ACIT 2(3), MUMBAI V. STOVEC INDUSTRIES LTD, MUMBAI

ITA 1990/MUM/2010

• Counselvise Citation: 199019914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: URVESH PATEL
• Assessee Lawyers: G K NAIR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1990/MUM /2010 (ASSESSMENT YEAR: 2006-07) DCIT 2(3), R. NO.555, AAYAKAR BHAVAN, MUMBAI ....... APPELLANT VS M/S. STOVEC INDUSTRIES LTD., 43, DR. V.B. GANDHI MARG, FORT, MUMBAI -400 001 ..... RESPONDENT PAN: AAABCS 7223 D APPELLANT BY: SHRI URVESH PATEL RESPONDENT BY: SHRI G.K. NAIR O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-6 MUMBAI DATED 03.12.2009 FOR THE A.Y. 2006- 07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT (A) ERRED IN DELETING THE ADDITION OF ` 9,77,287/- MADE BY THE ASSESSING OFFICER U/S.40(A)(IA), DISREG ARDING THE FACT THAT THIS AMOUNT REPRESENTED ONLY COMMISSI ON BY ANOTHER NAME. 2. BRIEFLY STATED, THE FACTS ARE AS UNDER. THE ASS ESSEE-COMPANY IS IN THE MANUFACTURING AND SALE OF NICKEL PERFORATED SCREENS, OFFSET PRINTING PLATES AND MACHINERY FOR TEXTILE PRINTING AND TRADING IN SPECIAL CHEMICALS ETC. IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS GIVEN THE DISCOUNT. THE A.O. WAS OF THE OPINIO N THAT THE DISCOUNT ITA 1990/MUM/2010 M/S. STOVEC INDUSTRIES LTD. 2 SHOWN BY THE ASSESSEE IS NOTHING BUT THE ADJUSTMENT IN TERMS OF COMMISSION AND AS THE ASSESSEE HAS NOT DEDUCTED THE TAX-AT-SOURCE (TDS) THE SAID AMOUNT IS NOT ALLOWABLE U/S.40(A)(IA ) OF THE ACT. HE, THEREFORE, MADE THE DISALLOWANCE OF THE ENTIRE AMOU NT OF THE DISCOUNT CLAIMED AT ` 9,77,287/-. THE ASSESSEE CHALLENGED THE DISALLOWA NCE BEFORE THE LD. CIT (A) AND LD. CIT (A) DELETED THE SAME. IN THE ASSESSEES OWN CASE FOR THE A.Y. 2005-06 THE LD. CO UNSEL HAS FILED THE COPY OF THE TRIBUNAL ORDER BEING ITA NO.722/MUM/201 0 AND C.O. NO.180/MUM/2010 DATED 23.12.2010 WHEREIN IN THAT CA SE AN IDENTICAL DISALLOWANCE WAS MADE BY THE A.O., THE LD . CIT (A) DELETED THE SAME. THE REVENUE FILED THE APPEAL AGAINST THE ORDER OF THE LD. CIT (A) IN THE TRIBUNAL, THE TRIBUNAL DELETED THE A DDITION ALLOWING THE CLAIM OF THE ASSESSEE IN THE ABOVE SAID ORDER. THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL IS AS UNDER:- 24. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD. WE FIND THAT BEFORE THE LEARNED CIT (A), IT WAS POI NTED OUT THAT THE AMOUNT CLAIMED WERE IN THE RANGE OF ` 171 TO 94,320. IT IS NOT THE CASE OF THE REVENUE THAT COM MISSION HAS BEEN PAID AT ANY SPECIFIC RATE WHICH IS THE PRI MARY INGREDIENT OF COMMISSION PAYMENT. IF IN NORMAL COU RSE OF BUSINESS, CERTAIN AMOUNTS COULD NOT BE RECOVERED ON ACCOUNT OF QUALITY, STANDARD, ETC., THEN THE SAME C ANNOT BE BRANDED AS COMMISSION MERELY BECAUSE THE ASSESSEE H AD APPOINTED SELLING AGENT. THE ASSESSING OFFICER HIM SELF HAS OBSERVED THAT LOOKING AT THE TOTAL SALES OF THE ASS ESSEE, THE SUM OF ` 6,92,000 IS TOO SMALL AN AMOUNT. HOWEVER, HE HAS POINTED OUT THIS AMOUNT CUSTOMERS WILL NOT REFU SE TO PAY. BUT, IN ANY CASE, THIS COULD NOT LEAD TO THE CONCLUSION THAT THE SAME WAS COMMISSION TO THE SOLE SELLING AG ENT. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LEARNED C IT (A). THIS GROUND OF APPEAL BY THE REVENUE IS THUS DISMIS SED. ITA 1990/MUM/2010 M/S. STOVEC INDUSTRIES LTD. 3 3. AS THE FACTS ARE IDENTICAL IN THIS YEAR, WE FIND NO REASON TO TAKE DIFFERENT VIEW. WE, ACCORDINGLY, CONFIRM THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH JUNE 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 29TH JUNE 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)16, MUMBAI. 4) THE CIT-VIII, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 1990/MUM/2010 M/S. STOVEC INDUSTRIES LTD. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 29.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 29.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER