Appeal details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 0693 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 10 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-01-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
11-03-2016
Judgement Text
ITA NO.1376/MUM/2016 INDUSTRIAL METAL CORPORATION ASSESSMENT YEAR 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1376/MUM/2016 ( / ASSESSMENT YEAR: 2012-13) ASSISTANT COMMISSIONER O F INCOME TAX-19(1) 2 ND FLOOR, MATRU MANDIR TARDEO ROAD, MUMBAI-400 007 / VS. INDUSTRIAL METAL CORPORATION SHOP NO.152,NANUBHAI DESAI ROAD ISLAMPUR STREET MUMBAI-400 004 '# ./ ./ PAN/GIR NO.AAAFI-0572-P ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SAURABH KUMAR RAI, LD. DR ASSESSEE BY : NONE / DATE OF HEARING : 10/01/2018 / DATE OF PRONOUNCEMENT : 17 /01/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2012-13 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-30/AC19(1)/734/2014-15 DATED 16/12/2015. THE ASSESSMENT FOR IMPUGNED AY WAS FRAM ED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-19(1), MUMBAI [AO] U/S 1 43(3) ON 2 ITA NO.1376/MUM/2016 INDUSTRIAL METAL CORPORATION ASSESSMENT YEAR 2012-13 11/03/2015. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE AND NO ADJOURNMENT APPLICATION IS ON RECORD. HENCE, WE PRO CEED TO DISPOSE-OFF THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD A ND AFTER HEARING LD. DEPARTMENTAL REPRESENTATIVE [DR]. THE REVENUE HAS R AISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING COMMISSION PAID TO THE HUF WHERE THE SERVICE WERE RENDERED BY ITS KARTA IN THE INDIVIDUAL CAPACITY.? 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARN ED CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. BRIEFLY STATED, THE ASSESSEE BEING RESIDENT FIRM ENGAGED AS TRADERS AND WHOLESALER WAS ASSESSED FOR IMPUGNED AY U/S 143(3) AT RS.2,07, 62,430/- AFTER CERTAIN ADDITIONS AS AGAINST RETURNED INCOME OF RS.1,76,19,386/- FILED BY THE ASSESSEE ON 25/09/2012. THE SOLE SUBJECT MAT TER OF THIS APPEAL IS DISALLOWANCE OF CERTAIN COMMISSION AGGREGATING TO R S.31,24,655/- PAID BY THE ASSESSEE TO FOLLOWING SIX HINDU UNDIVIDED FAMILY [HUF] ENTITIES:- S.NO. NAME OF THE PARTY AMOUNT 1 HARDIK H SHAH HUF 509886 2 HANSMUKHLAL A SHAH HUF 509794 3 LALIT T SANGHAVI HUF 605883 4 MAHENDRA T SANGHAVI HUF 499933 5 PANKAJ T SANGHAVI HUF 499856 6 RAMESH T SANGHVI HUF 499303 TOTAL 3124655 THE SAID COMMISSION HAS BEEN DISALLOWED SINCE LD. A O OPINED THAT FOR PAYMENT OF COMMISSION, THE SERVICES ARE TO BE RENDE RED WHICH COULD NOT BE ESTABLISHED SINCE THE HUF WAS AN IMPERSON ENTITY. 3 ITA NO.1376/MUM/2016 INDUSTRIAL METAL CORPORATION ASSESSMENT YEAR 2012-13 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 16/12/2015 WHERE L D. CIT(A) AFTER CONSIDERING ASSESSEE SUBMISSIONS DECIDED THE ISSUE IN ASSESSEES FAVOUR BY MAKING FOLLOWING OBSERVATIONS:- 6.3 PERUSED THE EVIDENCES FURNISHED IN SUPPORT OF THE COMMISSION RECEIPTS INCLUDING THE CONFIRMATIONS AND BASIS FOR THE AMOUNT OF COMMI SSION PAID IS ARRIVED AND ON THE SALE BILLS ON THE BASIS ON WHICH THE COMMISSION WAS PAID, THE BALANCE SHEETS AND P&L ACCOUNTS ALONG WITH RETURNS OF INCOME WHEREIN THE A MOUNTS OF COMMISSION ADMITTED BY THE CONCERNED HUF ETC. I HAVE CAREFULLY CONSIDERED THE GROUND ON WHICH SUCH COMMISSION WAS DISALLOWED BY THE AO I.E. THE HUF IS AN IMPERSON ENTITY AND CANNOT RENDER ANY SERVICE TO THE PAY THE COMMISSION. I AM NOT IN POSITION TO AGREE WITH THE ARGUMENT OF THE AO ON THIS COUNT. TOUGH THE HUF IS AN IMPERSON ENTITY, ON BEHALF OF THE HUF, ITS KARTA OR ANY OF ITS ACTIVE MEMBER CAN TAKE THE DECISION OR RENDER THE SERVICES FOR EARNING THE COMMISSION. IF THE ARGUMEN T OF THE AO IS TO BE ACCEPTED THEN ANY FIRM OR COMPANY OR ANY OTHER ENTITY OTHER THAN AN INDIVIDUAL, WHICH ARE ALSO IMPERSON ENTITIES LIKE HUF, CANNOT RENDER ANY SERVI CE OR DO ANY BUSINESS ACTIVITY. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF THE COMMISSI ON PAID TO THE HUFS, IN THE ASSESSMENT BY THE AO, IS HEREBY DELETED. THE APPELL ANT SUCCEEDS ON THIS GROUND. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTEND ED THAT HUF BEING IMPERSON ENTITY COULD NOT RENDER SERVICES TO THE ASSESSEE A ND THEREFORE, THE DISALLOWANCE WAS JUSTIFIED. 5. WE HAVE HEARD THE CONTENTIONS AND PERUSED RELEVA NT MATERIAL ON RECORD. IT IS NOTED THAT LD. CIT(A) HAS DULY EXAMIN ED THE CLAIM OF THE ASSESSEE AND PERUSED THE DOCUMENTS ON THE BASIS OF WHICH COMMISSION WAS PAID BY THE ASSESSEE. THE RECEIPT OF COMMISSION PAYMENT WAS DULY CONFIRMED BY THE RESPECTIVE PAYEES AND THE PAYMENTS WERE DULY REFLECTED BY THE PAYEES IN THEIR RESPECTIVE RETURNS. HENCE, T HE GENUINENESS OF THE EXPENDITURE IS NOT IN DISPUTE AND THE SAME STANDS V ERIFIED BY THE LD. FIRST APPELLATE AUTHORITY AND MOREOVER, THE REVENUE HAS N OT CONTESTED THESE 4 ITA NO.1376/MUM/2016 INDUSTRIAL METAL CORPORATION ASSESSMENT YEAR 2012-13 FINDINGS OF LD. CIT(A). NOW, THE ONLY BASIS OF DISA LLOWANCE WHICH REMAINS IS THE FACT THAT HUF BEING IMPERSON ENTITY COULD NOT RENDER ANY SERVICES TO THE ASSESSEE AND EARN COMMISSION THEREON. HOWEVER, WE F IND THAT NOTHING IN LAW DEBARS THE ASSESSEE FROM PAYING COMMISSION TO H UF AND MOREOVER, THE ACTS OF HUF ARE DONE IN THE NAME OF THE KARTA ONLY AND HE ACTS ON BEHALF OF THE HUF. THEREFORE, FINDING THE STAND OF LD. CIT(A) QUITE FAIR AND LOGICAL, WE DISMISS REVENUES APPEAL. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :17 .01.2018 SR.PS:- THIRUMALESH ! / 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
