ACIT, Circle, Bhilwara V. M/s. Fashion Suitings Pvt. Ltd. , Bhilwara

ITA 283/JODH/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9989 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 23-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 37(1)

Judgement Text

1 ITA NO.283/JODH/2019 M/S. FASHION SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2016-17 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.283/JODH/2019 ( / ASSESSMENT YEAR: 2016-17) A CIT - CIRCLE BHILWARA INCOME TAX OFFICE, SHASTRI NAGAR KAWA KHERA CHORAHA, BHILWARA RAJASTHAN-311 001. / VS. M/S. FASHIO N SUITINGS P RIVATE LIMITED RCM WORLD, SPL-6 , P.O. SWAROOP GANJ VIA. RIICO GROWTH CENTRE BHILWARA, RAJASTHAN-311 001. ./ ./PAN/GIR NO. AAACF-3294-L ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI RAJENDRA JAIN (ADVOCATE) LD. AR REVENUE BY : SHRI K.C. BADHOK- LD. CIT- DR / DATE OF HEARING : 02/11/2020 / DATE OF PRONOUNCEMENT : 21/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY DEPARTMENT FOR ASSESSMENT YE AR [IN SHORT REFERRED TO AS AY] 2016-17, CONTEST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS), AJMER, [IN SHORT REFERRED TO AS CIT(A)], 2 ITA NO.283/JODH/2019 M/S. FASHION SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2016-17 APPEAL NO.476/2018-19, DATED 10/06/2019 ON FOLLOWIN G SOLE GROUND:- DELETING THE ADDITION MADE BY THE AO OF RS.2,14,46, 481/- ON ACCOUNT OF ROYALTY COMMISSION WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE PAID THE COMMISSION TO THE AGENTS IN THE CHAIN WHO HAVE NOT RENDERED ANY SERVICES, THUS, THE SAME CANNOT BE CONSIDERED TO HAVE BEEN PA ID WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. AS EVIDENT, THE REVENUE IS AGGRIEVED BY DELETION OF ADDITION OF RS.214.46 LACS ON ACCOUNT OF ROYALTY COMMISSION. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING WRITTEN SUBMI SSIONS AND DOCUMENTS PLACED IN THE PAPER BOOK. THE JUDICIAL PR ECEDENTS AS RELIED UPON DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT MATTER WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. FACTS ON RECORD WOULD BE THAT ASSESSEE BEING RES IDENT CORPORATE ASSESSEE WAS ASSESSED U/S. 143(3) ON 28/1 2/2018 WHEREIN IT WAS SADDLED WITH DISALLOWANCE U/S. 37(1) ON ACCOUNT OF ROYALTY COMMISSION FOR RS.214.46 LACS. THE ASSESSEE IS STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEXT ILES, HANDLOOM & POWER-LOOM AS WELL AS OF POWER GENERATION. IT IS ALSO INVOLVED IN TRADING OF GOODS THROUGH MULTI-LEVEL MARKETING DIST RIBUTION NETWORK ALL OVER INDIA. THE ASSESSEE PAID DISTRIBUTION COMM ISSION OF RS.117.05 CRORES DURING THE YEAR UNDER MULTILEVEL M ARKETING WHICH, INTER-ALIA, INCLUDED ROYALTY COMMISSION OF RS.21.44 CRORES. CONSIDERING ASSESSEES NATURE OF BUSINESS, LD. AO O PINED THAT THE ENTIRE COMMISSION WAS NOT INCURRED WHOLLY AND EXCLU SIVELY FOR 3 ITA NO.283/JODH/2019 M/S. FASHION SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2016-17 BUSINESS PURPOSES. THE ASSESSEES PLEA THAT THE ISS UE WAS RECURRING ONE AND ALREADY DECIDED IN ASSESSEES FAV OR BY THE TRIBUNAL FOR AYS 2009-10 TO 2012-13, WAS REJECTED B Y OBSERVING THAT THE DECISION WAS CHALLENGED BY THE REVENUE BEF ORE HONBLE HIGH COURT AND THE SAME HAD NOT ATTAINED FINALITY. FINALLY, LD. AO ESTIMATED A DISALLOWANCE OF 10% AGAINST THE SAME AN D ADDED AN AMOUNT OF RS.214.46 LACS TO THE INCOME OF THE ASSES SEE. 4. UPON FURTHER APPEAL, LD. CIT(A) CONCURRED WITH T HE PLEA THAT THE SAID EXPENDITURE WAS ALLOWED BY TRIBUNAL FOR AY 2009-10 VIDE ITA NO.357/JODH/2012 ORDER DATED 11/02/2013 WHICH W AS FOLLOWED BY FIRST APPELLATE AUTHORITY IN AY 2010-11 & 2011-1 2 AND THEREFORE, FACTS BEING IDENTICAL, THE ADDITION WAS TO BE DELET ED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. WE FIND THAT THE FACT THAT THE ISSUE WAS COVERED SQUARELY IN ASSESSEES FAVOR BY THE CITED DECISION OF THIS TRIB UNAL FOR AY 2009- 10 REMAIN UNCONTROVERTED BEFORE US. THERE IS NOTHIN G ON RECORD WHICH SUGGESTS THAT THE AFORESAID DECISION WAS EVER REVERSED IN ANY MANNER OR THE SAME WAS NOT APPLICABLE TO THE YE AR UNDER CONSIDERATION. NO CHANGE IN FACTS HAS BEEN DEMONSTR ATED BEFORE US. IN FACT THE AFORESAID DECISION HAS SUBSEQUENTLY BEEN FOLLOWED BY COORDINATE BENCH OF THIS TRIBUNAL FOR AY 2010-11 (ITA NO.321/JODH/2014 DATED 09/03/2016), AY 2011-12 (ITA NO.300/JODH/2015 DATED 16/03/2016), AY 2012-13 (ITA NO.89/JODH/2016 DATED 11/01/2017), AY 2014-15 (ITA NO.477/JODH/2017 DATED 08/02/2018). THEREFORE, RESP ECTFULLY FOLLOWING THE SAME, WE CONFIRM THE STAND OF LD. CIT (A). 4 ITA NO.283/JODH/2019 M/S. FASHION SUITINGS PRIVATE LIMITED ASSESSMENT YEAR: 2016-17 6. IN NUTSHELL, THE APPEAL STANDS DISMISSED. O RDER PRONOUNCED U/R 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (SANDEEP GOSAIN) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21/12/2020 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. # ( ) / THE CIT(A) 4. # / CIT CONCERNED 5. $%!& ' , ' , / DR, ITAT, JODHPUR 6. %)*+ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, JODHPUR.