M/s. GE Healthcare Biosciences Limited, CHENNAI V. ADIT, CHENNAI

ITA 1900/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64437 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 25-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S MO HARANA
• Assessee Lawyers: N VENKATARAMAN SR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS.2147/MDS/2010 & 1900/MDS/2011 ASST. YEARS : 2007-08 & 2008-09 GE HEALTHCARE BIOSCIENCES LTD., (INDIA BRANCH OFFICE), FF3, PALANI CENTRE, 32, VENKATA NARAYANA ROAD CHENNAI 600 017. PAN : AAACC6917F. (APPELLANT) V. THE DEPUTY DIRECTOR OF INCOME TAX, CHENNAI. (RESPONDENT) APPELLANT BY : SHRI N. VENKATARAMAN, SR. COUNSEL RESPONDENT BY : SHRI S. MOHARANA, CIT, D.R. DATE OF HEARING : 27 SEPT. 2012 DATE OF PRONOUNCEMENT : 12 TH OCT. 2012 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THE ASSESSEE FILED THESE APPEALS AGAINST ASSESSME NT ORDERS PASSED UNDER SEC.143(3) READ WITH SEC.144C(1 3) OF THE I.T. ACT BY THE DY. DIRECTOR OF INCOME TAX (INTERNATIONA L TAXATION), CHENNAI IN PURSUANCE TO THE DIRECTIONS OF THE DISPU TE RESOLUTION I.T.A. 2147MDS/10 & 1900/MDS/11 2 PANEL (HEREINAFTER CALLED DRP). THE ONLY ISSUE I N THE GROUNDS OF APPEAL OF THE ASSESSEE IS THAT THE DDIT ERRED IN ES TIMATING THE COMMISSION INCOME AT 20% OF THE SALES REVENUE FOR T HE SERVICES RENDERED BY THE ASSESSEE AS DISTRIBUTOR OF THE PROD UCTS TO ITS ASSOCIATE ENTERPRISES. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRADING OF BIO SCIENCES PRODUCTS AND AFTER SALES SUPPORT SERVICES, FILED ITS RETURN OF I NCOME ON 31.10.2007 ON A TOTAL INCOME OF A.95,94,080/-. THE ASST. DIRE CTOR OF INCOME TAX (INTERNATIONAL TAXATION), CHENNAI PASSED DRAFT ASSE SSMENT ORDER ON 31.12.2009 PROPOSING TO ESTIMATE THE COMMISSION INC OME OF THE ASSESSEE AT 20% OF THE SALES REVENUE ATTRIBUTED TO INDIAN OPERATIONS AS AGAINST 10% OF COMMISSION INCOME ADMITTED BY THE ASSESSEE. THE ASSESSEE FILED OBJECTIONS BEFORE DRP, CHENNAI F OR THE SAID PROPOSAL OF THE ASST. DIRECTOR OF INCOME TAX (INTER NATIONAL TAXATION) FOR ESTIMATING COMMISSION INCOME ON SALES AT 20% AS AGAINST 10% ADMITTED BY THE ASSESSEE. THE DRP BY ITS ORDER DAT ED 24.9.2010 REJECTED THE OBJECTIONS OF THE ASSESSEE AND CONFIRM ED THE PROPOSED ADDITION OF COMMISSION INCOME AT 20% OF SALES REVEN UE. THE I.T.A. 2147MDS/10 & 1900/MDS/11 3 ASSESSEE IS IN APPEAL BEFORE US ON CONFIRMING THE S AID ADDITION OF COMMISSION INCOME ESTIMATING AT 20% OF SALES ATTRIB UTABLE TO INDIAN OPERATIONS. 3. THE ASSESSEE ALSO FILED AN APPEAL FOR THE ASST. YEAR 2008- 09 AGAINST THE ASSESSMENT ORDER PASSED UNDER SEC.14 3(3) READ WITH SEC.144C(13) BY THE DY. DIRECTOR OF INCOME TAX (INT ERNATIONAL TAXATION) ESTIMATING THE COMMISSION INCOME AT 12% O N THE SALES ATTRIBUTABLE TO INDIAN OPERATIONS AS AGAINST 10% AD MITTED BY THE ASSESSEE. AT THE TIME OF HEARING THE SR. COUNSEL, MR. N. VENKATARAMAN APPEARING FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSING OFFICER ESTIMATED SALES COMMISSION INCOME AT 20% OF THE SALES ATTRIBUTABLE TO INDIAN OPERATIONS FOR THE ASS T. YEAR 2007-08 AS AGAINST 10% REPORTED BY THE ASSESSEE. SIMILARLY, F OR THE ASST. YEAR 2008-09, THE ASSESSING OFFICER IN HIS DRAFT ASSESSM ENT ORDER, PROPOSED TO ESTIMATE THE COMMISSION INCOME ON SALES ATTRIBUTABLE TO INDIAN OPERATIONS AT 15% ON THE GROUND THAT DURING THE ASST. YEAR 2008-09 FOR THE REASON THAT THE LIST OF CUSTOMERS F URNISHED BY THE ASSESSEE COVERS A NUMBER OF REPEAT CUSTOMERS AND TH E SALES AND MARKETING EFFORTS WOULD BE LESS. THE COUNSEL SUBMI TS THAT DURING THE I.T.A. 2147MDS/10 & 1900/MDS/11 4 ASST. YEAR 2008-09 THE REPEAT SALES ARE 88%. THE C OUNSEL FOR THE ASSESSEE SUBMITS THAT THE DRP BY ITS ORDER DATED 25 .8.2011 DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE COMMISSION IN COME AT 12% OF SALES ATTRIBUTABLE TO INDIAN OPERATIONS. THE COUNS EL FOR THE ASSESSEE AT THIS STAGE SUBMITS THAT THE ASSESSEE HAD FILED A N ADDITIONAL EVIDENCE FOR THE ASST. YEAR 2007-08 WITH COMPLETE D ATA OF SALES IE., THE SALES MADE TO A NEW CUSTOMER AND THE SALES MADE TO THE OLD CUSTOMERS DURING THE ASSESSMENT YEAR 2007-08. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE DATA REVEALS THAT TH E ASSESSEE HAD MADE REPEAT SALES TO THE EXTENT OF 93% DURING THE ASST. YEAR 2007- 08. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT WHEN THE REPEAT SALES WERE AT 88% DURING THE ASST. YEAR 2008 -09 WERE 88% THE COMMISSION INCOME ESTIMATED WAS AT 12%. THEREF ORE, WHEN REPEAT SALES WERE AT 93% DURING THE ASST. YEAR 2007 -08 , ESTIMATING THE INCOME AT 20% IS ON VERY MUCH HIGHER SIDE. THE COUNSEL FOR THE ASSESSEE, PLEADS FOR ADMISSION OF ADDITIONAL EV IDENCE AND SUBMITS THAT THE MATTER MAY BE SENT BACK TO THE ASS ESSING OFFICER FOR HIS EXAMINATION AS THE ASSESSEE DID NOT HAVE AN OC CASION TO PRODUCE THESE DATA BEFORE THE ASSESSING OFFICER AT THE TIME OF COMPLETION OF I.T.A. 2147MDS/10 & 1900/MDS/11 5 ASSESSMENT FOR THE ASST. YEAR 2007-08. THE COUNS EL FOR THE ASSESSEE ON FIRST PLACE SUBMITS THAT SINCE THE REPE AT SALES DURING THE ASST. YEAR 2007-08 WERE AT 93%, THE ASSESSING OFFIC ER MAY BE DIRECTED TO ESTIMATE THE COMMISSION INCOME ON SALES AT 11%. THE COUNSEL FOR THE ASSESSEE ON SECOND PLACE SUBMITS T HAT IT IS ACCEPTABLE TO THE ASSESSEE EVEN IF THE COMMISSION I NCOME IS ESTIMATED AT 12% AS WAS DONE IN THE IMMEDIATELY SUC CEEDING ASST. YEAR IE., A.Y. 2008-09. 4. THE DEPARTMENTAL REPRESENTATIVE DID NOT SERIOUS LY OBJECT FOR THE ADMISSION OF ADDITIONAL EVIDENCE. HOWEVER, HE SUBMITS THAT THE ASSESSING OFFICER HAS TO EXAMINE THESE DETAILS ON REPEAT SALES AND, THEREFORE, SUBMITS THAT THE MATTER MAY BE REMI TTED TO THE FILE OF THE ASSESSING OFFICER FOR HIS EXAMINATION. AS FAR AS THE ESTIMATION OF COMMISSION INCOME AT 12% FOR THE ASST. YEAR 2008-09 IS CONCERNED, THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER S OF ASSESSING OFFICER IN ESTIMATING THE SAME AT 12% AS AGAINST 10 % ADMITTED BY THE ASSESSEE. I.T.A. 2147MDS/10 & 1900/MDS/11 6 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS A LSO THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. SINCE THE ADDITION AL EVIDENCE FILED BY THE ASSESSEE IS GOING TO THE ROOT OF THE MATTER, WE ARE ADMITTING THE ADDITIONAL EVIDENCE. THE ASSESSING OFFICER ESTIMAT ED THE COMMISSION INCOME ON SALES AT 12% ON SALES ATTRIBUTABLE TO IND IAN OPERATIONS FOR THE ASST. YEAR 2008-09 AS DIRECTED BY DRP, AS AGAIN ST 20% ESTIMATED FOR THE IMMEDIATELY PRECEDING ASST. YEAR 2007-08. THE REASON FOR ESTIMATING THE COMMISSION INCOME ON SALES AT 12% DU RING THE ASST. YEAR 2008-09 ON SAME SET OF FACTS IS THAT THE LIST OF CUSTOMERS FURNISHED BY THE ASSESSEE REVEALS A NUMBER OF REPEA T CUSTOMERS FOR WHICH THE SALES AND MARKETING EFFORTS WOULD BE LESS THAN IN THE EARLIER YEARS. ACCORDING TO THE ASSESSEE THE REPEA T SALES DURING THE ASST. YEAR 2008-09 WERE AT 88%. THE ADDITIONAL EV IDENCE FILED BY THE ASSESSEE FOR THE ASST. YEAR 2007-08 SHOWS THAT THE REPEAT SALES ARE TO THE EXTENT OF 93%. IF THE ASSESSING OFFICER ESTIMATED THE COMMISSION INCOME AT 12% ON THE BASIS THAT THE ASSE SSEE HAD MADE SALES TO A NUMBER OF REPEAT CUSTOMERS AND THE SALES AND MARKETING I.T.A. 2147MDS/10 & 1900/MDS/11 7 EFFORTS WOULD BE LESS WHEN COMPARED TO EARLIER YEAR S, THE SAME BASIS SHOULD BE ADOPTED FOR ESTIMATION THE COMMISSION INC OME EVEN FOR THE ASST. YEAR 2007-08. IN THE CIRCUMSTANCES, WE S ET ASIDE THE APPEAL FOR THE ASST. YEAR 2007-08 TO THE FILE OF TH E ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND RESTRICT THE COMMISSION INCOME ON SALE S TO 12% AS ESTIMATED IN THE ASST. YEAR 2008-09, IF THE DATA FI LED BY THE ASSESSEE PROVES THAT THE REPEAT SALES MADE BY THE ASSESSEE D URING THE ASST. YEAR 2007-08 IS 93% OR IF IT IS MORE THAN THE PERCE NTAGE OF REPEAT SALES MADE IN THE ASST. YEAR 2008-09. THE ASSESSEE IS DIRECTED TO PRODUCE THE ADDITIONAL EVIDENCE BEFORE THE ASSESSI NG OFFICER. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 6. AS FAR AS THE APPEAL FOR THE ASST. YEAR 2008-09 IS CONCERNED, SINCE THE ASSESSEE HAS ACCEPTED THE ESTI MATION OF COMMISSION INCOME ON SALES AT 12% FOR THE ASST. YEA R 2007-08, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE IN ESTIMATIN G THE COMMISSION INCOME ON SALES AT 12% FOR THE ASST. YEA R 2008-09 ON SAME SET OF FACTS AND, THEREFORE, WE DISMISS THE AP PEAL FOR THE ASST. YEAR 2008-09 I.T.A. 2147MDS/10 & 1900/MDS/11 8 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR T HE ASST. YEAR 2007-08 IS PARTLY ALLOWED FOR STATISTICAL PURP OSE AND APPEAL FOR THE ASST. YEAR 2008-09 IS DISMISSED. 10. ORDER PRONOUNCED ON FRIDAY, THE 12 TH DAY OF OCTOBER 2012. SD/- SD/- ( N.S. SAINI) (CHALLA NAGENDR A PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 12 TH OCTOBER 2012. JLS. COPY TO :- 1) ASSESSEE 2) RESPONDENT 3) CIT(APPEALS) 4) C.I.T. (5) D.R., 4) GUARD FILE.