Bock (India) Pvt.Ltd., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 2274/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85813 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 08-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: M K PATEL

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.2274/AHD/2011 / ASSTT. YEAR: 2006-07 BOCK (INDIA) P. LTD. SURVEY NO.471 SAKARDA, BHADARWA ROAD NR. MIXI BUS STAND, SAVLI DIST. VADODARA 391 780. PAN : AAACB 7738 H VS DCIT, CIR.1(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI M.K. PATEL REVENUE BY : SHRI M.K. SINGH, SR.DR / DATE OF HEARING : 04/03/2015 / DATE OF PRONOUNCEMENT: 13/03/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-I, BARODA DATED 20.6.2011 FOR ASSTT.YEAR 2006-07. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISSION AMOUNTING TO RS.2,75,455/- ON THE GROUND THAT THERE WAS VARIATION IN THE COMMI SSION PAYMENT AND DATE OF CORRESPONDING SALES TRANSACTION. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADE OF COMPRESSOR A ND SPARES. THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD MADE COMMISSION PAYMENT OF RS.5,50,910/-. THE AO R EQUIRED THE ASSESSEE TO FURNISH DETAILS AND JUSTIFICATION NOTE IN RESPECT OF ITA NO.2274/AHD/2011 2 COMMISSION PAID AND SERVICES OBTAINED. THE ASSESSE E DID NOT FURNISH THE DETAILS AND JUSTIFICATION, AND THEREFORE, THE A SSESSEE COULD NOT SUBSTANTIATE THE CLAIM, AND THE AO DISALLOWED DEDUC TION FOR COMMISSION PAYMENT OF RS.5,50,910/-. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMIT TED THAT IT HAS FILED A LETTER BEFORE THE AO PROVIDING THE DETAILS OF COMMISSION PAID. IN THE SAID LETTER, IT WAS ALSO SUBMITTED THAT THE COM MISSION PAYMENTS WERE TOWARDS SERVICES RENDERED BY THE PARTIES FOR A CHIEVING SALES AND AS PER THE AUDITED ACCOUNTS, SALES DURING THE YEAR INCREASED BY MORE THAN 25% DUE TO APPOINTMENT OF COMMISSION AGENTS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE ALSO PROVIDED DETAILS O F COMMISSION PAYMENTS IN PRECEDING TWO YEARS AND SUBMITTED THAT NO DISALLOWANCE WAS MADE IN THOSE YEARS IN THE ASSESSMENT MADE UNDE R SECTION 143(3). IT WAS SUBMITTED THAT THE TURNOVER OF THE ASSESSEE- COMPANY INCREASED FROM RS.3.89 CRORES TO RS.5.02 CRORES IN THE YEAR U NDER CONSIDERATION, AND THE AO MADE DISALLOWANCE ON SURMISES AND CONJEC TURES. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OBS ERVED THAT THE REASONS FOR MAKING THE DISALLOWANCE BY THE AO FOR C OMMISSION PAYMENTS ON ACCOUNT OF NON-FILING OF THE DETAILS OF COMMISSION PAID OR FOR PROVIDING JUSTIFICATION FOR MAKING THE COMMISSI ON PAYMENTS DID NOT APPEAR TO BE CORRECT. THE CIT(A) OBSERVED THAT THE COPY OF THE LETTER FILED DURING THE ASSESSMENT PROCEEDINGS, DETAILS OF SALES COMMISSION WERE PROVIDED DURING THE ASSESSMENT PROCEEDINGS, AN D IT WAS SUBMITTED THAT THE COMMISSION WAS FOR ACHIEVING SALES. THE CIT(A) FURTHER OBSERVED THAT, HOWEVER, ON GOING THROUGH FURTHER DE TAILS OF COMMISSION PAYMENTS, IT WAS NOTICED THAT THE COMMISSION PAYMEN TS VARY WIDELY FROM 3% TO 25%. THE CIT(A) FURTHER OBSERVED THAT IN SOME CASES, THE COMMISSION PAYMENTS WERE OUTSTANDING AT THE YEAR-EN D, EVEN THOUGH THE DATE OF CORRESPONDING SALES TRANSACTION WAS MOR E THAN 6 MONTHS BACK. FURTHER, IN SOME CASES, COMPLETE ADDRESSES O F PARTIES WERE NOT ITA NO.2274/AHD/2011 3 AVAILABLE. THE CIT(A) OBSERVED THAT THE AR COULD N OT SATISFACTORILY EXPLAIN WIDE VARIATION IN THE RATES OF COMMISSION P AYMENTS. CONSIDERING THESE ASPECTS, THE CIT(A) HELD THAT THE PAYMENTS OF COMMISSION COULD NOT BE SAID TO BE WHOLLY AND EXCLU SIVELY IN CONNECTION WITH THE BUSINESS, AND THEREFORE SUSTAINED DISALLOW ANCE AT 50% OF THE TOTAL COMMISSION PAYMENT, AND THEREBY RESTRICTED TH E DISALLOWANCE TO RS.2,75,455/-. 6. BEFORE US, THE AR OF THE ASSESSEE CONTENDED THAT NO DISALLOWANCE FOR COMMISSION PAYMENT WAS MADE IN EARLIER YEARS. BECAUSE OF PAYMENT OF COMMISSION, THE SALE OF THE ASSESSEE INC REASED FROM RS.3.89 TO RS.5.02 CRORES. THEREFORE, THE DISALLOW ANCE AT 50% OF THE TOTAL COMMISSION PAYMENT SUSTAINED BY THE CIT(A) WA S NOT JUSTIFIED. 7. ON THE OTHER HAND, THE DR SUPPORTED THE ORDER OF THE CIT(A). 8. WE FIND THAT THE AR OF THE ASSESSEE COULD NOT PO INT ANY SPECIFIC MISTAKE IN THE ORDER OF THE CIT(A). THE CIT(A) OBS ERVED THAT NO JUSTIFICATION FOR VARIATION IN RATE OF COMMISSION F ROM 3% TO 25% COULD BE EXPLAINED BY THE ASSESSEE, AND IN CERTAIN CASES, THE ADDRESSES OF THE PARTIES TO WHOM THE COMMISSION WAS PAID WAS NOT FUR NISHED. NO MISTAKE IN THE ABOVE FINDINGS OF THE CIT(A) COULD B E POINTED OUT BY THE AR. IN THE ABSENCE OF ANY SUCH MATERIAL BROUGHT BE FORE US, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS CONFIRMED AND THE GROUND OF THE APPEAL OF THE ASSES SEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 13 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/3/2015