The ACIT.Circle-8, Ahmedabad V. M/s. Yudo Hot Runner (India) Ltd., Ahmedabad

ITA 1893/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1961 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-06-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: G C PIPARA
• Keywords: Gift; Business income; Opportunity of being heard
• Section: 43B; 143(3); 131; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1893/AHD/2009 A. Y.: 2006-07 THE A. C. I. T., CIRCLE-8, 4 TH FLOOR, AJANTA COMMERCIAL CENTRE, A WING, ASHRAM ROAD, AHMEDABAD VS YUDO HOT RUNNER (INDIA) LTD., FLAT NO.A/402, SHRINAND NAGAR-II, VEJALPUR, AHMEDABAD PA NO. AAACY 1304R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. K. MISHRA, SR. DR RESPONDENT BY SHRI G. C. PIPARA, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER OF THE LEARNED CIT(A)-XIV, A HMEDABAD DATED 30 TH MARCH, 2009 FOR ASSESSMENT YEAR 2006-07. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES AND CONSIDE RED THE MATERIAL AVAILABLE ON RECORD. 3. GROUNDS NO.1, THE REVENUE CHALLENGED THE DELETIO N OF ADDITION OF COMMISSION EXPENSES OF RS.50,35,025/-. IT WAS NO TICED BY THE AO THAT THE ASSESSEE HAS CLAIMED COMMISSION EXPENSES O F RS.50,35,025/-. WHEN ASKED TO FURNISH DETAILS OF TH E SAME, THE ASSESSEE REPLIED THAT IT HAS PAID COMMISSION TO THR EE PARTIES, (1) M/S. TORAN TRADERS OF RS.14,98,998/-, (2) M/S. PRITHVI C ORPORATION OF ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 2 RS.34,73,415/- AND (3) MR. A. S. RAO OF RS.62,162/- , IN SUPPORT OF WHICH THE ASSESSEE FURNISHED COPIES OF ACCOUNTS AND COPIES OF DEBIT NOTES STATED TO HAVE BEEN ISSUED BY THE PARTIES AT SR. NO.1 AND 2 ABOVE. IN ORDER TO VERIFY THE GENUINENESS OF THE CL AIM, SUMMONS U/S 131 OF THE IT ACT WERE ISSUED TO THESE PARTIES ON T HE ADDRESSES GIVEN, BUT THE INSPECTOR COULD NOT SERVE THE SAME A S THE PARTIES WERE NOT TRACEABLE. EVEN THE SUMMONS SENT THROUGH POSTAL DEPARTMENT RETURNED WITH REMARK NOT FOUND AND NOT KNOWN. THE REAFTER, THE ASSESSEE WAS ASKED TO PRODUCE THESE PARTIES VIDE NO TICE DATED 24- 11-2008 AND THE LEARNED COUNSEL FOR THE ASSESSEE FU RNISHED A COPY OF CONFIRMATION AND COPY OF ACKNOWLEDGMENT OF RETUR N OF INCOME OF ONE SHRI PRABHUDAS WAGHELA, PROPRIETOR OF M/S. PRIT HVI CORPORATION AND FURTHER FILED A CONFIRMATION LETTER AND COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME OF ASHOK SHAH, PROPRIETOR OF M/S. TORAN TRADING. THE AO FURTHER ASKED THE ASSESSEE TO PRODUCE THE DE TAILS OF THE PARTIES IN RESPECT OF WHOM COMMISSION OF RS.50,00,0 00/- WAS PAID AND THE DETAILS OF NATURE OF SERVICES RENDERED BY T HEM. AS PER THE ORDER SHEET ENTRY MADE BY THE AO ON 8-12-2008, THE LEARNED COUNSEL FOR THE ASSESSEE STATED BEFORE THE AO THAT THESE TW O PERSONS I. E. SHRI PRABHUDAS WAGHELA, PROPRIETOR OF M/S. PRITHVI CORPORATION AND ASHOK SHAH, PROPRIETOR OF TORAN TRADING TO WHOM COM MISSION HAS BEEN PAID HAVE HELPED THE ASSESSEE COMPANY IN PROCU RING ORDERS AND IN SPITE OF HIS REQUEST SHRI PRABHUDAS WAGHELA AND SHRI ASHOK SHAH HAVE REFUSED TO ATTEND AND HE EXPRESSED HIS IN ABILITY TO PRODUCE THEM FOR VERIFICATION. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO STATED THAT THE APPELLANT HAS NO FURTHER DETAI LS/DOCUMENTS OTHER THAN THOSE PRODUCED TILL DATE. IN VIEW OF THE ABOVE FACTS AND ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 3 CIRCUMSTANCES THE AO OBSERVED THAT THE PAYMENT OF C OMMISSION TO THE ABOVE PERSONS REMAINED TO BE PROVED, AS THE ASS ESSEE FAILED TO PRODUCE THE DETAILS AND THE NATURE OF SERVICES REND ERED. THE AO FURTHER OBSERVED THAT MERELY PROVIDING THE CONFIRMA TION AND COPIES OF ACKNOWLEDGEMENT OF RETURNS OF INCOME TO WHOM SUCH P AYMENT WAS CLAIMED TO HAVE BEEN MADE DO NOT ITSELF PROVE THE G ENUINENESS OF THE EXPENDITURE. THE AO FURTHER OBSERVED THAT THE ASSES SEE IS ACTING AS AN INDENTING AGENT OF THE YUDO CO. LTD., KOREA AND HAS RECEIVED COMMISSION ON SALES MADE DIRECTLY BY THE SAID KOREA N COMPANY TO ITS INDIAN CUSTOMERS AND THE ASSESSEE PASSED ON THE COMMISSION TO THESE PERSONS IN TURN, THE CUSTOMERS OF PARENT COMP ANY ARE MAINLY BIG MNCS LIKE GILLETTE INDIA AND IN THE ABSENCE OF WORK DETAILS OF SO CALLED AGENTS, THEIR QUALIFICATION, THEIR COMPETENC E TO DEAL WITH BIG CORPORATIONS, THEIR KNOWLEDGE REGARDING THE PRODUCT S ETC., THE SERVICES RENDERED BY THEM WERE NOT PROVED. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LAKSHMI NARAYAN COTTON MILLS CO. LTD. VS CIT 73 ITR 634 THE AO HELD THAT T HE BURDEN OF PROVING THAT SERVICES WERE RENDERED WAS ON THE ASSE SSEE WHICH THE ASSESSEE TOTALLY FAILED TO DISCHARGE. FURTHER, THE SUMMONS COULD NOT BE SERVED ON THE PARTIES AND THE ASSESSEE DID NOT P RODUCE THESE PARTIES NOR THE ASSESSEE FURNISHED THE INFORMATION/ DETAILS REQUIRED FROM TIME TO TIME. THEREFORE, THE AO HELD THAT THE COMMISSION PAYMENT WAS NOT GENUINE AND DISALLOWED THE SAME. 4. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A) AND IT WAS SUBMITTED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF HOT RUNNER SYSTEM, TUB E HEATERS, ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 4 TEMPERATURE CONTROLLERS ETC., AND IS ALSO WORKING A S INDENTING AGENTS FOR INDIA IN RESPECT OF PRODUCTS MANUFACTURE D BY ITS PARENT COMPANY YUDO COMPANY LTD., KOREA AND DURING THE YEA R UNDER CONSIDERATION, IT HAS RECEIVED A COMMISSION OF RS.2 ,05,22,549/- ON ACCOUNT SALES MADE TO VARIOUS PARTIES. IN ORDER TO RENDER THE SAID SERVICES OF SALES TO LOCAL COMPANIES IN INDIA, THE ASSESSEE HAS APPOINTED M/S. TORAN TRADERS AND M/S. PRITHVI CORPO RATION AS COMMISSION AGENTS FOR WHICH THEY HAVE BEEN PAID COM MISSION OF RS.14,98,998/- AND RS.34,73,415/- RESPECTIVELY. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FURNISHED THE DETAILS OF PAYM ENTS MADE TO THESE PARTIES. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN BOTH CASE, THE APPELLANT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED CONFIRMATION OF BO TH THE PARTIES ALONG WITH COPY OF ACKNOWLEDGEMENT OF RETURN OF INC OME OF THE PROPERTIES OF THE TWO CONCERNS. THE ASSESSEE HAS ST ATED THAT THESE TWO PERSONS HAVE HELPED THE COMPANY TO PRODUCE THE ORDERS AND THE COPY OF PAN ISSUED TO M/S. PRITHVI CORPORATION WAS ALSO SUBMITTED AND THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT IT IS INCORRECT TO SAY THAT THE ASSESSEE HAS FAILED TO PR ODUCE DETAILS AND NATURE OF SERVICES RENDERED BY THESE PARTIES. IN FA CT, THE ASSESSEE HAS FILED ALL THE DETAILS AS CONTAINED IN THE CONFI RMATION LETTERS AND OTHER DETAILS DURING THE COURSE OF ASSESSMENT PROCE EDINGS. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE PARTIES ARE IN EXISTENCE AND ARE ASSESSED TO INCOME TAX AND IN VIEW OF THE DOCUMENTARY EVIDENCES FURNISHED, SUCH AS CONFIRMATI ON OF THE AGENT ALONG WITH PAN, COPY OF ACCOUNT DULY CONFIRMED, COP Y OF PAN CARD, COPY OF ACKNOWLEDGMENT OF RETURN, COPY OF DEBIT NOT E, DETAILS OF ORDER ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 5 PROCURED GIVING DESCRIPTION OF THE ITEMS PROCURED, ORDER DATE AND THE AMOUNT IN US DOLLAR FOR WHICH ORDER HAS BEEN PROCUR ED BY THE COMMISSION AGENTS FOR THE COMPANY, IT WAS SUBMITTED THAT IT WAS CLEAR THAT AT THE GIVEN ADDRESS IN THE CONFIRMATION , THESE 2 PARTIES WERE IN EXISTENCE AND THERE WAS NO DOUBT THAT THE S ERVICES RENDERED BY THEM. IT WAS ALSO SUBMITTED THAT ON THE ENTIRE A MOUNT OF COMMISSION PAID BY THE COMPANY TDS AT THE APPLICABL E RATE HAS BEEN DEDUCTED AND ONLY AFTER DEDUCTION OF TDS, THE BALANCE AMOUNT HAS BEEN PAID TO THE COMMISSION AGENTS. THIS FACT W AS CLEAR FROM THE COPIES OF ACCOUNT AS SUBMITTED BY THE COMMISSION AG ENTS TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ALONG WITH THE CONFIRMATION. IT WAS FURTHER SUBMITTED THAT ALONG W ITH THE SAID CONFIRMATION, THE DETAILS OF SALES MADE BY THESE CO MMISSION AGENTS FOR WHICH COMMISSION HAS BEEN PAID WERE ALSO SUBMIT TED WHICH CONTAINS THE DESCRIPTION OF THE ORDER, DATE OF ORDE R AND AMOUNT OF SALES IN US DOLLAR. THE SAID DETAILS OF SALES ARE D ULY SIGNED BY THE COMMISSION AGENTS. THEREFORE, IT WAS CONTENDED THAT IN VIEW OF COMPLETE DETAILS AS TO THE SERVICES RENDERED, THEIR INCOME-TAX PAN AND CONFIRMATION, IT IS ABSOLUTELY CLEAR THAT THE S AID EXPENDITURE HAS BEEN INCURRED BY THE COMPANY FOR THE PURPOSE OF BUS INESS WHICH IS IN THE NORMAL COURSE OF BUSINESS AND THEREFORE, THE AO HAS ERRED IN DISALLOWING RS.50,35,025/- CLAIMED BY THE ASSESSEE. IT WAS ARGUED THAT THE DISALLOWANCE IS BASED ON IRRELEVANT AND IM MATERIAL FINDING AND THUS, REQUIRES TO BE CANCELLED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE COMPANY HAS EARNED A COMMISSION OF ABOUT R S.156.00 LACS FROM THE ORDERS WHICH HAVE BEEN PROCURED BY TH ESE TWO COMMISSION AGENTS FOR WHICH A COMMISSION OF RS.49,7 2,413/- HAS ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 6 BEEN PAID BY THE ASSESSEE COMPANY. THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE PARTIES FOR WHICH ORDER S HAVE BEEN PROCURED ARE NEW TO THE COMPANY AND THE BUSINESS HA S BEEN BROUGHT IN BY THESE AGENTS FOR THE FIRST TIME TO THE COMPAN Y, AS A RESULT OF WHICH THE COMPANY HAS EARNED A TOTAL COMMISSION OF RS.2,05,22,549/- AS AGAINST SUCH COMMISSION OF RS.3 2,99,942/- IN THE PROCEEDING YEAR. FURTHER, THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE ASSESSEE EARNED COMMISSION OF AB OUT RS.156.00 LACS FROM THE ORDERS WHICH HAVE BEEN PROCURED BY TH ESE TWO COMMISSION AGENTS FOR WHICH A COMMISSION OF RS.49,7 2,413/- HAS BEEN PAID. THEREFORE, THE ENTIRE COMMISSION WHICH H AS BEEN EARNED BY THE COMPANY OF RS.156.00 LACS IS PERTAINING TO T HE NEW BUSINESS WHICH HAS BEEN BROUGHT IN BY THESE COMMISSION AGENT S AND IT WAS SPECIFICALLY AGREED THAT ON THE BUSINESS BROUGHT IN BY THESE PERSONS, A COMMISSION @ 15% OF THE SALES AMOUNT WOULD BE PAI D. IT WAS FURTHER CLARIFIED THAT AMOUNT OF COMMISSION EARNED BY THE COMPANY FROM ITS PRINCIPAL COMPANY NAMELY YUDO COMPANY LTD. , KOREA IS ABOUT 45 TO 50% OF THE SALES. THE PRODUCT OF THE CO MPANY DID NOT HAVE A READY MARKET AND WITHOUT EFFORTS AND AGGRESS IVE MARKETING IT WAS NOT POSSIBLE TO SELL THE PRODUCTS OF THE COMPAN Y. FOR THE SAID CONTENTION THE ASSESSEE POINTED OUT THAT THE TOTAL SALES MADE BY THE COMPANY ARE ONLY RS.16,59,610/- DURING THE YEAR UND ER CONSIDERATION AS AGAINST SUCH SALES OF RS.25,85,171/- IN THE PREC EDING YEAR. THUS, THE SALES WERE DECREASING AND IT WAS BECAUSE OF THE SALES MADE BY THE COMMISSION AGENTS DURING THE YEAR UNDER CONSIDE RATION, THE COMPANY HAS EARNED A SUBSTANTIAL COMMISSION AS A RE SULT THE COMPANY HAS SURVIVED DURING THE YEAR UNDER CONSIDER ATION. IT WAS ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 7 ALSO SUBMITTED THAT THE COMPANY DID NOT HAVE ANY SA LES PERSONAL OR STAFF LOOKING AFTER THE SALES OF THE COMPANY AND MA JORITY OF THE BUSINESS OF THE COMPANY HAS BEEN CARRIED OUT THROUG H AGENTS ONLY IN THIS YEAR AS WELL AS IN THE SUBSEQUENT YEAR ALSO. I T WAS ALSO FURTHER SUBMITTED THAT THE TOTAL STAFF STRENGTH OF THE COMP ANY FOR THE RELEVANT YEAR WAS ONLY OF SIX PERSONS WHICH INCLUDED ONE CEO -CUM DIRECTOR, ONE MANAGER, ONE ACCOUNTS IN-CHARGE AND THREE LOWER GRADE STAFF BEING OFFICE BOY, OFFICE ASSISTANT AND ASSISTANT EN GINEER. THE ENTIRE SALES OF THE COMPANY AS WELL AS COMMISSION BUSINESS OF THE COMPANY WERE MANAGED AND LOOKED AFTER BY THE COMMIS SION AGENTS AND THREE SENIOR PERSONS NAMELY SHRI VISHAL AGARWAL , DIRECTOR, MR. BALAJI SINGH THAKUR, MANAGER AND GEETA PRABHU, IN-C HARGE ACCOUNTS AND ADMINISTRATION. IT WAS SUBMITTED THAT THE ENTIR E EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND THE S AME IS AN ALLOWABLE DEDUCTION AND THEREFORE, REQUIRES TO BE A LLOWED AS DEDUCTION FROM THE TOTAL INCOME OF THE COMPANY. IT WAS FURTHER SUBMITTED THAT THE AO HAS INCORRECTLY STATED IN PAR A 2.6 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS FAILED TO PR ODUCE THE DETAILS AND NATURE OF SERVICES RENDERED BY THE PERSONS AND THE SAID OBSERVATION IS CONTRARY ALSO AS IMMEDIATELY THE AO IN THE SAID PARA 2.6 HAS STATED THAT MERELY PROVIDING CONFIRMATION A ND COPIES OF