INTERPLEX INDIA PVT. LTD., Mumbai V. D.C.I.T. CIR. 3(2), Mumbai

ITA 1082/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1442 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 23-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAMA KARTIKEYANLD
• Assessee Lawyers: KULDEEP MEHTA LD
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

ITA NO.1082/MUM/2018 M/S. INTERPLEX INDIA P.LTD. ASSESSMENT YEAR :2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1082/MUM/2018 ( / ASSESSMENT YEAR: 2010-11) M/S. INTERPLEX INDIA PVT.LTD. 404-B, BAKHTAVAR OPP. COLABA POST OFFICE COLABA, MUMBAI-400 005. / VS. D CIT - CIRCLE - 3 (2) ROOM NO.608 AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ./ ./PAN/GIR NO. AAACI-2634-R ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : KULDEEP MEHTA- LD. AR RESPONDENT BY : ABHI RAMA KARTIKEYAN-LD.DR / DATE OF HEARING : 12/03/2019 / DATE OF PRONOUNCEMENT : 18/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2010-11 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-8, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-8/IT-214/14-15 DATED 18/12/2017 QUA CONFIRMATION OF DISALLOWANCE OF COMMISSION EXPENSES FOR RS.13.98 LA CS. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY WAS STATED TO BE ENGAGED AS ITA NO.1082/MUM/2018 M/S. INTERPLEX INDIA P.LTD. ASSESSMENT YEAR :2010-11 2 MANUFACTURERS OF CELLULOSE ACETATE SHEETS (PLASTICI ZED) IG GRADE GRANULES, PET SHEETS, SUN STRAP ETC. 2.1 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD . DEPUTY COMMISSIONER OF INCOME TAX-CIRCLE-3(2), MUMBAI [AO] IN SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT ON 24/12/2012 WHER EIN THE ASSESSEE WAS SADDLED WITH IMPUGNED DISALLOWANCE OF RS.13.98 LACS, BEING EXCESSIVE COMMISSION PAID BY THE ASSESSEE TO AN ENT ITY NAMELY M/S. JAYSON INTERNATIONAL [JAYSON]. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT ASSESSEE PAID CERTAIN COMMISSION TO THE FOLLOWING PARTIES: - NO. NAME OF PARTY COMMISSION PAID (RS.) RATE OF COMMISSION (RS./PER KG) 1. JAYSON INTERNATIONAL 16,70,221/- 7.50 PER KG / 1 0.00 PER KG 2. SAMARA UDHYOG 4,60,539/- 1.5 PER KG THE SAME LED THE LD. AO TO FORM A BELIEF THAT COMMI SSION WAS PAID AT EXCESSIVE RATE TO M/S. JAYSON INTERNATIONAL . ALTHOUGH THE ASSESSEE DEFENDED THE DIFFERENCE IN RATES VIDE REPLY DATED 0 5/12/2012, INTER-ALIA, BY SUBMITTING THAT M/S JAYSON INTERNATIONAL WAS ASS OCIATED WITH THE ASSESSEE FOR ABOUT 15 YEARS AND CREATED CUSTOMER BA SE OF ABOUT 70 COMPANIES SCATTERED ALL OVER NORTH INCLUDING SMALLE R TOWNS IN PUNJAB WHEREAS M/S SAMARA UDHYOG WAS APPOINTED TO SERVICE 2-3 CUSTOMERS IN NASHIK REGION. IT WAS ALSO SUBMITTED THAT JAYSON WAS RESPONSIBLE FOR TIMELY COLLECTION OF PAYMENT AND WAS REQUIRED TO RE MIT THE SAME TWICE IN EVERY MONTH IRRESPECTIVE OF FACT WHETHER THE ACTUAL PAYMENT WAS RECEIVED FROM THE CUSTOMER OR NOT IN CONTRAST TO SAMARA WHO WOULD REMIT AMOUNT ONLY ONCE IN A MONTH AND THAT TOO, AFTER REA LIZING THE SAME FROM ITA NO.1082/MUM/2018 M/S. INTERPLEX INDIA P.LTD. ASSESSMENT YEAR :2010-11 3 THE CUSTOMERS. ANOTHER DISTINGUISHING FACTOR ADDUCE D WAS THAT CUSTOMERS HANDLED BY JAYSON WERE SCATTERED AND THEIR ORDER SIZED VARIED CONSIDERABLY. LASTLY THE PER KG REALIZATION BY JAYSON WAS STATED TO BE HIGHER BY MORE THAN RS.19/- PER KG IN COMPARI SON TO SAMARA. HOWEVER, LD. AO, NOTICING THAT THE SALES QUANTITY O F 3.07 LAC KG ACHIEVED BY SAMARA FAR EXCEEDED THE SALES QUANTITY OF 1.81 LAC KG ACHIEVED BY JAYSON AND THEREFORE, THERE WAS NO JUSTIFICATION FOR HIGHE R COMMISSION PAYMENT. IT WAS ALSO OBSERVED THAT THE F ACTS THAT JAYSON WAS CATERING TO LARGER AREA OR THE SALES REALIZATIO N PER KG. WERE HIGHER HAS NOT BEEN SUPPORTED WITH ANY COMPARATIVE DATA /E VIDENCES. FINALLY, NOT CONVINCED, THE ALLOWABLE COMMISSION PAYMENT WAS RESTRICTED TO RS.1.50 PER KG AND THE DIFFERENTIAL AMOUNT I.E. RS. 13.98 LACS WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE STAND OF LD. AO, UPON CONFIRMATION BY LD. FIRST APPELLATE AUTHOR ITY, IS UNDER APPEAL BEFORE US. 3. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SHRI KULDEEP MEHTA , DRAWING OUR ATTENTION TO THE DOCUMENTS ON RECORD, SUBMITTED THAT SIMILAR COMMISSION WAS PAID BY THE A SSESSEE IN PRECEDING YEARS AND THE SAME HAS BEEN ACCEPTED BY T HE REVENUE. IT HAS BEEN SUBMITTED THAT JAYSON WAS ASSOCIATED WITH THE ASSESSEE FOR MORE THAN 15 YEARS AND THE COMMISSION WAS BEING PAID PUR SUANT TO WRITTEN AGREEMENT ENTERED INTO BY THE ASSESSEE WITH JAYSON. THE LD. AR ALSO DREW OUR ATTENTION TO THE FACTORS THAT JUSTIFIES PA YMENT OF COMMISSION AT HIGHER RATE. AN APPLICATION FOR ADMISSION OF ADDITI ONAL EVIDENCES U/R 29 OF THE INCOME TAX RULES, 1962 HAS ALSO BEEN PUT FORWAR D TO SUBMIT THAT JAYSONS SALES REALIZATION PER KG WERE MUCH HIGHER THAN THAT OF SAMARA. ITA NO.1082/MUM/2018 M/S. INTERPLEX INDIA P.LTD. ASSESSMENT YEAR :2010-11 4 THESE EVIDENCES ARE IN THE SHAPE OF SALES INVOICES RAISED BY THE ASSESSEE. PER CONTRA, LD. DR SUBMITTED THAT THE COMPLETE ONUS TO JUSTIFY HIGHER RATE TO JAYSON WAS ON ASSESSEE. 4. UPON CAREFUL CONSIDERATION, WE FIND THAT BASIC F ACTS ARE NOT IN DISPUTE. THE ONLY DISPUTE IS WITH REGARD TO HIGHER RATE OF COMMISSION PAID BY THE ASSESSEE TO JAYSON. IT IS ALSO UNDISPUTED FACT THAT JAYSON WAS ASSOCIATED WITH ASSESSEE FOR MORE THAN 15 YEARS AND WAS BEING PAID COMMISSION AT CERTAIN RATE REGULARLY. THE GENU INENESS OF THE SAME IS NOT UNDER DOUBT SINCE THE LD. AO HIMSELF, HAS AL LOWED THE SAME TO THE EXTENT OF RS.1.50 PER KG. ONE OF THE MAJOR FACTORS WHICH LED THE LD. AO TO MAKE THE SAID DISALLOWANCE WAS THE FACT THAT THE ASSESSEE FAILED TO DEMONSTRATE THAT THE JAYSONS SALES REALIZATION WAS MUCH HIGHER THAN THAT OF SAMARA. TO REBUT THE SAME, THE ASSESSEE HAS PLACED ON RECOR D ADDITIONAL EVIDENCES WHICH, IF FOUND TENABLE, WOULD DISPEL THE APPREHENSION RAISED BY LD. AO. THEREFORE, WE REMIT THE ISSUE BACK TO THE FILE OF LD. AO TO APPRECIATE THE ADDITIONAL EVI DENCES AS PLACED ON RECORD AND RE-ADJUDICATE THE SAME AFTER AFFORDING R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WHO, IN TURN, IS DI RECTED TO SUBSTANTIATE HIS STAND, IN THIS REGARD. 5. RESULTANTLY, THE APPEAL STANDS ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18/03/2019 SR.PS, JAISY VARGHESE ITA NO.1082/MUM/2018 M/S. INTERPLEX INDIA P.LTD. ASSESSMENT YEAR :2010-11 5 !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.