ITO WD 13(2)(2), MUMBAI V. JAWAHAR DISTRIBUTORS, MUMBAI

ITA 2668/MUM/2010

• Counselvise Citation: 266819914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 04-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VANDANA SAGAR

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI R.S.PADVEKAR (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.2668/M/2010 ASSESSMENT YEAR 2006-07 THE ITO 13(2)(2) M/S. JAWAHAR DISTRIBUTORS R NO.477, 4 TH FLOOR 102, ANAND BHAVAN, MASJID BUNDER AAYAKAR BHAVAN, M.K.ROAD KESHAVJI NAIK ROAD, MUMBAI 400 020. MUMBAI 400 009. PAN : AADFJ 4101 G APPELLANT RESPONDENT REVENUE BY : SMT. VANDANA SAGAR ASSESSEE BY : NONE O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 20.1.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING DELETING THE AD DITION MADE BY THE AO ON ACCOUNT OF COMMISSION INCOME. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE WHO WAS DISTRIBUTOR OF DIFFERENT COMPANIES INCLUDING M/S.BHARATI TEL. VENT URE COMMUNICATION LTD. HAD RECEIVED GROSS COMMISSION OF RS.79,09,506 FROM M/S. BHARATI TEL. THE ASSESSEE HOWEVER OFFERED COMMISSION INCOME OF ONLY RS.7,01,4 26/-. THE ASSESSEE EXPLAINED THAT AS PER THE AGREEMENT WITH THE COMPAN Y IT WAS RECEIVING GROSS 2 COMMISSION @ 5% FROM WHICH THE ASSESSEE HAD TO PAY COMMISSION @ 3 TO 4% TO THE RETAILERS. ACCORDINGLY THE INCOME SHOW WAS L OWER. THE AO HOWEVER OBSERVED THAT THE ASSESSEE HAD NOT GIVEN ITEM-WISE DETAILS ON WHICH THE ASSESSEE HAD PAID COMMISSION TO THE RETAILERS @ 3 T O 4%. THE AO THEREFORE ALLOWED THE COMMISSION TO THE RETAILERS @ 3.5% WHIC H WAS COMPUTED AT RS.55,36,654/-. THE NET COMMISSION OF RS.23,72,852/ - (7909506 5536654) WAS ASSESSED AS COMMISSION INCOME IN PLACE OF RS.7, 01,426/- OFFERED BY THE ASSESSEE. 3. IN APPEAL THE ASSESSEE SUBMITTED THAT IT WAS GET TING GROSS COMMISSION @ 5% AS DISTRIBUTORSHIP COMMISSION TO SELL PRE-PAID VOUCHERS AND THE ASSESSEE WAS GIVING 3 TO 4% COMMISSION TO THE RETAILER SHOPS . THE ASSESSEE HAD RECEIVED THE NET COMMISSION AFTER DEDUCTING EXPENDI TURE WHICH HAD BEEN CORRECTLY SHOWN AS INCOME. AFTER CONSIDERING THE EX PLANATION OF THE ASSESSEE CIT(A) OBSERVED THAT THE CERTIFICATE GIVEN BY THE T ELECOM COMPANY SHOWED THAT 5% WAS AGGREGATE MARGIN AVAILABLE TO BOTH THE DISTR IBUTOR AND RETAILER PUT TOGETHER AND AFTER REDUCING THE DISCOUNT/ COMMISSIO N PAID TO THE RETAILER OF ABOUT 3.75% , THE ASSESSEE HAD SHOWN THE INCOME CORRECTLY. CIT( A) ACCORDINGLY DIRECTED THE AO TO DELETE THE ADDITION AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US NO ONE APPEARED TO REPRESENT THE CASE ON BEHALF OF THE ASSESSEE THOUGH ON THE PREVIOUS DATE OF HEARING ON 3.5.11 CASE WAS ADJOURNED TO 4.5.11 AND THE DATE OF HEARING WAS ANNOUNCED IN THE OPEN COURT. IT IS ALSO NOTED THAT ON THE EARLIER DATE OF HEARING ON 8.3.11 ALSO, NO ONE APPEARED AND NOTICE FOR NEXT DATE OF HEARING ON 3.5.11 WAS DULY SERVED THROUGH THE DR AS PER THE REPORT OF THE AO PLACED ON RECORD. WE THERE FORE PROCEED TO DECIDE THE 3 APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED DR WHO PLACED RELIANCE ON THE ORDER OF THE AO. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ASSESSMENT OF INCOME ON ACCOUN T OF COMMISSION RECEIVED BY THE ASSESSEE FROM THE DISTRIBUTORSHIP OF BHARATI TEL.VENTURE COMMUNICATION LTD. THE ASSESSEE HAD RECEIVED GROSS COMMISSION OF RS.79,09,506/ @ 5% FROM THE TELECOM COMPANY. THE ASSESSEE HAD SUBMITTED BEF ORE THE AO THAT OUT OF THE GROSS COMMISSION RECEIVED, IT WAS PAYING COMMIS SION TO THE RETAIL SHOPS @ 3 TO 4% FOR SELLING THE PRE-PAID VOUCHERS. THE AO H OWEVER NOTED THAT THE ASSESSEE HAD NOT GIVEN ITEM-WISE DETAILS REGARDING THE PAYMENT OF COMMISSION TO THE RETAIL SHOPS. HE THEREFORE ALLOWED COMMISSIO N PAYMENT ONLY @ 3.5% AND ACCORDINGLY COMPUTED THE NET COMMISSION INCOME OF THE ASSESSEE AT RS.23,72,852/- IN PLACE OF RS.7,01,426/- DECLARED B Y THE ASSESSEE. CIT(A) HAS ALLOWED AVERAGE COMMISSION TO RETAILERS AT ABOUT 3. 75% WITHOUT ANY FURTHER MATERIAL PRODUCED BEFORE HIM TO SUBSTANTIATE THE PA YMENT OF COMMISSION @ 3.75%. THE ASSESSEE HAD ONLY SUBMITTED BEFORE CIT(A ) THAT GROSS COMMISSION OF 5% WAS AGGREGATE MARGIN AVAILABLE TO THE DISTRIB UTOR (ASSESSEE) AND RETAILERS PUT TOGETHER AND ON THE BASIS OF SUCH SUB MISSION CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE THOUGH NO MATERIAL WAS PRODUC ED BEFORE HIM ALSO TO SUBSTANTIATE THE PAYMENT OF COMMISSION @ 3.75% TO THE RETAILERS. THE ORDER OF CIT(A) THEREFORE CANNOT BE SUSTAINED. THE MATTER IN OUR VIEW REQUIRES FRESH VERIFICATION REGARDING THE ACTUAL PAYMENT OF COMMIS SION TO THE RETAILERS FOR ARRIVING AT A FAIR DECISION IN THE MATTER. WE THERE FORE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE FOR SUB MITTING THE DETAILS 4 REGARDING PAYMENT OF COMMISSION TO THE RETAILER AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED F OR STATISTICAL PURPOSE. 7. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11.05 .2011. SD/- SD/- ( R.S. PADVEKAR ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 11.05.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR I BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK