M/s Varun Motors(P) Ltd., Visakhapatnam V. The DCIT, Central Circle-1, Visakhapatnam, Visakhapatnam

ITA 43/VIZ/2012

• Counselvise Citation: 4325314 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 17-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Search and seizure
• Section: 143(3); 153A; 132

Judgement Text

ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO S . 38 TO 44 /VIZAG/ 20 1 2 ASSESSMENT YEAR S : 2002 - 03 T O 2008 - 09 RES PECTIVELY M/S. VARUN MOTORS (P) LTD. VISAKHAPATNAM VS. DCIT CENTRAL CIRCLE - 1 VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AABCV 2471Q ASSESSEE BY : SHRI G.V.N. HARI, ADVOCATE REVENUE BY : SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 12.12.201 3 DATE OF PRONOUNCEMENT : 13 .12.2013 ORDER PER B. RAMAKOTAIAH:- THESE SEVEN APPEALS BY THE ASSESSEE ARE AGAINST TH E COMMON ORDER PASSED BY THE CIT(A)-1, HYDERABAD DATED 13.12.2011 AGAINST THE ORDERS OF THE AO U/S 143(3) OF THE ACT R.W.S. 153A OF THE ACT FOR THE RESPECTIVE ASSESSMENT YEARS AND U/S 143(3) OF THE ACT FOR A.Y. 2008-09. THE ISSUE INVOLVED IN THESE APPEALS IS WITH REFERENCE TO THE ADHOC DISALLOWANCE CONFIRMED BY THE CIT(A) WHEN ASSESSING OFFICER DISA LLOWED THE CREDIT NOTE DISCOUNTS CLAIMED BY THE ASSESSEE OUT OF THE TOTAL CLAIM OF DISCOUNTS. 2. BRIEFLY STATED, ASSESSEE COMPANY M/S. VARUN MOTO RS (P) LTD. IS ENGAGED IN AUTOMOBILE BUSINESS AND AN AUTHORIZED DE ALER FOR MARUTI UDYOG LIMITED IN THE STATE OF ANDHRA PRADESH. SEARCH & S EIZURE OPERATION U/S 132 OF THE I.T. ACT WERE CONDUCTED ON 11.3.2008 IN ASSE SSEES BUSINESS PREMISES. IN THE CONSEQUENTIAL ASSESSMENTS U/S 153A THE ASSES SING OFFICER EXAMINED THE CLAIM OF DISCOUNT CLAIMED BY ASSESSEE AND ON EN QUIRY FROM SOME OF THE CUSTOMERS (11 CUSTOMERS) CAME TO THE CONCLUSION THA T THE ASSESSEES CLAIM OF DISCOUNT CANNOT BE ALLOWED. THE DISCOUNTS SPONSORE D AND OFFERED BY MARUTI UDYOG LTD. TO THE CUSTOMERS THROUGH THE ASSESSEE CO MPANY WAS ALLOWED, ALONG WITH DISCOUNTS ALLOWED IN INVOICES. ASSESSIN G OFFICER HOWEVER DID NOT ALLOW THE DISCOUNTS CLAIMED THROUGH CREDIT NOTES PA SSED IN THE BOOKS OF ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 2 ACCOUNTS. ACCORDINGLY, ASSESSING OFFICER DISALLOW ED VARIOUS AMOUNTS IN THE RESPECTIVE ASSESSMENT YEARS. 3. ASSESSEE HAS CONTESTED BEFORE THE LD. CIT(A) AND EXPLAINED THE DETAILED TRADE PRACTICE, ENTRIES PASSED, CONFIRMATI ON BY THE CUSTOMERS IN CROSS EXAMINATION AND ALSO THE FACT THAT NO CASH DI SCOUNT WAS GIVEN TO ANY CUSTOMER. IT WAS ALSO EXPLAINED THAT OUT OF THE TO TAL ON ROAD COST RECEIVED FROM THE CUSTOMER, AFTER ACCOUNTING VARIOUS EXPENDI TURES INCLUDING INSURANCE AND REGISTRATION CHARGES, IF THERE IS ANY DIFFERENC E THE SAME IS TREATED AS DISCOUNT BY WAY OF PASSING NECESSARY CREDIT NOTES. SOMETIMES, THERE WILL BE EXCESS PAYMENT BY CUSTOMER WHICH WILL BE RETURNED B Y WAY OF CHEQUE ONLY. THE LD. CIT(A) ELABORATELY CONSIDERED THE ISSUES FR OM PARA 4 TO 4.10 AND HAS COME TO THE CONCLUSION VIDE PARA 4.10 THAT SUCH OUT RIGHT DISALLOWANCE OF THE DISCOUNT AMOUNT IN EXCESS OF THE DISCOUNT RECEIVED FROM PRINCIPAL COMPANY I.E. MUL AS WELL AS DISCOUNT OFFERED IN THE FORM OF JOURNAL ENTRY IS NOT JUSTIFIED ON THE PART OF THE ASSESSING OFFICER WHEN THE FACTS ARE SPEAKING OTHERWISE. HE HAS HELD THAT THE ABOVE DISCUSSION M ADE IN THE ORDER DOES NOT SUPPORT THE CONTENTION OF THE ASSESSING OFFICER. T HUS, THE ASSESSEES MAIN CONTENTIONS WERE ACCEPTED. 4. HOWEVER, THE LD. CIT(A) VIDE PARA-4.11 OF THE OR DER CONSIDERED TWO INSTANCES WHERE ASSESSEES CLAIM OF DISCOUNT COULD NOT BE VERIFIED AND ACCORDINGLY, KEEPING IN VIEW THE DISCREPANCIES HELD THAT 5% OF THE CLAIM ON ACCOUNT OF DISCOUNT IS DIRECTED TO BE DISALLOWED FO R EACH ASSESSMENT YEAR TO COVER THE DEFECTS ON ACCOUNT OF UNVERIFIABLE NATURE OF THE DISCOUNT ALLOWED IN THE FORM OF CASH OR OTHERWISE. ACCORDINGLY, HE RES TRICTED THE DISALLOWANCE TO 5% OF THE CLAIM. HIS ORDER IN PARA 4.11 IS AS UNDE R: 04.11 HAVING SAID THAT THE ASSESSEE IS ENTITLED TO CLAIM THE DISCOUNT, IT IS NOT ALTOGETHER RULED OUT THE POSSIBILITY OF INFLATING THE QUANTUM OF CLAIM. AS HELD BY THE AO IN THE ASSESSMENT ORDER ABOUT THE VERACITY OF STATEMENTS G IVEN BY VARIOUS CUSTOMERS AT THE TIME OF SEARCH AND SUBSEQU ENT ASSESSMENT PROCEEDINGS, THERE IS SOME SUSPICION IN THE CLAIM OF THE ASSESSEE. IT IS NOT THE CASE THAT IN ALL OCCASIONS THE ASSESSEE IS BEARING THE COST OF INSURANCE AND LIFE TAX ON BE HALF OF CUSTOMERS, THERE ARE SOME INSTANCES WHERE THE CUSTO MER ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 3 REMITTING THE NECESSARY PAYMENT DIRECTLY TO THE INS URANCE COMPANY AND TO THE GOVERNMENT A/C. IN SUCH CASES, CASH DISCOUNT WAS OFFERED TO THOSE CUSTOMERS AND THE SAM E IS RIOT VERIFIABLE IN FULL. IN FEW CASES, THE ASSESSEE CLAI MS REFUND OF SOME PART OF THE DISCOUNT TO THE CUSTOMERS AFTER ADJUSTING TO VARIOUS SERVICES OFFERED AS FOUND IN THE CASE OF AG ILENT TECHNOLOGIES LTD IN THE YEAR RELEVANT TO AY 2005-06 , THOUGH IT IS CLAIMED THAT SUCH REFUNDS HAVE BEEN MADE BY CHEQ UES BUT THE SAME ARC NOT VERIFIABLE IN THE ABSENCE OF ACKNO WLEDGEMENT FROM SUCH CUSTOMERS. IN SOME CASES, IT IS SUBMITTED THAT THE INVOICE VALUE ALONG WITH SERVICES HAS BEEN INFLATED ON THE REQUEST OF THE CUSTOMER TO GET MORE FINANCE EITHER FROM THE EMPLOYER OR FROM THE FINANCIAL INSTITUTIONS, CONSEQUENT LY, THE CUSTOMERS HAVE BEEN GIVEN MORE DISCOUNT AS CONTENDED BY THE APPELLANT. SOME OF THE CASES HAVE BEEN EXAMIN ED. IN THE CASE OF VINODINIPAI (BANJARA HILLS), IT IS CLAIMED THAT DISCOUNT OF RS.83,909/- WAS ALLOWED TO THE CUSTOMER. HOWEV ER, ON VERIFICATION, IT IS FOUND THAT ONLY A SUM OF RS.74 ; 403/- WAS ALLOWED AS DISCOUNT. THOUGH IT IS CLAIMED THAT THE AMOUNT IS REDUCED FROM THE INVOICE, STILL THE DIFFERENCE OF R S.9,506/- EXISTS. THE EX-SHOWROOM PRICE OF THE VEHICLE BALENO VX! IS RS.6,51,593/-. WHEREAS IN THE CASE OF ABOVE CUST OMER, INVOICE AMOUNT OF RS.5,77,190/- WAS RAISED AND DEBITED TO THE CUSTOMER'S A/C. THUS IT COULD EXPLAIN TO T HE EXTENT OF RS.74,403/- WHICH IS ALLOWED IN THE FORM OF INSURANCE, LIFE TAX, REGISTRATION CHARGES ETC. BUT THE BALANCE AM OUNT COULD NOT BE EXPLAINED PROPERLY, HENCE, KEEPING IN VIEW THE ABOVE DISCREPANCIES, IT IS HELD THAT 5% OF THE CLAIM ON A CCOUNT OF DISCOUNT IS DIRECTED TO BE DISALLOWED FOR EACH ASSESSMEN T YEAR TO COVER THE DEFECTS ON ACCOUNT OF UNV ERIFIABLE NATURE OF DISCOUNT ALLOWED IN THE FORM OF CASH OR OTHERWISE. SUCH DISALLOWANCE WOULD MEET THE JUS TICE FROM BOTH ENDS. ACCORDINGLY, THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE FOR EACH ASST. YEAR UNDER APPEAL AS UNDER AND THE BALANCE AMOUNT IS DIRECTED TO BE ALLOWED AS DEDUCTI ON. A SSESSMENT YEAR DISCOUNT DIRECTED TO BE DISALLOWED (RS.) 2002 - 03 7,03,579 2003 - 04 18,55,479 2004 - 05 28,83,897 2005 - 06 47,36,015 2006 - 07 60,96,674 2007 - 08 54,81,173 2008 - 09 47,86,417 ASSESSEE ALSO CONTESTED THE ADDITION ON THE GROUND THAT THERE IS NO MATERIAL' DISCOVERED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS ABOUT THE DISCOUNT; HENCE THE ACTION OF THE AO IS AGAINST THE PRINCIPLES OF LAW. I DO NOT SUBSCRIBE T O THE VIEW ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 4 EXPRESSED BY THE APPELLANT SINCE IN THE COURSE OF S EARCH PROCEEDINGS, SOME OF THE CUSTOMERS HAVE DENIED HAVING RECEIVED ANY DISCOUNT AND ACCORDINGLY, THE DEPARTME NT PROCEEDED AGAINST THE COMPANY. THEREFORE, IT IS NOT ILLEGAL ON THE PART OF THE ASSESSING AUTHORITY TO MAKE ADDITIO N IN RESPECT OF DISCOUNT CLAIMED BY THE ASSESSEE COMPANY. IN THE RESULT, SUCH CONTENTION OF THE ASSESSEE IS REJECTED. 5. IT WAS THIS ADHOC DISALLOWANCE MADE BY THE LD. C IT(A) IS CONTESTED BEFORE US IN ALL THE IMPUGNED ASSESSMENT YEARS. 6. LD. COUNSEL REFERRING TO THE PAPER BOOK RUNNING TO PAGES 508 SUBMITTED THAT THE LD. CIT(A) HAS ACCEPTED THE TRA DE PRACTICE, METHOD OF ACCOUNTING, MODE OF JOURNAL ENTRIES AND HAS CAME TO A CONCLUSION THAT AOS ACTION IN DISALLOWING THE DISCOUNTS OUT OF CREDIT N OTES CANNOT BE SUSTAINED. WITH REFERENCE TO THE TWO INSTANCES EXAMINED BY THE LD. CIT(A), IT WAS SUBMITTED THAT IN THE CASE OF VINODINI PAI, BANJARA HILLS, THIS IS NOT A DISCOUNT ALLOWED BY WAY OF CREDIT NOTE BUT DISCOUNT ALLOWED BY REDUCTION IN THE INVOICE WHICH THE ASSESSING OFFICER HAS ACCEPTED AS A GENUI NE CLAIM. THUS CONSIDERING THE CASE OF VINODINI PAI, WHICH IS NOT DOUBTED BY THE AO IS NOT CORRECT ON THE PART OF THE CIT(A). WITH REFERE NCE TO THE VEHICLE BALINO STATED AS SECOND INSTANCE THEREIN ALSO THE AMOUNT O F DISCOUNT IN THE INVOICE ITSELF. THEREFORE, THERE IS NO BASIS FOR MAKING AD HOC DISALLOWANCE OF 5% BY THE CIT(A) WHEN ASSESSING OFFICER HIMSELF ACCEPTED AND THE DISCOUNT GIVEN IN THE INVOICES ITSELF ARE NOT DOUBTED AND ALLOWED. I T WAS THE CONTENTION THAT ADHOC DISALLOWANCE MADE BY THE CIT IS NOT WARRANTED , THAT TOO ON TWO SMALL INSTANCES OVER A PERIOD OF 7 YEARS HAVING TURNOVER IN CRORES OF RUPEES. 7. IT WAS FURTHER SUBMITTED THAT THERE IS NO INCRIM INATING MATERIAL AT ALL IN THE SEARCH PROCEEDINGS AND SOME OF THE YEARS THE AS SESSMENT HAVE BEEN CONCLUDED U/S 143(3) OF THE ACT AND THEREFORE RE-EX AMINING THE ISSUES DOES NOT ARISE AT ALL. FURTHER, IT IS ALSO SUBMITTED TH AT HONBLE ITAT IN THE CASE OF B. PULLAM RAJU VIDE ITS ORDER DATED 4.12.2009 HELD THAT DISCOUNTS ALLOWED TO CUSTOMERS BY WAY OF A JOURNAL ENTRY IN THE BOOKS OF ACCOUNT CANNOT BE DISALLOWED IN THE ABSENCE OF ANY EVIDENCE TO THE CO NTRARY. LD. CIT(DR) HOWEVER, WHILE ADMITTING THAT REVENUE HAS NOT PREFE RRED ANY CROSS APPEAL ON ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 5 THE DELETION OF THE AMOUNTS BY THE LD. CIT(A) HOWEV ER SUBMITTED THAT ORDER OF THE CIT(A) IS TO BE UPHELD AS THE DISCOUNTS ARE NOT VERIFIABLE. 8. LD. COUNSEL IN REPLY SUBMITTED THAT ALL THE VEHI CLES SOLD BY THE ASSESSEE ARE REGISTERED WITH PROPER ADDRESSES AND P ROOF OF IDENTITY IS WITH THE REGISTRATION AUTHORITY. THEREFORE, QUESTION OF NON-VERIFIABILITY OF EITHER THE SALES OR THE DISCOUNTS ALLOWED DOES NOT ARISE A T ALL. IT WAS FURTHER CONTENDED THAT THERE ARE NO CASH DISCOUNTS ALLOWED AT ALL, WHICH WAS THE BASIS FOR LD. CIT(A)S OBSERVATION AND REFERRED TO THE OBSERVATION OF THE CIT(A) WHILE DISALLOWING THE 5% OF DISCOUNT. 9. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FA CTS ON RECORD. ADMITTEDLY IN MANY OF THE YEARS UNDER CONSIDERATION , THE ASSESSMENTS U/S 143(3) HAVE BEEN COMPLETED AND THE DISCOUNT CLAIMS WERE ALLOWED TO THE ASSESSEE. NOT ONLY THAT THE 11 INSTANCES WHERE THE DEPARTMENT MADE ENQUIRIES AND STATEMENTS THAT THEY DID NOT GET ANY DISCOUNT WERE DISPROVED IN THE CROSS EXAMINATION, ON FURNISHING THE INVOICE S AND MENTION OF DISCOUNTS WHICH WAS ADMITTEDLY ACCEPTED BY THE PARTIES. MORE OVER, ASSESSING OFFICER HIMSELF HAS ALLOWED THE DISCOUNTS GIVEN IN THE INVO ICES WITHOUT ANY DOUBT AND ONLY DISALLOWED THE DISCOUNTS BY WAY OF JOURNAL ENT RIES IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS EXPLAINED THE METHOD OF ACCOUNTING WHILE PASSING THE JOURNAL ENTRY BEING THAT THE ON ROAD PR ICE RECEIVED FROM THE CUSTOMER IS ADJUSTED BY WAY OF SALE PRICE OF VEHICL E, INSURANCE, REGISTRATION AND OTHER CHARGES AND IF THERE IS ANY SHORTFALL IN THE TOTAL BILL AND THE AMOUNT RECEIVED FROM THE CUSTOMER, THE DIFFERENCE IS TREAT ED AS DISCOUNT. IN THAT SENSE NO CASH DISCOUNT WAS EVER ALLOWED TO ANY CUST OMER OR TO THE BROKER AND EVERYTHING WAS BY WAY OF ENTRIES IN THE BOOKS OF ACCOUNTS. LD. CIT(A) ALSO ADMITS THAT IN RESPECT OF GIVING DISCOUNTS, AS SESSEES INCOMES HAVE BEEN INCREASING OVER A PERIOD OF TIME AND HE HIMSELF APP ROVES THAT THE ACTION OF THE AO IN DISALLOWANCE OF DISCOUNT IS NOT JUSTIFIED WHEN THE FACTS ARE SPEAKING OTHERWISE. TO THAT EXTENT, THE ORDER OF THE CIT RU NNING UP TO PAGE 29 PARA 4.10 IS PURELY ON ANALYSIS OF FACTS AND FINDINGS AR E AS PER THE RECORD. HOWEVER, WE ARE OF THE OPINION THAT LD. CIT(A) ERRE D IN CONSIDERING THE SO CALLED DISCREPANCIES IN THE INVOICES RAISED BY THE ASSESSEE IN ORDER TO JUSTIFY ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 6 THE ADHOC DISALLOWANCE OVER A PERIOD OF 7 YEARS. A S EXPLAINED BY THE LD. COUNSEL, THE SALE INSTANCES REPORTED BY THE CIT(A) WHERE THE SO CALLED DIFFERENCE OF RS.9,506/- EXIST IN CASE OF VINODINI PAI AND IN THE CASE OF BALENO SALE DO PERTAIN TO THE DISCOUNTS ALLOWED ON SALE IN VOICES WHICH THE ASSESSING OFFICER ACCEPTED IN ASSESSMENT. THUS SO CALLED DIS CREPANCIES ARE NOT OUT OF THE DISCOUNTS GIVEN BY WAY OF CREDIT NOTES. THUS T HERE IS NO BASIS FOR LD. CIT(A) TO MAKE ADHOC DISALLOWANCE, WHILE AT THE SAM E TIME GIVING A FINDING THAT AO IS NOT JUSTIFIED TO MAKE OUTRIGHT DISALLOWA NCE OF THE DISCOUNT AMOUNT. WE ARE NOT IN A POSITION TO ACCEPT THE CONCLUSIONS DRAWN BY THE CIT(A) IN MAKING THE DISALLOWANCE AT 5% OF THE DISCOUNT CLAIM . 10. ITAT IN THE CASE OF B. PULLAM RAJU ITA NO.333/V IZAG/2007 DATED 4.12.2009 HAS CONSIDERED SIMILAR ISSUE AND HELD AS UNDER: 4. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAD FURNISHED TO THE AO, THE NAMES AND ADDRESSES OF THE CUSTOMERS TO WHOM TRADE DISCOUNT WAS GIVEN. BEFORE THE LD. CIT(A) THE ASSESSEE ALSO FILED CONFIRMATION LETTERS OBTAINED FROM THE SAID CUSTOME RS. LD. CIT(A) HAS ALSO CONFRONTED THEM WITH THE AO. THOUGH THE A O FOUND CERTAIN FAULTS IN THE CONFIRMATION LETTERS, THE ASS ESSEE HAS CLARIFIED THE VARIOUS DOUBTS RAISED BY THE AO. THE LD. CIT(A ) ALSO NOTICED THAT THE ACCOUNTING METHODOLOGY FOLLOWED BY THE ASS ESSEE IN THIS REGARD. THE ASSESSEE HAD BEEN RAISING INVOICES AT THE MRP RATES AND THEREAFTER THE ASSESSEE WAS PASSING A JOURNAL E NTRY BY CREDITING THE CUSTOMER ACCOUNT AND DEBITING THE DIS COUNT ACCOUNT, WITH THE AMOUNT OF DISCOUNT GIVEN TO THE CUSTOMERS. THUS, THE LD. CIT(A) HAS NOTICED THAT THE SAID DISCOUNT WAS ACCOU NTED FOR BY WAY OF JOURNAL ENTRIES AND THUS THERE WAS NO MONEY TRAN SACTION INVOLVED IN IT. THE LD. CIT(A) HAS ALSO NOTICED TH AT IT IS A COMMON PRACTICE AMONG THE BUSINESSMEN TO OFFER DISCOUNT TO ATTRACT CUSTOMERS AND TO PROMOTE THE SALES. THE LD. CIT(A) HAS ALSO TAKEN NOTE OF MARKET BULLETING ISSUED BY THE SUPPLI ER OF VEHICLES OFFERING DISCOUNT WHICH WERE FURNISHED DURING THE C OURSE OF ASSESSMENT PROCEEDINGS AND HAS COME TO THE CONCLUSI ON THAT THE DISCOUNT SCHEMES WERE IN OPERATION DURING THE RELEV ANT PERIOD. LD. CIT(A) HAS ALSO NOTICED THAT THE SALES TAX AUTHORIT IES HAVE ACCEPTED THE TRADE DISCOUNT DISCLOSED BY THE ASSESS EE. HENCE ON A CONSPECTUS OF THE MATTER, THE LD. CIT (A) ACCEPTED THE GENUINENESS OF THE DISCOUNT AND DELETED THE ADDITIO N MADE BY THE AO. ON A CAREFUL READING OF THE ORDER OF THE LD. C IT(A), WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS TAKEN A CONS CIOUS DECISION AFTER CONSIDERING ALL THE RELEVANT FACTS AND CIRCUM STANCES OF THE CASE. HENCE WE DO NOT FIND ANY INFIRMITY IN HIS DE CISION AND ACCORDINGLY UPHOLD HIS ORDER. ITA NOS.38 TO 44/VIZAG/2012 M/S. VARUN MOTORSD (P) LTD., VSKP 7 11. RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN IN THE ABOVE CASE, SINCE THE FACTS IN THIS CASE ARE ALSO SIMILAR AND THE DIS COUNT WAS ACCOUNTED BY WAY OF JOURNAL ENTRIES AND AS THERE ARE NO CASH TRANSAC TIONS INVOLVED, WE CANNOT UPHOLD THE ADHOC DISALLOWANCE MADE BY THE LD. CIT(A ). ACCORDINGLY, THE SAME IS DELETED. ASSESSING OFFICER IS DIRECTED TO ALLOW THE DISCOUNT AS CLAIMED. 12. IN THE COURSE OF ARGUMENTS, LD. COUNSEL RAISED VARIOUS LEGAL PROPOSITIONS IN MAKING DISALLOWANCES IN THE COURSE OF PROCEEDINGS U/S 153A. SINCE THE ISSUE IS CONSIDERED ON MERITS ON EXAMINAT ION OF THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THERE IS NO NEED T O DISCUSS THE LEGAL ISSUES WHICH IN OUR OPINION ARE ACADEMIC IN NATURE. CONSI DERING THE FACTS OF THE CASE, WE ARE NOT UPHOLDING THE ORDER OF THE CIT(A) TO THE EXTENT OF MAKING ADHOC DISALLOWANCE AND ACCORDINGLY THE AMOUNT CONFI RMED BY THE CIT(A) STANDS DELETED. ASSESSEES GROUNDS ARE CONSIDERED ALLOWED. 13. IN THE RESULT, ALL THE SEVEN APPEALS WERE ALLOW ED. PRONOUNCED IN THE OPEN COURT ON 13 TH DEC13 SD/ - SD/ - ( SAKTIJIT DEY ) ( B. RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 13 TH DECEMBER, 2013 COPY TO 1 M/S. VARUN MOTORS (P) LTD., D.NO.7 - 8 - 1/1, VARUN TOWERS, SIRIPURAM, KASTURBA MARG, VISAKHAPATNAM 2 DCIT CENTRAL CIR CLE - 1, VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM. 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM