ITO, Ward - 3(1), Kolkata, Kolkata V. M/s. SLS Zippers Ltd., Kolkata

ITA 1737/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83057 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 19-12-2011
• Court: TRIBUNAL
• Department Lawyers: M L SARDAR
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1737/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, WD. 3(1), KOLKATA. VS. M/S. SL S ZIPPERS LTD. (PAN: (AAHCS3364D) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 13.08.2014 DATE OF PRONOUNCEMENT: 28.08.2014 FOR THE APPELLANT: SHRI M. L. SARDAR, JCIT, SR. DR FOR THE RESPONDENT: SHRI SUBHAS AGARWAL, ADVOCAT E / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-I, KOLKATA IN APPEAL. NO. 214/CIT(A)-I/WD-3(1)/07-08 DATED 05.09.2011. ASSESS MENT WAS FRAMED BY ITO, WARD-3(1), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2004-05 VIDE HIS ORDER DATED 27.12. 2006. 2. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF BOGUS COMMISSION OF RS.20,95,255/-. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS BY DELETING THE ADDITION OF RS.20,.95,255/-, ON ACCOUNT OF DISALLOWANCE OF BOGU S COMMISSION BY TREATING THAT THE DISALLOWANCE MADE BY AO WITHOUT ANY BASIS AND ON AS SUMPTION. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPA NYS MAIN BUSINESS WAS THAT OF SELLING OF FITTING MATERIALS OF LEATHER I.E. ZIPPERS, PULLERS, SLIDERS ETC. THE ASSESSEES TOTAL TURNOVER DURING THE RELEVANT YEAR WAS AT RS.6.29 CR. THE ASSESSEE B EFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS , CLAIMED THAT OUT OF THE TOTAL TURNOVE R THE ASSESSEE HAS SOLD THE PRODUCT FOR A SUM OF RS.3,99,65,243/- OF NET BY GIVING COMMISSION OF RS.20,95,255/- TO 23 PERSONS. THE ASSESSEE BEFORE THE AO FILED COMPLETE DETAILS I.E. DETAILS O F PARTYWISE COMMISSION PAID ALONG WITH THE DOCUMENTS AND CONFIRMATIONS, PAYMENT MADE BY ACCOUN T PAYEE CHEQUE, DETAILS OF INCOME TAX PARTICULARS OF RECIPIENTS WHEREBY THEY HAVE INCLUDE D THE COMMISSION INCOME, COMMISSION BILL RAISED AND TDS DEDUCTED ON THE COMMISSION. THE ASS ESSEE HAS FILED THESE DETAILS BEFORE AO, BEFORE CIT(A) AND EVEN NOW BEFORE US IN THE PAPER B OOK CONSISTING OF PAGES 1 TO 124 AND 2 ITA NO.1737/K/2011 M/S. SLS ZIPPERS LTD. AY 2004-05 ANOTHER PAPER BOOK CONSISTING OF PAGES 1 TO 37. TH E ASSESSEE HAS ALSO FILED COPIES OF AGREEMENT WITH THE COMMISSION AGENT AND REPLIES RECEIVED BY THE AO FROM THE COMMISSION AGENTS. BUT THE AO HAS NOT BELIEVED THE DOCUMENTS FILED BY THE ASSESSEE AND MADE DISALLOWANCE OF THIS COMMISSION. AGGRIEVED, ASSESSEE PREFERRED APPEAL B EFORE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS BY THE ASSESSEE DELETED THE DISALLOWANC E BY OBSERVING IN PARA 7 AS UNDER: 7. I HAVE CAREFULLY CONSIDERED THE SUBMISSION AND ARGUMENT PLACED BY THE APPELLANT. THERE HAS BEEN SUBSTANCE AND MERIT IN THE ARGUMENT PLACED BY THE APPELLANT THAT THE APPELLANT HAS BEEN MAKING PAYMENT ON ACCOUNT OF COM MISSION FOR SO MANY YEARS TO THE PARTIES MENTIONED ABOVE AND IT HAS BEEN ACCEPTED BY THE DEPARTMENT. NO REMEDIAL ACTION FOR THE EARLIER YEARS AND SUBSEQUENT YEAR ALSO HAS BEEN INITIATED ON THE CONCLUSION DRAWN BY THE AO IN RESPECT OF PAYMENT OF COMMISSION THIS YEAR. THE APPELLANT CLAIMS THAT HE HAS MADE THE PAYMENT OF RS.32.13 LAKHS ON ACCOUNT OF BR OKERAGE AND COMMISSION ON THEIR SALES LAST YEAR I.E. AY 03-04 AND IT HAS BEEN ACCEP TED BY THE AO. FURTHER, THE A/R STRONGLY ARGUED THAT THE AO HAS MADE DISALLOWANCE ON THE SUR MISES, CONJECTURES AND ASSUMPTION THAT THE ASSESSEE WOULD GET THE CASH BACK WHICH HAS NO BASIS AND SUBSTANCE. THE PERSONS TO WHOM PAYMENTS HAVE BEEN MADE AFTER DEDUCTION OF TAX HAVE SHOWN SUCH PAYMENTS AS INCOME IN THE RETURNS. IN VIEW OF THE FOREGOING DISCUSSION, THE SUBMISSION AND ARGUMENT MADE BY THE APPELLANT, THE DISALLOWANCE MADE BY THE AO WITHOUT ANY BASIS A ND ON ASSUMPTION, SURMISES AND CONJECTURES IS NOT CORRECT AND THUS, THE APPELLANT GETS RELIEF ON THIS ISSUE. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS FILED COMPLETE DETAIL S OF PAYMENTS MADE TO PARTIES, WHO HAVE RECEIVED COMMISSION AND ALSO DETAILS OF TDS DEDUCTE D AND SERVICES RENDERED. THE ASSESSEE IS CONSISTENTLY CLAIMING THIS COMMISSION IN EARLIER YE ARS ALSO AND IN SUBSEQUENT YEARS ALSO. THE REVENUE IS CONSISTENTLY ALLOWING THIS COMMISSION BU T IN THIS YEAR ONLY THE PECULIAR POSITION IS THAT THE AO DISALLOWED THE SAME. WHEN THIS WAS CON FRONTED TO LD. SR. DR, HE COULD NOT REPLY RATHER HE STATED HE MERELY RELYING ON THE ASSESSMEN T ORDER. WE FIND THAT THERE IS NO REASON TO INTERFERE IN THE ORDER OF CIT(A). HENCE, WE CONFIR M THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 5. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE DISALLOWANCE OF TRAVELLING EXPENSES. FOR THIS, REVE NUE HAS RAISED FOLLOWING GROUND NO. 2: 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS BY DELETING THE ADDITION OF RS.2,63,352/- ON ACCOUNT OF DISALLOWANCE OF TRAVELL ING EXPENSES, BEING PERSONAL IN NATURE BY TREATING IT FOR THE PURPOSE OF BUSINESS. 6. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS MADE DISALLOWANCE ON ACCOUNT OF TRAVELLING EXPENSES OF R S.2,63,352/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASE OF AIR TICKETS FROM KOLKATA TO MUMBAI AND ALSO TO DELHI. ASSESSEE CLAIMED THAT THE PRINCIPAL OF THE ASSESSEE IS AT DELHI AND MAJOR PORTION OF PURCHASES IS MADE FROM DELHI. HENCE HE IS TO VISIT THE PRINCIPAL BUT AS REGARDS T O MUMBAI VISIT, THE ASSESSEE COULD NOT EXPLAIN 3 ITA NO.1737/K/2011 M/S. SLS ZIPPERS LTD. AY 2004-05 ANY THING. THE AO DISALLOWED THE ENTIRE TRAVELLING EXPENSES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALLOWED THE CLAIM OF ASSE SSEE SIMPLY ON THE SUBMISSION OF THE ASSESSEE BY OBSERVING IN PARA 9.2 AS UNDER: 9.2. IN VIEW OF THE SUBMISSION OF THE APPELLANT, T HERE IS FORCE IN THE ARGUMENT MADE BY THE APPELLANT THAT EXPENDITURE HAS BEEN INCURRED AS TRAVELLING EXPENSES FOR THE PURPOSE OF BUSINESS. THE AO HAS DISALLOWED THE EXPENDITURE ON THE BASIS OF ASSUMPTION AND SURMISES AND CONJECTURE FOR NO BUSINESS AT DELHI. THUS, THE ADDITION MADE BY THE AO IS DELETED. THE AO IS DIRECTED TO ALLOW THE EXPENSES CLAIM ON TRAVELLING EXPENSES. AGGRIEVED, NOW REVENUE CAME IN APPEAL BEFORE US. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT AS REGARDS TO THE TRAVELLING DONE TO D ELHI BY THE ASSESSEE, THE CAUSE IS REASONABLE BECAUSE THE PRINCIPAL OF ASSESSEE IS IN DELHI. BUT AS REGARDS TO MUMBAI VISIT, EVEN NOW BEFORE US, THEASSESSEE COULD NOT EXPLAIN THE REASONS. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE DETAILED EXPENSES I.E. THE EXPENSES INCURRED FO R PURCHASE OF AIR TICKETS TO DELHI NEEDS ALLOWANCE. WE DIRECT THE AO ACCORDINGLY. AS REGARD S TO AIR TICKET EXPENSES FOR MUMBAI, WHICH IS WITHOUT ANY REASON AND HENCE, THE AO SHOULD RECO MPUTE AND MAKE DISALLOWANCE. THIS ISSUE OF REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTIC AL PURPOSES. 8. IN THE RESULT, APPEAL OF REVENUE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 9. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28.08.2 014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28TH AUGUST, 2014 ,- #./ 0 JD.(SR.P.S.) 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT ITO, WARD-3(1), KOLKATA 2 *+() / RESPONDENT M/S. SLS ZIPPERS LTD., P-5, CANNING STREET, KOLKATA- 700 001.W. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #