Shroff Textile Exports, Coimbatore V. ACIT Non Corporate Circle 2, Coimbatore

ITA 2161/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5722 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN JCIT D R
• Keywords: Business income

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2161 /MDS./2017 ( ASSESSMENT YEAR : 2013-14 ) M/S.SHROFF TEXTILE EXPORTS , 42,KANNUSAMY ROAD, R.S.PURAM,COIMBATORE 641 001. VS. THE ACIT, NON-CORPORATE CIRCLE-2, COIMBATORE. PAN AANFS 2542 N ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : MR.B.SAGADEVAN, JCIT, D.R ! ' / DATE OF HEARING : 22.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 05.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-2, COIMBA TORE DATED 30.05.2017 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO.2161/MDS/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR CONSIDERATION. (I) THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE AO WAS NOT RIGHT IN NOT CONSIDERING THE REGULAR METHOD OF ACCOUNTING FOLLOW ED CONTINUOUSLY, WITHOUT REJECTING THE SAME AS DEFECTIVE, BY THE APP ELLANT, TO INCLUDE THE AMOUNT OF ` 1,26,283/-, WHICH WAS ACCOUNTED IN THE YEAR OF RECE IPT BY THE APPELLANT, AND INCLUDED IN THE TOTAL INCOME OF THE APPELLANT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (2) THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE AO SHOULD NOT HAVE INCLUDED THE AMOUNT OF ` 1,26,283/- AS PER FORM 26AS DETAILS, IN QUESTION, AS INCOME OF THE PREVIOUS YEAR OF THE APP ELLANT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (3) FOR THESE AND OTHER ADDITIONAL GROUNDS OF APPEA L THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CI T(A)-2, COIMBATORE, UPHOLDING THE ADDITION OF ` 1,26,283/- IS OPPOSED TO LAW AND UNSUSTAINABLE IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FIRM IS A COMMISSION AGENT AND HAS FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 10.09.2013 DECLARING TOTAL INCOME O F ` 42,07,650/-. IN THIS CASE, THE ISSUE IN DISPUTE IS REGARDING ADD ITION OF COMMISSION INCOME OF ` 1,26,283/- REPORTED IN 26AS BUT HAS NOT BEEN OFFERE D TO TAX. DURING SCRUTINY, THE AO VERIFIED 26AS DETAILS AND FOUND THAT THE ITA NO.2161/MDS/2017 3 APPELLANT HAD NOT ADMITTED COMMISSION INCOME OF ` 1,26,283/- RECEIVED FROM M/S.WINSOME YARNS LTD., TO TAX AND AD DED THE ABOVE SUM TO THE RETURNED INCOME. AGGRIEVED BY THIS ADDIT ION, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 3.1 BEFORE THE LD.CIT(A), THE APPELLANTS AUTHORIZ ED REPRESENTATIVE SHRI B. KRISHNAMOORTHI, CA (HEREIN A FTER REFERRED TO AS AR) APPEARED AND EXPLAINED THAT THE ABOVE SUM OF ` 1,26,2831- WAS ACTUALLY NOT RECEIVED DURING THE YEAR BUT M/S.WINSO ME YARNS LTD., FOLLOWING THEIR METHOD OF ACCOUNTING, PROVIDED THE COMMISSION IN THEIR BOOKS AND DEDUCTED TAX ALTHOUGH THEY WERE DISPUTING THE PAYMENT OF THIS SUM TO THE APPELLANT. IT WAS UNDER THESE CIRCU MSTANCES THE APPELLANT DID NOT ACCOUNT THIS INCOME. FURTHER, THE APPELLANT WAS FOLLOWING CASH BASIS OF ACCOUNTING UPTO FY.2012-13. IT WAS THE PRACTICE OF THE APPELLANT IN THE PAST THAT AS AND W HEN COMMISSION PAYMENTS ARE RECEIVED, IT IS OFFERED AS INCOME OF T HAT YEAR AND CLAIM CREDIT FOR TDS ON SUCH INCOME THOUGH TDS WOULD HAVE BEEN MADE BY THE PAYER IN THE PREVIOUS YEARS ON ACCRUAL BASIS . FOLLOWING THIS METHOD, THE ABOVE SUM WAS OFFERED TO TAX IN A.Y.201 6-17 AS IT WAS ITA NO.2161/MDS/2017 4 RECEIVED FROM M!S.WINSOME YARNS LTD., DURING THE F. Y.2015-16 AND CORRESPONDING TDS WAS ALSO CLAIMED IN A.Y.2016-17. THE AR FILED A CHART SHOWING THE COMMISSION INCOMES RECEIVED FROM DIFFERENT PARTIES IN DIFFERENT YEARS AND OFFER OF SUCH INCOME IN DIFFERENT ASSESSMENT YEARS TO TAX THOUGH THE COMMISSION WAS A PPEARING IN FORM NO.26AS OF THE PREVIOUS YEARS. THE AR SUBMITTE D THAT SINCE THE INCOME HAD SUFFERED TAX IN SUBSEQUENT YEAR, THE AO OUGHT NOT TO HAVE MADE THE ADDITION AND PLEADED FOR DELETION OF THE SAME. 3.2 THE LD.CIT(A) OBSERVED THAT ASSESSEE, BESIDES EARNING COMMISSION INCOME ON SALE OF YARN ETC., WAS ALSO EN GAGED IN TRADING AND THE REGULAR SYSTEM OF ACCOUNTING FOLLOWED WAS M ERCANTILE SYSTEM. WHEN POINTED ABOUT THE SAME, THE AR ADMITT ED THAT MERCANTILE SYSTEM WAS BEING FOLLOWED IN RESPECT OF TRADING BUSINESS WHEREAS CASH SYSTEM WAS FOLLOWED FOR ACCOUNTING COM MISSION TILL F.Y 2012-13. THE LD.CIT(A) DECLINED TO ACCEPT THE ARGUM ENT OF A.R THAT APPELLANT CAN FOLLOW DIFFERENT METHODS OF ACCOUNTIN G FOR DIFFERENT HEADS OF BUSINESS INCOME IN THE SAME YEAR. IT HAS T O FOLLOW A UNIFORM SYSTEM OF ACCOUNTING FOR ALL INCOMES FALLING UNDER THE HEAD BUSINESS INCOME. THE EARNING OF COMMISSION WAS ALSO A PART OF THE ITA NO.2161/MDS/2017 5 APPELLANTS BUSINESS AS IT IS IN THE SAME LINE THAT THE APPELLANT IS DOING TRADE. THEREFORE, THE LD.CIT(A) OBSERVED THAT THE AO HAS RIGHTLY BROUGHT THE ABOVE COMMISSION INCOME TO TAX IN THIS YEAR FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING AS HA S BEEN FOLLOWED BY THE ASSESSEE FOR OTHER BUSINESS INCOMES. ACCORD ING TO LD.CIT(A), THE PARTY, AFTER HAVING CREDITED THE APPELLANTS AC COUNT AND DEDUCTING TAX, COULD NOT HAVE DISPUTED THE PAYMENT AS SUCH AN D ALSO THE APPELLANT DID NOT PRODUCE ANY PROOF OF SUCH DISPUTE . HENCE, LD.CIT(A) DISMISSED THE APPEAL OF ASSESSEE. AGAINST THE ORDER OF LD.CIT(A), NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, NONE APPEARED ON BEHA LF OF THE ASSESSEE. I TOOK UP THE CASE FOR ADJUDICATION AFTER HEARING THE LD.D.R. AND PERUSING THE MATERIALS ON RECORD. IN THIS CAS E, THE MAIN PLEA OF ASSESSEE BEFORE THE LOWER AUTHORITIES IS THAT THE I MPUGNED AMOUNT , THOUGH IT WAS REFLECTED IN THE 26AS, IT WAS NOT ACT UALLY RECEIVED AND WAS OFFERED FOR TAXATION IN THE NEXT ASSESSMENT YEA R AND TDS ALSO NOT CONSIDERED FOR THE ASSESSMENT YEAR UNDER CONSID ERATION. IN MY OPINION, IF THE AMOUNT OF INCOME AS WELL AS CORRESP ONDING TDS WAS CONSIDERED IN THE NEXT ASSESSMENT YEAR, THERE CANNO T BE ADDITION IN ITA NO.2161/MDS/2017 6 THE ASSESSMENT YEAR UNDER CONSIDERATION. OTHERWISE IT AMOUNT TO DOUBLE TAXATION, IT SHALL BE AVOIDED. ACCORDINGLY, I REMIT THE ISUSE TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE WHETHE R THE ASSESSEE HAS OFFERED THE SAME INCOME FOR THE NEXT ASSESSMENT YEA R AND DECIDE IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 05 TH DECEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 05 TH DECEMBER , 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF