Shri Atul D. Kapasi, Ahmedabad V. The Income Tax Officer, Ward-2(1), Ahmedabad

ITA 114/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6085 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Keywords: Maximum Marginal Rate
• Section: 143(3); 142(1)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JM AND SHRI MANISH BORAD, AM ./ITA.NO. 114/AHD/2014 ( / ASSTT YEAR :2009-10) SHRI ATUL D. KAPASI PROP. M/S ARIES MARKETING, A-403, SANSKRUTI APARTMENT, NR. SANT KABIR ROAD, AHMEDABAD-380013 PAN:ABKPK1389F VS. THE INCOME TAX OFFICER, WARD-2(1), AHMEDABAD (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI HARDIK VORA, A.R / RESPONDENT BY: SHRI T. SANKAR, SR. D.R. / DATE OF HEARING 19/02/2018 /DATE OF PRONOUNCEMENT 20/02/2018 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL OF ASSESSEE RELATING TO ASSESSMENT Y EAR 2009-10 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-6, AHMEDABAD DATED 04.12.2013, ARISING O UT OF ORDER U/S. 143(3) OF THE ACT FRAMED ON 29.12.2011 BY ITO, WARD -2(1), AHMEDABAD. 2. SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST THE OR DER OF LD. CIT(A) FOR CONFIRMING DISALLOWANCE OF COMMISSION EXPENSES OF RS. 4,75,000/-. ITA.NO. 114/AHD/2014 ASSESSMENT YEAR 2009-10 - 2 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS O F MARKETING AND COMMISSION AGENT AND RUNNING A SOLE PROPRIETORSHIP CONCERN M/S. ARIES MARKETING. E-RETURN OF INCOME DECLARING INCOM E OF RS. 2,42,940/- FILED ON 12.08.2009. CASE SELECTED FOR S CRUTINY THROUGH CASS. NOTICES U/S. 143(2) & 142(1) OF THE ACT WERE DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS LD. ASSESSING OFFICER WHILE EXAMINING THE COMMISSION EX PENDITURE OF RS. 24,75,000/- PAID TO DIFFERENT PERSONS OBSERVED THAT ASSESSEE HAS PAID COMMISSION OF RS. 4,75,000/- TO M/S. MANGALAM CORPO RATION WHICH IS OWNED BY SANDIP KUMAR MANGILAL JAIN (HUF). LD. ASS ESSING OFFICER WAS OF THE VIEW THAT HUF CANNOT EARN INCOME FROM CO MMISSION, THEREFORE DISALLOWED THE CLAIM AND ASSESSED THE INC OME AT RS. 7,17,940/-. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) BUT FAILED TO SUCCEED AS LD. CIT(A) CONFIRMED DISALLOWA NCE OBSERVING THAT NO EVIDENCE HAS BEEN FILED IN SUPPORT OF THE SERVIC ES RENDERED BY M/S. MANGALAM CORPORATION. 5. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS ALLOWED THE COMMISSION EXPENSES PAID TO OTHER A GENTS PROVIDING SIMILAR TYPE OF ACTIVITY. THE PAYEE M/S. MANGALAM C ORPORATION IS DULY ASSESSED TO TAX AND PAYEE TAXES AT THE MAXIMUM MARG INAL RATE. TAX HAS BEEN DEDUCTED AT SOURCE AND PAYMENT HAS BEEN MADE T HROUGH ACCOUNT ITA.NO. 114/AHD/2014 ASSESSMENT YEAR 2009-10 - 3 PAYEE CHEQUE. RELIANCE WAS PLACED IN THE JUDGMENT O F HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT-2 VS. GUJARAT GAS FINANCIAL SERVICES LIMITED (2015) 60 TAXMANN. C OM 483 (GUJARAT) AND THE JUDGMENT HAS GIVEN BY HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. DR. AMAR KANT GUPTA (2013) 35 TAXMA NN.COM 447 ALLAHABAD. 7. ON THE OTHER HAND LD. D.R VEHEMENTLY ARGUED SUPP ORTING THE ORDERS OF LOWER AUTHORITIES AND FURTHER SUBMITTED T HAT NO PROOF OF PROVIDING SERVICES AS A COMMISSION AGENT WERE GIVEN BEFORE THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND GONE THROUGH THE JUDGMENT CARE FULLY REFERRED AND RELIED BY THE LD. COUNSEL. THE SOLE GRIEVANCE IS WI TH REGARD TO DISALLOWANCE OF COMMISSION EXPENSE OF RS. 4,75,000/ - CONFIRMED BY LD. CIT(A). WE OBSERVE THAT THE ASSESSEE IS ITSELF INTO THE BUSINESS OF MARKETING/COMMISSION AGENT. AN AMOUNT OF RS. 24,75, 000/- HAS BEEN DEBITED TO PROFIT AND LOSS ACCOUNT AS COMMISSION PA ID TO DIFFERENT PERSONS. IT IS NOT DISPUTED AT THE END OF REVENUE T HAT SIMILAR TYPE OF SERVICES WITH SIMILAR EVIDENCES WERE THEREFOR EACH OF THE PERSON RECEIVING THE COMMISSION. LD. ASSESSING OFFICER HAS ONLY DISALLOWED THE COMMISSION OF RS. 4,75,000/- AND HAS NOT RAISED ANY DOUBT ON THE REMAINING AMOUNTS. BASIC REASON FOR NOT ALLOWING TH E CLAIM BY ASSESSING OFFICER WAS FOR HIS VIEW THAT HUF CANNOT EARN COMMISSION INCOME. HOWEVER THIS VIEW OF LD. ASSESSING OFFICER IS NOT SUPPORTED BY ANY LEGAL PROVISION OF LAW. ITA.NO. 114/AHD/2014 ASSESSMENT YEAR 2009-10 - 4 9. WE FURTHER FIND THAT THE ALLEGED COMMISSION HAS BEEN PAID THROUGH ACCOUNT PAYEE CHEQUE VIA BANKING CHANNEL AF TER DEDUCTING TAX AT SOURCE. THE PAYEE I.E. M/S. MANGALAM CORPORATION PROPRIETOR KUMAR MANGALAM JAIN (HUF) IS DULY ASSESSED TO TAX A S DISCERNABLE FROM THE INCOME TAX RETURN PLACED AT PAGE NO. 6 OF THE PAPER BOOK WHICH ALSO CLARIFY THAT THE ASSESSEE (HUF) COMES UN DER THE TAX BRACKET OF MAXIMUM MARGINAL RATE. LD. CIT(A) SOLE OBSERVATI ON IS THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROOF THE TYPE OF SER VICES PROVIDED HOWEVER FROM PERUSAL OF THE DEBIT NOTE SHOWING THE PARTICULARS OF WORK PERFORMED AS WELL AS THE FACT THAT THE ASSESSING OF FICER HAS ALLOWED THE COMMISSION EXPENSE FOR ALL THE OTHER PERSONS WHEREI N ALSO SIMILAR DOCUMENTS WERE AVAILABLE, THEREFORE DO NOT JUSTIFY THE VIEW OF LD. CIT(A). 10. WE FURTHER FIND THAT HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF GUJARAT GAS FINANCIAL SERVICES LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSEE COMPANY AS WELL AS THE PARENT C OMPANY BOTH WERE ASSESSED TO TAX AT MAXIMUM MARGINAL RATE, THEREFORE IT COULD NOT BE SAID THAT SERVICES CHARGED WAS PAID AT UNREASONAL R ATE TO EVADE TAX THEREBY ALLOWING THE APPEAL IN FAVOUR OF THE ASSESS EE. IN LIGHT OF THE ABOVE JUDGMENT WE OBSERVE THAT IN THE INSTANT APPEA L ALSO THE PAYEE RECEIVING THE COMMISSION IS ASSESSED TO MAXIMUM MAR GINAL RATE AND THERE IS NO LOSS TO THE REVENUE AND WE THEREFORE RE SPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT A S WELL AS IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE FIND NO R EASON TO SUSTAIN THE DISALLOWANCE OF COMMISSION OF RS. 4,75,000/-. WE AC CORDINGLY SET ITA.NO. 114/AHD/2014 ASSESSMENT YEAR 2009-10 - 5 ASIDE THE FINDING OF BOTH THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 20/02/ 2018 AT AH MEDABAD. SD/- SD/- (MAHAVIR PRASAD) JUDICIAL MEMBER MUKUL ( MANISH BORAD) ACCOUNTANT MEMBER DATED, 20 /02/2018 ! '!/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. !-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD