M/S SKEMA INTERNATIONAL PVT. LTD., Jaipur V. DCIT, Jaipur

ITA 1118/JPR/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82768 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: AASHISH SHARMA
• Section: 234B

Judgement Text

ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 1118/JP/2011 ASSESSMENT YEARS : 2008-09 PAN : AAHCS 8478 C M/S. SKEMA INTERNATIONAL (P) LTD. VS. THE DCIT E-699, RIICO INDUSTRIAL AREA CIRCLE- 7 PHASE-III, SITAPURA INDUSTRIAL AREA, JAIPUR JAIP UR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AASHISH SHARMA DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 12-08-2014 DATE OF PRONOUNCEMENT: 12-09-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-III, JAIPUR DATED 19-09-2011 FOR THE AS SESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE RAISED THE FOLLOWING GROUNDS O F APPEAL. 1. THAT THE CIT(A) HAS GROSSLY ERRED IN DOUBTING THE GENUINENESS OF COMMISSION. 2. THAT THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING A N ADDITION OF RS. 33,35,661/- ON ACCOUNT OF COMMISSION. 3. THAT THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING A DDITION OF RS.3,40,875/- ON ACCOUNT OF DIRECTORS TRAVELLING EX PENSES. ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 2 4. THAT THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING C HARGING INTEREST U/S 234B AND 234C OF THE INCOME TAX ACT, 1 961 OF RS.3,59,640/- AND 38,328/- RESPECTIVELY. 2.1 AS REGARDS GROUND NOS. 1 AND 2 OF THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ISSUE OF COMMISSION TO M/S.LA MAISION COLONIALE IS COVERED BY ITAT, JAIPUR BENCH ORDER DATED 18-11-2011 IN ASSESSEES OWN CASE IN ITA NO.234/JP/11 FOR A.Y. 20 06-07. THE ITAT HAS ALLOWED THE COMMISSION TO THIS CONCERN HOLDING THE TRANSACTION TO BE GENUINE AND SERVICES RENDERED, BY FOLLOWING OBSERV ATIONS :- 8.1 WE HAVE GONE THROUGH THE ORDER OF AO AS WELL AS ORDER OF LD.CIT(A) AND WE FIND THAT ASSESSEE HAS SUPPLIED GOODS AS PER AGREEMENT BASIS THROUGH M/S.LAMAISONCOLONIALE, COPY OF AGREEMENT IS PLACED ON RECORD. THE AO AND LD.CIT(A) SAYS THA T THIS IS NOT A VALID AGREEMENT. WE DO NOT KNOW HOW BOTH THE LOWER AUTHORITIES TREATED THE AGREEMENT AS NOT VALID. ALL THE CONDIT IONS FOR SUPPLY OF MATERIAL ARE MENTIONED IN THIS AGREEMENT. THERE AR E CONDITION OF QUALITY CONTROL, CONDITION OF GUARANTEE CONDITION O F TERMS OF DELIVERY, CONDITION OF COMMISSION & REPRESENTATION RATE CONTR ACT, RECEPTION OF DELIVERY, PENALTIES AND COMPLIANCE WITH REGULATIONS . TERMS OF PAYMENT IS ALSO MENTIONED IN THIS AGREEMENT. THERE FORE, WE SEE NO REASON TO DISBELIEVE THIS AGREEMENT. IT IS FURTHER SEEN THAT ASSESSEE HAS MADE PAYMENT THROUGH PROPER BANKING CHANNEL AND CERTIFICATE HAS BEEN RECEIVED NOW WHICH CONFIRMED THAT ASSESSEE HAD PAID COMMISSION @ 15% FOR THE PERIOD 2005-06 WHICH FALLS IN THE PREVIOUS ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 3 YEAR RELATING TO ASSESSMENT YEAR UNDER CONSIDERATIO N. COPY OF ACCOUNT OF M/S.LA MAISON COLONIALE IS PLACED AT PAG ES 56-90. LETTER PAYMENT IS PLACED AT PAGES 71-72. EVEN REMAND REPO RT WAS SOUGHT FROM THE AO, COPY OF WHICH IS PLACED AT PAGES 74-75 , BY WHICH THE COPY OF AGREEMENT FILED BEFORE3 THE LD.CIT(A) AND C OPY OF LETTER OF COMMISSION AND BANK CERTIFICATE WAS SENT TO THE AO FOR VERIFICATION. NO ADVERSE MATERIAL WAS FOUND BY THE AO. HOWEVER, IT WAS STATED THAT ASSESSEE COULD NOT PROVE THE REASON FOR PAYMEN T OF COMMISSION AND, THEREFORE, ACTION OF THE AO SHOULD BE CONFIRME D. IN OUR VIEW, THE REJECTION OF CLAIM IS NOT JUSTIFIED. IT WAS PROVID ED THAT ASSESSEE HAS MADE SALES OF MORE THAN RS.2 CRORES THROUGH THIS PA RTY AND COMMISSION HAS BEEN PAID ON THE AGREED AMOUNT AFTER DEDUCTING TDS AS PER PROVISIONS OF LAW. THE SALE CONSIDERATION H AS BEEN RECEIVED BY THE ASSESSEE THROUGH PROPER BANKING CHANNEL. COMMI SSION PAYMENT HAS BEEN CLEARED THROUGH PROPER BANKING CHANNEL. C ONFIRMATORY LETTER AND COPY OF AGREEMENT ALONG WITH LETTER OF C OMMISSION PERCENTAGE ARE PLACED ON RECORD. IN OUR VIEW, THE AO DISALLOWED THE CLAIM ON TECHNICAL REASON THAT CONFIRMATION LETTER IS RECEIVED THROUGH FAX WHICH IS NOT SIGNED. HOWEVER, WE SEE THAT CONF IRMATORY LETTER RECEIVED NOW IS DULY SIGNED BY ONE RAYMOND CARDONA. IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCES, WE FEEL THAT PAYMENT OF COMMISSION WAS GENUINE AND THE SAME IS ALLOWABLE UNDER SECTION 37(1). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITIO N BY ALLOWING THE CLAIM OF DEDUCTION. 2.2 THE LD. COUNSEL FURTHER CONTENDS THAT THIS COMM ISSION TO M/S.LA MAISON COLONIALE REMAINED UNPAID. CONSEQUENTLY THE SAME AMOUNT OF ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 4 COMMISSION HAS BEEN OFFERED U/S 41(1) OF THE ACT A S INCOME FOR CESSATION OF LIABILITY IN A.Y. 11-12 WHICH HAS BEEN TAXED BY DEP ARTMENT. THE LD.CITS ORDER IS PASSED PRIOR TO THE ITAT ORDER. 2.3 APROPOS GROUND NO. 3, LD. COUNSEL CONTENDS THA T THE ADDITION ON ACCOUNT OF TRAVELLING EXPENSES HAS BEEN MADE ON AD HOC BASIS ONLY WITHOUT BRINGING ON RECORD THE FACT OF USE OF PERSONAL ELEM ENT BY THE DIRECTOR. THIS ADDITION IN THE CASE OF COMPANY AND THAT TOO BY FOR EIGN DIRECTOR IS NOT MAINTAINABLE MORE PARTICULARLY WHERE THE ENTIRE SAL ES HAS BEEN GOT DONE BY THE FOREIGN DIRECTOR AND WHOSE EFFORTS ARE NOT DENI ED BY THE AUTHORITIES BELOW. THE ENTIRE VOUCHERS OF THE TRAVELLING ARE A NNEXED AS PAPER BOOK PAGE NUMBERS 30 TO 177 OF THE PAPER BOOK. 2.4 THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED OPINION, TH E GROUND NOS. 1 & 2 OF THE ASSESSEE ABOUT COMMISSION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY ITAT JUDGMENT (SUPRA). THUS IN VIEW THEREOF , G. NO.1 AND 2 OF THE ASSESSEE ARE ALLOWED. 2.6 APROPOS GROUND 3, ALSO WE FIND MERIT IN THE AR GUMENT OF THE LD COUNSEL FOR THE ASSESSEE THAT TRAVELLING ALLOWANCES CAN NOT BE PARTLY DISALLOWED ON ADHOC BASIS WITHOUT POINTING OUT THE SPECIFIC REASONS AND ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 5 INSTANCES ON A PRIVATE TRAVEL. THUS IN VIEW THEREO F , G.NO.3 OF THE ASSESSEE STANDS ALLOWED. 3.1 THE GROUND NO.4 OF THE ASSESSEE IS REGARDING C HARGING OF INTEREST U/S 234B WHICH IS CONSEQUENTIAL IN NATURE. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12-0 9-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 12 TH SEPT. 2014 *MISHRA COPY FORWARDED TO:- 1. M/S. SKEMA INTERNATIONAL (P) LTD., JAIPUR 2. THE DCIT, CIRCLE- 7, JAIPUR 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 1118/JP/2011) AR ITAT, JAIPUR ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 6 ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 7 ITA NO. 1118/JP/2011 M/S. SKEMA INTERNATIONAL (P) LTD. VS. DCIT , CIRCLE - 3, JAIPUR 8