ACKNOWLEDGEMENT OF RETURNS OF INCOME OF THE PERSONS DID NOT PROVE THE GENUINENESS OF THE EXPENDITURE. IT WAS SUBMITTE D THAT AMOUNT OF SALES ON WHICH COMMISSION HAS BEEN PAID HAVE ALREAD Y BEEN FURNISHED TO THE AO AND DEBIT NOTES ISSUED BY THESE PARTIES CONTAINED COMPLETE DETAILS IN RESPECT OF WHICH COMMISSION HAS BEEN PAID. THE ONLY LAPSE ON THE PART OF THE ASSESSEE IS THAT THES E TWO PERSONS HAVE ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 8 NOT ATTENDED BEFORE THE AO PURSUANCE TO THE SUMMONS ISSUED TO THEM AND MERELY STATED THAT THESE TWO PERSONS HAVE NOT ATTENDED BEFORE THE AO CANNOT MAKE A GROUND FOR DISALLOWING THE COMMISSION PAID BY THE COMPANY IN VIEW OF THE FACT THAT COMPL ETE DETAILS AND THE AMOUNT OF COMMISSION EARNED BY THE COMPANY AND DETA ILS OF SALES FOR WHICH ORDERS HAVE BEEN PROCURED BY THESE TWO CO MMISSION AGENTS HAVE BEEN FURNISHED TO THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE AO HAS INCORRECTLY STATE D THAT NATURE OF SERVICES RENDERED AND RATE FIXED THEREOF HAVE NOT B EEN SUBMITTED. THE ASSESSEE ALSO RELIED UPON SEVERAL DECISIONS IN SUPPORT OF HIS CONTENTION THAT COMMISSION PAYMENT IS ALLOWABLE DED UCTION WHICH ARE NOTED IN THE IMPUGNED ORDER. 6. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS O F THE ASSESSEE AND EVIDENCES ON RECORD DELETED THE ADDITI ON. HIS FINDINGS IN PARA 3.3 OF THE APPELLATE ORDER ARE REPRODUCED A S UNDER: 3.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS ADVANCED BY THE A. R. OF THE APPELL ANT ALONG WITH THE CASE LAWS RELIED UPON. IT IS SEEN FR OM THE DETAILS FURNISHED BY THE A. R. THAT THE APPELLANT H AS FURNISHED ALL THE DETAILS OF THE PERSONS TO WHOM TH E COMMISSION WAS PAID, SUCH AS DEBIT NOTES, CONFIRMAT ION WITH ALL THE DETAILS, ALONG WITH PAN, COPY OF ACK. OF RETURN, COPY OF DEBIT NOTE, DETAILS OF ORDER PROCUR ED, ORDER DATE AND THE AMOUNT IN US $ ETC. AND HENCE I FIND T HAT THE OBSERVATION MADE BY THE A. O. THAT THE APPELLANT FA ILED TO COMPLY WITH THE SUMMONS AND FURNISH NECESSARY DOCUMENTS, SO AS TO SUBSTANTIATE ITS CLAIM OF HUGE PAYMENT OF COMMISSION AND THE NATURE OF SERVICES RENDERED IS QUITE CONTRARY TO THE FACTS OF THE CASE . IN FACT, ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 9 THE APPELLANT HAS EXPLAINED THE CIRCUMSTANCES UNDER WHICH IT HAD TO PAY THE COMMISSION AND CONSIDERING THE QUANTUM OF AMOUNT RECEIVED FROM KOREAN COMPANY AS WELL AS THE SALES MADE OF THE PRODUCT IN THE INDIAN MARKET, WHICH WAS POSSIBLE BECAUSE OF MARKETING TECHNIQUES AND ACTIVE INVOLVEMENT OF THESE TWO AGEN TS. I AM OF THE VIEW THAT THE PAYMENT OF COMMISSION @ 15% OF SALES MADE, AS AGREED UPON, IS QUITE REASONABLE. FR OM THE DETAILS OF THE SALES MADE BY THE COMMISSION AGE NTS AS ANNEXED TO THE CONFIRMATIONS FILED BY THE COMMIS SION AGENTS TO THE A. O. IT IS SEEN THAT COMPLETE DETAIL S OF THE SALES AS MADE BY THE COMMISSION AGENT HAVE BEEN GIV EN SUCH AS NAME OF THE ITEM, ORDER DATE AND AMOUNT IN US DOLLARS. ACCORDINGLY, M/S. TORAN TRADING HAS PROCUR ED SALES ORDER OF US $ 222074 ON WHICH COMMISSION OF RS.14,98,998/- HAS BEEN PAID BY THE COMPANY. THE APPROXIMATE VALUE OF THE SALES OF US $ 222074 COMES TO ABOUT RS.94.98 LACS. SIMILARLY, IN CASE OF M/S. PRI THVI CORPORATION, AS PER ANNEXURE WHICH IS PLACED ON PAG E-41 OF THE PAPER BOOK, WHICH IS ANNEXED TO DEBIT NOTE, FILED TO A. O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, COMPLETE DETAILS OF ORDERS PROCURED HAVE BEEN GIVEN ALONG WITH ORDER DATE, AMOUNT IN US DOLLARS. ACCORD INGLY, TOTAL ORDERS PROCURED ARE OF US $ 514580 EQUIVALENT TO INDIAN RUPEES OF RS.2,31,56,100/- ON WHICH COMMISSI ON @ 15% AMOUNTING TO RS.34,73,416/- HAS BEEN PAID BY THE COMPANY AS PER DEBIT NOTE DATED 31/3/2006 RAISE D BY M/S. PRITHVI CORPORATION. THE CORRESPONDING AMOUNT OF COMMISSION EARNED BY THE COMPANY IS RS.46,63,755/- AGAINST THE COMMISSION PAID TO M/S. TORAN TRADING O F RS.14,98,998/- AND COMMISSION EARNED BY THE COMPANY PERTAINING TO COMMISSION PAID TO M/S. PRITHVI CORPO RATION OF RS.34,73,415/- IS