DCIT, Circle-5(1), Kolkata, Kolkata V. Kesoram Industries Limited, Kolkata

ITA 1781/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0775 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DILIP S DAMLE
• Section: 263

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1781 / KOL / 20 17 ASSESSMENT YEAR :2008-09 DCIT, CIRCLE-5(1) P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . M/S KESORAM INDUSTRIES LTD., 9/1, R.N. MUKHERJEE, KOLKTA-700001 [ PAN NO.AABCK 2417 P ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. SINGH, CIT-DR /BY RESPONDENT SHRI DILIP S. DAMLE, ADVOCATE /DATE OF HEARING 29-11-2018 /DATE OF PRONOUNCEMENT 30-11-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2008-09 A RISES FROM THE COMMISSIONER OF INCOME TAX (APPEALS)-17, KOLKATAS ORDER DATED 07.03.2017, PASSED IN CASE NO.226/CIT(A)-17/KOL/15-16, IN PROCE EDINGS U/S. 147/154/251/143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES SOLE SUBSTANTIVE GROUND PLEADED IN THE INSTANT APPEAL SEEKS TO REVIVE THE ASSESSING OFFICERS ACTION DISA LLOWING / ADDING THIS TAXPAYERS DISCOUNT AND BROKERAGE CLAIM OF 21,83,16,311/- DURING THE COURSE OF ASSESSMENT AS REVERSED IN LOWER APPELLATE PROCEE DINGS AS FOLLOWS:- DECISION : IN THIS CASE THE AO HAS MADE THE ADDITION ON THE GROUND THAT DISCOUNTS OFFERED BY THE ASSESSEE HAVE BEEN NETTED FROM THE S ALES SO THERE CANNOT BE AN ADMISSIBLE CLAIM FOR ADDITIONAL DISCOUNT. IT IS THE CONTENTION OF THE AO THAT ONCE THE DISCOUNT HAS BEEN DEDUCTED FROM THE GROSS SALES THE ASSESSEE CANNOT CLAIM FURTHER ITA NO.1781/KOL/2017 A.Y. 2008-0 9 DCIT, CIR-5(1), KOL. VS. M/S KESO RAM INDUSTRIES LTD. PAGE 2 DISCOUNT UNDER THE ACCOUNTING HEAD BROKERAGE AND D ISCOUNT. ACCORDINGLY, THE ORDER POST SALES DISCOUNT CLAIMED BY THE ASSESSEE W AS TREATED BY THE AO AS A DOUBLE CLAIM AND DISALLOWED. ACCORDINGLY, DISALLOWA NCE OF RS.21,83,16,311/- WAS MADE BY THE AO. I HAVE GONE THROUGH THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE AO CAREFULLY. IT HAS BEEN SUBMITTED THAT THE ASSESSEE OFFERS UPFRONT DISCOUNT AT THE TIME OF THE SALES WHICH IS CALLED TRADE DISCOUNT. THE SA LES ARE REPORTED NET OF TRADE DISCOUNT. THE OTHER DISCOUNTS OFFERED BY THE ASSESS EE WHICH ARE MOSTLY THE POST-SALE ARE: (A) TURN OVER DISCOUNT (B) PROMPT PAYMENT DISCOUNT (C) QUANTITY DISCOUNT; (D) SLAB DISCOUN T (E) DISCOUNT ON SALE OF DISPOSAL OF SECOND TUBES; IT HAS ALSO BEEN SUBMITTED THAT ASSESSMENT ORDERS F OR ASSESSMENT YEAR 2005 TO 2007-08 WERE PASSED U/S. 143(3). IN ALL THE EARLIER YEARS SAME ACCOUNTING POLICY REGARDING THE DISCOUNTS OFFERED BY THE ASSESSEE WAS FOLLOWED I.E. TRADE DISCOUNTS WERE NETTED OFF AGAIN SALES AND THE OTHER POST-SALE DISCOUNTS WERE SHOWN SEPARATELY AND INDEPENDENTLY IN THE PROFIT AND LOSS ACCOUNT. I N THESE YEARS THE AO HAS ACCEPTED THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE W ITH RESPECT TO TREATMENT OF POST- SALE DISCOUNT. IN THIS CASE IT HAS BEEN ARGUED THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT U/S.145(3). THERE IS NO CHANGE OF FACTS AS FAR AS ACCOUNTING TREATMENT OF DISCOUNT IS CONCERNED. ACCORDINGLY, RELIANCE WAS PL ACED ON THE DECISION OF THE APEX COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT (19 3 ITR 321), WHEREIN IT OBSERVED S FOLLOWS: WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLE NGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE C HANGED IN A SUBSEQUENT YEAR. IT WAS ALSO SUBMITTED THAT ON SAME SET OF FACTS THA T THE ORDER PASSED U/S.263 BY THE CIT IN A.YR. 2011-12 HAS BEEN SET ASIDE BY THE HON' BLE ITAT. TRADE DISCOUNT IS OFFERED UPFRONT ON SALES. I HAVE GONE THROUGH THE SAMPLE BILL SUBMITTED BY THE A/R OF THE ASSESSEE, IN THE CASE O F EASTERN TYRE CORPORATION,, WHEREIN THE INVOICE AMOUNT IS RS.416680/- ON WHICH TRADE DISCOUNT IS R.140/- AND THEREFORE THE NET PRODUCT VALUE BILLEEDIS RS.41540/ -. THEREAFTER, VAT OF 12.5% HAS BEEN LEVIED AND THE NET INVOICE VALUE IS RS.46733/- . THE OTHER DISCOUNTS ARE NOT NETTED OFF AGAINST SALES AND ARE DEBITED SEPARATELY IN THE P/L ACCOUNT. LIKE PROMPT PAYMENT DISCOUNT OF 0.5% IS OFFERED BY THE ASSESSEE TO ITS CUSTOMER IF THE PAYMENT IS REALIZED WITHIN 30-32 DAYS. TURNOVER DISCOU9NTOF 1. 5% IS OFFERED IF THE DEALER OF THE ASSESSEE EXCEED THE NET BILLING LIMIT BY 3-4 TIMES. MOREOVER, ON IDENTICAL FACTS THE CLAIM OF THE ASSESSEE IN THE A.YR. 2005-06 TO 2007- 08 IN SCRUTINY ASSESSMENTS PASSED UNDER SECTION 143(3). THE AO HAS NOT BROUGHT ANY NEW MATERIAL FACTS ON RECORD WHICH WOULD NECESSITATE A CHANGE IN THE STAN D TAKEN AS REGARD THE ACCOUNTING METHOD WITH RESPECT TO TREATMENT OF POST-SALE DISCO UNTS EARLIER ACCEPTED BY THE DEPARTMENT. THIS ACCOUNTING METHOD HAS BEEN CONTINU OUSLY FOLLOWED BY THE ASSESSEE AND ACCEPTED BY THE DEPARTMENT IN SCRUTINY ASSESSMENTS. RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT IN RADHASO AMI SATSANG (SUPRA) I AM OF THE OPINION THAT THE AO HAS TAKEN AN ENTIRELY CONTRARY STAND IN THIS YEAR ON THE TREATMENT OF POST-SALE DISCOUNTS WHICH IS NOT SUPPORTED BY AN Y CHANGE IN MATERIAL FACTS WHICH IS NOT CORRECT. ACCORDINGLY, THE DISALLOWANCE IS HE REBY DELETED. ITA NO.1781/KOL/2017 A.Y. 2008-0 9 DCIT, CIR-5(1), KOL. VS. M/S KESO RAM INDUSTRIES LTD. PAGE 3 3. LEARNED CIT-DR VEHEMENTLY CONTENDS THAT CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE IMPUGNED DISCOUNT AND BROKERAGE DISALLOWANCE. WE INVITED HIS ATTENTION TO THE FACT THAT THIS TRIBUNAL HAS ALREADY REVERSED THE CITS ACTION IN ASSESSMENT YEAR 2011-1 2 SEEKING TO DISALLOW THE VERY CLAIM IN SEC. 263 PROCEEDINGS. LEARNED CO-ORDI NATE BENCHS ORDER TO THIS EFFECT IN ITA NO.1189/KOL/2016 DECIDED ON 04.11.2016. FORMS PART OFSERVED BEFORE US. WE ARE INFORMED THAT REVENUES APPEAL AG AINST THE SAME IS PENDING BEFORE HON'BLE JURISDICTIONAL HIGH COURT. T HERE IS NO DISTINCTION ON FACTS OR LAW POINTED OUT AT EITHER PARTIES BEHEST IN THE SE TWO ASSESSMENT YEARS QUA THE IMPUGNED IDENTICAL ISSUE. WE THEREFORE ADOPT JU DICIAL CONSISTENCY IN THIS FACTS AND CIRCUMSTANCES TO AFFIRM THE CIT(A)S FIND INGS UNDER CHALLENGE DELETING DISCOUNT AND BROKERAGE DISALLOWANCE OF 21,83,16,311/-. 4. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 30/11/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 30 / 11 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIR-5(1), P-7, CHOWRINGHEE SQUARE, KOLKATA-69 2. /RESPONDENT-M/S KESORAM INDUSTRIES LTD. 9/1, R.N.MU KHERJEE, KOLKATA-001 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,