India Steel Corporation, Kolkata V. ITO, WD-35(2), KOLKATA, Kolkata

ITA 1750/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5020 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAG JCIT SRDR
• Assessee Lawyers: V N PUROHIT; H V BHARDWAJ
• Keywords: Competent authority
• Section: 143(3); 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1750 - 1751 / KOL / 2014 ASSESSMENT YEARS :2010-11 & 2011-12 INDIA STEEL CORPORATION 2 ND FLOOR, ROOM NO. 36, 5/1, CLIVE ROW, KOLKATA -700 001 [ PAN NO. AAAFI 8045 B ] V/S . INCOME TAX OFFICER,WARD-35(2), PODDARCOURT, 18, RABINDRA SARANI, KOLKATA-700 001 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI V.N.PUROHIT, AR & SHRI H.V. BHARDWAJ, AR /BY RESPONDENT SHRI R.P. NAG, JCIT-SR-DR /DATE OF HEARING 18-04-2016 ! /DATE OF PRONOUNCEMENT 22-04-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY ASSESSEE ARE ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA DATED 02.07.2014. ASSESSMENTS WERE FRAMED BY ITO WARD-35(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ERS DATED 21.03.2013 & 28.03.2014 FOR ASSESSMENT YEARS 2010-11 & 2011-12 R ESPECTIVELY. 2. SINCE COMMON GROUNDS ARE INVOLVED IN BOTH THE AP PEALS OF ASSESSEE EXCEPT FIGURERS, THEREFORE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE. ITA NO.1750-1751/KOL/2014 A.YS 2010-11 & 2011-12 INDIA STEEL CORPN. V. ITO WD.35(2) KOL. PAGE 2 FIRST WE TAKE ITA NO.1750/KOL/2014 FOR AY10-11 . 2. FIRST ISSUE RAISED IN THIS APPEAL OF ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY DISAL LOWING THE COMMISSION EXPENSE OF 24,37,169/- ON ACCOUNT OF SALES NOT MADE DURING TH E YEAR. FOR THIS, ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUN D:- (1) THAT THE COMMISSIONER OF INCOME TAX (APPEALS)- XX HAS ERRED, BOTH ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF RS.24,37,169/- OF CLAIM OF COMMISSI ON. 3. FACTS IN BRIEF ARE THAT ASSESSEE IS A PARTNERSHI P FIRM AND ENGAGED IN THE MANUFACTURING BUSINESS OF ELECTRIC TRANSFORMER AND SIMILAR OTHER PRODUCTS USED BY VARIOUS ELECTRICITY BOARDS AND THEIR DISTRI BUTION UNITS. DURING THE YEAR, ASSESSEE HAS CLAIMED EXPENSE OF 47,47,106/- IN THE FORM OF COMMISSION EXPENSE PAID BY ASSESSEE FOR GETTING THE TENDERS AR RANGED THROUGH VARIOUS AGENTS FROM THE ELECTRICITY BOARDS @ 2 TO 3% ON THE VALUE OF ORDERS PROCURED BY SUCH AGENTS. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMIT DETAILS OF SALES MADE DURING THE YEAR AGAINST THE AFORESAID COMMISSION EXPENSE. IN COMPLIANCE THERETO , ASSESSEE SUBMITTED THAT FOR THE YEAR UNDER CONSIDERATION SALE HAS BEEN BOOKED AGAINST COMMISSION EXPENSE AT 23,09,937/- ONLY BUT FOR THE PAYMENT OF COMMISSION OF 24,37,169/- NO SALE WAS BOOKED DURING THE YEAR. ACC ORDINGLY, AO DISALLOWED THE EXCESS CLAIM OF COMMISSION EXPENSE F OR THE SUM OF 24,36,169/- ON THE GROUND THAT THIS EXPENSE SHOULD BE BOOKED IN ITS BOOKS OF ACCOUNT IN THE YEAR WHEN THE RELATED SALES WILL BE RECORDED IN ITS BOOKS OF ACCOUNT ALSO. HENCE, THE COMMISSION AMOUNT OF 24,37,169/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE ASSESSEE SUBMITTED THAT COMMISSION EXPENSE WAS BASE D ON THE VALUE OF ORDERS PROCURED THROUGH SERVICES OF AGENTS AND THES E EXPENSES WERE INCURRED THROUGH ACCOUNT PAYEE CHEQUE AFTER DEDUCTING TDS. T HERE WAS NO DISALLOWANCE IN THE EARLIER YEARS MADE BY AO AND TH E ASSESSEE CLAIMED SUCH ITA NO.1750-1751/KOL/2014 A.YS 2010-11 & 2011-12 INDIA STEEL CORPN. V. ITO WD.35(2) KOL. PAGE 3 EXPENSES. HOWEVER, LD. CIT(A) REJECTED THE CLAIM OF ASSESSEE BY OBSERVING THAT COMMISSION ATTRIBUTABLE TO THE SALES DECLARED IN THE YEAR UNDER CONSIDERATION WAS CORRECTLY ALLOWED BY AO. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD. AR FILED PAPER BOOK HAVING PAGES 1 TO 75 AND SUBMITTED THAT ASSESSEE IS FOLLOWING TO RECOGNIZE THE COMMISS ION EXPENSE ON THE BASIS OF ORDERS PROCURED BY COMMISSION AGENT AND NOT ON T HE BASIS OF ACTUAL SALE BOOKED IN ITS BOOKS OF ACCOUNT. THIS PAYMENT TO THE COMMISSION AGENT WAS MADE AFTER DEDUCTING TDS. THE COMMISSION AGENTS USE D TO RAISE THE BILLS IMMEDIATELY AFTER PROCURING THE ORDER IN THE NAME O F ASSESSEE WHICH ARE PLACED ON PAGES 25 TO 62 OF THE PAPER BOOK AND ALL THE COMMISSIONS WERE BOOKED AFTER DEDUCTING TDS AND THE CHALLANS FOR THE PAYMENTS OF TDS WERE PLACED FROM PAGES 64 TO 72 OF THE PAPER BOOK. FINAL LY, LD. AR PRAYED THAT ASSESSEE HAS BEEN CLAIMING SUCH COMMISSION EXPENSE CONSISTENTLY FOR THE LAST SO MANY YEARS. THEREFORE IT SHOULD BE ALLOWED AS DEDUCTION WHILE COMPUTING THE INCOME IN THE HEAD OF BUSINESS AND STATED THAT ISSUE MAY BE DECIDED ON MERIT. ON THE OTHER HAND, LD. DR SUBMITT ED THAT THE COMMISSION EXPENSES CORRESPONDING TO SALES BOOKED BY THE ASSES SEE SHOULD BE ALLOWED AS DEDUCTION AS NO SERVICES RENDERED BY THE AGENTS IN CONNECTION UNRECORDED SALE. LD. DR FURTHER SUBMITTED THAT ISSUE OF COMMIS SION AROSE FIRST TIME DURING THE YEAR AND SAME WAS NOT LOOKED UPON IN THE EARLIE R YEARS SO, THIS DOES NOT MEAN THE COMMISSION EXPENSE SHOULD BE ALLOWED ON TH E BASIS OF CONSISTENCY. HE VEHEMENTLY RELIED ON THE ORDERS OF AUTHORITIES B ELOW. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND T HAT ASSESSEE WAS CLAIMING THE COMMISSION EXPENSE ON THE BASIS OF ORDERS PROCU RED BY COMMISSION AGENT BUT AUTHORITIES BELOW DID REJECTED THE SAME O N THE GROUND THAT ITA NO.1750-1751/KOL/2014 A.YS 2010-11 & 2011-12 INDIA STEEL CORPN. V. ITO WD.35(2) KOL. PAGE 4 COMMISSION EXPENSE WHICH ARE CORRESPONDING TO THE S ALES MADE DURING THE YEAR SHOULD BE ALLOWED AS DEDUCTION IN THE YEAR UND ER CONSIDERATION. HOWEVER, WE FIND FORCE FROM THE ARGUMENT OF LD. AR THAT NO SUCH DISALLOWANCE WAS MADE IN EARLIER YEARS AND EXPENSES WERE DULY CLAIMED IN ITS BOOKS OF ACCOUNT AFTER GETTING THE BILLS FROM THE C ONCERNED PARTIES AND AFTER TDS DEDUCTION. WE FIND THAT SERVICES RENDERED BY CO MMISSION AGENTS HAVE NOT BEEN DOUBTED BY THE AUTHORITIES BELOW. WE FURTH ER FIND THAT ASSESSEES CLAIM OF COMMISSION EXPENSE ON THE BASIS OF BILLS R AISED BY COMMISSION AGENTS FOR THE VALUE OF ORDERS ARRANGED BY THEM CON SISTENTLY AND THESE WERE ALLOWED IN THE PAST YEARS ALSO. WE ALSO FIND THAT A SSESSEE HAVING THE ARRANGEMENT WITH THE COMMISSION AGENT FOR PROCURING THE ORDERS FROM THE ELECTRICITY BOARDS AND ONCE THE ORDER HAS BEEN ARRA NGED THEN THE COMMISSION AGENT IS ENTITLED FOR THE COMMISSION ON THE VALUE O F SUCH ORDER ARRANGED BY HIM. IN THIS POINT OF ARGUMENT, LD. DR HAS NOT BROU GHT ANYTHING ON RECORD TO CONTROVERT THE ARGUMENT RAISED BY LD. AR. THEREFORE , WE ARE INCLINED TO REVERSE THE ORDERS OF AUTHORITIES BELOW AND THIS GR OUND OF ASSESSEES APPEAL IS ALLOWED. 7. COMING TO NEXT GROUND RAISED BY ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF AO BY DISALLOWING THE DEDU CTION OF 5,100/- U/S 80G OF THE ACT ON ACCOUNT OF DONATION. 8. AT THE OUTSET, IT WAS OBSERVED THAT LD. CIT(A) H AS DISALLOWED THE DONATION ON THE GROUND THAT ASSESSEE FAILED TO SUBM IT THE EXEMPTION CERTIFICATE ISSUED TO THE INSTITUTION REGISTERED U/ S 80G OF THE ACT BY THE COMPETENT AUTHORITY. HOWEVER, LD. AR DREW OUR ATTEN TION ON PAGE 73 OF THE PAPER BOOK WHERE THE CERTIFICATE ISSUED BY COMPETEN T AUTHORITY U/S. 80G(5) CLAUSE (IV) TO THE INSTITUTION WAS PLACED ALONG WIT H PAN NO. ACCORDINGLY, WE ARE INCLINED TO REVERSE THE ORDERS OF AUTHORITIES B ELOW AND THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. ITA NO.1750-1751/KOL/2014 A.YS 2010-11 & 2011-12 INDIA STEEL CORPN. V. ITO WD.35(2) KOL. PAGE 5 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. COMING TO ITA NO.1751/KOL/2014 FOR A.Y. 11-12. 10. AS STATED EARLIER, THE ISSUE IN THIS YEAR IS SA ME AS THAT OF THE LAST YEAR. THE ONLY DIFFERENCE IS THE AMOUNT INVOLVED. SINCE T HE FACTS ARE EXACTLY IDENTICAL, BOTH THE PARTIES ARE AGREED WHATEVER VIE W TAKEN IN THE ABOVE APPEAL OF ASSESSEE MAY BE TAKEN IN THIS APPEAL OF ASSESSEE ALSO, WE HOLD ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 12. IN COMBINED RESULT, BOTH THE APPEALS OF ASSESSEE ST AND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 22 /04/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 22 / 04 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-INDIA STEEL CORPN. 2 ND FLOOR, ROOM NO.36, 5/1 CLIVE ROW, KOL-01 2. /REVENUE-ITO WARD, WARD-25(2), PODDAR COURT, 18, RA BIDNRA SARANI, KOL-01 3.#,#-. / / CONCERNED CIT KOLKATA 4. /- / CIT (A) KOLKATA 5.2 3455-., -.!, / DR, ITAT, KOLKATA 6.489:; / GUARD FILE. BY ORDER/ , /TRUE COPY/ /# -.!,