DCIT, New Delhi V. M/s. ETM Technology Pvt. Ltd., New Delhi

ITA 2965/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6462 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 09-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BEDOBINA CHAUDHARI
• Keywords: Additional evidence; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 143(2)

Judgement Text

ITA NO. 2965 /DEL./201 5 ASSESSMENT Y EAR: 2007 - 08 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SM C NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMB E R ITA NO. 2 965 /DEL./201 5 ASSESSMENT YEAR: 20 0 7 - 08 DCIT CIRCLE - 8(1) ROOM NO. 415, 4 TH FLOOR, C.R. BUILDING, NEW DELHI VS. ETM TECHNOLOGY PVT. LTD. C/O NANGIA & CO. SUITE 4A, PLAZA M6, JASOLA, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: A A BCE4590 P ) REVENUE BY: MS. BEDOBINA CHAUDHARI, SR. DR ASSESSEE BY: SH. NEERAJ SHARMA , C.A. SH. MANPREET BAGGA, CA DATE OF HEARING 0 9 / 0 3 /201 7 DATE OF PRONOUNCEMENT 1 0 / 0 3 /201 7 ORDER PER B.P. JAIN , ACCOUNTANT MEMBER : 1. THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD. CIT(A) - 14 NEW DELHI VIDE ORDER DATED 27 . 2 .201 5 FOR THE A.Y. 20 0 7 - 08 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - PAGE 2 OF 8 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.32,31,500/ - MADE ON ACCOUNT OF COMMISSION EXPENSE S. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,93,203/ - MADE ON ACCOUNT OF TRAVELLING EXPENSES, WITHOUT CONSIDERING THAT THE NATURE OF SERVICES RENDERED WAS NOT EXPLAINED BY THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT TH E ASSESSEE C OMPANY FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2007 - 08 ON 24.10.2007 DECLARING INCOME OF RS. 14,62,844/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) WAS SERVED ON THE APPELLANT. THE ASSESSEE CO MPANY IS ENGAGED IN THE TRADI NG OF ELECTRICAL EQUIPMENT I.E. HIGH VOLTAGE ELECTRIC EQUIPMENT. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY HAS DEBITED ITS PROFIT AND LOSS ACCOUNT WITH AN AMOUNT OF RS. 32,31,500/ - TOWARDS COMMISSION PAYMENTS. T HE ASSESSING OFFICER REQUESTED THE APPELLANT TO FURNISH THE DETAILS OF SUCH COMMISSION PAYMENTS. IN RESPONSE, THE APPELLANT SUBMITTED THE NAME, ADDRESS AND THE GROSS AMOUNT OF COMMISS ION PAYMENTS. IN RESPONSE THE APPELLANT SUBMITTED THE NAME, ADDRESS AND T HE GROSS AMOUNT OF COMMISSION PAID TO AGENTS ALONG WITH THE DETAILS OF TDS PAGE 3 OF 8 DEDUCTED ON SUCH COMMISSION PAYMENT. THE APPELLANT ALSO SUBMITTED THE COPY OF CONFIRMATIONS OF ACCOUNTS OF THE COMMISSION AGENTS. HOWEVER, THE ASSESSING O FFICER D ISALLOWED THE CLA IM OF COMMISSION PAYMENT ON THE GROUND THAT THE APPELLANT COMPANY FAILED TO PROVIDE THE DETAILS OF THE NATURE OF SERVICES RENDERED BY THE COMMISSION AGENTS AND THE BENEFIT ACCRUING TO T HE ASSESSEE COMPANY. THE ASSESSING OFFICER FURTHER NOTED THAT THE A SSES SEE C OMPANY HAD DEBITED AN AMOUNT OF RS. 2,93,2031 / - IN ITS PROFIT AND LOSS ACCOUNT ON ACCOUNT OF TRAVELLING EXPENSES. THE ASSESSING OFFICER REQUESTED THE APPELLANT COMPANY TO PROVIDE THE DETAILS OF SUCH TRAVELLING EXPENSES. IN RESPONSE, THE APPELLANT COMP ANY SUBMITTED BEFORE THE ASSESSING OFFICER THAT DURING THE RELEVANT A SSESSMENT YEAR, DIRECTORS OF APPELLANT COMPANY TRAVELLED TO SWITZERLAND FOR BUSINESS PURPOSES AND ALSO FURNISHED THE DETAILS OF TRAVELLING EXPENSES SUCH AS VISA FEES, HOTEL ETC. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF TRAVELLING EXPENSES ON THE GROUND THAT THE APPELLANT COMPANY COULD NOT ESTABLISH THE BENEFIT ACCRUING TO IT FROM THE FOREIGN TOUR OF THE DIRECTORS AND ADDED IT BACK TO THE TOTAL INCOME OF THE APPELLANT COMPANY AND COMPLETED THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT VIDE ORDER DATED 03.12.2009 AT THE INCOME OF RS. 49,87,547/ - . PAGE 4 OF 8 3. BEFORE LD. CIT (A) THE ASSESSEE SUBMITTED ADDITIONAL EVIDENCES AND ACCORDINGLY A REMAND REPORT WAS TAKEN FROM THE ASSESSING OFFICER AND AFTER CONSIDERING REMAND REPORT AND SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITIONS SO MADE BY THE ASSE SSING OFFICER. THE REVENUE ARGUED THAT THE ASSESSEE HAS NOT SUBMITTED CONFIRMATION OF ACCOUNTS OF THE COMMISSION AND ALSO THE PURPOSE OF TRAVELLING ABROAD. 4. THE LD. AR ON THE OTHER HAND RELIED UPON THE ORDER OF LD. CIT (A) FOR THE SAKE OF CONVENIENCE, I HEREBY REPRODUCE THE ORDER OF THE LD. CIT (A) WHO HAS DELETED THE ADDITIONS AS UNDER: - 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE A.R OF THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER. IT IS NOTED THAT THE APPELLANT COMPANY IS TRADING IN ELECTRICAL EQUIPMENT I.E. HIGH VOLTAGE ELECTRICAL EQUIPMENT. THE APPELLANT COMPANY IS REPRESENTING M/S HAFLEY TEST AG, SWITZERLAND AND HIPOTRONICS INC., USA (GROUP COMPANY OF HAFLEY TEST AG) AND SELLING THEIR PRODUCTS IN INDIAN MARKET. THE SALE S ARE AFFECTED BY THE APPELLANT COMPANY WITH THE HELP OF COMMISSION AGENTS AND DURING THE COURSE OF ASSESSMENT, THE APPELLANT HAS SUBMITTED BEFORE THE ASSESSING OFFICER, THE NAMES, ADDRESS, PAN NUMBER, CONFIRMATION OF ACCOUNTS OF THE COMMISSION AGENTS. BES IDES, THE PAGE 5 OF 8 APPELLANT HAS ALSO SUBMITTED THE DETAILS OF COMMISSION PAYMENTS AND THE TDS DEDUCTED ON ACCOUNT OF COMMISSION PAYMENTS. THE ASSESSING OFFICER HAS NOT DISPUTED THE GENUINENESS OF PAYMENTS OF SUCH COMMISSION TO THE COMMISSION AGENTS. IT WAS ALSO EX PLAINED BEFORE THE ASSESSING OFFICER THAT THE APPELLANT COMPANY IS REPRESENTING THE ELECTRICAL JS MANUFACTURING COMPANIES OF SWITZERLAND AND USA AND SELLING THEM IN THE INDIA N MARKET THROUGH AGENTS. THE APPELLANT COMPANY HAS ALSO SUBMITTED BEFORE T HE ASSES SING OFFICER SAMPLES OF COPIES OF SALE BILLS EVIDENCING THE SALE OF ELECTRICAL GOODS THROUGH THE COMMISSION AGENTS. THEREFORE, IN MY OPINION, THE COMMISSION PAYMENTS TO THE AGENTS HAS BEEN ESTABLISHED BY THE APPELLANT COMPANY AND ACCORDINGLY, THE ASSESSIN G OFFICER IS DIRECTED TO ALLOW THE COMMISSION EXPENSES OF RS. 32,31,500/ - . IT IS FURTHER NOTED THAT THE DIRECTORS OF THE APPELLANT COMPANY NAMELY MR. ANIL UPPAL AND MRS. ANU UPPAL HAVE TRAVELLED TO SWITZERLAND AND THE TRAVELLING EXPENSES OF RS. 2,93,203/ - PERTAINS TO THE AFORESAID DIRECTORS OF THE APPELLANT COMPANY. IT IS WORTHWHILE TO MENTION THAT THE APPELLANT COMPANY IS TRADING IN ELECTRICAL GOODS AND SELLING THE GOODS OF M/S HAFLEY TEST AG, SWITZERLAND. THE DETAILS OF TRAVELLING EXPENSES SUCH AS VISA BI LL, HOTEL BILLS HAVE BEEN FURNISHED BY THE APPELLANT COMPANY DURING THE COURSE OF ASSESSMENT AND THE GENUINENESS OF SUCH TRAVELLING EXPENSES HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER . THE ASSESSING OFFICER HAS DISALLOWED THE TRAVELLING EXPENSES ONLY ON THE GROUND THAT THE APPELLANT COMPANY HAS FAILED TO DISCLOSE THE PURPOSE OF TRAVELLING OF THE DIRECTORS TO SWITZERLAND. HOWEVER, IT PAGE 6 OF 8 IS EVIDENT THAT THE DIRECTORS OF THE COMPANY HAVE TRAV ELLED TO SWITZERLAND FOR BUSINESS PURPOSES AS THE COMPANY IS TRADING IN THE ELECTRICAL GOODS OF M/S HAFLEY TEST REVERSED THE AG, SWITZERLAND. THUS, THE TRAVELLING EXPENSES HAVE BEEN INCURRED BY THE APPELLANT COMPANY FOR BUSINESS PURPOSES AND THE SAME IS A N ALLOWABLE EXPENSE U/S 37 OF THE INCOME TAX ACT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE IMPUGNED AD DITION OF RS. 2,93,203/ - . 5. THOUGH THE LD. DR ARGUED THAT CONFIRMATION OF THE PARTIES ARE NOT THERE, IT WAS POINTED OUT THAT IT WAS SUBMITTED ALONG WITH ADDITIONAL EVIDENCES WHICH IS ON THE RECORD OF THE LD. CIT(A) . C OPIES OF THE SALES BILLS EVIDENCING THE ELECTRICAL GOODS THROUGH COMMISSION AGENT AND ALL THE EVIDENCE S ARE PLACED ON RECORD WHICH WAS SENT TO THE ASSESSING OFFICER FOR HIS EXAMINATION. THEREFORE IT CANNOT BE SAID THAT THE ASSESSING OFFICER DOES NOT HAVE THE CONFIRMATION OF THE PARTIES ETC. AS REGARDS THE DISALLOWANCE OF TRAVELLING EXPENSES PURPOSE OF THE BUSINESS HAS BEEN MENTIONED BY THE ASS ESSEE BEFORE THE LD. CIT(A) AND IS AVAILABLE WITH ASSESSING OFFICER IN REMAND PROCEEDINGS . THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY DELETED BOTH THE ADDITIONS. THUS THE APPEAL OF THE REVENUE IS DISMISSED. PAGE 7 OF 8 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 7 . P RONOUNCED IN THE OPEN COURT ON 1 0 . 0 3 .201 7. ( B.P. JAIN ) ACCOUNTANT MEMB E R DATED: 1 0 . 0 3 .2017 NARENDER COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT (APPEALS) 5) DR: ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON 9 .0 3 .2017 DRAFT PLACED BEFORE AUTHOR 9 .0 3 .2017 PAGE 8 OF 8 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 1 0 .3.2017 KEPT FOR PRONOUNCEMENT ON FILE SENT TO THE BENCH CLERK 1 0 .3.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.