ITO, New Delhi V. Shri Inder Lal Mehta, New Delhi

ITA 2929/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81847 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: S K ARORA
• Keywords: Additional evidence; Commercial expediency

Judgement Text

ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO. 2929/DEL/2013 ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, VS INDER LAL MEHTA, WARD-33(2), ROOM NO.1602, B-1/591H, 16 TH FLOOR, TOWER E-2, JANAKPURI, DR. S.P. MUKHERJEE CIVIC CENTRE, NEW D ELHI-110058 J.L. NEHRU ROAD, (PAN: AABFD2095B) NEW DELHI-110002 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL SINGH, SR.DR RESPONDENT BY : SHRI S.K. ARORA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF CIT(A)-XXVI, NEW DELHI DATED 28.02.2013 IN APPEAL NO. 308/2011-12 FOR AY 2009-10. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- 1. 'THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 24,18,900/- MADE BY THE A0 ON ACCOUNT OF PAYMEN TS RECEIVED FROM M/S HITACHI SINGAPORE DURING THE YEAR UNDER CONSIDERATION. 2. THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FAC T THAT THE ASSESSEE OFFERED THIS AMOUNT OF RS. 24,18, 900/- IN ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 2 OF 7 RETURN OF AY 2011-12 AFTER THE AO MADE ADDITION ON THIS ACCOUNT IN AY 2009-10. 3. THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCES WITHOUT PROVIDING OPPORTUNITY TO THE AO U NDER RULE 46A OF THE IT RULES 1962. 4. THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANC E OF RS. 10,72,000/- MADE BY THE AO ON ACCOUNT OF COMMISSION EXPENSES DESPITE THE FACT THAT THE ASSES SEE COULD NOT SUBSTANTIATE THE BUSINESS EXPEDIENCY OF T HE SAME.' 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. APROPOS GROUND NO. 3, LD. DR SUBMITTED THAT THE CIT(A) ACCEPTED ADDITIONAL EVIDENCE WITHOU T CALLING REMAND REPORT FROM THE AO IN CONTRAVENTION OF RULE 46A OF THE INC OME TAX RULES, 1962. 4. THE LD. COUNSEL FOR THE ASSESSEE REPLIED THAT NO ADDITIONAL EVIDENCE WAS SUBMITTED BEFORE THE CIT(A). THE LD. COUNSEL VEHEME NTLY CONTENDED THAT THE COPIES OF INCOME TAX RETURN FOR AY 2010-11 AND TDS CERTIFICATES ARE PART OF THE RECORD OF THE INCOME TAX DEPARTMENT WHICH CANNOT BE SAID AS ADDITIONAL EVIDENCE AND THERE WAS NO VIOLATION OF RULE 46A OF INCOME TAX RULES, 1962 BY LD. CIT(A). 5. ON CAREFUL PERUSAL OF THE ORDER OF THE CIT(A), S PECIALLY PARAS 8 AND 11, WE NOTE THAT THE ASSESSEE FILED COPIES OF E-FILING ACKNOWLEDGEMENT ALONG WITH BALANCE SHEET, P&L ACCOUNT, ANNEXURES THERETO AND C OPIES OF THE TDS RETURNS BEFORE CIT(A) AT THE FIRST TIME AND THESE DOCUMENTS WERE NOT PRODUCED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS. WE ALSO NOTE THAT THE CIT(A) ADMITTED ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 3 OF 7 AND CONSIDERED THIS DOCUMENTARY EVIDENCE WHILE GRAN TING RELIEF FOR THE ASSESSEE. AT THE SAME TIME, WE OBSERVE THAT THE ACKNOWLEDGEME NT OF FILING RETURN AND TDS CERTIFICATES ARE PART OF THE RECORD OF THE REVE NUE DEPARTMENT AND UNTIL AND UNLESS THEIR GENUINENESS IS DOUBTED BY THE REVENUE AUTHORITIES, THE SAME DOCUMENT DOES NOT REQUIRE ANY VERIFICATION OR EXAMI NATION AT THE END OF AO. HENCE, WE DECLINE TO HOLD THAT THE CIT(A) ADMITTED AND CONSIDERED ADDITIONAL EVIDENCE IN CONTRAVENTION TO RULE 46A OF THE I.T. R ULES, 1961. HENCE, LEGAL GROUND NO. 3 OF THE REVENUE IS DISMISSED. GROUND NO. 1 & 2 6. APROPOS THESE GROUNDS, LD. DR FOR THE ASSESSEE S UBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.24,18,900 MADE BY THE AO ON ACCOUNT OF PAYMENT RECEIVED FROM M/S HITACHI SINGAPORE DURI NG THE FINANCIAL YEAR UNDER CONSIDERATION. THE DR FURTHER CONTENDED THAT THE CIT(A) ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE OFFERED THIS AMOUNT IN THE RETURN OF AY 2011-12 AFTER THE AO MADE ADDITION NON THE COUNT IN AY 2009-10. THE DR FINALLY SUPPORTED THE ASSESSMENT ORDER AND SUBMITTE D THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 7. LD. COUNSEL FOR THE ASSESSEE REPLIED THAT THE CI T(A) HAS GRANTED RELIEF FOR THE ASSESSEE ON COGENT AND JUSTIFIED GROUND, HENCE THE APPEAL IS HAVING NO SUBSTANCE. HE HAS DRAWN OUR ATTENTION TOWARDS PARA 8 OF THE IMPUGNED ORDER ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 4 OF 7 AND ALSO SUBMITTED THAT WHEN THE ASSESSEE HAS OFFER ED THIS INCOME FOR TAXATION IN AY 2010-11, THEREFORE, ACTION OF THE AO WAS NOT TENABLE. 8. ON CAREFUL CONSIDERATION OF ABOVE AND PERUSAL OF THE OPERATIVE PART OF THE ORDER, WE OBSERVE THAT THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING CONCLUSION:- I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSI ONS OF THE AR AND THE ASSESSING OFFICER'S FINDING. AS EXPL AINED BY THE AR, THE APPELLANT HAD RECEIVED US$ 50,000 FROM M/S HITACHI SINGAPORE TO MEET THE COST OF SITE PREPARATION AND INSTALLATION OF THE SAID MRI MACHINE AT THE PREMISES OF MLB MEDI CAL COLLEGE AFTER ITS ARRIVAL. I FIND THAT THE MRI MACH INE WAS ALTHOUGH SHIPPED BY M/S. HITACHI FROM JAPAN ON 28.2 .2009, BUT IT RECEIVED IN INDIA IN THE MONTH OF MAY 2009 I.E. IN THE NEXT FINANCIAL YEAR WHEN THE WORK OF ITS INSTALLATION ST ARTED AND IT WAS OUT OF THE ADVANCE AMOUNT OF RS.24,18,900/-, TH E APPELLANT MET THE COST OF INSTALLATION AND OTHER EXPENSES. TH E AR OF THE APPELLANT HAS FILED BEFORE ME COPY OF E-FILING ACKN OWLEDGMENT NUMBER 381097640310312 DATED 31.3.2012 ALONG WITH C OPIES OF BALANCE SHEET, PROFIT & LOSS ACCOUNT AND ALL ANN EXURES TO SHOW THAT THIS AMOUNT OF RS.24,18,900/- HAS DULY BE EN DECLARED AS INCOME OF THE APPELLANT FOR THE ASSESSMENT YEAR 2010-11. I HAVE PERUSED THESE DOCUMENTS AND FIND THAT THE APPE LLANT HAS OFFERED THIS INCOME FOR TAXATION IN THE ASSESSMENT YEAR 2010-11. THEREFORE, CONSIDERING ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE, I FIND THAT THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. ACCORDINGLY, THE ADDITI ON OF RS.24,18,900/- MADE BY THE ASSESSING OFFICER IS DEL ETED. 9. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT T HE CIT(A) WAS QUITE JUSTIFIED IN DELETING THE IMPUGNED ADDITION AS THE ASSESSEE RECEIVED DISPUTED AMOUNT IN MAY 2009 I.E. IN THE NEXT FINANCIAL YEAR RELATED TO AY 2010-11 WHEN THE WORK OF INSTALLATION OF MRI MACHINE WAS STARTED AND THE AMOUNT OF ADDITION WAS AN ADVANCE TO MEET THE COST OF INSTALLATION AND OTHER EXPENSES. ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 5 OF 7 SUBSEQUENTLY, WHEN THE ASSESSEE HAD DECLARED THIS A MOUNT AS INCOME IN THE RETURN OF INCOME FILED FOR AY 2010-11, THEN IT WAS NOT JUSTIFIED TO SUSTAIN THE ADDITION IN THE HANDS OF ASSESSEE. THE DR HAS NOT DISPUTED THE FACT THAT THE AMOUNT WAS RECEIVED IN MAY 2009 AND OFFERED FOR TAX ATION IN AY 2010-11. UNDER THESE CIRCUMSTANCES, WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A), HENCE, GROUND NO. 1 & 2 OF THE REVENUE ARE DISMISSED. GROUND NO.4 10. APROPOS GROUND NO. 4, LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.10,72,000 MADE BY T HE AO ON ACCOUNT OF COMMISSION EXPENSES DESPITE THE FACT THAT THE ASSES SEE COULD NOT SUBSTANTIATE THE BUSINESS EXPEDIENCY OF THE SAME. THE DR CONTEN DED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 11. LD. COUNSEL FOR THE ASSESSEE REPLIED THAT THE A SSESSEE EARNED COMMISSION OF RS. 15 LAKH FROM M/S BLUE STAR LTD. ON ACCOUNT O F HIS SERVICES IN SUCCESSFULLY OBTAINING THE CONTRACT FOR SUPPLY OF M RI MACHINE BY MS/ HITACHI. THE ASSESSEE PAID SOME COMMISSION TO DR. RAJESH MEH TA, MR. O.P. MALHOTRA AND MRS. ANNU MALHTORA WHO PROVIDED THEIR VALUABLE SERVICES DURING THE PROCESS OF SECURING ORDER. LD.COUNSEL VEHEMENTLY CO NTENDED THAT THE PAYMENT OF COMMISSION WAS MADE BY THE ASSESSEE THROUGH CHEQ UES AND AFTER DEDUCTION OF ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 6 OF 7 TDS WHICH WAS FURTHER DEPOSITED WITH THE DEPARTMENT , HENCE, THE AO WAS WRONG IN MAKING THE ADDITION WHICH WAS RIGHTLY DELE TED BY THE CIT(A). 12. ON CAREFUL CONSIDERATION OF ABOVE, WE OBSERVE T HAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING CONCLUSION:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS OF THE APPELLANT. ON PERUSAL OF DETAILS, ON RECORD, I FIND THAT THE APPELLANT EARNED A COMMI SSION OF RS.15 LAKH FROM M/S. BLUE STAR LTD. ON ACCOUNT OF H IS SERVICES IN SUCCESSFULLY OBTAINING THE CONTRACT FOR SUPPLY OF MRI MACHINE BY M/S. HITACHI. THE APPELLANT IN TURN PAID SOME COMMISSION TO DR. RAJESH MEHTA, MR. O.P. MALHO TRA AND MRS. ANNU MALHOTRA WHO PROVIDED A VALUABLE PROFESSIONAL AND TECHNICAL IN-PUTS. DURING THE PROC ESS OF SECURING THE ORDER. ALL THE PAYMENTS WERE MADE THRO UGH CHEQUES AND TDS WAS DULY DEDUCTED AND DEPOSITED BY THE APPELLANT ON THESE COMMISSION PAYMENTS. THE APPELLA NT HAS FILED BEFORE ME COPIES OF THE TDS RETURNS IN RESPEC T OF DEDUCTION AND DEPOSIT OF TAX ON COMMISSION PAYMENTS . THEREFORE, CONSIDERING THESE FACTS, I SEE NO JUSTIF ICATION FOR THE ASSESSING OFFICER TO DISALLOW THESE COMMISSION EXPENSES. ACCORDINGLY, THE ADDITION OF RS.10,72,000/- MADE BY THE ASSESSING OFFICER IS DELETED. 13. IN VIEW OF ABOVE, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE CIT(A) BECAUSE AS PER FACTUAL MATRIX OF THE CASE, THE PAYM ENT OF COMMISSION WAS MADE BY THE ASSESSEE UNDER COMMERCIAL EXPEDIENCY AS IT W AS NOT POSSIBLE FOR THE ASSESSEE TO SECURE ORDER WITHOUT TECHNICAL SUPPORT OF THE PAYEE PROFESSIONALS. WE FURTHER NOTE THAT ALL PAYMENTS HAVE BEEN MADE TH ROUGH CHEQUES AFTER DEDUCTION OF TDS WHICH WAS ALSO DEPOSITED WITH THE DEPARTMENT. HENCE, WE ARE UNABLE TO SEE ANY PERVERSITY OR AMBIGUITY IN TH E IMPUGNED ORDER IN THIS ITA NO. 2929/DEL/2013 ASSTT.YEAR: 2008-09 PAGE 7 OF 7 REGARD AND WE UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 4 OF THE REVENUE IS ALSO DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 28TH OCTOBER, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR