The DCIT, Circle-9, Surat V. M/s. Trishul Motors, Surat

ITA 142/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85510 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Section: 40A(3); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUN TANT MEMBER ITA NO. 142 / AHD/201 1 ASSESSMENT YEAR: 2007 - 08 DCIT, CIRCLE - 9, SURAT VS M/S. TRISHUL MOTORS, CHANDRADEEP, OPP. SADHNA SOCIETY, VARACHHA ROAD, SURAT PAN : AABFT 4110 H / APPELLANT / RESPONDENT REVENUE BY : SHRI B .L. YADAV, SR. DR. ASSESSEE(S) BY : SHRI TUSHAR HEMANI, AR / DATE OF HEARING : 1 3 / 01 /201 5 / DATE OF PRONOUNCEMENT : 16 / 01 /201 5 / O R D E R PER SHRI N.S. SAINI , ACCOUNTANT M EMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME - TAX (A PPEALS ) - V , SURAT DATED 07 . 1 0 .201 0 FOR ASSESSMENT YEAR 2007 - 08 . 2. THE GROUND NO.1 OF THE APPEAL READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.10,00,000/ - MADE BY THE A.O. AFTER MAKING AD - HOC DISALLOWANCE OUT OF THE VEHICLE DISCOUNT EXP. DESPITE THE FACT THAT THE ADDITION WAS MADE AS THE ASSESSEE FAILED TO PRODU CE DOCUMENTARY EVIDENCES OF DISCOUNT PASSED ON TO THE CUSTOMERS IN ALL THE CASES. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A DEALER OF EICHER LIGHT COMMERCIAL VEHICLES (LCV) AND HEAVY COMMERCIAL VEHICLES ITA NO 142 / AHD / 201 1 DCIT V. M/S. TRISHUL MOTORS AY: 2007 - 08 - 2 - (HCV) AND SERVICE THEREOF. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION OF RS. 1,97,63,220/ - ON ACCOUNT OF DISCOUNT ON SALE OF VEHICLES. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICE R THAT AS PER POLICY OF EICHER MOTORS LIMITED, DISCOUNTS WERE ALLOWED TO THE PURCHASER OF VEHICLES IN INVOICE ITSELF. THE GROSS AMOUNT WAS CREDITED UNDER THE HEAD SALES, THE DISCOUNT ALLOWED IN THE INVOICE WAS SHOWN ON THE DEBIT SIDE OF THE PROFIT AND LO SS ACCOUNT. IN SUPPORT OF THIS CLAIM, THE ASSESSEE PRODUCED ALL 672 SALE INVOICES BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER OBSERVED THAT OUT OF 672 CUSTOMERS, THE ASSESSEE FILED CONFIRMATION FOR RECEIPT OF DISCOUNT FROM 250 CUSTOMERS ONLY. HE, THEREFORE, DISALLOWED RS.10,00,000/ - ON AD - HOC BASIS OUT OF ABOVE DISCOUNT. 4. ON APPEAL, THE CIT(A) DELETED THE AFORESAID DISALLOWANCE BY OBSERVING AS UNDER: - I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUB MISSIONS OF THE APPE LLANT. IT IS SEEN THAT THE APPELLANT HAS SUBMITTED COMPLETE DETAILS OF NAME AND ADDRESS OF THE CUSTOMERS, DATE OF INVOICE, SALE AMOUNT, DISCOUNT, AND IDENTITY PROOF OF THE CUSTOMERS IN ALL CAS ES. FURTHER, THE CONFIRM ATIONS FROM AROUND 250 CUSTOMERS CONFIRMING THE FACT THAT THEY HAVE RECEIVED DISCOUNT FRO M THE APPELLANT, HAVE ALSO BEEN SUBMITTED. THE APPELLANT HAS ALSO SUBMITTED PAN OF MANY OF THE CUSTOMERS . I T IS ALSO SEEN THAT THE AO HAS SUMMONED SOME OF THE CUSTOMER S AND EXAMINED THEM ON OATH WHEREIN ALSO THEY HAVE CONFIRMED THE FACT OF HAVING RECEIVED THE DISCOUNT FROM THE APPELLANT ON PURCHASE OF VEHICLE AND ALSO PRODUCED DOCUMENTARY EVIDENCE IN THE FORM OF THEIR RETURN OF INCOME. THUS, THERE IS NO MATERIAL BEFORE THE AO TO DOUBT THE DISCOUNT EXPENSES. THE APPELLANT HAS ALSO ESTABLISHED WITH EVIDENCE THAT THE DISCOUNT RECEIVED BY IT ON PURCHASES HAS BEEN PASSED ON TO THE CUSTOMERS ON SALES AS PER THE POLICY OF THE COMPANY AND THUS, THE DISCOUNT EXPENSES HAS NOT BEE N FULLY BOR NE BY IT. IT IS ALSO SEEN THAT THE BOOK RESULTS OF THE APPELLANT HAVE IMPROVED IN TH E CURRENT YEAR AS COMPARED TO THE EARLIER YEAR EVEN AFTER PASSING ON THE DISCOUNT AND THE DISCOUNT OF RS. 1.97 CRORES IS FULLY COMPARABLE WITH THE DISCOUNT OF 1. 51 CRORES AS PASSED IN THE EARLIER YEAR. MOREOVER, IT IS SEEN THAT THE SALES TAX AUTHORITIES, WHICH COLLECTS THE SALES TAX ON THE SALES VALUE HAS ALSO ACCEPTED THE TAX ON THE NET AMOUNT OF SALES AFTER DEDUCTING THE AMOUNT OF DISCOUNT PASSED. AS AGAINST THI S, THE AO HAS NOT BEEN ABLE TO BRING ANYTHING ON ITA NO 142 / AHD / 201 1 DCIT V. M/S. TRISHUL MOTORS AY: 2007 - 08 - 3 - RECORD SO AS TO DISBELIEVE THE DISCOUNT BUT HAS MERELY STATED THAT THE APPELLANT HAS NOT PRODUCED THE EVIDENCE OF DISCOUNT PASSED TO THE CUSTOMERS IN ALL THE CASES, WHICH I N MY OPINION IS NOT CORRECT. HENCE, IN VIEW OF THE ABOVE FACTS, I HEREBY DELETE THE AD - HOC DISALLOWANCE OF R S. 10,00,000 / - AS MADE BY THE AO OUT OF VEHICLE DISCOUNT EXPENSES. 5. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND CONTENDED THAT THE A SSESSEE COULD NOT PRODUCE CONFIRMATION FROM ALL CUSTOMERS AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING RS.10,00,000/ - ON ESTIMATE BASIS. 6. WE FIND THAT THE DISALLOWANCE WAS MADE ON A WRONG FOOTING AND WITHOUT PROPER APPRECIATING THE FACTS. IN THE INSTANT CASE, THE DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE FINDING OF THE CIT(A) THAT THE DISCOUNT IN QUESTION WAS ALLOWED TO THE CUSTOMERS IN THE INVOICE ITSELF. THAT BEING SO, THE FACT OF ALLOWING OF DISCOUNT WAS DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE IN THE FORM OF INVOICE ITSELF. FURTHER THE ASSESSEE FILED COMPLETE LIST OF CUSTOMERS TO WHOM DISCOUNTS WERE ALLOWED, GIVING THEIR ADDRESSES AND IN MANY CASES THEIR PAN ALSO. STILL, FURTHER THE FACT OF DISCOUNT ALLOWED WAS ALSO CORROBORATED WITH THE CONFIRMATION OF ABOUT 250 CUSTOMERS. THE DEPARTMENTAL REPRESENTATIVE HAS NOT CONTROVERTED THE FINDING RECORDED BY THE CIT(A) TO THE EFFECT THAT EVEN FEW CUSTOMERS WERE EXAMINED BY THE ASSESSING OFFICER BY ISSUING SUMMONS U/S 131 OF T HE ACT AND WHEREIN ALL THE PERSONS WHO WERE EXAMINED CONFIRMED THE FACT OF RECEIVING DISCOUNT FROM THE ASSESSEE. STRANGELY, THIS FACT HAS NOT BEEN STATED IN THE ASSESSMENT ORDER. BE THAT AS IT MAY. WE OBSERVE THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO BRING ON RECORD ANY MATERIAL TO SHOW THAT IN ANY CASE DISCOUNT WAS NOT ALLOWED TO THE CUSTOMERS AS STATED IN THE INVOICE AND THE ASSESSEE ACTUALLY RECEIVED ANY AMOUNT MORE THAN THE NET SALE PRICE STATED IN THE INVOICE. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, THE AD - HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS ON A WRONG FOOTING AND IS UNSUSTAINABLE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. ITA NO 142 / AHD / 201 1 DCIT V. M/S. TRISHUL MOTORS AY: 2007 - 08 - 4 - 7. GROUND NO.2 OF THE APPEAL READS AS U NDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,07,470/ - MADE BY THE A.O. AFTER DISALLOWING VARIOUS EXPENSES @ 20% DESPITE THE FACT ALL THE EXP. WERE INCURRED IN CASH AND TH E ASSESSEE FAILED TO PRODUCE ALL THE VOUCHERS IN SUPPORT OF THE EXPENSES CLAIMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED RS.3,07,470/ - BEIN G 20% OF EXPENDITURE OF RS.15,37,353/ - INCURRED UNDER THE FOLLOWING HEADS ON THE GROUND THAT THESE EXPENDITURE WERE INCURRED IN CASH AND THE ASSESSEE FAILED TO PRODUCE ALL VOUCHERS : - SR. NO. NATURE OF EXPENSES AMOUNT OF EXPENSES AD - HOC DISALLOWANCE @ 20 % 1 VEHICLE DELIVERY EXPENSES 3,28,283 65,656 2 EICHER VEHICLE EXPENSES 2,62,965 52,593 3 LABOUR INCENTIVE EXPENSES 2,70,495 54,099 4 PETROL EXPENSES 6,75,610 1,35,122 TOTAL 15,37,353 3,07,470 9. ON APPEAL, THE CIT(A) DELETED THE ENTIRE DISALLOW ANCE BY OBSERVING AS UNDER: - 7. I HAVE CONSIDERED THE FACTS OF THE CASE, THE ORDER OF THE AO AND THE SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE NATURE AND THE QUANTUM OF EXPENSES IN SUCH THAT THE SAME HAVE TO BE INCURRED IN CASH AND THE SAID EXPEN SES ARE NOT ONLY VERY PETTY BUT ARE ALSO COMPARABLE WITH THE EARLIER YEAR AND MOREOVER, ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE AO HAS NOT OBSERVED THAT ANY OF THE EXPENSES PAID IN CASH EXCEEDED THE LIMITS SPECIFIED U/S 40A(3) NOR HAS H E FOUND ANY EXPENSES TO BE NON - GENUINE. THEREFORE, I DELETE THE AD - HOC DISALLOWANCE OF 20% TOTALING TO RS.3,07,470/ - AS MADE BY THE AO OUT OF VARIOUS EXPENSES. 10. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ITA NO 142 / AHD / 201 1 DCIT V. M/S. TRISHUL MOTORS AY: 2007 - 08 - 5 - 11. WE FIND THAT THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INSTANCE WHERE THE CASH PAYMENT OF EXPENDITURE EXCEEDED THE LIMIT SPECIFIED U/S 40A(3) OF THE ACT. FURTHER, THE DEPARTMENTAL REPRESENTATIVE COULD NOT DISPUTE THE FINDING OF THE CIT(A ) THAT THE AMOUNT OF EXPENDITURE CLAIMED UNDER THE HEADS UNDER CONSIDERATION WERE COMPARABLE WITH THE EXPENDITURE OF THE EARLIER YEARS. NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT THE EXPENDITURE CLAIMED UNDER ANY OF THE HEADS IN QUESTION WERE UNREASONA BLY EXCESSIVE COMPARED TO THE PAST ACCEPTED POSITION AND THE VOLUME OF BUSINESS. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISS ED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY , THE 16 TH OF JANUARY , 201 5 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDA BAD; DATED 16 /01 /201 5 *BIJU T , PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - V , SURAT 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD