The ACIT, Circle-4(1)., Visakhapatnam V. Sri B Pullam Raju, Rajahmundry

ITA 333/VIZ/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2825 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 02-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR

Judgement Text

PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.333/VIZAG/2007 ASSESSMENT YEAR: 2004-05 ACIT, CIRCLE-4(1), VISAKHAPATNAM VS. B. PULLAM RAJU, RAJAHMUNDRY (APPELLANT) (RESPONDENT) PAN NO. AGFPB 1808 C APPELLANT BY: SHRI B. JAYAKUMAR, DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI B R BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 30-04-2007 PASSED BY THE LD CIT (A)-II VISAKHAPATNAM AND IT RELATES TO THE ASSESSMENT YEAR 2004-05. 2. THE ONLY ISSUE THAT NEEDS ADJUDICATION IS WHETHE R THE LD CIT (A) IS JUSTIFIED IN DELETING THE ADDITION OF RS.27,72,954/ - RELATING TO DISCOUNT STATED TO HAVE BEEN ALLOWED TO THE CUSTOMERS. 3. THE FACTS ARE STATED IN BRIEF. THE ASSESSEE IS A SALES AND SERVICE DEALER FOR EICHER MOTORS LTD., AND CARRYING ON BUSINESS AT RAJAHMUNDRY. HE IS DEALING IN LCVS AND HCVS AND THE BUSES OF EICHER MOT ORS LTD., THE ASSESSEE HAD DECLARED A TURN OVER OF RS.7.13 CRORES ON SALE OF VEHICLES, SPARES, OILS AND LUBRICANTS, AFTER DEDUCTING THE T RADE DISCOUNT OF PAGE 2 OF 3 RS.27,72,954/- TO 107 CUSTOMERS. SINCE THE INVOICES RAISED BY THE ASSESSEE DID NOT CONTAIN THE AMOUNT OF DISCOUNT GIV EN TO THE CUSTOMERS, THE AO DISBELIEVED THE DISCOUNT CLAIM AND ADDED THE SAM E TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. THE SAID ADDITION WAS DEL ETED BY THE LD CIT (A) IN THE APPEAL PREFERRED BY THE ASSESSEE. HENCE THE REV ENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAD FURNISHED TO THE AO, THE NAME S AND ADDRESSES OF THE CUSTOMERS TO WHOM TRADE DISCOUNT WAS GIVEN. BEFORE THE LD CIT (A), THE ASSESSEE ALSO FILED CONFIRMATION LETTERS OBTAINED F ROM THE SAID CUSTOMERS. LD CIT (A) HAS ALSO CONFRONTED THEM WITH THE AO. THOUG H THE AO FOUND CERTAIN FAULTS IN THE CONFIRMATION LETTERS, THE ASSESSEE HA S CLARIFIED THE VARIOUS DOUBTS RAISED BY THE AO. THE LD CIT (A) ALSO NOTICED THAT THE ACCOUNTING METHODOLOGY FOLLOWED BY THE ASSESSEE IN THIS REGARD . THE ASSESSEE HAD BEEN RAISING INVOICES AT THE MRP RATES AND THEREAFTER TH E ASSESSEE WAS PASSING A JOURNAL ENTRY BY CREDITING THE CUSTOMER ACCOUNT AND DEBITING THE DISCOUNT ACCOUNT, WITH THE AMOUNT OF DISCOUNT GIVEN TO THE C USTOMERS. THUS, THE LD CIT (A) HAS NOTICED THAT THE SAID DISCOUNT WAS ACCO UNTED FOR BY WAY OF JOURNAL ENTRIES AND THUS THE3RE WAS NO MONEY TRANSA CTION INVOLVED IN IT. THE LD CIT (A) HAS ALSO NOTICED THAT IT IS A COMMON PRA CTICE AMONG THE BUSINESSMEN TO OFFER DISCOUNT TO ATTRACT CUSTOMERS AND TO PROMOTE THE SALES. THE LD CIT (A) HAS ALSO TAKEN NOTE OF MARKET BULLET ING ISSUED BY THE SUPPLIER OF VEHICLES OFFERING DISCOUNT WHICH WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS COME TO THE CONCLUSI ON THAT THE DISCOUNT SCHEMES WERE IN OPERATION DURING THE RELEVANT PERIO D. LD CIT (A) HAS ALSO NOTICED THAT THE SALES TAX AUTHORITIES HAVE ACCEPTE D THE TRADE DISCOUNT PAGE 3 OF 3 DISCLOSED BY THE ASSESSEE. HENCE ON A CONSPECTUS OF THE MATTER, THE LD CIT (A) ACCEPTED THE GENUINENESS OF THE DISCOUNT AND DE LETED THE ADDITION MADE BY THE AO. ON A CAREFUL READING OF THE ORDER OF THE LD CIT (A), WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN A CONSCIOUS DECISION AFTER CONSIDERING ALL THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CAS E. HENCE WE DO NOT FIND ANY INFIRMITY IN HIS DECISION AND ACCORDINGLY UPHOL D HIS ORDER. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 4.12.2009 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, 4 TH DECEMBER, 2009. COPY TO 1 THE ACIT, CIRCLE-4(1), 3 RD FLOOR, DIRECT TAXES BUILDING, DOUBLE ROAD, MVP COLONY, VISAKHAPATNAM-17 2 SHRI B. PULLAM RAJU, PROP. SRINIVASA AUTOMOBILE, THADITHORA, RAJAHMUNDRY 3 THE CIT VISAKHAPATNAM 4 THE CIT(A)-II, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM