST OF THE MANUFACTURER. THEREFORE, THERE IS NO QUESTION OF G IVING ANY EVIDENCE TO SUBSTANTIATE THAT IT WAS AT THE BEHEST OF THE MANUF ACTURER. WE FIND SOME FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. FROM THE VARIOUS LEAFLETS/ADVERTISEMENTS IN NEWSPAPERS, COPIES OF WH ICH ARE PLACED IN THE PAPER BOOK, WE FIND IT IS THE ASSESSEE WHO HAS FLOATED TH E SCHEME TO ATTRACT THE CUSTOMERS AND, THEREFORE, THERE WAS NO QUESTION OF FILING OF ANY EVIDENCE TO 20 ITA NO.119/RPR/2014 C.O. NO.03/RPR/2014 SUBSTANTIATE THAT SUCH EXPENSES WERE INCURRED ON AC COUNT OF ANY SCHEME FLOATED BY THE MANUFACTURER. FURTHER, THE AMOUNT HAS BEEN PAID BY THE ASSESSEE TO THE INSURANCE COMPANY THROUGH BANKING CHANNELS. IT IS ALSO A NORMAL TRADE PRACTICE THAT USUALLY THE INSURANCE CHARGES FOR THE FIRST YE AR IS PAID BY VARIOUS DEALERS TO ATTRACT THE CUSTOMERS. FURTHER, SUCH FREE INSURANC E EXPENSES WERE ALLOWED IN THE PART IN SCRUTINY ASSESSMENTS. IN OUR OPINION, THE ORDER OF THE LD. CIT(A) IN THE INSTANT CASE IS A REASONED ONE AND DOES NOT CALL FO R ANY INTERFERENCE. WE, THEREFORE, UPHOLD THE SAME AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 26. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH AUGUST, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14-08-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., RAIPUR. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, RAIPUR