ITO, Ward - 9(2), Kolkata, Kolkata V. Visura Trading & Investment (India) Ltd., Kolkata

ITA 1727/KOL/2011

• Counselvise Citation: 172723514 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: S M SURANA

Judgement Text

I.T.A. NO.: 1727/KOL./2011 AS SESSMENT YEAR : 2006-07 PAGE 1 TO 5 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI SHAMIM YAHYA (A CCOUNTANT MEMBER) I.T.A. NO.: 1727/KOL./ 2011 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER,...........................,.... ...........APPELLANT WARD-9(2), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, KOLKATA-700 069 -VS.- VISURA TRADING & INVESTMENT (INDIA) LTD............ ........RESPONDENT 156A, M.G. ROAD, 2 ND FLOOR, KOLKATA-700 007 [PAN : AAACV 9060 C] APPEARANCES BY: SHRI D.J. MEHTA, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JUNE 18, 2014 DATE OF PRONOUNCING THE ORDER : JUNE 24, 2014 O R D E R PER SHAMIM YAHYA: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 10.10.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. GROUNDS OF APPEAL ARE AS UNDER :- (1) THAT THE LD. CIT(A) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.6,32,411/- MADE ON ACCOUNT OF UNDER CHARGE OF INTEREST FROM SUNDRY DEBTORS. (2) THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN LAW AN D IN FACT IN DELETING THE ADDITION OF RS.10,59,173/- MADE ON ACC OUNT OF DISCOUNT ALLOWED BY THE ASSESSEE TO PARTIES WHICH W AS RELATED TO PREVIOUS FINANCIAL 2004-05. (3) THAT THE LD. CIT(A) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.2,96,562/- MADE ON ACCOUNT OF COMMIS SION PAID I.T.A. NO.: 1727/KOL./2011 AS SESSMENT YEAR : 2006-07 PAGE 1 TO 5 2 TO NEPTUNE SYNTHETICS REGARDING WHICH THE ASSESSEE FAILED TO EXPLAIN THE BASIS OF DETERMINATION OF COMMISSION AN D THE ACTIVE ROLE PLAYED BY NEPTUNE SYNTHETICS TO BE IN RECEIPT OF SUCH COMMISSION. 3. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3), DATED 31.12.2008. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS CONSIGNMENT AGENT OF GAIL AND GETS COMMISSION ON SALES. THE PAYMENT IS MADE BY THE PURCHASERS DIRECT LY BUT IN CASE OF DELAY THE ASSESSEE MAKES PAYMENT AND REALIZES FROM PARTIE S. GAIL ALLOWED DISCOUNT TO PURCHASERS BY ISSUING CREDIT NOTES THRO UGH ASESSEE WHO PASSES IT OVER TO THE PURCHASERS. THE ASSESSEE CHAR GED INTEREST FOR DELAY IN PAYMENT BY THE PURCHASERS AND ALSO DEBITS THE DI SCOUNT ALLOWED TO THE PURCHASERS FOR EQUALIZING THE INTEREST. ASSESSING O FFICER HELD THAT THE ASSESSEE HAS UNDER CHARGED INTEREST OF RS.6,32,411/ - FROM SUNDRY DEBTORS AND ADDED BACK THE SAME. THE ASSESSING OFFICER ALSO ADDED BACK RS.10,59,173/- ON THE GROUND THAT THE ASSESSEE RECE IVED RS.10,59,173/- AS DISCOUNT FROM GAIL WHICH WAS PAID TO THE PARTIES AND SINCE THIS DISCOUNT RELATED TO FINANCIAL YEAR 2004-05 PERTAINI NG TO ASSESSMENT YEAR 2005-06 THE SAME IS ALLOWED. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE PAID RS.2,96,562/- AS COMMISSION TO M/S. N EPTUNE SYNTHETICS BUT NO EXPLANATION WAS OFFERED HENCE HE DISALLOWED THE SAID AMOUNT. 4. UPON ASSESSEES APPEAL, LD. CIT(APPEALS) CONSIDE RED THE SUBMISSIONS OF THE ASSESSEE. 5. AS REGARDS THE ADDITION OF RS.6,32,411/- ON ACCO UNT OF UNDER CHARGE OF INTEREST, LD. CIT(APPEALS) HELD AS UNDER :- I FIND THAT THE APPELLANT HAS CHARGED INTEREST FRO M THE DEBTORS AND HAVE ALSO DEBITED THE AMOUNT IN THEIR ACCOUNT A GAINST THE DISCOUNT CREDITED TO THEM. IT ALSO APPEARS THAT THE AMOUNT OF INTEREST CHARGED TOGETHER WITH THE DISCOUNT RE-DEBI TED EXCEEDS THE CALCULATIONS MADE BY THE AO. IN ANY CASE, IT IS NOT THE DISALLOWANCE OF INTEREST PAID BUT THE AO HAS ADDED BACK THE AMOUNT OF INTEREST WHICH THE APPELLANT SHOULD HAVE FURTHER CHARGED. IT IS TRITE LAW THAT NO INCOME COULD BE ES TIMATED WHICH I.T.A. NO.: 1727/KOL./2011 AS SESSMENT YEAR : 2006-07 PAGE 1 TO 5 3 THE APPELLANT COULD HAVE EARNED BUT HAS NOT ACTUALL Y EARNED. THE ISSUE IS FULLY COVERED BY THE JUDGMENTS CITED B Y THE APPELLANT. APART FROM THAT THE APPELLANT SUBMITTED FULL DETAILS OF THE PARTIES BUT THE AO HAS NOT BEEN ABLE TO BRIN G ON RECORD ANY EVIDENCE TO SUGGEST THAT THE APPELLANT ACTUALLY CHARGED INTEREST FROM ANY OF THE DEBTORS WHICH WAS NOT DISC LOSED IN THE ACCOUNT. IN VIEW OF THE ABOVE, THE ADDITION IS DIRE CTED TO BE DELETED. 6. IN APPEAL BEFORE US, ON BEHALF OF THE REVENUE LD . DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSI NG OFFICER. 7. HAVING HEARD BOTH THE PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD, WE FIND THAT LD. CIT(APPEALS) HAS CORREC TLY APPRECIATED THE FACTS OF THE CASE. HE HAS FOUND THAT THE AMOUNT OF INTEREST CHARGED TOGETHER WITH THE DISCOUNT EXCEEDS THE CALCULATIONS MADE BY THE ASSESSING OFFICER. MOREOVER, WE ALSO AGREE THAT THE ASSESSING OFFICER HAD ADDED BACK THE AMOUNT OF INTEREST WHICH THE ASSESSE E HAS NOT CHARGED. IT IS SETTLED LAW THAT REAL INCOME HAS TO BE CHARGED A ND NOT THE ESTIMATED INCOME WHICH THE ASSESSEE COULD HAVE EARNED. ACCORD INGLY WE UPHOLD THE ORDER OF LD. CIT(APPEALS). 8. AS REGARDS GROUND RELATING TO THE ADDITION OF RS .10,59,173/- ON ACCOUNT OF DISCOUNT, LD. CIT(APPEALS) DELETED THE A DDITION HOLDING AS UNDER:- WITH REGARD TO THIS ADDITION OF RS.10,59,173/- THE FACT REMAINS THAT THE PRINCIPAL GAIL ALLOWED THE DISCOUN T TO THE PURCHASERS THROUGH THE APPELLANT. IT APPEARS FROM T HE CREDIT NOTES ISSUED BY GAIL THAT SPECIFIC NAMES OF THE PUR CHASERS TO WHOM THE DISCOUNT WAS ALLOWED IS MENTIONED. THE AO HAS ADDED BACK THE AMOUNT ON THE GROUND THAT THE DISCOUNT REL ATED TO THE FINANCIAL YEAR 2004-05 WHICH THE APPELLANT HAS PAID TO THE PURCHASERS IN THE CURRENT ASSESSMENT YEAR AND SINCE IT RELATES TO EARLIER FINANCIAL YEAR THE SAME IS DISALLOWED. I T APPEARS THAT THE AO HAS MISSED THE POINT THAT THOUGH THE DISCOUN T RELATES TO THE FY 2004-05 THE CREDIT NOTE WAS RECEIVED IN FY 2 005-06, THE CREDIT AND DEBIT BOTH WERE ACCOUNTED FOR IN FY 2005 -06. IN FACT THIS CREDIT NOTE HAD NO EFFECT ON THE APPELLANTS A CCOUNTS SINCE THE CREDIT OF DISCOUNT WAS NEGATED BY DEBIT OF DISC OUNT IN THE SAME FINANCIAL YEAR. THE DISCOUNT WAS NOT THE INCOM E OF THE I.T.A. NO.: 1727/KOL./2011 AS SESSMENT YEAR : 2006-07 PAGE 1 TO 5 4 APPELLANT BUT THAT THE PURCHASERS PASSED TO THEM BY GAIL THROUGH THE APPELLANT. HENCE THE ADDITION MADE UNDE R MISCONCEPTION CANNOT STAND AND HENCE IT IS DELETED . 9. IN APPEAL BEFORE US, ON BEHALF OF THE REVENUE LD . DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE ASSESS ING OFFICER. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE AGREE WITH THE LD. CIT(APPE ALS) THAT THE ASSESSING OFFICER HAS MISSED THE POINT THAT THOUGH THE DISCOU NT RELATED TO THE FINANCIAL YEAR 2004-05, THE CREDIT NOTE WAS RECEIVE D IN FINANCIAL YEAR 2005-06, THE CREDIT AND DEBIT BOTH WERE ACCOUNTED F OR IN F.Y. 2005-06. MOREOVER, THIS CREDIT NOTE HAS NO EFFECT ON ASSESSE ES ACCOUNTS SINCE THE CREDIT OF DISCOUNT WAS NEGATED BY DEBIT OF DISCOUNT IN THE SAME FINANCIAL YEAR. THE DISCOUNT WAS NOT THE INCOME OF THE ASSESS EE BUT THAT OF THE PURCHASERS PASSED TO THEM BY GAIL THROUGH THE ASSES SEE. HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(APPEALS) ON THIS IS SUE. 11. AS REGARDS THE DISALLOWANCE OF COMMISSION PAID AT RS.2,96,562/-, IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) THAT ALL THE DETAILS AND DOCUMENTS WERE FILED AND PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE FACTS REMAINED THE SAME AS IN E ARLIER YEARS. LD. CIT(APPEALS) HELD THAT THE ASSESSEE HAS SUBMITTED T HE BILL AS WELL AS THE PAN OF THE PARTY AND DULY DEDUCTED THE TAX. LD. CIT (APPEALS) FURTHER FOUND THAT AS REGARDS THE SERVICES RENDERED, THE AS SESSING OFFICER HAS HIMSELF ACCEPTED THE COMMISSION PAID TO THE SAME PA RTY IN ASSESSMENT YEAR 2005-06 FOR WHICH HE HIMSELF COMPLETED THE ASS ESSMENT UNDER SECTION 143(3). ACCORDINGLY LD. CIT(APPEALS) DELETE D THE ADDITION. 12. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL. I.T.A. NO.: 1727/KOL./2011 AS SESSMENT YEAR : 2006-07 PAGE 1 TO 5 5 13. HAVING HEARD BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS DULY PRODU CED BILL OF THE COMMISSION PAID. IN THIS REGARD, PAN OF THE PAYEE H AS ALSO BEEN SUBMITTED. TAX HAS DULY BEEN DEDUCTED, THE COMMISSI ON PAID TO THE SAME PARTY HAS BEEN ALLOWED BY ASSESSING OFFICER IN EARL IER ASSESSMENT YEAR. UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF LD. CIT(APPEALS). ACCORDINGLY, WE UPHOLD THE SAME. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF JUNE, 2014. SD/- SD/- MAHAVIR SINGH SHAMIM YAHYA (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 24 TH DAY OF JUNE, 2014 COPIES TO : (1) INCOME TAX OFFICER, WARD-9(2), KOLKATA, AAYAKAR BHAWAN, 5 TH FLOOR, KOLKATA-700 069 (2) VISURA TRADING & INVESTMENT (INDIA) LTD, 156A, M.G. ROAD, 2 ND FLOOR, KOLKATA-700 007 (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.