Eximcorp India Private Limited, Kolkata V. DCIT, Cir.-5(2), , Kolkata

ITA 2582/KOL/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5753 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 12-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 37; 133(6); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.2582/Kol/2019 Assessment Year: 2013-14 Eximcorp India Private Limited........ .........................................................Appellant 25, R.N. Mukherjee Road, 4 th Floor, Suite C, Kolkata-1. [PAN: AAACE7115P] vs. DCIT, Circle-5(2), Kolkata....................................................................Respondent Appearances by: None appeared on behalf of the appellant. Smt. Ranu Biswas, Addl. CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : March 10, 2022 Date of pronouncing the order : March 30, 2022 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 17.10.2019 of the Commissioner of Income Tax (Appeals)-2, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). The assessee in this appeal has taken the following grounds of appeal: “1. That on the facts and in the Circumstances of the case, the Ld. Commissioner of Income-tax (Appeals) [hereinafter referred to as Ld. CIT(Appeals)] was not justified and erred in law in confirming the disallowance of commission paid to the HUF's amounting to Rs.11,79,995/-. 2. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in not considering the fact that both the HUF's had duly replied to the Notice u/s 133(6) and submitted all relevant documents in support of the appellant claims. 3. That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) was not justified and erred in ignoring the fact that the commission was paid wholly and exclusively for the purpose of the business as contemplated u/s 37 of the Act. 4. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal.” I.T.A. No.2582/Kol/2019 Assessment Year: 2013-14 Eximcorp India Private Limited 2 2. No one has put in appearance on behalf of the assessee despite notice, therefore, we proceed to decide the present appeal on merits after going through the records and after hearing the ld. DR. 3. The brief facts, relevant to the issue, are that the Assessing Officer, during the assessment proceedings, noticed that the assessee company had paid brokerage of Rs.1.19 crore. On verification of the details, the Assessing Officer noted that the assessee had paid commission to total 26 parties. However, he found that the following commission was paid to two HUFs: Name of the payees PAN Amount (Rs.) Asish Kumar (HUF) AALHA6209E 9,39,434 Pradip Kumar Patawari (HUF) AAHHP2873H 2,40,561 Total 11,79,995 He asked the assessee to explain why commission to HUF entities be allowed. In reply, the assessee submitted as under: “Our sales policy is not to lose a customer to the best of our ability and reward the person who develops or introduces a business for the life time of a relationship with such customer regardless of whether such introducer has a regular role in day to affairs or not. This secures a trust and we are known in a market for such trust and reliability of our commitment. The management of Sales requires expert skill to identify of our commitment. The management of sales requires expert skill to identify and determine the product in our range that actually fits the suitability for the end application of the user With regard to the specific query concerning the accounts of (i) Aashish Kumar, (ii) Aashish Kumar, HUF and Chaitali Tibrewal we would like to state and submit that all the three accounts belong to Sri Aashish Kumar and he has only managed his commission receipts in a manner that minimizes his tax burden and we believe he is entitled to it. He together with Abhishek Rejgaria manages the entire sales of the company including office management, administration, Aashish Kumar is also an attorney of the company holding a power of attorney to discharge all the functions as may arise while managing the day to day affairs. Until the FY 2014-15, the company has been rewarding them by way of a commission on selected sales taking in to consideration the quantum of such commissions in totality vis-à-vis the need of commensurate remuneration for the contribution 1o the growth and development of business. Taking the established remunerations by way of commission during the past periods, health of company's own financial position, the rewards to both Aashish Kumar & Abhishek Rajgaria has been I.T.A. No.2582/Kol/2019 Assessment Year: 2013-14 Eximcorp India Private Limited 3 compounded in to a monthly salary of Rs.3.00 Lakh per month with effect from 1-04- 2015 plus such other benefits and productivity bonuses as the company may consider 1necessary upon review of its own business health during the last month of the fiscal year.” Considering the aforesaid reply, the Assessing Officer noticed that from the aforesaid reply it is revealed that the assessee had resorted to diverting commission payments to HUF entities as per the concerned Karta’s request. He noticed that the aforesaid diversion did not prove rendering of services by the said HUF entities. He accordingly disallowed the payments of commission to HUF entities amounting to Rs.11,79,995/- and added back the same to the income of the assessee. 4. Being aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the CIT(A). Even before the ld. CIT(A), the assessee could not prove the rendering of any service by the aforesaid HUF entities. The ld. CIT(A), therefore, dismissed the appeal of the assessee observing as under: “I have considered the grounds of appeal, statement of facts and submission of the authorized representative of the appellate company as well as the order of the assessing officer framed in the light of the materials available on record before the assessing officer during the assessment proceedings. In find that the AO has disallowed the expenses in absence of evidences for providing the proof of service by the HUF. The AR during the appellate proceeding admitted that the payment was made on the basis of direction of Individual (Karta) who asked for the same. I further find that in absence of proof of service, actually rendered by the HUF, it can be held that the expenses were incurred wholly and exclusively for the purpose of the business. Keeping in view of the facts as mentioned above, in the absence of any cogent material evidence, I do not find any infirmity in the order of the Assessing Officer and the same is hereby upheld. In view of above, this ground of appeal is dismissed.” 5. Being aggrieved by the said order of the ld. CIT(A), the assessee has come in appeal before us. Neither anyone put in appearance on behalf of the assessee nor there is any document on the file to show that the aforesaid HUF entities have rendered any service to the assessee, justifying the payment of the aforesaid commission amount. We, therefore, do not find any infirmity in the order of the CIT(A) and the same is upheld. The appeal of the assessee is thereby dismissed. I.T.A. No.2582/Kol/2019 Assessment Year: 2013-14 Eximcorp India Private Limited 4 6. In the result, the appeal of the assessee stands dismissed. Kolkata, the 30 th March, 2022. Sd/- Sd/- [Girish Agrawal] [Sanjay Garg] Accountant Member Judicial Member Dated: .03.2022. RS Copy of the order forwarded to: 1. Eximcorp India Private Limited 2. DCIT, Circle-5(2), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches