Shri Pravinbhai N.Patel, Himatnagar V. The Dy.CIT.,S.K.Circle, Himatnagar

ITA 382/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76866 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH

Judgement Text

``IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ITA NO.382/AHD/2013 A.Y.2007-08 PRAVINBHAI N. PATEL, B/G-11, SHALIBHADRA COMPLEX, B/H DURGA COMPLEX, HIMATNAGAR. PAN: AJAPP 0051H VS DCIT, SABARKANTHA, HIMATNAGAR CIRCLE. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI NIMESH YADAV, SR.D.R., ASSESSEE(S) BY : SHRI D.K. PARIKH, A.R. / DATE OF HEARING : 10/07/2014 / DATE OF PRONOUNCEMENT: 11/07/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M AN ORDER OF LD. CIT(A)-XXI AHMEDABAD, DATED 18.12.2012. THE GROUNDS RAISED ARE REPRODUCED BELOW: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) WAS CONFIRM AMT. OF RS.35,92,041/- ON ACCOUNT OF COMMISSIONER RECEIP T NOT CREDITED IN THE BOOKS OF ACCOUNTS DURING THE YEAR. THE DIFFERENCE B ETWEEN TDS CERTIFICATE ISSUED BY THE DEDUCTOR AND CREDITED IN PROFIT & LOS S ACCOUNT. 2. NOT ENTERING THE ALTERNATIVE CLAIM OF THE APPELL ANT IN GETTING DEDUCTION OF THE CORRESPONDING AMOUNT IN RELATION TO THE WARR ANTY CLAIM EXPENSES, WHICH WERE INTIMATELY LINKED WITH THE COMMISSION RE CEIPT OF RS.35,92,041/- AS MENTIONED IN GROUND OF APPEAL NO.1. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 18.12.2009 WERE THAT THE AS SESSEE IN INDIVIDUAL CAPACITY IS AN AUTHORIZED DEALER OF NETAFIM IRRIGAT IONS INDIA PVT. LTD. AND ITA NO.382/AHD/2013 PRAVINBHAI N. PATEL VS. DCIT, SABARKANTHA, HIMMATNA GAR CIRCLE. FOR A.Y. 2007-08 - 2 - SELLING DRIP IRRIGATION SYSTEM ON COMMISSION BASIS. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD SHOWN GROSS COMMISSION INC OME OF RS.84,39,326/-, WHEREAS THE TDS CERTIFICATE ATTACHE D WITH THE RETURN HAVE SHOWN COMMISSION RECEIPTS TOTALING RS.1,20,31,367/- . THEREFORE, AS PER THE AO THERE WAS A SHORT FALL OF RS.35,92,041/-. TH E AO WAS NOT CONVINCED AND THE IMPUGNED ADDITION WAS MADE AS PER THE FOLLOWING OBSERVATION: 7. IN THIS CONNECTION IT IS MENTIONED HERE THAT AS SESSEE'S REPLY IS TOTALLY VOGUE. THE DECISION OF THE HON'BLE SUPREME COURT IS APPLICABLE ONLY IN CASES WHERE PROVISIONS ARE MADE FOR WARRANTY CLAIMS. IN CASE OF ASSESSEE N O PROVISIONS FOR WARRANTY ARE MADE IN ACCOUNTS BASED ON SAME CRITERIA AGAINST ANY FUTURE LIABILITY. IN ANY EARLIER YEAR ALSO NO SUCH PROVISIONS WERE EVER MADE BY THE ASSESSEE. HENCE FACTS OF THE ASSESSEE'S CASE ARE NOT SAME AS THAT OF THE CASE RE LIED UPON AND THEREFORE ASSESSEE CAN NOT GET ANY RELIEF FROM THAT DECISION (223 CTR 0425). FURTHER ASSESSEE HAS FILED COPY OF LETTER DATED NIL FROM NETAFIM IN WHICH IT I S MENTIONED THAT AS PER SERVICE AGREEMENT ASSESSEE SHALL PROVIDE SERVICE FOR FIVE Y EARS UNDER GGRC MODULE. IT IS MENTIONED HERE THAT AS PER AGREEMENT SIGNED BY NETA FIM AND ASSESSEE .DATED 13/02/2004 ASSESSEE IS TO PROVIDE 'AFTER SALES AND TECHNICAL SERVICES' FOR WHICH ASSESSEE IS SUPPOSED TO HAVE STOCK OF SPARES REQUIR ED FOR REPAIRING AND MAINTENANCE WHENEVER REQUIRED. ASSESSEE IS DEALING IN SPARE PAR TS OF NETAFIM SYSTEM AND TURNOVER DURING THE YEAR IS RS.22,V9,824/- AND GP R S.3,19,54.4/R. I.E. 14.34%. THIS.SHOWS THAT FOR PROVIDING SPARES ALSO ASSESSEE IS EARNING PROFIT. THUS ASSESSEE CAN NOT JUSTIFY NON ACCOUNTING OF COMMISSION RECEIP TS OF RS.35,92,041/- IN F.Y. 2006- 07 ON THE GROUND THAT IT HAS TO PROVIDE AFTER SALES SERVICES TO CUSTOMERS. ASSESSEE'S CONTENTIONS THAT DIFFERENCE HAS BEEN TAKEN INTO REC EIPTS IN F.Y. 07-08'IS ALSO NOT ACCEPTABLE AS CORRECT BECAUSE WHEN ASSESSEE TAKES C REDIT FOR TDS OF RS.6,01.200/- IN F.Y. 2006-07 ON WHOLE AMOUNT OF COMMISSION RS.1,20, 23,982/-. IT SHOULD HAVE ACCOUNTED THE WHOLE AMOUNT OF COMMISSION IN F.Y. 20 06-07 ONLY. THIS THE ASSESSEE HAS NOT DONE AND THE SAME IS TOTALLY WRONG FROM ALL PRINCIPALS OF ACCOUNTING. ASSESSEE WAS HAVING AGREEMENT FOR COMMISSION WITH T HE PRINCIPAL COMPANY AND THUS WAS WELL AWARE OF THE AMOUNT OF COMMISSION DUE TO H IM AND THUS SHOULD HAVE ACCOUNTED FOR THE COMMISSION BY PROPER WORKING ON D UE. BASIS AS ASSESSEE .IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THUS EXP LANATIONS SUBMITTED BY ASSESSEE ARE-NOT ACCEPTABLE REGARDING ACCOUNTING PART OF THE COMMISSION RECEIVED IN NEXT FINANCIAL YEAR ON THE GROUND THAT HE HAS TO PROVIDE SERVICES FOR FIVE YEARS TO CUSTOMERS BECAUSE ASSESSEE WAS NEVER FOLLOWING SUCH ACCOUNTING PRACTICES IN EARLIER YEAR ALSO. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE ACTION OF THE AO WAS CONFIRMED. ITA NO.382/AHD/2013 PRAVINBHAI N. PATEL VS. DCIT, SABARKANTHA, HIMMATNA GAR CIRCLE. FOR A.Y. 2007-08 - 3 - 4. FROM THE SIDE OF THE APPELLANT, LEARNED AR, MR. D.K. PARIKH APPEARED AND PLEADED THAT THE BALANCE AMOUNT HAVE B EEN SHOWN FOR THE ASSESSMENT YEAR, I.E., A.Y.2008-09 BUT NO CREDIT HA S SO FAR BEEN GIVEN BY THE REVENUE DEPARTMENT. HE HAS ARGUED THAT THE SAME INCOME CANNOT BE TAXED TWICE AND IN ITS SUPPORT PLACED RELIANCE ON SMT. VARSHA JI, SALUNKHE, 98 ITD 147 (MUMBAI) (TM) AND ON STANDARD FIRE WORKS PVT. LTD., 128 TTJ 1 (CHENNAI) (TM) . 5. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., M R. NIMESH YADAV HAS OBJECTED THE ARGUMENTS OF LEARNED AR THAT IN A SITUATION WHEN IN A.Y. 2008-09 THE BALANCE AMOUNT HAD BEEN SHOWN AS I NCOME THEN THAT VERY INCOME SHOULD NOT BE TAXED IN THE YEAR UNDER C ONSIDERATION. ACCORDING TO LEARNED DR, THE SAID INCOME FOR A.Y.20 08-09 WAS UNDISPUTEDLY DISCLOSED BY THE ASSESSEE SUO MOTU , THEREFORE, THERE WAS NO QUESTION OF GRANTING ANY RELIEF TO THE ASSESSEE SPE CIALLY WHEN THE ASSESSEE HAS NOT MOVED ANY RECTIFICATION APPLICATION FOR THA T YEAR. 6. WE HAVE HEARD BOTH THE SIDES. THE CASE RECORDS O F THE ASSESSEE HAVE ALSO BEEN PERUSED. AS FAR AS THE ACTION OF THE AO IS CONCERNED FOR THE YEAR UNDER CONSIDERATION, I.E., A.Y. 2007-08, W E HEREBY HOLD THAT THE SAME WAS CORRECT IN VIEW OF THE PROVISIONS OF SECTI ON 199 OF IT ACT WHICH SAYS THAT ANY SUM PAID IN TERMS OF SECTION 19 2 SHALL BE TREATED AS TAX PAID ON BEHALF OF THE PERSON IN RESPECT OF WHOS E INCOME SUCH PAYMENT OF TAX HAS BEEN MADE AND CREDIT TO BE GIVEN FOR THE ASSESSMENT YEAR FOR WHICH TAX HAS BEEN PAID. A RULE HAS BEEN F RAMED IN THIS REGARD AND VIDE RULE 37BA WHERE UNDER ANY PROVISION OF THE ACT ON ANY PART OF THE INCOME TAX HAS BEEN DEDUCTED AT SOURCE THE SAME IS ASSESSABLE IN THE ITA NO.382/AHD/2013 PRAVINBHAI N. PATEL VS. DCIT, SABARKANTHA, HIMMATNA GAR CIRCLE. FOR A.Y. 2007-08 - 4 - HANDS OF A PERSON AND THE CREDIT IS TO BE GIVEN. VI DE SUB RULE 3 CREDIT FOR TAX DEDUCTED AT SOURCE SHALL BE GIVEN FOR THE ASSES SMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. DUE TO THESE PROVISIONS, WE FIND NO FALLACY IN THE TREATMENT GIVEN BY THE AO AND THE SAME IS HEREB Y CONFIRMED. HOWEVER FOR THE PLEA OF THE ASSESSEE TO GIVE THE AD JUSTMENT DECLARED FOR A.Y. 2008-09, THERE ARE CERTAIN PROVISIONS IN THE A CT UNDER WHICH A REDRESSAL IS PERMISSIBLE. THE ASSESSEE CAN TAKE SHE LTER OF THOSE PROVISIONS OF THE ACT IF HE IS WILLING TO AVAIL THE BENEFIT OF THE INCOME DECLARED FOR A.Y. 2008-09. NATURALLY, THE INCOME WHICH IS ASSESS ED FOR A.Y. 2007-08 CANNOT BE TAXED AGAIN FOR A.Y. 2008-09. WE HOLD ACC ORDINGLY AND THE GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED THAT TOO FOR STATISTICAL PURPOSE ONLY, IN THE TERMS INDICATED ABOVE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED THAT TOO FOR STATISTICAL PURPOSE ONLY. SD/- SD/- (N.S. SAINI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/07/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD