Resource Metals and Mineral Traders Private Limited, Hyderabad V. Dy. Commissioner of Income Tax , Circle-2(3), Hyderabad

ITA 160/Hyd/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0762 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 17-10-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV BENJWAL
• Assessee Lawyers: M V JOSHI
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A - SMC , HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 160 /HYD/20 18 ASSESSMENT YEAR: 20 13 - 14 M/S. RESOURCE METALS AND MINERAL TRADERS PVT LTD., HYDERABAD. PAN: AAFCR 9600 K VS. DCIT, CENTRAL CIRCLE - 2(3), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI M.V. JOSHI, CA REVENUE BY: SRI RAJEEV BENJWAL, DR DATE OF HEARING: 17/10/2019 DATE OF PRONOUNCEMENT: 20 /1 2 /2019 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 12, HYDERABAD IN APPEAL NO. 0023/2016 - 17 DATED 10/07/2017 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE A.Y. 2013 - 14. 2. THE ASSESSEE HAS RAISED 4 GROUNDS IN ITS APPEAL HOWEVER, THE CRU X OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED IN UPHOLDING T HE ORDER OF THE LD. AO WHO HAD DISALLOWED RS. 8,55,130/ - TOWARDS REBATE AND DISCOUNT DEBITE D TO THE P & L ACCOUNT. 3. T HE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVA TE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING IN I R ON , 2 STEEL AND OTHER PRODUCT S FILED ITS E - RETURN OF INCOME ON 29/9/2013 DECLARING TOTAL INCOME OF RS. 11,52,870/ - . THEREAFTE R, THE CASE WAS TAKEN UP FOR SCRUTINY UNDER CASS AND FINALLY THE ASSESSMENT ORDER WAS PASSED U/S. 14 3(3) OF THE ACT ON 28/3/2016 WHEREIN THE LD. AO DISALLOWED THE EXPENDITURE INCURRED THE REBATE AND DIS COUNT OF RS. 8,55,130/ - OF FERED TO THE CLIENT OF THE ASSESS EE - COMPANY. THE ASSESSEE HAD EXPLAINED B EFORE THE LD. AO THAT IT WAS FORCED TO OFFER SUCH DISC OUNT BECAUSE THE QUALITY OF MT TOWER PARTS SUPPLIED BY THE ASSESSEE TO M/S. ADA RSH GLOBAL TRADERS A ND SERVICES PRIVATE LIMITED WERE OF INFERIOR QUALITY. H OWEVER, THE LD. AO REJECTED THE SUBMISSION OF THE ASSESSEE BECAUSE THE ASSESSEE - COMPANY W AS ONLY INDULGING IN TRADING ACTIVITY AND NOT MANUFACTURING AND THE LOSS RESULTING DUE TO SUCH DEFE CTS ARE TO BE BORNE ONL Y BY THE MANUFACT URER . MOREOVER, M/S. ADARSH GLO BAL TRADERS AND SERVICES PRIVATE L IMITED WAS OPERATING IN THE SAME PREMISES AS THAT OF THE ASS ESSEE. ON APPE AL, THE LD. CIT (A ) CONFI RMED THE ORDER OF THE LD. AO BY AGREE ING WITH HIS VIEW. 4. AT THE OUTSET, WE DO NOT FI ND ANY MERIT EITHER IN THE ORDER OF THE LD. CIT (A) NOR IN THE ORDER OF THE LD. AO . THE REVENUE CANNOT SIT IN THE JUDGMENT ON THE COMMERCIAL DECISION T AKEN BY THE ASSESSEE. T HE ASSESSEE HAD OFFERED SUCH REBATE AND DIS COUNT 3 TO ITS CLI ENTS IN ORDER TO MAINTAIN GOOD RELATI ONSHIP AND SUSTAIN CONTINUITY IN THE B USINESS. DU E TO COMMERCIAL PRUDE NCE, IN THE WISDOM OF THE AS SESSEE IT MIGHT NOT HAVE CLAIMED THE L OSS FROM ITS SUPPLIER. T HESE COMMERCIAL DECISIONS OF THE ASSESSEE CANNOT BE CHALLENGED BY THE REVENUE . M OREOVER, IT IS APPARENT THAT THE ASSESSEE AND ITS CLIENTS ARE MAINTAINING GOOD RELATIONSHIP AS EVIDENT FROM THE F ACT THAT THEY ARE HOUSED IN THE SAME PREMISES AND NO NEGATIVE INFERENCE CAN BE DRAWN FROM THE SAME. THEREFORE, WE DO NOT FIND IT APPROPRIATE ON THE PART OF THE REVENUE TO DISALLOW THE GENUIN E EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS THE REBATE AND DISCOUNT OFFERED TO ITS CLI ENTS. H ENCE , WE HEREBY DIRECT THE LD. AO TO DELETE THE DISALLOWANCE OF RS. 8,55,130/ - TOWARDS REBATE AND DISCOUNT OFFERED BY THE ASSESSEE TO ITS CLIENT . 5. I N THE RESULT, APPEA L OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER , 2019. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 20 TH DECEMBER , 2019 OKK 4 COPY TO: - 1) M/S. RESOURCE METALS AND MINERAL TRADERS P LTD., C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD - 82. 2) DCIT, CENTRAL CIRCLE - 2(3), HYDERABAD. 3) THE CIT(A) - 12 , HYDERABAD 4) THE PR. CIT ( CENTRAL) , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE .