The Dy. Commissioner of Income Tax, Circle-2(1)(1), Ahmedabad V. M/s. Inder Hotels Pvt. Ltd., Ahmedabad

ITA 1852/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8131 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: P D SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA.NO.1852/AHD/2016 / ASSTT. YEAR: 2012-2013 DCIT, CIR.2(2)(1) AHMEDABAD. VS INDER HOTELS P.LTD. 578/5, OPP: GUJARAT COLLEGE ELLISBRIDGE AHMEDABAD 380 009. PAN : AAACI 3674 H ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI SAURABH SINGH, SR.DR ASSESSEE BY : SHRI P.D. SHAH, AR / DATE OF HEARING : 09/04/2018 / DATE OF PRONOUNCEMENT: 04/06/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF LD.CIT(A)-2, AHMEDABAD DATED 26.4.2016 PASSED FOR THE ASSTT.YEAR 2012-13. 2. IN THE FIRST GROUND OF APPEAL, REVENUE HAS PLEAD ED THAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.11,07,231/- WH ICH WAS ADDED BY THE AO WITH HELP OF SECTION 14A OF THE INCOME TAX ACT, 196 1. 3. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE HAS DIVIDEND INCOME OF RS.828/-. THE LD.CIT(A) AFTER PUTTING RELIANCE UPO N THE FOLLOWING DECISIONS RESTRICTED THE ADDITION TO THE EXTENT OF DIVIDEND I NCOME: ITA NO.1852/AHD/2015 2 I) M/S.SHREE LAXMI BIDI TRADING CO. VS. DCIT, CO NO.31 5 & 316/AHD/2014 DTD. 30.3.2015; II) JIVRAJ TEA LTD. VS. DCIT, ITA NO.866/AHD/2012 DATED 28.8.2014; III) MADHUSUDAN INDUSTRIES LTD. VS. ITO, ITA NO.1715/AHD /2011 DATED 13.2.2015 4. AFTER TAKING INTO CONSIDERATION THE ORDER OF THE LD.CIT(A), WE DO NOT FIND ANY ERROR IN IT, BECAUSE THE ASSESSEE HAS A ME AGER TAX FREE INCOME OF RS.828/-. IN THESE ORDERS REFERRED BY THE LD.CIT(A ), IT HAS BEEN HELD THAT DISALLOWANCE CANNOT EXCEED THE EXEMPT INCOME. THER EFORE, THIS GROUND OF APPEAL IS REJECTED. 5. IN GROUND NO.2 THE GRIEVANCE OF THE REVENUE IS T HAT THE LD.CIT(A) HAS ERRED IN DELETING ADDITION OF RS.27,12,708/- 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY AT THE RELEVANT TIME WAS RUNNING A HOTEL. IT HAS FILED ITS RETURN OF INCOME ELECTRONICALLY ON 22.9.2012 DECLARING TOTAL INCOME AT RS.43,71,580/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE-C OMPANY HAS DEBITED AN AMOUNT OF RS.27,12,708/- AS COMMISSION. VIDE POINT NO.6 OF QUESTIONNAIRE ISSUED UNDER SECTION 142(1), THE AO HAS DIRECTED TH E ASSESSEE TO FURNISH DETAILS DEMONSTRATING SERVICES RENDERED BY THE COMM ISSION AGENT AND JUSTIFY THE PAYMENT. ACCORDING TO THE ASSESSEE, IT HAS FIL ED NECESSARY DETAILS, BUT THE LD.AO OBSERVED THAT THE ASSESSEE FAILED TO GIVE COM PLETE DETAILS. HE ACCORDINGLY DISALLOWED THE COMMISSION. 7. ON APPEAL, THE LD.CIT(A) DELETED THE DISALLOWANC E BY OBSERVING AS UNDER: 3.5 WITH REGARD TO THE ISSUE OF COMMISSION PAYMENT , THE AO HAS MADE THE DISALLOWANCE OF THE COMMISSION ON SALE OF RS.27 ,12,708/- FOR THE ITA NO.1852/AHD/2015 3 REASON APPELLANT HAS FAILED TO PROVE THE GENUINENES S OF THE EXPENDITURE AND ALSO FAILED TO PROVE THAT IT WAS INCURRED FOR T HE PURPOSE OF BUSINESS ONLY AND IN FACT THE EXPENDITURE WAS INCURRED BY TH E APPELLANT. 3.5.1. ON THE OTHER SIDE, THE APPELLANT HAS SUBMITT ED THAT IT HAS SUBMITTED THE DETAILS OF THE COMMISSION EXPENSES AN D THE AGENTS TO WHOM IT WAS PAID. IT HAS ALSO FILED THE COPIES OF T HE CREDIT NOTES ALONG WITH NATURE OF SERVICES RENDERED BY THE AGENTS MENT IONED THEREIN THROUGH THE LETTER DATED 04/03/2015. IT WAS ALSO SU BMITTED THAT BEING THE NATURE OF BUSINESS, THE BOOKINGS ARE MADE THROU GH THE AGENTS AND THE COMMISSION IS PAID TO THEM ON THE BASIS OF THE BUSINESS PROCURED BY THEM. IT HAS ALSO BEEN NOTICED IN THE EARLIER YEARS THAT THE COMMISSION PAYMENTS HAVE BEEN MADE TO THE AGENTS AND NO SUCH D ISALLOWANCE IN THE ORDER PASSED U/S. 143(3) OF THE ACT HAS BEEN MA DE. EVEN IN THE ASSESSMENT COMPLETED IN APPELLANT'S CASE FOR A. Y. 2013-14, NO DISALLOWANCE OF COMMISSION HAS BEEN MADE. THE APPEL LANT ALSO SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 194 H, THE TDS ON THE COMMISSION PAYMENTS HAVE BEEN MADE AND SUCH TDS HAS BEEN DEPOSITED IN THE GOVERNMENT ACCOUNT WHICH WAS EVIDE NT FROM THE COPIES OF THE CHALLAN SUBMITTED. 3.5.2. HAVING CONSIDERED THE FACTS AND SUBMISSION, IT HAS BEEN NOTICED THAT THE APPELLANT IS ENGAGED IN THE HOTEL BUSINESS AND HAS PROCURED THE BUSINESS THROUGH THE AGENTS AS PER THE TRADITION OF THIS LINE OF BUSINESS. ACCORDINGLY, IN THE PRECEDING YEARS ALSO, THE COMMI SSION PAYMENTS HAVE BEEN MADE. FURTHER, THE APPELLANT HAS MADE THE TDS ON THE COMMISSION PAYMENTS AND THE SAME HAVE BEEN DEPOSITE D IN THE GOVERNMENT ACCOUNTS. IN SUPPORT, THE APPELLANT HAS SUBMITTED THE CREDIT NOTE COPIES AND DETAILS OF THE COMMISSION AG ENTS. FURTHER, THE PAYMENT OF COMMISSION HAS BEEN MADE THROUGH BANKING CHANNELS WHICH HAS NOT BEEN DISPUTED. NOTHING HAS BEEN BROUG HT BY THE AO ON RECORD TO SHOW THAT EITHER THE COMMISSION AGENTS WE RE NOT EXISTED OR THEY DID NOT PROVIDE ANY SERVICES TO THE APPELLANT. IN FACT, THE DETAILS OF THE BUSINESS PROCURED BY THE AGENTS ARE NOTED IN TH E CREDIT NOTES FOR WHICH COMMISSION HAS BEEN PAID. SINCE THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES AND THERE WAS NO EVID ENCE TO SHOW THAT THE SAME HAS CAME BACK TO THE APPELLANT IN CASH FRO M THE AGENTS, THEREFORE, THE CLAIM OF COMMISSION CANNOT BE SAID T O IN-GENUINE. THUS, THE DISALLOWANCE OF THE COMMISSION MADE BY THE AO I S FOUND NOT CORRECT, AND HENCE, THE SAME IS DELETED. ITA NO.1852/AHD/2015 4 8. THE LD.DR RELIED UPON THE ORDER OF THE AO AND SU BMITTED THAT THE ASSESSEE FAILED TO BRING ANY EVIDENCE DEMONSTRATING SERVICES RENDERED BY THE ALLEGED COMMISSION AGENT. ON THE OTHER HAND, THE L D.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS COMPILED DETAILS IN TABULAR FORM WHICH WAS SUBMITTED TO THE AO VIDE ANNEXURE-C. IN THE DETAIL S, THE ASSESSEE HAS PRODUCED CREDIT NOTES ISSUED IN FAVOUR OF THE COMMI SSION AGENT. IN THE CREDIT NOTE, THE ASSESSEE HAS DISCLOSED REASON FOR PAYMENT OF COMMISSION. COMMISSION WAS PAID TO THE AGENTS FOR PROVIDING BUS INESS. COMPLETE DETAILS OF SUCH TRANSACTIONS HAVE BEEN SUBMITTED BY THE AO. IT CONTAINED INVOICE NUMBER, DATE, AMOUNT OF BUSINESS GIVEN BY THE CONCE RNED AGENT. SUCH DETAILS HAVE BEEN PLACED ON THE PAPER BOOK FROM PAGES 11 TO 19. 9. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. BEFORE EVALUATING THE EVIDENCE SUBMITTED B Y THE ASSESSEE, WE HAVE TO BEAR IN MIND THE NATURE OF BUSINESS CARRIED OUT BY THE ASSESSEE. IT IS IN THE HOTEL BUSINESS, WHICH IS DEPENDED UPON CERTAIN AGEN TS, WHO SEND GUEST TO IT. ACCORDING TO THE ASSESSEE, THESE AGENTS USED TO REC OMMEND THE HOTEL TO THE GUEST. IN OTHER WORDS, THEY WERE PROVIDING THE BUS INESS TO THE ASSESSEE AND IN LIEU OF THAT BUSINESS, IT IS PAYING COMMISSION. TH E AO DID NOT CONDUCT ANY INQUIRY EITHER FROM THE COMMISSION AGENT, WHETHER T HEY HAVE EVER PROVIDED BUSINESS OR NOT FROM THE ASSESSEE-COMPANY. HE SIMP LY OBSERVED THAT THE ASSESSEE HAS SUBMITTED THAT THESE PERSONS DO NOT FA LL WITHIN THE AMBIT OF SECTION 40A(2)(B) OF THE ACT, AND THEY ARE PERSONS ASSOCIATED WITH ADMINISTRATION OF ASSESSEE-COMPANY. THAT WAS ONE O F THE CONTENTIONS OF THE ASSESSEE. APART FROM THAT , IT HAS SUBMITTED COPIE S OF CREDIT-NOTES AND DETAILS OF PAYMENT. IT HAS ALLEGED THAT THEY HAVE PROVIDED BUSINESS TO THE ASSESSEE. NOW IT WAS FOR THE AO TO CONDUCT SOME SORTS OF INQU IRY, IF HE HAS ANY DOUBT. HE HAS NOT CONDUCTED ANY INQUIRY ON THESE DETAILS. THE LD.CIT(A) HAS ITA NO.1852/AHD/2015 5 APPRECIATED THESE ASPECTS, AND THEREAFTER DELETED T HE ADDITION. AFTER GOING THROUGH THE ORDER OF THE LD.CIT(A), WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 4 TH JUNE, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER