ASST 33(3), MUMBAI V. RUKMANI M IYER, MUMBAI

ITA 2409/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8389 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Department
• Bench Allotted: F
• Next Hearing Date: 02-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: HARISH P SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 2409 / MUM/20 1 5 ( ASSESSMENT YEAR : 2010 - 11 ) ACIT 33(3), MUMBAI VS. SMT. RUKMANI M IYER, 1002 DOLL APARTMENT, BHATT LANE, KANDIVALI (W), MUMBAI - 400067 PAN/GIR NO. AAAPI7916F APPELLANT ) .. RESPONDENT ) REVENUE BY MS. POOJA SWAROOP ASSESSEE BY SHRI HARISH P SHAH DATE OF HEARING 02 / 02 /201 7 DATE OF PRONOUNCEME NT 13 / 02 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 144C OF THE IT ACT. 2. THE ONLY GRIEVANCE OF REVENUE RELATES TO DEL ETION OF ADDITION TOWARDS COMMISSION BY INVOKING PROVISIONS OF SECTION 40(A)(I) OF THE ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT ASSESSEE IS A MERCHANT EXPORTER. DURING THE COURSE OF SCRUTINY ASSESSMENT AO DIS ALLOWED SALES COMMISSION OF RS.2,43,95,715/ - FOR NON DEDUCTION OF TAX U/S. 40(A)(I). BY THE IMPUGNED ORDER CIT(A) DELETED THE ADDITION / DISALLOWANCE AFTER FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 DATED 28/10/2 015. ITA NO. 2409/MUM/2015 SMT. RUKMANI M. IYER 2 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT SIMILAR ADDITION / DISALLOWANCE MADE U/S.40 (A)(I) WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 28/10/2015 AFTER HAVING THE FOLLOWING OBSERVATION: - 2.7. WE HAVE CONSIDERED SUBMISSION MADE BY BOTH THE SIDES, ORDERS OF LOWER AUTHORITIES AND MATERIAL PLACED - BEFORE US AS WELL AS ORDERS OF THE TRIBUNAL OF EARLIER YEARS. THE ISSUE INVOLVED HEREIN IS THAT WHETHER THE AMOUNT OF COMMISSION EXPENSES DEBITED BY THE ASSESSEE IS ALLOWABLE IN THE GIVEN FACTS AND CIRCUMSTANCES OR NOT. THE GRIEVANCE OF THE LD . AO WAS THAT THE ASSESSEE WAS NOT ABLE TO SHOW THAT EXPENSES INCURRED WERE ACCRUED AND CRYSTALLIZED DURING THE YEAR. THE LD. CIT(A) HAS RELIED UPON THE ORDERS OF EARLIER YEARS PASSED BY HIS PREDECESSORS TO DEC IDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. IT IS NOTED THAT THIS ISSUE HAS REACHED UP TO TRIBUNAL, WHEREIN IN BOTH THE ASSESSMENT YEARS I.E. A.YS. 2007 - 08 & 2008 - 09, THE ORDERS OF LD. CIT(A) HAVE BEEN CONFIRMED, BY DISMISSING THE APPEAL OF THE REVENUE ON T HIS ISSUE. IT IS NOTED THAT IN A.Y.2007 - 08, THE TRIBUNAL IN ITS ORDER DATED 09.04.2014, IN ITA NO.6952/2010 HAS EXAMINED THIS ISS UE IN DETAIL. THE RELEVANT PARA OF THE TRIBUNAL CONTAINING OBSERVATIONS IS REPRODUCED BELOW . WE HAVE HEARD THE LD. REPRESENTAT IVES O F BOTH THE PARTIES AND ALSO HAVE GONE THROUGH THE RECORDS. THE FACTS OF THE CASE REVEAL THAT IN FACT THE COMMISSION CLAIMED BY THE ASSESSEE AT THE RATE OF 12% OF SALES PAYABLE TO THE THREE PARTIES IN QUESTION WAS IN FACT A DISCOUNT ON THE SALES. THE AO DISALLOWED THE SAME HOLDING THAT THE LIABILITY DID NOT ACCRUE DURING THE YEAR IN QUESTION AS ALMOST 50% OF THE COMMISSION AMOUNT WAS DEDUCTED BY THE PARTIES IN THE SUBSEQUENT YEAR. IN OUR VIEW, THE FINDING ARRIVED AT BY THE AO WAS NOT CORRECT. IT IS NOT DISPUTED THAT ALLEGED COMMISSION AT RATE OF 12% OF THE SALES WAS IN FAC T A DISCOUNT ON SAL ES . IT IS OBVIOUS THAT THE PURCHASER 'WOULD PAY THE SA L E PRICE AFTER DEDUCTING THE DISCOUNT GIVEN ON THE SALE OF THE PRODUCT. SO FAR THE QUESTION OF ACCRUAL OF THE L IABILITY DURING THE YEAR UNDER CONSIDERATION IS CONCERNED, IT MAY BE NOTED THAT THE SALES IN QUESTION WERE BOOKED BY THE ASSESSEE E DURING THE YEAR. AS AND WHEN THE SALES WERE BOOKED BY THE ASSESSEE, AT THE SAME TIME THE DISCOUNT PAYABLE AGAINST THOSE SALES WAS ALSO TO BE BOOKED ALONG WITH THE SALES. SO THE MOMENT THE SALES ALONG WITH DISCOUNTS ARE BOOKED, THE LIABILITY TO PAY OR THE RIGHT OF THE PURCHASER TO DEDUCT THE DISCOUNT ACCRUES. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE LD. CIT(A) IN DELETING THE IMPUGNED ADDITIONS. THIS GROUND OF THE APPEA L OF THE REVENUE IS ACCORDINGLY DISMISSED. 2.8. SIMILARLY IN A.Y .2008 - 09 THE TRIBUNAL HAS DECIDE D THIS ISSUE IN FAVOUR OF ASSESSEE VIDE ORDER DATED 1.06.2015 IN ITA ITA NO. 2409/MUM/2015 SMT. RUKMANI M. IYER 3 N O.3233/M/2012, WHEREIN THE 'ORDER OF A.Y. 2007 - 08 HA S BEEN FOLLOWED BY THE TRIB UN AL . 6. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT EXPENSES SO DEBITED ACTUALLY ARE IN THE NATURE OF DISCOUNT AND NOT SALES COMMISSION . T HE TRIBUNAL OBSERVED THAT THE SALES ALONGWITH DISCOUNT S ARE BOOKED, THE LIABILITY TO PAY OR THE RIGHT OF THE PURCHASER TO DEDUCT THE DISCOUNT ACCRUES . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AS STATED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE ADDITION / DISALLOWANCE S O MADE ON ACCOUNT OF SALES COMMISSION. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 13 / 02 /2017 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 13 / 02 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//