RS.1,09,70,235/-. THEREFORE, I T IS CLEAR THAT THE PAYMENT OF COMMISSION IS SUPPORTED B Y DEBIT NOTE RAISED BY THE AGENTS, HAVING COMPLETE DE TAILS OF ORDERS PROCURED AND CORRESPONDINGLY SUBSTANTIAL INCOME HAS BEEN EARNED BY THE COMPANY ON SUCH ORDER S WHICH HAS BEEN PROCURED BY THE AGENTS. THERE IS FOR CE IN THE CONTENTION OF THE A. R. THAT IN THE ABSENCE OF A DIRECT MARKET, WITHOUT EFFORTS AND AGGRESSIVE MARKETING, I T WAS ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 10 NOT POSSIBLE TO SELL THE PRODUCTS OF THE COMPANY AN D IT WAS BECAUSE OF THE SALES MADE BY THE COMMISSION AGENTS, THE COMPANY HAS EARNED A SUBSTANTIAL COMMISSION AND THE COMPANY HAS SURVIVED DURING THE YEAR UNDER CONSIDERATION. FURTHER, CONSIDERING THE FACT THAT THE APPELLANT COMPANY HAD ONLY SIX PERSONS AS STAFF MEMBERS, WHICH INCLUDED ONE CEO CUM DIRECTOR, ONE MANAGER, ONE ACCOUNTS IN CHARGE AND 3 LOWER GRADE S TAFF, THE NATURE OF SERVICES RENDERED BY THESE TWO AGENTS IS VERY CRUCIAL AND BECAUSE OF THEIR ACTIVE CAMPAIGN, THE APPELLANT EARNED SUBSTANTIAL COMMISSION AND THE COMPANY SURVIVED DURING THE YEAR, AS IT CAN BE SEEN THAT THE TOTAL SALES DURING THE YEAR WERE ONLY RS.16,59, 610/- AS AGAINST SUCH SALES OF RS.25,85,171/- IN THE PREC EDING YEAR. IN THE LIGHT OF ABOVE FACTS, I AM OF THE OPIN ION THAT THE PAYMENT OF COMMISSION PAID TO THESE TWO AGENTS STANDS PROVED BEYOND DOUBT. IT IS FURTHER A CONTRAR Y OBSERVATION OF THE A. O. THAT IN ABSENCE OF WORK DE TAILS OF THE AGENT AND THEIR COMPETENCE TO DEAL WITH BIG CORPORATIONS AND MNCS PAYMENT OF COMMISSION IS NOT PROVED WHEREAS THE VERY BASIC FACT THAT ORDERS HAVE BEEN PROCURED, COMMISSION HAS BEEN EARNED BY THE COMPANY ON SUCH ORDERS ARE VERY MUCH A MATTER OF FACT AND T HIS ASPECT COULD NOT BE CONTROVERTED BY THE A. O. THE O NLY LAPSE AS ADMITTED BY THE COMPANY IN ITS WRITTEN SUBMISSION IS THAT COMMISSION AGENTS COULD NOT ATTE ND THE OFFICE OF THE A. O. IN RESPONSE TO SUMMONS ISSU ED. HOWEVER, IT IS CLEAR THAT BOTH THE COMMISSION AGENT S ARE ASSESSED TO INCOME-TAX, COPIES OF ACKNOWLEDGMENT OF PROOF OF HAVING FILED THE RETURN OF INCOME BY THE A GENTS, HAVE BEEN FURNISHED AND THE SAME HAVE BEEN ADMITTED BY THE A. O. IN THE ASSESSMENT ORDER ALSO. THEREFOR E, HAVING FURNISHED INCOME-TAX PAN NO. OF THE AGENTS A ND HAVING CONFIRMED THE RECEIPT OF COMMISSION AND HAVI NG SUPPLIED THE DETAILS OF SERVICES RENDERED, I HOLD T HAT THERE IS NO JUSTIFICATION IN MAKING DISALLOWANCE OF COMMI SSION, HENCE I DELETE THE DISALLOWANCE. ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 11 7. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE ASSESSEE HAS PAID COMMISSION TO THREE PART IES AND FILED CONFIRMATIONS AND DEBIT NOTES BUT THE SUMMONS ISSUE D BY THE AO COULD NOT BE SERVED FOR VERIFICATION OF THE EVIDENC ES BECAUSE THE CONCERN PARTIES WERE NOT TRACEABLE AT THE GIVEN ADD RESS. THE POSTAL AUTHORITIES ALSO RETURNED THE SUMMONS WITH THE REMA RKS PARTIES ARE NOT TRACEABLE AND NOT KNOWN. THE ASSESSEE DID NOT PRODUCE THE PARTIES BEFORE THE AO FOR EXAMINATION. THE ASSESSEE DID NOT PRODUCE ANY DETAILS ABOUT THE QUALIFICATIONS, WORK EXPERIEN CE AND TECHNICAL COMPETENCY OF THE SO CALLED AGENTS. THE ASSESSEE DI D NOT PRODUCE ANY DOCUMENTS LIKE BANK STATEMENTS AND DETAILS ABOU T NATURE OF SERVICES RENDERED BY THE AGENTS FOR THE ASSESSEE. T HEREFORE, THE EVIDENCES FILED BY THE ASSESSEE COULD NOT BE SUBJEC TED TO VERIFICATION. THE LEARNED CIT(A) SHOULD NOT HAVE DELETED THE ADDI TION. 8. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE FILED COPIES OF THE ACCOUNTS ALONG WIT H COPIES OF THE DEBIT NOTE AND CONFIRMATION OF THE PARTIES ALONG WI TH THEIR COPY OF ACKNOWLEDGEMENT OF RETURN OF TWO PARTIES. THEREFORE , ADDITION SHOULD NOT HAVE BEEN MADE BY THE A. O. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PB-48 TO 53 WHICH ARE THE CONF IRMATIONS OF M/S. TORAN TRADING REGARDING RECEIPT OF PAYMENTS ALONG W ITH PAN, COPY OF ACCOUNTS, COPY OF RETURN, DEBIT NOTES AND DETAILS O F SERVICES OFFERED ETC. SIMILAR DETAILS ARE FILED IN THE PAPER BOOK AT PAGES 54 TO 59 IN RESPECT OF M/S. PRITHVI CORPORATION. THE LEARNED CO UNSEL FOR THE ASSESSEE BY REFERRING TO THESE PAGES IN THE PAPER B OOK SUBMITTED ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 12 THAT COMMISSION WAS PAID TOWARDS SALE OF PRODUCTS M ARKETED BY THE ASSESSEE IN INDIA. HE HAS HOWEVER, ADMITTED THAT NO DETAILS OF SALES MADE THROUGH THE COMMISSION AGENTS ARE FILED IN THE PAPER BOOK AND THE SAME WERE ALSO NOT FILED BEFORE THE AO. THE LEA RNED COUNSEL FOR THE ASSESSEE ALSO ADMITTED THAT THE ASSESSEE COULD HAVE FILED THE CORRECT ADDRESS OF THE PARTIES BEFORE THE AO. HE HA S UNDERTAKEN THAT THE ASSESSEE IS IN POSITION TO FILE THE DETAILS OF THE SALES MADE THROUGH THE COMMISSION AGENTS BEFORE THE AO ALONG W ITH COMPLETE ADDRESSES OF THE PARTIES BEFORE THE AO FOR VERIFICA TION OF THE COMMISSION PAID AND THE SALES. HE HAS SUBMITTED THA T SINCE THE PARTIES WERE NOT UNDER THE CONTROL OF THE ASSESSEE, THEREFORE, THEY DID NOT APPEAR BEFORE THE AO. HE HAS ALSO FIELD CHART T O SHOW THAT COMMISSION WAS PAID TO OTHERS IN EARLIER YEARS AS W ELL AS COMMISSION WAS PAID IN THE SUBSEQUENT YEAR AND EVEN IN THE ASS ESSMENT YEAR 2008-09 THE COMMISSION PAYMENT IS ALLOWED OF THE LE SSER AMOUNT UNDER THE SCRUTINY ASSESSMENT ALSO U/S 143(3) OF TH E IT ACT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE MATERIALS ON RECORD AND WE ARE OF THE VIEW THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. TH E ASSESSEE FILED COPIES OF THE DEBIT NOTES AND THE CONFIRMATION OF T HE PARTIES ALONG WITH THEIR ACKNOWLEDGMENT OF RETURN OF INCOME BEFOR E THE AO TO PROVE THAT THE COMMISSION WAS PAID TO THESE THREE PARTIES . THE AO IN ORDER TO VERIFY THE GENUINENESS OF THE COMMISSION PAYMENT ISSUED SUMMONS U/S 131 OF THE IT ACT AGAINST M/S. TORAN TR ADING AND M/S. PRITHVI CORPORATION THROUGH INSPECTOR OF INCOME TAX DEPARTMENT BUT THE AFORESAID PARTIES WERE NOT TRACEABLE AT THE GIV EN ADDRESS. EVEN, ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 13 THE SUMMONS ISSUED THROUGH POSTAL AUTHORITIES ALSO RETURNED UN- SERVED WITH THE REMARKS NOT KNOWN. THE SAME WERE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE WAS ACCORDINGLY DIREC TED TO PRODUCE THE PARTIES FOR VERIFICATION BEFORE THE AO ALONG WI TH PROOF OF IDENTITY, COMPLETE ADDRESSES AND BANK STATEMENTS. THE ASSESSE E HOWEVER, FILED CONFIRMATION FROM THE PARTIES ALONG WITH ACKN OWLEDGMENT OF THE RETURN OF INCOME BUT THE PARTIES WERE NOT PRODUCED BEFORE THE AO FOR VERIFICATION OF THE TRANSACTIONS. NO FURTHER DETAIL S WERE FILED AND NO DETAILS WERE FILED ABOUT THE NATURE OF SERVICES REN DERED BY THESE PARTIES FOR THE ASSESSEE. THE REQUIRED DOCUMENTS BY THE AO WERE ALSO NOT PRODUCED. THE AO WAS, THEREFORE, JUSTIFIED IN RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF LACHMINARAYAN MADAN LAL VS CIT 86 ITR 439 IN WHICH IT WAS HELD THAT EVEN IF THERE IS AN AGREEMENT IN EXISTENCE FOR MAK ING THE PAYMENT, IT IS STILL OPEN TO THE INCOME TAX OFFICER TO CONSIDER THE RELEVANT FACTORS AND DETERMINE FOR HIMSELF WHETHER THE COMMISSION SAID TO HAVE BEEN PAID TO THE SELLING AG ENTS OR ANY PART THEREOF IS DEDUCTIBLE U/S 37 OF THE ACT. THE ASSESSEE ON THE OTHER HAND, HOWEVER PRODUCED CERTAIN DOCUMENTARY EV IDENCES TO SHOW THAT PAYMENTS HAVE BEEN MADE TO THESE PARTIES AND THEY ARE ASSESSED TO INCOME TAX. BUT NO DETAILS OF THE SALES WERE FILED WHICH WERE CONDUCTED THROUGH THE COMMISSION AGENTS. EVEN, IN THE PAPER BOOK BEFORE US NO SUCH DETAILS OF THE SALES ARE FIL ED WHICH WERE MADE THROUGH THE COMMISSION AGENTS. IT IS STATED IN THE CONFIRMATION CERTIFICATE THAT COMMISSION IS CHARGED TOWARDS SALE OF PRODUCTS MARKETED BY THE ASSESSEE. BUT NO DETAILS OF SALES M ADE THROUGH THE COMMISSION AGENTS HAVE BEEN FILED AND EVEN NO CORRE CT ADDRESSES OF ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 14 THE PARTIES/COMMISSION AGENTS WERE FILED BEFORE THE AO FOR VERIFICATION OF THE TRANSACTIONS. THE LEARNED CIT(A ) GOING BY THE DOCUMENTS ON RECORD ALLOWED THE APPEAL OF THE ASS ESSEE WITHOUT CONSIDERING OBJECTION OF THE AO. IN THE ABSENCE OF THE DETAILS CALLED FOR BY THE AO AND IN THE ABSENCE OF THE DETAILS OF THE SALES MADE THROUGH THE COMMISSION AGENTS AND IN THE ABSENCE OF PRODUCTION OF THE PARTIES BEFORE THE AO FOR EXAMINATION AND VERIF ICATION OF THE PAYMENTS/SALES COMMISSION, THE DETAILS COULD NOT BE SUBJECTED TO VERIFICATION BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUMENT SUBMITTED THAT HE IS NOW ABL E TO FILE THE DETAILS OF SALES MADE THROUGH THE COMMISSION AGENTS BEFORE THE AO ALONG WITH CORRECT ADDRESSES OF THE PARTIES FOR SUM MONING AND EXAMINATION BY THE AO. IN THIS VIEW OF THE MATTER, THE LEARNED CIT(A) SHOULD NOT HAVE DELETED THE ADDITION. IF THE LEARNE D CIT(A) WANTED TO PROCEED WITH THE MATTER, HE BEING HAVING CO-TERMINU S POWER COULD HAVE INVESTIGATED INTO THE MATTER AS PER OBJECTION OF THE AO BEFORE DELETING THE ADDITION. IN VIEW OF THE ABOVE DISCUSS IONS, WE ARE OF THE VIEW THAT THE GENUINENESS OF THE COMMISSION AND THE VERIFICATION OF THE DETAILS COULD NOT BE DONE IN THE MATTER. WE ACC ORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THI S ISSUE TO THE FILE OF THE AO WITH DIRECTION TO THE ASSESSEE TO FILE COMPL ETE DETAILS OF SALES MADE THROUGH THE COMMISSION AGENTS. THE ASSESSEE SH ALL ALSO PRODUCE CORRECT ADDRESSES OF THE PARTIES SO THAT TH E AO CAN ISSUE SUMMONS AGAINST THEM FOR PRODUCTION AND VERIFICATIO N OF THE DETAILS AND THE GENUINENESS OF THE COMMISSION PAYMENT. THE AO ON FILING THE DETAILS AS NOTED ABOVE MAY PROCEED WITH THE MAT TER IN ACCORDANCE WITH LAW AND SHALL PASS REASONED ORDER B Y GIVING ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 15 REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 OF THE DEPARTMENTAL APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 10. ON GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION ON ACCOUNT OF EXPENDITURE OF GIFTS OF RS.9 ,69,228/-. THE AO NOTED THAT THE ASSESSEE HAS NOT FURNISHED THE DETAI LS AND PROOF TO WHOM THE EXPENSIVE GIFTS HAVE BEEN MADE. THE ASSESS EE ONLY FURNISHED COPY OF THE BILL FOR PURCHASES OF GIFT AR TICLES WHICH ARE PURCHASES OF 3 WOOLEN CARPETS FROM JAIPUR WHICH WER E GIVEN TO SOME PERSONS. IN THE ABSENCE OF PARTICULARS AND THE DETA ILS OF THE PERSONS TO WHOM THE GIFTS HAVE BEEN MADE OF THE COSTLY ITEM S, THE AO DISALLOWED THE EXPENDITURE ON GIFTS. THE LEARNED CI T(A) ALSO NOTED THAT IT IS EXPLAINED BEFORE HIM THAT GIFTS OF WOOLE N CARPETS HAVE BEEN MADE TO CEO OF M/S. VIDYUT METALICS AND COULD NOT P ROVE THAT THE EXPENDITURE IS MADE FOR THE BUSINESS PURPOSE. THE L EARNED CIT(A) ACCORDINGLY CONFIRMED THE ADDITION AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 11. THE LEARNED DR STATED THAT SINCE THE ADDITION I S CONFIRMED BY THE LEARNED CIT(A), THEREFORE, THIS GROUND IS WRONG LY TAKEN IN THE GROUNDS OF APPEAL. ACCORDINGLY, IN VIEW OF THE ABOV E FACTS THIS GROUND HAS BECOME INFRUCTUOUS AND IS ACCORDINGLY REJECTED. 12. ON GROUND NO.3, THE REVENUE CHALLENGED THE DELE TION OF ADDITION OF DISALLOWANCE OF RS.20 LACS U/S 37(21) O F THE IT ACT BEING COMMISSION PAID TO THE EMPLOYEES. THE AO NOTED THAT IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS PROVIDED RS.20 LACS I N RESPECT OF ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 16 COMMISSION TO THE EMPLOYEES WHICH IT HAS DISALLOWED U/S 43B OF THE IT ACT IN THE COMPUTATION OF TOTAL INCOME BEING UNP AID AND THE AO CALLED FOR THE DETAILS OF THE SAME AT THE ASSESSMEN T STAGE AND THE ASSESSEES AUTHORIZED REPRESENTATIVES STATED THAT T HE COMMISSION IS PAID TO THE EMPLOYEES AS WELL AS DIRECTORS FOR IMPR ESSIVE FINANCIAL RESULTS. IT WAS ALSO EXPLAINED THAT SINCE THE COMMI SSION WAS NOT PAID ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN O F INCOME, THE SAME HAS BEEN DISALLOWED U/S 43B OF THE IT ACT AND IN TH E SUBSEQUENT YEAR THE ASSESSEE HAS PAID THE SAME AND HAS CLAIMED ACCORDINGLY. THE LEARNED AO, THEREFORE, NOTED THAT FOR WANT OF PROPER JUSTIFICATION AND IN THE ABSENCE OF THE DETAILS, TH E ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE EXPENDITURE. THE AO AFTER DISCUSSION OF THE SAME NOTED IN THE COMPUTATION OF INCOME THAT NO ADDITION IS MADE FOR TAX PURPOSES AS ALREADY ADDED U/S 43 B OF THE IT ACT BY THE ASSESSEE. ACCORDINGLY, NO ADDITION OF RS.20 LACS WA S MADE IN THE COMPUTATION OF INCOME. THE SUBMISSIONS WERE MADE BE FORE THE LEARNED CIT(A) TO JUSTIFY THE CIRCUMSTANCES UNDER W HICH COMMISSION PAYMENT WAS MADE TO THE EMPLOYEES AND THE DIRECTORS FOR SHOWING BETTER RESULTS. IT WAS ALSO EXPLAINED THAT IN THE E ARLIER YEAR AND SUBSEQUENT YEAR SIMILAR COMMISSION PAYMENT IS MADE TO THE EMPLOYEES AND DIRECTORS WHICH HAS BEEN ALLOWED. THE LEARNED CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE T HAT COMMISSION PAID TO THE EMPLOYEES IS ALLOWABLE DEDUCTION. THE L EARNED CIT(A) CONSIDERING THE MATERIAL ON RECORD HELD THAT COMMIS SION PAID OF RS.20 LACS IS ALLOWABLE DEDUCTION. THE LEARNED CIT( A) HOWEVER, IN THE OPERATIVE PORTION OF HIS FINDINGS NOTED IN PARA 5.3 AS UNDER: ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 17 HOWEVER, WHILE GIVING DEDUCTION OF RS.20 LACS ON THIS ACCOUNT, THE AO SHALL RESTRICT THE REVISED INC OME TO RETURNED INCOME AND THE REVISED INCOME IS NOT ALLOWED TO GO BELOW THE RETURNED INCOME. 13. THE LEARNED DR SUBMITTED THAT THE AO DID NOT MA KE SEPARATE ADDITION OF RS.20 LACS IN THE COMPUTATION OF INCOME BECAUSE THE ASSESSEE HIMSELF HAS ADDED THE SAME AMOUNT U/S 43 B OF THE IT ACT IN THE COMPUTATION OF INCOME. THE LEARNED DR SUBMIT TED THAT THE ISSUE IS HAVING ACADEMIC INTEREST ONLY AND EVEN IF THE ADDITION IS DELETED BY THE LEARNED CIT(A), IT WOULD NOT REDUCE THE RETURNED INCOME. THE LEARNED DR SUBMITTED THAT SINCE THIS PO INT IS TAKEN CARE OF BY THE LEARNED CIT(A) WHILE PASSING THE APPELLAT E ORDER, THIS ISSUE HAS BECOME ACADEMIC IN NATURE AND WOULD NOT REQUIRE ANY FURTHER FINDING ON THE ISSUE. 14. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT SIMILAR PAYMENTS WERE MADE IN THE EARLIER YEAR AND SUBSEQUENT YEAR WHICH HAVE BEEN ALLOWED BY THE AO U/S 143(3) OF THE IT ACT IN ASSESSMENT YEAR 2008-09. THE LEARNED COUNSEL FOR TH E ASSESSEE ALSO AGREED TO THE PROPOSITION THAT SINCE THE ADDIT ION IS MADE BY THE ASSESSEE HIMSELF IN THE COMPUTATION AND NO SEPARATE ADDITION IS MADE BY THE AO IN THE COMPUTATION, THEREFORE, EVEN IF THE ADDITION IS DELETED BY THE LEARNED CIT(A), IT WOULD NOT REDUCE THE RETURNED INCOME. HE HAS SUBMITTED THAT SINCE THIS POINT IS T AKEN CARE OF BY THE LEARNED CIT(A) IN HIS FINDING ON THIS ISSUE, THEREF ORE, THE ISSUE HAS BECOME ACADEMIC IN NATURE AT THIS STAGE AND WOULD N OT YIELD ANY RESULT BECAUSE THERE IS NO NEED FOR FURTHER FINDING ON THIS ISSUE. ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 18 15. ON CONSIDERATION OF THE ABOVE FACTS IN THE LIGH T OF THE FINDINGS OF THE AUTHORITIES BELOW, WE ARE OF THE VIEW, THE ISSU E IS HAVING ACADEMIC INTEREST ONLY AT THIS STAGE AND NO FURTHER FINDINGS ARE REQUIRED AS ARE ALSO ADMITTED BY THE LEARNED REPRES ENTATIVES OF BOTH THE PARTIES. THE AO DID NOT MAKE SEPARATE ADDITION OF RS.20 LACS EVEN AFTER DISALLOWING THE SAME BECAUSE IT WAS ALRE ADY ADDED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. EVEN IF, ADD ITION ON MERIT IS DELETED BY THE LEARNED CIT(A), IT CANNOT REDUCE THE RETURNED INCOME. THIS POINT IS TAKEN CARE OF BY THE LEARNED CIT(A) I N THE APPELLATE ORDER IN HIS OPERATIVE PORTION OF THE ORDER AS NOTE D ABOVE. THE ISSUE IS, THEREFORE, OF ACADEMIC INTEREST ONLY AND BOTH T HE PARTIES AGREED THAT THERE IS NO NEED TO DECIDE THE ISSUE FURTHER. ACCORDINGLY, GROUND NO.3 WOULD NOT REQUIRE ANY FURTHER FINDINGS. IT IS DISPOSED OF ACCORDINGLY. 16. NO OTHER POINT IS ARGUED OR PRESSED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10-03-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 10-03-2011 LAKSHMIKANT/- ITA NO.1893/AHD/2009 ACIT, CIR-8, AHMEDABAD VS YUDO HOT RUNNER (INDIA) L TD. 19 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD