ITO, Ludhiana V. M/s Bhatia Brothers Overseas, Ludhiana

ITA 17/CHANDI/2012

• Counselvise Citation: 1721514 RSA 2012
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 06-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 17/CHD/2012 ASSESSMENT YEAR: 2008-09 ITO, V M/S BHATIA BROTHERS OVERSEAS, WARD VII(1), 21-G.F., HIG, CIVIL LINES, LUDHIANA. LUDHIANA, PAN: AACFB-4405C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR RESPONDENT : SHRI KAPIL GOEL DATE OF HEARING : 05.12.2012 DATE OF PRONOUNCEMENT : 07.12.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 11.11.2011 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN DELETING THE ADDITION OF RS. 18,03,485/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FOREIGN TOUR EXPENS ES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, LUDHIANA HAS ERRED IN DELETING THE ADDITION OF RS. 17,69,283/- MADE BY THE AO ON ACCOUNT OF COMMISSION PAID TO FOREIGN AGENT. 3. THAT THE ORDER OF LD. CIT(A), LUDHIANA BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 2 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE AO IN RESPECT O F DELETION OF ADDITION MADE BY THE CIT(APPEALS), AMOUNTING TO RS.18,03,485/-, ON ACCOUNT OF FOREIGN TOUR EXPENSES . 4. LD. 'AR' PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(APPEALS). HE, FURTHER, STATED THAT SUCH EXPENS ES ARE ALLOWED, YEAR AFTER YEAR, BY THE DEPARTMENT AND IT WAS, FURTHER, CONTENDED THAT FOREIGN TOUR EXPENSES WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THE BUSINESS OF THE APPELLANT GOT A BOOST, AS A RESULT OF EXPENSES ON FOREIGN TOUR. 5. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT REC ORDS AND FOUND THAT THE CIT(APPEALS) HAS DISCUSSED A NUMBER OF DECISIONS TO SUPPORT HIS FINDINGS. THE FINDINGS OF THE CIT(APPEALS) ARE CONTAINED IN PARA 5, WHICH ARE REP RODUCED HEREUNDER : 5. 1 HAVE GONE, THROUGH THE SUBMISSIONS MADE BY TH E ASSESSEE AND-RELEVANT ORDER PASSED BY THE ASSESSING OFFICER. THE 1ST GROUND OF APPEAL RELATES TO DISALLOWANCE ON ACCOUNT OF FOR EIGN TRAVELING AND 2 NT DISALLOWANCE OF COMMISSION PAID TO FOREIGN COMMISSI ON AGENTS, THE COUNTRIES TO WHICH FOREIGN TRAVEL HAS BEEN MADE INC LUDES KUWAIT, DOHA, MUSCAT, SRI LANKA, SINGAPORE, THAILAND AND EG YPT, FOREIGN TOUR EXPENSES TO ALL THESE COUNTRIES WERE DISALLOWED, TH E PARTNERS HAVE UNDERTAKEN FOREIGN VISITS TO PROCURE ORDERS FROM AL L THESE COUNTRIES. THERE IS NO DENYING FACT THAT ORDERS HAVE BEEN IN F ACT PROCURED FROM THESE COUNTRIES AND ' EXPORT HAS ALSO BEEN MADE. IT IS ALSO CLEAR THAT BOTH THE PARTNERS ARE WORKING PARTNERS AND ARE FULL Y ENGAGED IN THE AFFAIRS OF THE BUSINESS. ASSESSING OFFICER HAS LAID DOWN THAT THERE IS NO DETAILS OF MEETINGS BEING HELD OR OUTCOME OF THE ME ETINGS AND BUSINESS PROCURED FROM FOREIGN TRAVEL. ASSESSING OFFICER HAS FURTHER OBSERVED THAT NO LINK HAS BEEN LAID DOWN BETWEEN BUSINESS PURPOSE AND FOREIGN TRAVEL. THE STAND OF THE ASSESSING OFFICER CANNOT BE APPREC IATED ON THE SIMPLE GROUND THAT WHEN THE ASSESSEE HAS ACTUALLY MADE EXP ORTS TO THE SAID 3 COUNTRIES AND PROCURED ORDERS FROM THERE, WHAT MORE HE HAS TO PROVE TO SHOW THE LINK BETWEEN FOREIGN TRAVEL AND BUSINESS P URPOSE OR WHAT EVIDENCE HE HAS TO PRODUCE TO DISCHARGE HIS ONUS TO PROVE THE BUSINESS PURPOSE OF THE FOREIGN TRAVEL. OUT OF SEVEN OR EIGH T COUNTRIES VISITED BY THE PARTNERS OF THE ASSESSEE FIRM, THERE IS NOT SINGLE COUNTRY TO WHICH EXPORT HAS NOT BEEN MADE. SO ON THE FACTS AND CIRCUMSTANCE S THE ORDER OF THE ASSESSING OFFICER IN DISALLOWING THE FOREIGN TOUR E XPENSES CANNOT BE UPHELD. HENCE ADDITION OF RS. 18,03,485.00 MADE BY ASSESSING OFFICER IS HEREBY DELETED AND THESE GROUNDS OF APPEAL OF ASSES SEE ARE ALLOWED. 5. A BARE PERUSAL OF THE FINDINGS OF THE CIT(APPEALS) AND FACTUAL MATRIX OF THE CASE, REVEALS THAT SUCH EXPEN SES ON FOREIGN TOURS, RESULTED IN INCREASE, IN THE TURNOVE R OF THE ASSESSEE. THE COUNTRIES VISITED WERE KUWAIT, DOHA, MUSCAT, SRI LANKA, SINGAPORE, THAILAND AND EGYPT. THE AO, H AS FAILED, TO BRING ON RECORD ANY MATERIAL TO SUPPORT THE CONTENTION THAT SUCH EXPENSES WERE PERSONAL, IN NAT URE OR WERE FOR NON-BUSINESS PURPOSE. THEREFORE, FINDINGS OF THE AO, CANNOT BE HELD. HOWEVER, FINDINGS OF THE CIT(A PPEALS) ARE BASED ON PROPER APPRECIATION OF THE FACTUAL MAT RIX OF THE CASE, AND, HENCE, THE SAME ARE UPHELD. ACCORDINGLY , THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED 6. IN GROUND NO.2, REVENUE CONTENDED THAT CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS.17,69,283/- MA DE ON ACCOUNT OF COMMISSION PAID TO FOREIGN AGENCIES. 7. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' PLACED RELIANCE ON THE ORDER PASSED BY THE AO, WHER EAS LD. 'AR' PLACED RELIANCE ON THE ORDER PASSED BY THE CIT (APPEALS). 8. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS AND FACTS OF THE CASE. THE AO, MADE AD DITION IN RESPECT OF COMMISSION PAID BY THE APPELLANT ON T HE GROUND THAT NO CONCLUSIVE EVIDENCES WERE FILED BY T HE 4 ASSESSEE, INDICATING THE SERVICES RENDERED BY SUCH COMMISSION AGENTS. HOWEVER, LD. 'AR' REFERRED TO AGREEMENTS WITH SUCH COMMISSION AGENTS AND FACTUM O F PAYMENT OF THE IMPUGNED COMMISSION AMOUNT. THE AGREEMENTS ARE ANNEXED AT PAGES 81-82 OF THE PAPER BOOK, FILED BY THE ASSESSEE. CIT(APPEALS), ALLOWED THE A PPEAL OF THE ASSESSEE. THE CIT(APPEALS), OBSERVED THAT IDEN TITY OF THE PARTY TO WHOM COMMISSION HAS BEEN PAID, STANDS ESTABLISHED. SIMILARLY, THE SERVICES RENDERED BY S UCH COMMISSION AGENTS ARE IN THE SHAPE OF ARRANGING FOR SUPPLY OF THE GOODS AND PAYMENT FROM THE BUYERS. THEY HAV E FACILITATED MEETINGS WITH FOREIGN BUYERS. LD. CIT( APPEALS) OBSERVED THAT FINDINGS OF THE AO ARE NOT BASED ON A NY COGENT AND CORROBORATIVE EVIDENCE. AS THE FINDINGS OF THE CIT(APPEALS), ARE ON PROPER APPRECIATION OF THE FAC TS OF THE CASE, WE DO NOT FIND ANY INFIRMITY THEREIN AND, HEN CE, THE SAME ARE UPHELD. HOWEVER, FOR THE SAKE OF PROPER APPRECIATION OF THE ISSUE, THE FINDINGS OF THE CIT( APPEALS) ARE REPRODUCED HEREUNDER : 6. NEXT POINT OF APPEAL GROUND 2 RELATES TO DISALL OWANCE OF COMMISSION PAID TO FOREIGN AGENTS ON THE GROUND THAT THERE IS NO PROOF REGARDING SERVICES BEING THE FOREIGN AGENTS. NOW HERE AGAIN C OMMISSION HAS BEEN PAID BY THE ASSESSEE TO AGENTS IN THE COUNTRIES WHE RE EXPORT OF GOODS HAS BEEN MADE. THE IN HIS REPLY SUBMITTED WITH THE ASSE SSING OFFICER AND IN THE APPELLATE ALSO HAS CLEARLY SHOWN THE SERVICES P ROVIDED BY THE COMMISSION IS ALSO NOT TO BE DOUBTED THAT THESE COM MISSION AGENTS HAVE HELPED FIRM TO ARRANGE MEETINGS WITH FOREIGN BUYERS , ACTED AS CONDUIT BETWEEN THE PARTIES, HELPED IN ARRANGING FOR SUPPLY OF GOOD S AND PAYMENTS FROM THE BUYERS. THE PAYMENTS TO THESE AGENTS AS PER THE LAW AND PROCEDURE LAID DOWN BY RBI AND AS PER PERMISSIONS FROM RBI. THE ASSESSI NG OFFICER HAS DOUBTED THE PAYMENT OF COMMISSION ON VERY FLIMSY GROUNDS AND HA S IGNORED ALL THE 5 SUBMISSIONS, EVIDENCES AND PROOFS GIVEN BY THE ASSE SSEE TO PROVE HIS POINT. THE IDENTITY OF THE COMMISSION AGENTS, SERVICES PROVIDE D BY THEM, EXPORTS MADE IN RELATION TO SERVICES PROVIDED BY THEM STANDS PROVED . PAYMENTS HAS BEEN MADE AS PER NORMS AND HENCE THERE IS NO GROUND ON WHICH THESE PAYMENTS COULD BE DISALLOWED. HENCE ADDITION OF RS. 17,69,28 3.00 MADE BY ASSESSING OFFICER IS HEREBY DELETED AND BOTH THE GR OUNDS OF APPEAL OF ASSESSEE ARE ALLOWED. FURTHER, I HAVE ALSO RELIED UPON THE C ASE LAWS AS SUBMITTED BY THE APPELLANT. 9. GROUND NOS. 3 & 4 ARE GENERAL IN NATURE AND, HEN CE, NEED NO SEPARATE ADJUDICATION. ACCORDINGLY, THE SA ME ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DEC.,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 7 TH DEC.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH