The ITO, Ahmedabad V. Shri Amit Babulal Shah, Ahmedabad

ITA 1282/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0607 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MAURYA
• Keywords: Gift; Commercial expediency

Judgement Text

I.T.A. NO . 1 282 /AHD/201 3 A SSESSMENT Y EAR: 2009 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] I.T.A. NO. 1 282 /AHD/ 20 1 3 ASSESSMENT Y EAR : 2009 - 10 INCOME TAX OFFICER, WARD 11(4 ) , AHMEDABAD. ................... . APPELLANT VS. AMIT B A BULAL SHAH, . ...... . ... . RESPONDENT 58, NUTAN CLOTH MARKET, O/S. RAIPUR GATE, RAIPUR, AHMEDABAD 380 001. [ PAN: AC IPS 6790 D ] APPEARANCES BY: R.P. MAURYA , FOR THE APPELLANT URVASHI SODHAN, FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 1 5 .06.2016 DATE OF PRONOUNCING THE ORDER : 14 .0 9 .2016 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 4 TH FEBRUARY, 2013, PASSED BY THE LEARNED CIT(A), FOR THE ASSES SMENT YEAR 2009 - 10, ON THE FOLLOWING GROUND S : - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.34,88,184/ - MADE ON ACCOUNT OF DISALLOWANCE OF SALES PROMOTION EXPENSES WITHOUT PROPERLY APPRECIATING THE FACT THAT ASSESSEE F AILED TO PROVE THE GENUINE NE SS OF SUCH EXPENSES. 2 . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE FACT THAT ASSESSEE F A ILED TO EITHER PRODUCE ANY PERSONS/PARTIES OR FURNISH CONFIRMATION LETTERS OF SUCH PERSONS/PARTIES TO WHOM THE G IFTS WERE BEING DISTRIBUTED. I.T.A. NO . 1 282 /AHD/201 3 A SSESSMENT Y EAR: 2009 - 10 PAGE 2 OF 3 3 . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT TAKING COGNISANCE OF THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN WHICH HE CLEARLY ADMITTED THAT, HE IS NOT A BLE TO PRODUCE SIN GLE PERSON FOR EXAMINATION. 4 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT ( A ) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE AS SESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN KITCHENWARE S . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED SALES PROMOTION EXPENSES OF R S.34,88,184/ - . WHILE ASSESSING OFFICER HAD NO ISSUES ABOUT THE BILLS AND VOUCHERS IN SUPPORT OF THESE EXPENSES, HE DISALLOWED THE EXPENSES ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO FURNISH EVIDENCES ABOUT HAVING GIVEN THESE SALE S PROMOTION ITEMS TO THE PERSONS. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO DELETED THE DISALLOWANCE BY OBSERVING AS FOLLOWS : - 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT. THERE IS NO D ENYING THE FACT THAT IT IS AN ACCEPTED BUSINESS PRACTICE TO DISTRIBUTE FREE GIFTS TO CUSTOMERS WITH A VIEW TO INCREASE SALES. AS PER MATERIAL AVAILABLE ON RECORDS, THE TURNOVER OF THE APPELLANT HAS INCREASED ALMOST FOUR TIMES, IN COMPARISON TO IMMEDIATELY PRECEDING ASSESSMENT YEAR. THUS, THERE IS SUFFICIENT FORCE IN ARGUMENT OF THE APPELLANT THAT THE INCREASED SALES PROMOTION EXPENSES WERE INCURRED WITH THE OBJECTIVE OF ACHIEVING A HIGHER TURNOVER. THE RELATIONSHIP BETWEEN THE EXPENDITURE INCURRED AND INCOM E EARNED GETS EVENLY ESTABL ISHED. THE ARGUMENT OF THE ID A O THAT THE APPELLANT DID NOT PRODUCE ANY RECIPIENT OF FREE GIFTS IS IMPRACTICAL SINCE THE SALES IS BEING MADE THROUGH DISTRIBUTORS AND HENCE APPELLANT WOULD GENERALLY NOT HAVE ANY INFORMATION ABOUT THE FINAL CONSUMER OF HIS PRODUCT AND THEREFORE THE INSISTENCE ON PRODUCTION OF SUCH CUSTOMERS OR FILING OF CONFIRMATION WAS UNCALLED FOR. AGAIN, IT IS SEEN THAT THE ENTIRE EXPENDITURE HAS BEEN PROPERLY BILLED AND VOUCHED AND ROUTED THROUGH THE BANKING CHA NNEL. THE A O HAS NOT BROUGHT ON RECORD ANY DISCREPANCY IN THE BOOKS OF THE APPELLANT. THUS ONCE THE COMMERCIAL EXPEDIENCY OF THE EXPENDITURE BEEN PROVED AND GENUINENESS OF TRANSACTIONS HAVING BEEN ESTABLISHED THERE CANNOT BE A CASE FOR DRAWING ANY ADVERSE INFERENCES. IT IS THEREFORE HELD THAT IN VIEW OF THE FACTS OF THE CASE, EVIDENCES AVAILABLE ON RECORDS, THE ADDITION ON ACCOUNT OF INADMISSIBLE SALES PROMOTION EXPENSES OF RS.3 4 , 88 , 184/ - (THE AO HAS APPARENTLY COMMITTED A TYPOGRAPHICAL MISTAKE SINCE THE ACTUAL SALES PROMOTION EXPENSES REFERRED BY HIM IN THE ORDER WAS AT RS . 34,28,1847 - ) CANNOT BE SUSTAINED. I.T.A. NO . 1 282 /AHD/201 3 A SSESSMENT Y EAR: 2009 - 10 PAGE 3 OF 3 ACCORDINGLY, THE ADDITION IS DELETED AND THE GROUND OF APPEAL RAISED ALLOWED. 3. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE ME. 4 . I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. I FIND THAT SALES PROMOTION SCHEMES WITH RESPECT TO THE PRODUCTS OF THE ASSESSE E IS ON RECORD , AND THAT THERE IS NO DISPUTE ABOUT THE FACT OF PURCHASE OF SALE S PROMOTION ITEMS AS WELL. I HAVE ALSO PERUSED AFFIDAVITS OF THE DEALERS A ND THE CUSTOMERS. IN VIEW OF THIS MATERIAL ON RECORD, THE OBSERVATIONS MADE BY THE ASSESSING OFFICER DO NOT SEEM TO BE CORRECT AT ALL. IN VIEW OF THESE DISCUSSIONS, I APPROVE THE WELL REASONED ORDER OF THE LEARNED CIT (A) A ND DECLINE TO INTERFERE IN THE MATTER. 6. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF S EPTEMBER, 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 14 TH DAY OF SEPTEMBER , 2016. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD