Sh. Hem Raj, Kullu V. ITO, Kullu

ITA 1386/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8357 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 15-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Assessee Lawyers: R R THAKUR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1386/CHD/2016 ASSESSMENT YEAR : 2011-12 SHRI HEM RAJ, VS THE ITO, PROP. M/S RAJ GARLIC TRADERS. KULLU (H.P.). VILLAGE GANEOLI, P.O. THATBIR, TEHSIL BANJAR, DISTT. KULLU (HP). PAN: APOPR1267B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R.THAKUR RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 31.01.2017 DATE OF PRONOUNCEMENT : 31.01.2017 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PALAMPUR DATED 22.09. 2016 FOR ASSESSMENT YEAR 2011-12. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 3 WITH REGARD TO ADDITION OF RS. 41,309/ -. THIS GROUND IS DISMISSED BEING NOT PRESSED. 2 4. ON GROUND NOS. 1 AND 2, ASSESSEE CHALLENGED THE ADDITION OF RS. 16,55,093/- TREATING THE AMOUNT OF EXPENSES ON THE SALE AS COMMISSION PAID. THE ASSESSING OFFICER NOTED THAT ASSESSEE IS ENGAGED IN WHOLESALE TRADING OF GARLIC. THE PERUSAL OF THE PR OFIT & LOSS ACCOUNT REVEALED THAT ASSESSEE HAS DEBITED EXPENSES ON ACCOUNT OF COMMISSION AT RS. 16,55,093/ -. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PE RSONS TO WHOM COMMISSION HAS BEEN PAID. THE ASSESSEE SUBMITTED THAT THIS IS NOT THE AMOUNT OF COMMISSION PAID BY THE ASSESSEE. THESE ARE SELLING AND DISTRI BUTION EXPENSES WHICH WAS WRONGLY ENTERED IN THE COMMISSIO N COLUMN DUE TO CLERICAL MISTAKE WHILE FILING THE RET URN OF INCOME AND ASSESSEE REQUESTED THAT SAME MAY BE TAKE N AS SELLING AND DISTRIBUTION EXPENSES. THE ASSESSIN G OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE BECAUSE AS PER EXPLANATION TO SECTION 194H OF THE A CT, COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEI VED OR RECEIVABLE DIRECTLY OR INDIRECTLY BY A PERSON AC TING ON BEHALF OF THE ANOTHER PERSON FOR SERVICES RENDERED OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSE TS, VALUABLE ARTICLES OR THINGS NOT BEING SECURITIES. THE ASSESSING OFFICER NOTED THAT ASSESSEE HIMSELF HAS ADMITTED THAT THE PAYMENT HAS BEEN MADE FOR SELLING HIS GOODS. THUS, AS THE PAYMENT HAS BEEN MADE AND EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE FOR SEL LING 3 HIS GOODS DURING THE COURSE OF HIS BUSINESS, THEREF ORE, IT FALLS UNDER THE DEFINITION OF COMMISSION AS PER PROVISIONS OF LAW NOTED BY THE ASSESSING OFFICER. THE ASSESSEE HAS FURNISHED THE COPY OF THE ACCOUNT OF COMMISSION PAID AND DETAILS OF PERSONS TO WHOM COMMISSION HAS BEEN PAID. IT REVEALED THAT ASSESSE E HAS PAID COMMISSION OF RS. 16,55,093/- AND HAS NOT DEDUCTED THE TDS AS PER PROVISIONS OF SECTION 194H OF THE ACT ON THIS PAYMENT, THEREFORE, IT IS NOT ALLOW ABLE DEDUCTION AND SAME WAS DISALLOWED BY ASSESSING OFFI CER UNDER SECTION 40(A)(IA) OF INCOME TAX ACT AND ADDIT ION WAS ACCORDINGLY MADE. 5. THE LD. CIT(APPEALS) CONFIRMED THE ADDITION HOLD ING THAT ASSESSEE HAS PAID COMMISSION TO PERSONS WHO HA VE RENDERED SERVICES TO THE ASSESSEE DURING THE COURSE OF BUSINESS OF BUYING AND SELLING GARLIC WHICH IS ALSO REFLECTED IN THE COPY OF THE ACCOUNT OF COMMISSION PAID TO VARIOUS PERSONS. SINCE NO TDS HAS BEEN DEDUCTED , ADDITION WAS CONFIRMED. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTH ORITIES BELOW. THE FACTS AS NOTED BY THE AUTHORITIES BELO W HAVE NOT BEEN DISPUTED BY THE ASSESSEE. EXPLANATIO N (I) TO SECTION 194H OF THE INCOME TAX ACT PROVIDES THE DEFINITION OF COMMISSION OR BROKERAGE AND READ S AS 4 UNDER : (I) COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONA L SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOOD S OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES; 7. THE LD. COUNSEL FOR THE ASSESSEE MERELY CONTENDE D THAT THIS TYPE OF PAYMENT IS NOT A PAYMENT OF COMMISSION SETTLED BETWEEN ASSESSEE AND SOUTHERN TRADERS. HE HAS SUBMITTED THAT THE PARTIES THEMSEL VES HAVE REDUCED THE AMOUNT FROM THE SALE BILL, THEREFO RE, NO AMOUNT WAS PAID OR PAYABLE BY THE ASSESSEE. COPY OF ONE OF THE BILL IS FILED AT PAGE 5 OF THE PAPER BOO K, HOWEVER, IT IS SPECIFICALLY RECORDED IN THE SALE BI LL THAT COMMISSION HAS BEEN PAID TO THE COMMISSION AGENTS. EVEN OTHERWISE, ASSESSEE HAS ADMITTED BEFORE THE AUTHORITIES BELOW THAT COMMISSION WAS IN-FACT SELLI NG AND DISTRIBUTION EXPENSES. THE LD. COUNSEL FOR THE ASSESSEE ALSO ADMITTED THAT ASSESSEE HAS CLAIMED DEDUCTION OF THESE EXPENSES IN THE PROFIT & LOSS ACCOUNT. THE DEFINITION OF COMMISSION OR BROKERAGE IN EXPLANATION (I) TO SECTION 194H IS INCLUSIVE DEFINI TION OF ANY PAYMENT RECEIVED OR RECEIVABLE DIRECTLY OR INDI RECTLY BY A PERSON ACTING ON BEHALF OF OTHER PERSON FOR SE RVICES RENDERED OR FOR ANY SERVICES IN THE COURSE OF BUYIN G OR SELLING OF THE GOODS OR IN RELATION TO ANY TRANSACT ION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING NO T BEING 5 SECURITIES. SINCE ASSESSEE HAS ADMITTED THAT THESE PAYMENTS HAVE BEEN MADE FOR SELLING THE GOODS AND ASSESSEE MADE CLAIM OF DEDUCTION IN THE PROFIT & LO SS ACCOUNT, THE4REFORE, THE EXPENSES INCURRED BY THE ASSESSEE FOR SELLING HIS GOODS DURING THE COURSE OF BUSINESS WOULD CLEARLY FALL UNDER THE DEFINITION OF COMMISSION AS PER EXPLANATION (I) TO SECTION 194H OF THE ACT. EVEN THE SALE BILL SUPPORT THE FINDINGS O F AUTHORITIES BELOW THAT IT WAS A COMMISSION PAID BY THE ASSESSEE. THE CONTENTION OF LD. COUNSEL FOR THE AS SESSEE HAS NO MERIT, SAME IS ACCORDINGLY REJECTED. 8. IN THE RESULT, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 9. ON GROUND NO. 4, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 70,072/- ON ACCOUNT OF DISALLOWANCE OF EXPEN SES. THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS DEBIT ED EXPENSES ON CONVEYANCE, STAFF WELFARE, HOTEL BOARDI NG & LODGING, ENTERTAINMENT AND MISCELLANEOUS EXPENSES, TOTALING TO RS. 7,00,721/-. THE ASSESSING OFFICER NOTED THAT THESE EXPENSES ARE INCURRED IN CASH AND ARE ON LY PARTLY VOUCHED. THEREFORE, 1/10 TH OF THE EXPENSES WERE DISALLOWED. THE LD. CIT(APPEALS) CONFIRMED THE ADD ITION. 10. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF AUTHORITIE S BELOW, NO DETAILS OR EVIDENCE HAVE BEEN FURNISHED B EFORE 6 ME TO SHOW THAT ALL THE EXPENSES ARE PROPERLY VOUCH ED TO THE SATISFACTION OF THE AUTHORITIES BELOW. IN T HE ABSENCE OF ANY PRODUCTION OF EVIDENCE ON RECORD, I DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DERS OF AUTHORITIES BELOW. THIS GROUND IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 31 ST JANUARY,2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH