The ACIT, Circle-4(1), Visakhapatnam V. M/s Srinivasa Automobiles (Visakha) (P) Ltd., Visakhapatnam

ITA 430/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7129 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.430/VIZAG/2009 ASSESSMENT YEAR : 2006-07 ACIT, CIRCLE-4(1), VISAKHAPATNAM VS. M/S. SRINIVASA AUTOMOBILES (VISAKHA) (P) LTD., VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN: AAGCS9835G I.T.A. NO.431/VIZAG/2009 ASSESSMENT YEAR : 2006-07 ACIT, CIRCLE-4(1), VISAKHAPATNAM VS. SHRI B. PULLAM RAJU, VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN : AGFBP1808C APPELLANT BY : SHRI GSS GOPINATH RESPONDENT BY : SHRI GVN HARI O R D E R PER BENCH : 1. BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY LD CIT(A) IN THE RESPECTIVE HANDS OF THE ASSESSEE AND THEY RELATE TO THE ASSESSMENT YEAR 2006-07. SINCE IDENTICAL ISSUES ARE URGED IN THESE TWO APPEALS AND FURTHER SINCE BOTH OF THEM ARE HEARD TOGETHER, WE FIND IT C ONVENIENT TO DISPOSE THEM OF BY THIS COMMON ORDER. 2. THE ONLY THAT IS AGITATED BY THE REVENUE IS WHETHER THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION RELATING TO THE TRADE DISC OUNT IN THE HANDS OF BOTH OF THE 2 ASSESSEES. IT MAY BE NOTED THAT THE DISCOUNT CLAIM ED BY M/S SRINIVASA AUTOMOBILE (P) LTD, WAS RS.44,57,044/- AND BY SRI P ULLAM RAJU WAS RS.41,46,306/-. 3. BOTH THE ASSESSEES ARE DEALERS OF M/S EICHER MOTOR LTD. BOTH THE ASSESSEES CLAIMED THE EXPENDITURE TOWARDS DISCOUNT IN THEIR RESPECTIVE PROFIT AND LOSS ACCOUNT AS STATED ABOVE. SINCE THE SALES INVO ICES RAISED BY THE ASSESSEES DID NOT CONTAIN THE AMOUNT OF DISCOUNT GIVEN TO THE CUSTOMERS, THE AO DISBELIEVED THE SAID CLAIM AND ADDED THE SAME TO TH E TOTAL INCOME. THE LD CIT(A) DELETED THE SAID ADDITION IN THE APPEAL PREF ERRED BY BOTH THE ASSESSEES. HENCE THE REVENUE IS IN APPEAL BEFORE US. 4. IT WAS BROUGHT TO OUR NOTICE THAT A SIMILAR ISSUE WAS CONSIDERED BY THIS BENCH IN THE CASE OF SHRI B.PULLAM RAJU IN ITA NO.3 33/VIZAG/2007 RELATING TO THE ASSESSMENT YEAR 2004-05 AND THIS BENCH, VIDE ITS OR DER DATED 4 TH DECEMBER, 2009 HAS UPHELD THE ORDER OF LD CIT(A) IN DELETING THE SIMILAR DISALLOWANCE MADE. WE HAVE GONE THROUGH THE SAID ORDER AND THE RELEVANT OBSERVATIONS MADE THEREIN ARE EXTRACTED BELOW: ..THE LD CIT(A) ALSO NOTICED THAT THE ACCOUNTING METHODOLOGY FOLLOWED BY THE ASSESSEE IN THIS REGARD. THE ASSESSEE HAD B EEN RAISING INVOICES AT THE MRP RATES AND THERE AFTER THE ASSESSEE WAS PASSING A JOURNAL ENTRY BY CREDITING THE CUSTOMER ACCOUNT AND DEBITING THE DISCOUNT ACCO UNT WITH THE AMOUNT OF DISCOUNT GIVEN TO THE CUSTOMERS. THUS, THE LD CIT( A) HAS NOTICED THAT THE SAID DISCOUNT WAS ACCOUNTED FOR BY WAY OF JOURNAL ENTRIE S AND THUS THERE WAS NO MONEY TRANSACTION INVOLVED IN IT. THE LD CIT(A) HA S ALSO NOTICED THAT IT IS A COMMON PRACTICE AMONG THE BUSINESSMEN TO OFFER DISC OUNT TO ATTRACT CUSTOMERS AND TO PROMOTE THE SALES. THE LD CIT(A) HAS ALSO T AKEN NOTE OF THE MARKET BULLETING ISSUED BY THE SUPPLIER OF VEHICLES OFFERI NG DISCOUNT WHICH WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS COME TO THE CONCLUSION THAT THE DISCOUNT SCHEMES WERE IN OPERATION DURING THE RELEVANT PERIOD. THE LD CIT(A) HAS ALSO NOTICED THAT THE SALES TAX AUTHORIT IES HAVE ACCEPTED THE TRADE DISCOUNT DISCLOSED BY THE ASSESSEE. HENCE ON A CON SPECTUS OF THE MATTER, THE LD CIT(A) ACCEPTED THE GENUINENESS OF THE DISCOUNT AND DELETED 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 RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE. HENC E WE DO NOT FIND ANY INFIRMITY IN HIS DECISION AND ACCORDINGLY UPHOLD HIS ORDER. 3 4.1 ON A CAREFUL PERUSAL OF THE ORDERS OF LD CIT(A ) UNDER CONSIDERATION, WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS CONSI DERED ALL THE POINTS REFERRED TO IN THE PRECEDING PARAGRAPH. SINCE THE FACTS AND CIRCU MSTANCES OF THE INSTANT CASE ARE IDENTICAL WITH THE CASE DECIDED EARLIER, CONSIS TENT WITH THE DECISION TAKEN THERE IN, WE CONFIRM THE ORDERS OF LD CIT(A) IN BOT H THE CASES. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVEN UE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 05/02/2010 SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 05 TH FEBRUARY, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 ACIT, CIRCLE-4(1), VISAKHAPATNAM 02 M/S. SRINIVAS AUTO MOBILES (VISAKHA) PVT. LTD., A-6, APIE, AUTONAGAR, GAJUWAKA, VISAKHAPATNAM 03 SHRI B PULLAM RAJU, M.D OF M/S. SRINIVAS AUTO MO BILES (VISAKHA) PVT. LTD., A-6, APIE, AUTONAGAR, GAJUWAKA, VISAKHAPATNAM 04 CIT -2, VISAKHAPATNAM 05 CIT(A), VISAKHAPATNAM 06 CIT (DR), ITAT, VISAKHAPAATNAM 07 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH