M/s. Sunrise Trading Co., Kolkata V. I.T.O., Ward - 36(2), Kolkata, Kolkata

ITA 2056/KOL/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4956 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI, R.C.SHARMA, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 2056 / KOL / 2009 & ITA NO.245/KOL/2011 ASSESSMENT YEARS :2006-07 & 2007-08 M/S SUNRISE TRADING CO. 1, NETAJI SUBHAS ROAD, 1S FLOOR, KALKATA 700 001 [ PAN NO.AA2FS 2138 L ] INCOME TAX OFFICER WARD- 36(2),PODDAR COURT, 3 RD FLOOR, KOLKATA 700 001 V/S . V/S . INCOME TAX OFFICER WARD-36(2), 18, RABINDRA SARANI, PODDAR COURT, 3 RD FLOOR, KOLKAA 700 001 M/S SUNRISE TRADING COMPANY, 1, NETAJI SUBHASH ROAD, KOLKATA 700 001 /APPELLANT .. / RESPONDENT /BY SHRI PAWAN KUMAR AGARWAL, AR /BY REVENUE SHRI P.B.PRAMANICK, SR-DR /DATE OF HEARING 13-12-2013 /DATE OF PRONOUNCEMENT 13-12-2013 / // / O R D E R PER R.C. SHARMA, ACCOUNTANT MEMBER:- THESE ARE TWO FILES FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-XX, KOLKATA FO R THE ASSESSMENT YEARS 2006-07 AND 2007-08, IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT). ITA NO.2056/K/2009 &245/K/2011 A.YS 06-07 & 07-08 ITO WD-36(2), KOL V. M/S SUNRISE TRADIN G CO. PAGE 2 2. COMMON GRIEVANCE OF REVENUE AND ASSESSEE RELATE TO DISALLOWANCE OF COMMISSION EXPENDITUE CLAIMED IN THE PROFIT AND LOS S ACCOUNT. IN THE AY 2006- 07, THE A.O. HAS DISALLOWED THE COMMISSION AND THE ACTION OF A.O WAS CONFIRMED BY CIT(A), AGAINST WHICH ASSESSEE IN FURT HER APPEAL BEFORE US.HOWEVER, IN THE AY 2007-08 SIMILAR COMMISSION DI SALLOWED BY A.O. WAS ALLOWED BY CIT(A) AFTER CALLING FOR THE REMAND REPO RT AGAINST THIS ORDER OF CIT(A) REVENUE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FIND FROM THE R ECORD THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN CIGARATES AND COMMISSION AND BROKERAGE AGENT. DURING THE AY 2006-07, THE AO FOU ND THAT ASSESSEE HAS CLAIMED COMMISSION PAYMENT OF RS.48,25,593/- TO THE FOLLOWNG THREE PARTIES:- I) MS SHYAM SEL LTD. RS.22,33,619/- II) M/S. PAARAS PETROFILES LTD. RS. 5,18,395- III) M/S. OM GANPATI TRADING CO. RS.20,73,579/- 4. IT WAS SUBMITTED BEFORE THE AO THAT COMMISSION W AS PAID FOR PROCUREMENT OF CONTRACTS, LIAISON WITH THE PARTIES AND EXECUTION OF CONTRACT WORK. COPIES OF BILLS ISSUED BY THE COMMISSION AGEN T WERE FILED BEFORE THE AO. IT WAS CONTENDED THAT PAYMENTS WERE MADE BY ACC OUNT PAYEE CHEQUES AND TAX THEREON WAS ALSO DEDUCTE. TO VERIFY THE GEN UINNESS OF THE CLAIM, THE AO ISSUED SUMMONS TO SHRI SUBAS CHAND TULSYAN, PART NER OF THE APPELLANT FIRM, AND HIS STATEMENT U/S. 131 WAS RECORDED ON 15 -10-2008.. AND, ON THE BASIS OF THE STATEMENT, THE AO CONCLUDED AS UNDER- 1- THE ASSESSEE HAD PERFORMED ALL THE CONTRACT RELA TED JOBS ITSELF. 2- THE ASSESSEE HAD NO KNOWLEDGE ABOUT THE CREDENTI ALS OR THE CAPABILITY OF THE CLAIMED COMMISSION AGENTS TO PERF ORM ANY JOB OR RENDER ANY SERVICE TO THE ASSESSEE. ITA NO.2056/K/2009 &245/K/2011 A.YS 06-07 & 07-08 ITO WD-36(2), KOL V. M/S SUNRISE TRADIN G CO. PAGE 3 3- THE ASSESSEE COULD NOT SITE OR PRODUCE ANY EVIDE NCE OF ANY SERVICES PERFORMED BY THE CLAIMED COMMISSIONING AGENTS. 5. THE AO ALSO RECORDED U/S. 131, STATEMENT OF SHRI DEEPAK AGARWAL, WHO APPEARED FOR THE COMMISSION AGENT M/S. SHYAM SEL LT D., THE AO INFERRED THAT THE COMMISSION AGENT HAD NETIHER RENDERD ANY SERVICES N OR WAS CAPABLE OF RENDERING ANY SERVICES TO THE ASSESSEE '. THE AO ALSO REQUIRED THE APPELLANT TO PRODUCE THE OTHER TWO COMISSION AGENTS BEFORE HI M. BUT, THE APPELLANT FAILD TO PRODUCE THEM ON THE GROUND THAT THEY WRE OUT OF STATION. THE AO FINALLY CONCLUDED, ON THE BASIS OF HIS ENQUIRIES AND ALSO T HE MATERIAL ON RECORD, THAT NO SERVICES WERE RENDERED BY THE COMMISSION AGENTS AND THAT THE CLAIM OF THE APPELLANT WAS NOT ALLOWABLE. THE AO THEEEFORE DISAL LOWED THE CLAIM OF RS.48,25,593/- BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ADDI TION. 6. IN THE AY 2007-08, A.O FOUND THAT SIMILAR COMMIS SION WAS PAID BY THE ASSESSEE WHICH AMOUNTED TO RS.51,48,555/- TO THE FO LLOWING PARTIES:- NAME OF THE COMMISSION AGENT AND ADDRESS COMMISSION PAID (RS) 1) M/S. PARAS PETROFILS LTD. VILL. PALSANA, RS.4,9 6,5228/- DIST. SURAT, GUJARAT 394315 2) M/S SHYAM SEL LTD. 29, GANESH CHANDRA AVENUE, KOLKATA 700013 RS.56,52,027/- RS.51,48,555/- CONTENTION OF THE ASSESSEE WAS THAT:- THE APPELLANT FIRM HAD ENTERED INTO SEPARATE AGREE MENT WITH THE AFORESAID TWO COMMISSION RECIPIENT COMAPANIES. COPI ES OF THE SAID AGREEMENTS ARE ATTACHED AND COLLECITIVELY MARKED AN NEXURE 3, APPEARING AT PAGES 21 TO 24 . THE NATURE OF SERVICES RENDERED BY THE COMMISSION RECIPIENTS ARE MENTIONED IN THE AGREEMEN T ITSELF. COPIES OF WHICH WERE SUBMITTED TO THE AO IN THE COURSE OF ASS ESSMENT PROCEEDINGS. RELEVANT PORTION OF SERVICES TO BE REN DERED BY THE COMMISSION RECIPIENT COMPANIES WERE AS PER SAID AGR EEMENT. ITA NO.2056/K/2009 &245/K/2011 A.YS 06-07 & 07-08 ITO WD-36(2), KOL V. M/S SUNRISE TRADIN G CO. PAGE 4 7. DURING THE COURSE OF APPELLATE PROCEEDINGS FOR T HE AY 2007-08, THE CIT(A) HAS CALLED FOR A REMAND REPORT AND AFTER CON SIDERING THE SAME DELETED THE ADDITION AFTER OBSERVING AS UNDER:- 7- A COPY OF THE REMAND REPORT WAS GIVEN TO THE APP ELLANT. THE LD. AR APPEARED FOR THE APPELLANT ON 23-11-2010, AND, FILE D REJOINDER TO THE REMAND REPORT. IT WAS CONTENDED THAT THE AO HAS HIM SELF ADMITTED IN THE REMAND REPORT THAT SERVICES WERE RENDERED BY THE CO MMISION AGENTS; AND SO, THE CLAIM OF COMMISSION IS ALLOWABLE AS BUS INESS EXPENDITURE. THE AO HAS MENTIONED IN THE REMEAND REPORT THAT THE APPELLANT HAS CLAIMED COMMISSION OF RS.46,52,027- TO M/S SHYAM SE L LTD WHEREAS THE SAID PARTY HAS CONFIRMED COMMISION RECEIPTS OF RS.47,73,483/-. IT WAS CLARIFIED THAT THE DIFFERENCE OF RS.1,21,476/- IS DUE TO PAYMENT OF ARREARS FOR EARLIER YEARS, AND ALSO, ON ACCOUNT OF SERVICE TAX; AND, THE SAME WAS EXPLAINED BEFORE THE AO DURING THE COURSEE OF THE REMAND PROCEEDINGS. 8- I HAVE PERUSED THE ASSESSMENT ORDER AND THE REMA ND REPORT OF THE AO. I HAVE ALSO CONSIDERED THE SUBMISSIONS OF THE A PPELLANT. THE AO DISALLOWED THE CLAIM OF COMMISSION ON THE GROUND TH AT NO SERVICES WERE RENDERED BY THE COMMISION AGENTS, AND, THAT THE PAY MENTS MADE TO THEM WERE OTHERWISE THAN FOR THE PURPOSES OF BUSINE SS. HOWERVER, THE GENUINENESS OF THE CLAIM HAS BEEN VERIFIED BY THE A O IN COURSE OF THE REMAND PROCEDINGS. THE APPELLANT HAS ENTERED INTO A GREEMENT WITH THE COMMISSION AGENTS, AND, THE COMMISION WAS PAID AS P ER THE TERMS OF THE AGREEMENT. COPY OF BILLS RAISED BY THE COMMISSI ON AGENTS WAS PRODUCED BEFORE THE AO. THE PAYMENTS WERE MADE THRO UGH BANKING CHANNEL, AND, TAX WAS ALSO DEDUCTED AT SOURCE. THE BOOKS OF ACCOUNT, BANK STATEMENTS, AND, OTHER RELEVANT DOCUMENTS WERE PRODUCED, AND, THE AO HAS NOT FOUND ANY DEFECTS IN SUCH BOOKS DOCU MENTS. IN THE REMAND REPORT, THE AO HAS ADMITTED THAT THE NATURE OF SERVICES RENDERED HAS BEEN MENTIONED IN THE AGREEMENT, AND, THE COMMISSION AGENTS HAVE ALSO CONFIEMED RENDERING OF SERVICES TO JUSTIFY THE CLAIM OF COMMISSION. ON THE OTHER HAND, THERE IS NO MATERIAL ON RECORD TO SHOW ANYTHING THAT COULD CAST SUSPICION OR DOUBT ABOUT T HE GENUINENESS OF THE CLAIM. IN VIEW OF THE ABOVE, THERE IS NO BASIS OR JUSTIFICASTION FOR THE DISALLOWANCE MADE BY THE AO; AND, THE SAME IS DIREC TED TO BE DELETED . THE GROUNDS RAISED BY THE APPELLANT ARE LIABLE TO B E ALLOWED. 8. BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFO RE US AGAINST THE ORDERS OF CIT(A). FROM THE RECORD, WE FIND THAT ASS ESSEE-FIRM HAS EARNED COMMISSION INCOME OF RS.77.09 LAKHS FOR PROVIDING S ERVICES IN RESPECT OF VARIOUS WORKS CONTRACT PROCURED BY IT. FOR EXECUTIO N OF THESE WORKS CONTRCT, ITA NO.2056/K/2009 &245/K/2011 A.YS 06-07 & 07-08 ITO WD-36(2), KOL V. M/S SUNRISE TRADIN G CO. PAGE 5 THE ASSESSEE HAD ALSO INCURRED EXPENDITURE IN THE F ORM OF COMMISION PAID TWO/THREE PATIES WHICH AMOUNTING TO RS.48.26 LAKHS IN THE Y 2006-07. THE ASSESSEE HAS SUBMITTED COPY OF AGREEMENTD BETWEEN T HE ASSESSEE AND THE RECIPIENT OF COMMISSION, BILL OF COMMISSION, COPY O F LEDGER ACCOUNT. BOTH THE LOWER AUTHORITIES HAVE DISALLOWED THE COMMISION ON THE PLEA THAT ASSESSEE HAD FAILED TO PROVE THAT THE SERVICES WAS ACTUALLY RENDERED BY SUB-AGENTS, HOWEVER, IN THE AY 2007-08 DISALOWANCE OF COMMISSIO N WAS DELETED BY CIT(A) ON THE BASIS OF COMMISION SERVICES CONFIRMED BY THE SERVICES PROVIDING BY THE ASSESSEE'S LETER, STATEMENT OF ASSESSEE-FIRM RECORDED BY THE ASSESSING OFFICER CONFIRMING THE NATURE OF SERVICES PROVIDED BY THE COMMISISON RECIPIENTS. THE CIT(A) HAS CALLED FOR A REMAND REPORT, WHEREIN SERVICES PROVIDED BY THE PARTIES WERE CONFIRMED, HO WEVER, PARITES IN BOTH YEARS WERE SAME. 9. AFTER GOING THROUGH THE ENTIRE MATERIALS PLACED ON RECORD VIS--VIS THE REMAND REPORT AND THE REASONS GIVEN BY CIT(A) FOR D ELETING THE DISALLOWANCE OF THE COMMISSION IN THE AY 2007-08 AS WELL AS REAS ONS GIVEN FOR CONFIRMNG THE DISALLOWANCE OF COMMISSION IN THE AY 2006-07, W E FIND THAT MERE PAYMENT OF COMMISSION BY THE CHEQUES ARE NOT SUFFICIENT TO PROVE THE INCURRING OF EXPENDITURE FOR THE PURPOSE OF BUSINESS. PRECISE SE RVICE RENDERED BY COMMISSIN AGENTS ARE REQUIRED TO BE PROVED FOR THIS PURPOSE, AO SHOULD CALL THE RECIPIENTS OF COMMISSION AND RECORD THEIR STATE MENTS. AFTER RECORDING THE STATEMENTS OF RECIPIENTS OF COMMISIONN, IF THE AO F OUND THAT SERVICES HAVE ACTUALLY BEEN RENDERED, NO DISALLOWANCE OF COMMISSI ON IS TO BE MADE. IT IS PRIMARY DUTY OF THE ASSESSEE TO DISCHARGE THE BURDE N OF PROVING THAT THE EXPENDITUES WERE WHOLLY AND EXCLUSIVELY INCURRED FO R THE PURPOSE OF BUSINESS AND IN CASE OF COMMISSION PAYMENT, SERVICES FOR WHI CH COMMISSION HAS BEEN PAID IS REQUIRED TO BE PROVED. ITA NO.2056/K/2009 &245/K/2011 A.YS 06-07 & 07-08 ITO WD-36(2), KOL V. M/S SUNRISE TRADIN G CO. PAGE 6 10. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH FOR BOTH THE YEARS. NEEDLESS TO SAY, ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY BEFORE HIM DECIDING THE APPEAL. 11. IN THE RESULT, BOTH THE APPEAL OF ASSESSEE AND REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2013 SD/- SD- (GEORGE MATHAN) (R.C. SHARMA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP #- 13/12/2013 - - - - .- .- .- .- / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. 2 / CONCERNED CIT 4. 2- / CIT (A) 5. - , , / DR, ITAT, KOLKATA 6. : / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ,