Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 3707 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
11 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-06-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
22-06-2010
Assessment Year
2003-2004
Appeal Filed On
15-07-2009
Judgement Text
ITA NO. 3211/DEL/2009 A.Y. 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3211/DEL/2009 A.Y. : 2003-04 M/S SURYA FOODS AND AGRO LTD., VS. ADDL. C.I.T., CIRCLE-9, E-67(LGF), GREATER KAILASH-III, NEW DELHI MASJID MOTH, NEW DELHI 48 (PAN: AAACS3026P) [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. PRAKASH NARAIN, ADVOCATE DEPARTMENT BY : MRS. PRATIMA KAUSHIK, DR PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONERS OF INCOME TAX (APPEALS) DATED 19.3.20 09 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE FIRST ISSUE RAISED READS AS UNDER:- THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEA L)-XII, NEW DELHI HAS ERRED, BOTH ON FACTS AND IN LAW IN DISTINGUISHING A DVERTISEMENT EXPENSES VIS--VIS DONATION, AND CONFIRMING ADDITION OF RS. 3,13,800/-. THE PAYMENT WAS MADE FOR ADVERTISEMENTS IN THE BROACHERS/SOUVI NER PUBLISHED BY ORGANIZATIONS LISTED IN THE ORDER OF LEARNED ADDL. C.I.T. RANGE-9, NEW DELHI. ITA NO. 3211/DEL/2009 A.Y. 2003-04 2 3. THE ASSESSING OFFICER IN THIS CASE NOTED THAT A SSESSEE HAS BOOKED A TOTAL EXPENDITURE OF RS. 82667026/- UNDER THE HEAD ADVE RTISEMENT. ON EXAMINING THE DETAIL THEREOF THE ASSESSING OFFICER FOUND THE FOLLOWING EXPENSES, THOUGH CLAIMED AS ADVERTISEMENT EXPENSES ARE IN THE NATURE OF DONATIONS. DISTRICT WEIGHT LIFTING ASSOCIATION, NOIDA 51,000 LAV KUSH RAMLEELA COMMITTEE, DELHI 25,000 DISTRICT BADMINTON CLUB 20,000 INSTITUTE OF MANAGEMENT STUDY 5,000 FEDERATION OF INDIA RESIDENTS WELFARE ASSOCIATION 10,000 KRISHI MANGAL 14,000 VALUE EDUCATION SERVICE 4,500 UTTER PRADESH JOURNALIST ASSOCIATION 2,000 BASUDHA STAM SEVA 5,000 AMITY SPORTS FOUNDATION, NOIDA 500 JAGDAMBA PRATIDHUANI 5,000 PROBHARI SARBOJANIN DURGA PUJA SAMITY 1,000 SAHASHRADABDI DURGA PUJA SAMITY 3,000 DPS, R.K. PURAM 10,000 ST. MARYS MEDICAL CENTRE 10,000 SECTOR 14, WELFARE ASSOCIATION 10,000 KATHANKRAM 6,000 RAJENDRA NAGAR ART CLUB (REGD) 1,500 SARJU BRAHIMIN SABHA 5,000 LIONESS CLUB 4,000 BHARTI BAAISYA SAMAJ 10,000 UP JUDICIAL SERVICE ASSOCIATION 15,000 AMITY BUSINESS SCHOOL 6,000 INDIAN ACADEMY OF ART & CULTURE 5,000 CSD CONTROL 15,000 GLOBAL CULTURAL SOCIETY 11,000 MEHFIL E-ABAD, RAS RANG 15,000 RAJASTHAN CLUB 16,000 RAJASTHAN KALYAN PARISHAD 15,000 SANJVANI 2,500 SANT NIRANKARI SAMAGAM 10,000 TOTAL 3,13,000 ITA NO. 3211/DEL/2009 A.Y. 2003-04 3 3.1 ASSESSING OFFICER ASKED FOR THE VOUCHERS, BILL S TO SUBSTANTIATE THE CLAIM THAT ABOVE PAYMENTS ACTUALLY WERE TOWARDS THE ADVE RTISEMENT CAMPAIGN OF THE ASSESSEE. ASSESSEE COULD NOT FURNISH ANY DETAIL WH ICH SUGGESTED THAT THESE PAYMENTS WERE ACTUALLY TOWARDS ADVERTISEMENT. ASSE SSING OFFICER CONCLUDED THAT FROM THE PLAIN READING OF THE NAME OF THE INST ITUTIONS TO WHOM THE PAYMENTS HAVE BEEN MADE, CLEARLY INDICATES THAT THE AMOUNTS GIVEN WERE ACTUALLY DONATIONS AND NOT FOR ANY ADVERTISEMENT. ACCORDING LY, HE TREATED THE AMOUNT AS DONATIONS AND DISALLOWED ACCORDINGLY. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) REPRODUCED THE ASSESSING OFFICER S FINDING WITHOUT GIVING HIS OWN FINDING. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS GIVEN VARI OUS SUMS TO VARIOUS ORGANIZATIONS FOR ADVERTISEMENT IN BROUCHERS/ SOUV ERNIER AND HE CLAIMED THAT THESE ARE GENUINE ADVERTISEMENT EXPENSES AND CANNO T BE TREATED AS DONATION. 6.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER C LAIMED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT GIVEN ANY FINDING ON THIS ISSUE. 6.2 UPON CAREFUL CONSIDERATION, WE FIND THAT THE S UBMISSION OF THE LD. COUNSEL OF THE ASSESSEE THAT THESE PAYMENTS HAVE BEEN GIVEN FOR ADVERTISEMENT IN BROUCHERS / SOUVERNIER OF THE VARIOUS ORGANIZATIONS FOR ADVERTISEMENT IS COGENT ENOUGH. THE ASSESSING OFFICERS INFERENCE THAT THE NAMES OF THESE ORGANIZATIONS ITSELF SHOWS THAT THESE ARE DONATIONS, IS BASED O N SURMISES AND CONJECTURES. IT IS SETTLED LAW THAT DISALLOWANCE BASED UPON SURMISE S AND ITA NO. 3211/DEL/2009 A.Y. 2003-04 4 CONJECTURES, DEVOID OF COGENT MATERIAL ARE NOT SUSTA INABLE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS I SSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. THE NEXT ISSUE RAISED READS AS UNDER:- THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEA L)-XII, NEW DELHI HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING DISAL LOWANCE OF THE CLAIM OF COMMISSION ON SALES FOR RS. 3,20,043/- PAID TO COMP ANIES STOCKIEST ON SALES MADE TO KENDRIYA BHANDAR, BSF, AIR FORCE AND CSD CANTEENS. 8. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AS BOOKED RS. 19,84,805/- UNDER THE HEAD COMMISSION ON SALES. ASSESSING OF FICER FOUND THE FOLLOWING PAYMENTS OF COMMISSION WERE MADE FOR EFFECTING SALE S TO THE GOVERNMENT AGENCIES. S.NO. NAME OF THE PARTY TO WHOM COMMISSION PAID NAME OF AGENCY (GOVT.) TO WHOM SALES MADE AMOUNT OF COMMISSION PAID 1. NIRMAL ENTERPRISES KENDRIYA BHANDAR 12,034 2. SHIV SHANKAR SALES CO. AIR FORCE CANTEEN 7,446 3. SHIV SHANKAR SALES CO. AIR FORCE CANTEEN 11,923 4. NIRMAL ENTERPRISES KENDRIYA BHANDAR 12,826 5. SHIV SHANKAR SALES CO AIR FORCE CANTEEN 4,819 6. -DO- CSD, INC AND BSF 44,154 7. -DO- CSD & MATHURA REFINERY 38,613 8. -DO- CSD, INCS 42,166 9. -DO- INCS & CSD 83,191 10. -DO- CSD & INCS 43,324 11. MUSKAN ENTEPRISES KENDRIYA BHANDAR 18,019 12. SARITA BSF CANTEEN 1,528 TOTAL AMOUNT OF COMMISSION PAID 3,20,043 ITA NO. 3211/DEL/2009 A.Y. 2003-04 5 8.1 THIS IS IN ASSESSING OFFICER S OPINION WAS IN CONTRAVENTION TO THE EXPLANATION GIVEN BELOW UNDER SECTION 37(1) OF THE IT ACT. HENCE, HE DISALLOWED THE SAME. 9. ASSESSEE SUBMITTED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE SALES COMMISSION ARE NECESSARY AND THE SAL E AGENTS ARE RESPONSIBLE FOR FOLLOW UP WITH THE GOVERNMENT INSTITUTIONS, THEY T AKE ORDER, THEY ACT AS A LIAISON AGENT BETWEEN THE COMPANY AND THE GOVERNMENT INSTIT UTIONS. LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT ACCEPT THIS CONTENTION AND HELD THAT NO FOLLOW-UP ACTION/ LIAISONING IS NEEDED WITH GOVERNMENT INSTITUTIONS WHO ARE BOUND TO MAKE PAYMENT FOR SUPPLY. 10. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 11. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ON THE SAME ISSUE THE T RIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 IN ITA NO. 494/DEL/09 VIDE ORDER D ATED 30.4.2009 HAS DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDE R:- WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOTICE D THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON COMMISSION FOR THE PURPOSE AS MENTIONED BY THE ASSESSEE AND NO EVIDENCE HAS BEEN SHOWN TO THE CONT RARY. JUST BECAUSE THE ASSESSEE HAS MADE PAYMENT OF COMMISSION TO PERSONS WHO HAVE ASSISTED THE ASSESSEE IN OBTAINING INFORMATION IN REGARD TO THE REQUIREMENT OF KENDRIYA BHANDAR AND CSD CANTEENS, IT CANNOT BE SA ID THAT THE PAYMENT OF COMMISSION IS ILLEGAL PAYMENT OR IS A PAYMENT AGAIN ST THE PUBLIC POLICY. THIS BEING SO, IN VIEW OF THE PRINCIPLE LAID DOWN B Y THE COORDINATE BENCH OF ITA NO. 3211/DEL/2009 A.Y. 2003-04 6 THIS TRIBUNAL IN THE CASE OF JINDAL SAW PIPES LTD. (SUPRA) AND ALSO ON ACCOUNT OF THE FACT THAT THE REVENUE AHS NOT BEEN ABLE TO P RODUCE ANY EVIDENCE TO SHOW THAT SUCH PAYMENT OF COMMISSION, AS MADE BY TH E ASSESSEE, WERE AGAINST PUBLIC POLICY OR WERE NOT PERMITTED BY LAW, SUCH DISALLOWANCE TO ALLOW THE ASSESSEE THE BENEFIT OF THE COMMISSION AS MADE AND WHICH HAS BEEN DISALLOWED BY THE ASSESSING AUTHORITY. 12. UPON CAREFUL CONSIDERATION, WE FIND THAT THE FA CTS ARE IDENTICAL. HENCE, ADHERING TO THE DOCTRINE OF STAIRE DECISES, WE RESP ECTFULLY THE FOLLOW THE TRIBUNAL ORDER DATED 30.4.2009 REFERRED ABOVE. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUED IN FAVOUR OF THE ASSESSEE. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2010, U PON CONCLUSION OF HEARING. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 22/06/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES
