DCIT, Circle-8, Kolkata, Kolkata V. M/s Five Stein India Projects Pvt. Ltd., Kolkata

ITA 1855/KOL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1073 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHOWNGTHU

Judgement Text

M/S FIVE STEIN INDIA PROJECTS PVT. LTD. I.T.A NO.1855/KOL/2014 ASSESSMENT YEAR:2010-11 PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NO.1855/KOL/2014 (ASSESSMENT YEAR: 2010-11) DCIT-CIR-8, KOLKATA APPELLANT VS M/S FIVE STEIN INDIA PROJECTS PVT. LTD. RESPONDENT PAN:[AADCS 7768 M] FOR THE APPELLANT : SHRI DAVID Z. CHOWNGTHU, ADDL. CIT(DR) FOR THE RESPONDENT : SHRI ANUP SINHA, ADVOCATE DATE OF HEARING : 21.09.2017 DATE OF PRONOUNCEMENT: 08.11.2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL FILED BY REVENUE IS ARISING OUT OF ORDER DATED 25.07.2014 OF COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA FOR THE ASSESSMENT YEAR 2010-11. 2. THE ONLY ISSUE IS TO BE DECIDED IS AS TO WHETHER THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.1,22,17,558/- ON ACCOUNT OF COMMISSION PAID TO M/S. SUNSHINE COMMOTRADE PVT. LTD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE LD. CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271A. 3. THE LD. A/R SUBMITS THAT THE ISSUE RAISED BY THE REVENUE IS COVERED IN FAVOUR OF THE ASSESSEE BY AN ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2009-10 AND THE SAME WAS PLACED ON M/S FIVE STEIN INDIA PROJECTS PVT. LTD. I.T.A NO.1855/KOL/2014 ASSESSMENT YEAR:2010-11 PAGE | 2 RECORD AND REFERRED TO PARA NO.4 OF THE SAID ORDER AND ARGUED THAT THE TRIBUNAL CONSIDERING THE AGREEMENT ENTERED BETWEEN THE ASSESSEE AND M/S. SUNSHINE COMMOTRADE PVT. LTD. AND REMAND REPORT OF THE AO HELD THAT BY VIRTUE OF THE SAID AGREEMENT, THE COMMISSION PAID TO SAID M/S. SUNSHINE COMMOTRADE PVT. LTD. WAS ALLOWED AS DEDUCTION IN THE EARLIER YEARS BY THE APPELLANT-REVENUE. THE LD. DR COULD NOT CONTROVERT THE SAME. 4. HEARD BOTH SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE NOTE THAT AS RIGHTLY POINTED OUT BY THE LD. AR, THE TRIBUNAL IN ASSESSEES OWN CASE DECIDED THE SAME ISSUE AND DELETED THE ADDITION MADE ON ACCOUNT OF COMMISSION PAYMENTS FOR A.Y 2009-10. THE RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER COMMISSION PAID TO SUNSHINE COMMOTRADE PVT LTD AMOUNTING TO RS.40,82,939/- COULD BE DISALLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS ISSUE IS ALSO INTERLINKED WITH THE GROUND NO.4 RAISED BY THE REVENUE. THE GROUND NO.2 AND 4 RAISED BY THE REVENUE BEFORE US ARE AS BELOW:- 2. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN HOLDING THAT THE AO HAS ERRED IN DISALLOWING THE COMMISSION PAID TO M/S. SUNSHINE COMMOTRADE PVT. LTD. AMOUNTING RS.40,82,939/-. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS VIOLATED RULE 46A BY NOT AFFORDING THE AO TO GIVE HIS COMMENTS ON THE FRESH EVIDENCES OR COUNTER THE SAME BEFORE DELETING THE DISALLOWANCE U/S 40(A)(IA) OF RS.46,56,333/-. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH SUNSHINE COMMOTRADE PVT LTD WHEREIN THE SAID PARTY WOULD RENDER CERTAIN SERVICES TO THE ASSSESSEE IN CONSIDERATION OF 2% COMMISSION ON TOTAL VALUE OF CONTRACT. THE ASSESSEE DEBITED A SUM OF RS. 87,39,272/- AS EXPENDITURE INCURRED TOWARDS COMMISSION PAID TO SUNSHINE COMMOTRADE PVT LTD BY ACCOUNT PAYEE CHEQUES. ACCORDING TO LEARNED AO, THE SAID PARTY IS A RELATED CONCERN OF THE ASSESSEE COMPANY AND NO DETAILS REGARDING THE NATURE OF SERVICES RENDERED BY THE SAID CONCERN WAS PRODUCED BEFORE HIM. IT WAS ALSO SEEN BY THE LEARNED AO THAT ASSESSEE ITSELF HAD DISALLOWED A SUM OF RS. 46,56,633/- U/S 40(A)(IA) OF THE ACT IN ITS RETURN OF INCOME. ACCORDING TO LEARNED AO, SINCE THE COMMISSION PAYMENTS WERE MADE TO SISTER CONCERN OF THE ASSESSEE AND NO DETAILS REGARDING NATURE OF SERVICES RENDERED BY THE SAID CONCERN WAS MADE AVAILABLE BEFORE HIM AND WHETHER THE COMMISSION PAID TO SISTER CONCERN IS EXCESSIVE OR UNREASONABLE OR NOT COULD NOT BE VERIFIED. ACCORDINGLY HE SOUGHT TO DISALLOW THE SUM OF RS. 40,82,939/- TOWARDS COMMISSION PAYMENT. 4.2. ON FIRST APPEAL, THE ASSESSEE PLACED THE COPY OF THE AGREEMENT ENTERED INTO WITH SUNSHINE COMMOTRADE PVT LTD AND ALSO ELABORATED THE VARIOUS SERVICES RENDERED BY THE SAID PARTY TO THE ASSESSEE. THE ASSESSEE PLEADED THAT THE SERVICES PROVIDED BY SUNSHINE COMMOTRADE PVT LTD INTER ALIA INCLUDED THE FOLLOWING ACTIVITIES:- (I) ENTERING INTO BUSINESS RELATIONSHIPS WITH CUSTOMERS IN RELATION TO SALE OF THE PRODUCTS OF THE ASSESSEE. M/S FIVE STEIN INDIA PROJECTS PVT. LTD. I.T.A NO.1855/KOL/2014 ASSESSMENT YEAR:2010-11 PAGE | 3 (II) GETTING INVOLVED INTO THE PROJECTS RELATING TO THE PRODUCTS OF THE ASSESSEE IN VARIOUS MATTERS (III) SECURING CONTRACTS FROM CUSTOMERS IN RELATION TO THE PRODUCTS OF THE ASSESSEE. IT WAS ALSO PLEADED BEFORE THE LEARNED CITA THAT SUNSHINE COMMOTRADE PVT LTD ASSISTED THE ASSESSEE TO BID FOR AND NEGOTIATE CONTRACTS WITH VARIOUS PARTIES , AND ON THE BASIS OF SUCH CONTRACTS THE ASSESSEE COMPANYS BUSINESS WAS SURVIVING. THE SAID CONCERN HAD THE REQUISITE KNOWLEDGE, EXPERIENCE AND EXPERTISE THAT ENABLED THE ASSESSEE TO PROMOTE ITS BUSINESS. THE ASSESSEE ALSO FILED BEFORE THE LEARNED CIT(A) A DECLARATION FROM ITS MANAGING DIRECTOR THAT THE SAID PARTY SUNSHINE COMMOTRADE PVT LTD IS NOT A RELATED CONCERN OF THE ASSESSEE. THE LEARNED CIT(A) SOUGHT FOR A REMAND REPORT FROM THE LEARNED AO. BEFORE THE LEARNED AO, THE CONCERNED PARTY I.E SUNSHINE COMMOTRADE PVT LTD ALSO CONFIRMED VIDE THEIR LETTER DATED 19.7.2012 THAT THEY ARE NOT RELATED TO THE ASSESSEE. IT WAS ALSO PLEADED BEFORE THE LEARNED CITA THAT THE ASSESSEE HAS BEEN PAYING COMMISSION BY VIRTUE OF DULY EXECUTED AGREEMENT FOR A LONG TIME AND IN ALL THE PREVIOUS ASSESSMENT YEARS, THE PREVIOUS ASSESSING OFFICERS HAVE ALLOWED THE SAME AS DEDUCTION. THE LEARNED CIT(A) RELYING ON ALL THESE SUBMISSIONS AND EVIDENCES, DELETED THE ADDITION. 5. IN VIEW OF THE SAME FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 2009-10, WE DELETE THE IMPUGNED ADDITION MADE ON ACCOUNT OF COMMISSION PAYMENT AND THE IMPUGNED ORDER OF CIT(A) IS SET ASIDE. THUS, GROUND RAISED BY THE REVENUE IN THIS REGARD IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.11.2017. SD/- SD/- J. SUDHAKAR REDDY S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 08.11.2017 PLACE : KOLKATA RS (SPS) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT DCIT, CIRCLE - 8, KOLKATA , AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQ., KOLKATA 700 069. 2 RESPONDENT M/S. FIVE STEIN INDIA PROJECTS P VT. LTD. , KANAK BUILDING, 4 TH FLOOR, 41 J. L. NEHRU ROAD, KOLKATA 700 071. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA //TRUE COPY// BY ORDER, SR.PS/H.O.O ITAT, KOLKATA