ACIT, Chandigarh V. M/s Ashwani Automobiles Pvt. Ltd., Chandigarh

ITA 1356/CHANDI/2010

• Counselvise Citation: 135621514 RSA 2010
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: VINEET KRISHAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.1356/CHD/2010 ( ASSESSMENT YEARS : 2006-07) THE A.C.I.T., VS. M/S ASHWANI AUTOMOBILES PVT. L TD., CIRCLE 2(1), PLOT NO.181, IND. AREA, PHASE I, CHANDIGARH. CHANDIGARH. PAN: AAECA1757D AND ITA NO.1373/CHD/2010 ( ASSESSMENT YEARS : 2006-07) M/S ASHWANI AUTOMOBILES PVT. LTD., VS. THE A.C.I. T., PLOT NO.181, IND. AREA, PHASE I, CIRCLE 2 (1), CHANDIGARH. CHANDIGARH. PAN: AAECA1757D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VINEET KRISHAN DEPARTMENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 22.11.2012 DATE OF PRONOUNCEMENT :29.11.2012 O R D E R PER SUSHMA CHOWLA, J.M. : THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REV ENUE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S), CHANDIGARH DATED 21.7.2010 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961. 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND REVE NUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER PASSED UNDER SECTION 250(6) BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH IN APPEAL NO.220/P/08-09 DATED 21.07.2010 IS CONTRARY TO LAW AND FACTS OF THE CASE . 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX(APPEAL) GRAVELY ERRED IN UPHOLDING THE ADDITION OF RS.10,21,740/- OUT OF TOTAL ADDITION AT RS.23,66,694/- MADE BY LD. ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF 30% OF DISCOUNT AND REBATE. 3. THAT THE LD CIT(A) GRAVELY ERRED IN SUSTAINING T HE ADDITION OF RS.10,31,740 ALTHOUGH THE EXPENSES WERE INCURRED FOR PURPOSE OF BUSINESS AND IN THE PRESENC E OF PROPERLY MAINTAINED ACCOUNTS AND WITHOUT POINTING ANY SPECIFIC DEFECTS IN THE SAME. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL : 1. THE LD.CIT(A)-I, HAS ERRED IN DELETING THE ADDI TION OF RS.13,34,954/- ON ACCOUNT OF DISALLOWANCE OF DISCOUNT AND REBATE. 5. THE ONLY ISSUE RAISED IN THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE IN RELATION TO THE EXPENDITURE ON D ISCOUNT AND REBATE. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CAR DEALER AND IS AN AUTHORIZED DEALER OF M/S HYUNDAI. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN SALE OF CARS A T RS.55,12,28,145/-, SALES ON ACCOUNT OF SPARES AT RS.1,99,96,154/- AND SERVICE CHARGES OF RS.1,01,81,378/-.. THE ASSESSEE CLAIMED EXPENDITUR E OF RS.78,88,980/- ON ACCOUNT OF REBATE AND DISCOUNT. THE ASSESSING O FFICER NOTED THAT THERE WAS A HUGE JUMP IN THE SAID REBATE AND DISCOU NT ACCOUNT AS COMPARED TO THE PRECEDING YEAR WHERE TOTAL EXPENDIT URE WAS OF RS.18,30,469/- AS AGAINST EXPENDITURE OF RS.78,88,9 80/- DURING THE YEAR. THE EXPLANATION OF THE ASSESSEE THAT IT HAD GIVEN C ASH DISCOUNT AND HAD ALSO GIVEN FREE ACCESSORIES WITH THE CARS IN ADDITI ON TO PROVIDING FREE INSURANCE AND FREE OILS AND LUBRICANTS AND FREE SPA RE PARTS DURING THE 3 INITIAL FREE SERVICE, DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER AND 30% OUT OF THE TOTAL DISCOUNT AND REBATE EXPENDITUR E WAS DISALLOWED RESULTING IN ADDITION OF RS.23,66,694/-. 7. BEFORE THE CIT (APPEALS), THE ASSESSEE CLAIMED T HAT THE CASH DISCOUNT WAS ALLOWED TO THE CUSTOMERS AS PER THE AG REEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE CUSTOMERS AT THE TIME OF SALE OF THE CARS AND THE SAME WAS ALLOWED IN ROUTINE MANNER FOR CARR YING ON THE BUSINESS OF THE ASSESSEE. THE SAID EXPENDITURE WAS FULLY BA CKED BY THE VOUCHERS AND THE ASSESSING OFFICER HAD DISALLOWED PART OF TH E EXPENDITURE HOLDING THE TOTAL EXPENDITURE TO BE HUGE. IN RESPECT OF FR EE ACCESSORIES PROVIDED TO THE CUSTOMERS, THE ASSESSEE FURNISHED MONTH-WISE TABULATED DETAILS IN RESPECT OF FREE ACCESSORIES PROVIDED TO THE CUSTOME RS. THE ASSESSEE ALSO FURNISHED DETAILS FOR THE FREE INSURANCE GIVEN ALON GWITH THE CARS AND ALSO CLAIMED THAT IT HAD INCURRED EXPENDITURE ON PROVIDI NG FREE OILS AND LUBRICANTS AND ALSO FREE SPARE PARTS ON AFTER SALES SERVICE PROVIDED TO THE CUSTOMERS TO WHOM THE CARS WERE SOLD BY THE ASSESSE E. 8. THE CIT (APPEALS) FROM THE PERUSAL OF THE ADVERT ISEMENT RELATING TO THE PERIOD UNDER APPEAL NOTED THAT THE PURCHASER S OF SANTRO CAR WERE BEING PROVIDED FREE INSURANCE, GEAR LOCK, CAR BODY COVER, LEATHER GEAR KNOB, CAR PERFUME, MP-3 MUSIC SYSTEM, SEAT COVER, F OG LAMPS AND FLOOR MATS AND 5 GM GOLD COIN.. SIMILARLY THE PURC HASERS OF GETZ CARS WERE ALSO PROVIDED FREE INSURANCE + MP-3 STEREO AND 5GM GOLD COIN. IN RESPECT OF FREE ACCESSORIES PROVIDED TO THE CUSTOME RS THE CIT (APPEALS) REFERRED TO THE TABULATED DETAILS FURNISHED AND OBS ERVED THAT FROM THE PERUSAL OF THE ABOVE, IT CAN BE SEEN THAT THOUGH TH E APPELLANT IS PROVIDING FREE ACCESSORIES TO THE CUSTOMERS BUT THE RE IS NO UNIFORMITY IN THE ITEMS BEING GIVEN. THE ITEMS WHICH COST QUITE LESS ARE PROVIDED TO ALMOST ALL THE CUSTOMERS BUT THE COSTLY ITEMS LIKE CENTRAL LOCKING, MP-3 4 MUSIC SYSTEMS ETC. ARE NOT PROVIDING TO EVERYONE . THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD VARIOUS MODEL S OF HYUNDAI CARS TOTALING 1330 ON WHICH CASH DISCOUNT WAS ALSO PROVI DED, AGAINST WHICH THE ASSESSEE WAS MAINTAINING INVOICES WHICH WERE PR ODUCED BEFORE THE CIT (APPEALS). IN RESPECT OF FREE OILS AND LUBRICA NTS AND FREE SPARE PARTS THE CIT (APPEALS) OBSERVED THAT MOST OF THE BILLS P ERTAINED TO OLD CARS WHICH WERE NOT ENTITLED FOR FREE SERVICE AND ALSO I N VIEW OF THE PURCHASE OF SPARE PARTS/LUBRICANTS AT RS.1.72 CRORES DEBITIE D TO THE PROFIT & LOSS ACCOUNT, THE SAID EXPENDITURE TOTALING RS.10,31,740 /- WAS DISALLOWED BY THE CIT (APPEALS). HOWEVER, IN RESPECT OF THE BALA NCE EXPENDITURE DISALLOWED BY THE ASSESSING OFFICER TOTALING RS.13, 34,954/-, THE ADDITION WAS DELETED. 9. THE ASSESSEE IS IN APPEAL AGAINST UPHOLDING OF A DDITION TOTALING RS.10,31,740/-. THE REVENUE IN APPEAL AGAINST THE RELIEF ALLOWED OF RS.13,34,954/-. 10. SHRI VINEET KRISHAN APPEARED ON BEHALF OF THE A SSESSEE AND SHRI AKHILESH GUPTA PUT IN APPEARANCE ON BEHALF OF THE R EVENUE AND PUT- FORWARD THEIR CONTENTIONS. 11. THE LEARNED A.R. FOR THE ASSESSEE BEFORE US PRO DUCED VOLUMINOUS RECORD MAINTAINED BY THE ASSESSEE IN RESPECT OF FRE E OILS AND LUBRICANTS AND ALSO FREE SPARE PARTS BILL-WISE PROVIDED TO THE CUSTOMERS. THE PLEA OF THE LEARNED A.R. FOR THE ASSESSEE WAS THAT THE S AID EXPENDITURE WAS IN RELATION TO THE CARS SOLD BY THE ASSESSEE AND FREE AFTER SALES SERVICES TO BE PROVIDED TO THE CUSTOMERS. IN RESPECT OF THE BA LANCE EXPENDITURE I.E. FREE INSURANCE, FREE ACCESSORIES AND CASH DISCOUNT, RELIANCE WAS PLACED UPON THE ORDER OF THE CIT (APPEALS) AND THE EVIDENC ES FURNISHED BEFORE US. 5 12. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANC E ON THE ORDER OF THE ASSESSING OFFICER IN RESPECT OF THE ADDITION MA DE ON ACCOUNT OF FREE INSURANCE, FREE ACCESSORIES AND CASH DISCOUNT AND F URTHER PLACED THE RELIANCE ON THE ORDER OF THE CIT (APPEALS) FOR DISA LLOWING SUM OF RS.10,31,740/-. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS DEALER OF HYUNDAI CARS AND ALONGWITH TH E SALE OF CAR HAD PROVIDED FREE INSURANCE, CASH DISCOUNT AND FREE ACC ESSORIES TO ITS CUSTOMERS. IN ADDITION, FOR PROVIDING THE FREE AFT ER SALE SERVICE TO THE CUSTOMERS, THE ASSESSEE HAD DEBITED A SUM OF RS.7,3 2,970/- ON ACCOUNT OF FREE OILS AND LUBRICANTS AND RS.2,98,770/- ON ACCOU NT OF FREE SPARE PARTS. THE TOTAL EXPENDITURE INCURRED DURING THE YEAR UNDE R THE HEAD REBATE AND DISCOUNT WAS RS.78,88,980/- AND THE ASSESSING OFFICER HAD DISALLOWED 30% OF THE SAID EXPENDITURE BEING EXCESS IVE. THE CIT (APPEALS) HAD ALLOWED THE CLAIM OF FREE INSURANCE, FREE ACCESSORIES AND FREE DISCOUNT IN VIEW OF VARIOUS EVIDENCES FILED BY THE ASSESSEE INCLUDING THE COPIES OF ADVERTISEMENT ACCOUNT RELAT ABLE TO THE PERIOD UNDER CONSIDERATION. THE CASH DISCOUNT IS DEBITED TO THE BILLS ISSUED BY THE ASSESSEE TO IT IS CUSTOMERS AND SUPPORTED BY TH E VOUCHERS MAINTAINED IN THE DUE COURSE OF CARRYING ON THE BUSINESS. IN VIEW THEREOF, WE FIND NO MERIT IN THE GROUND OF APPEAL RAISED BY THE REVE NUE AGAINST THE RELIEF ALLOWED BY THE CIT (APPEALS) IN RELATION TO THE PAR T DISALLOWANCE MADE OUT OF FREE INSURANCE, FREE ACCESSORIES AND CASH DI SCOUNT. HENCE, GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 14. THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS .10,31,740/- I.E. ON ACCOUNT OF FREE LUBRICANTS/OILS AND ALSO FREE SPARE PARTS PROVIDED BY THE ASSESSEE TO THE CUSTOMERS AGAINST FREE SERVICE COUP ON ISSUED ON PURCHASE OF CAR. HOWEVER, ON PERUSAL OF THE SAMPLE BILLS AN D VOUCHERS PRODUCED 6 BY THE ASSESSEE WE FIND CERTAIN DISCREPANCIES I.E. IN SOME CASES IT TRANSPIRES THAT THE SAID EXPENDITURE HAS BEEN INCUR RED ON OLD CARS AND NOT ON NEW CARS. IN ORDER TO PLUG THE LEAKAGE OF REVEN UE WE DEEM IT FIT TO DISALLOW SUM OF RS.2 LACS OUT OF THE SAID EXPENDITU RE ON FREE OILS AND LUBRICANTS AND FREE SPARE PARTS TOTALING RS.10,31,7 40/-. THUS THE ASSESSEE IS ALLOWED RELIEF OF RS.8,31,740/-. THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF NOVEMBER, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH NOVEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7