VArdhman AGRO AGENCIES, Jaipur V. ITO, Alwar

ITA 439/JPR/2014

• Counselvise Citation: 43923114 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 04-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Keywords: Reasonable cause

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 439/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 M/S. VARDHMAN AGRO AGENCIES JALUKI ROAD, LAXMANGARH DISTT. ALWAR CUKE VS. THE ITO WARD- 1 (2) ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAEFV 0239 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT -DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 09/10/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A), ALWAR DATED 07-11-2013 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN THE ASSESSEE RAISED FOLLOWING GROUNDS:- (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 40,000/- ON ESTIMATE BASIS OUT OF FREE SERVICE CAMP EXPENSES. (II) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS1.50 LACS ON ESTIMATE BASIS OUT O F REBATE AND DISCOUNT EXPENSES. ITA NO. 439/JP/2014 M/S. VARDHMAN AGRO AGENCIES VS. ITO, WARD- 1(2) ALW AR . 2 2.1 THE APPEAL IS FILED BELATEDLY BY 116 DAYS. HOWE VER, THE CONDONATION APPLICATION FILED BY THE ASSESSEE CONTE NDING THEREIN IS AS UNDER- WITH REFERENCE TO ABOVE, IT IS TO SUBMIT THAT THA T ORDER OF LD. CIT(A) DATED 7-1-2013 SERVED ON MY COU NSEL WAS INTIMATED TO ME ON 5-05-2014 AS THE ORDER WAS MISPLACED BY HIM. I HAVE THEREFORE, CHANGED MY COUN SEL AND FILING THE APPEAL WITH A REQUEST FOR CONDONING THE DELAY. MY AFFIDAVIT IN THIS CONNECTION IS ENCLOSED. THE CONTENTS ARE SUPPORTED BY AN AFFIDAVIT. IT IS F URTHER DEPOSED THAT THE ASSESSEE WITHDREW THE FILE FROM ITS EARLIER COUNSEL AND APPOINTED A NEW COUNSEL. IT IS PLEADED THAT THE DELAY IN FILING THE APPEAL BEING BEYOND THE CONTROL OF THE ASSESSEE MAY BE CONDONED. 2.2 THE LD. DR IS HEARD WHO OPPOSED THE CONDONATION APPLICATION OF THE ASSESSEE. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN MY CONSIDERED VIEW, IF ASSE SSEE'S COUNSEL DOES NOT INTIMATE ABOUT THE RECEIPT OF THE ORDER THEN IT BEC OMES A REASONABLE CAUSE FOR LATE FILING THE APPEAL AND THE ASSESSEE CANNOT BE PUNISHED FOR THE LAPSES ON THE PART OF THE COUNSEL. IN VIEW THEREOF, THE DELAY IS CONDONED. 3.1 ON MERIT ALSO, THE LD. COUNSEL FOR THE ASSESSEE CON TENDS THAT THE ASSESSEE DEALS IN TRADING OF TRACTORS, TRACTOR PART S, OIL, GREASE AND ITA NO. 439/JP/2014 M/S. VARDHMAN AGRO AGENCIES VS. ITO, WARD- 1(2) ALW AR . 3 AGRICULTURAL EQUIPMENTS. DURING THE YEAR ASSESSEE H AS CLAIMED EXPENDITURE OF RS. 58,520/- UNDER THE HEAD FREE SER VICE CAMP EXPENSES. IT WAS EXPLAINED THAT FREE SERVICE CAMPS ARE ORGANISED WITH THE HELP OF THE DISTRIBUTORS TECHNICAL STAFF WHO CHECK THE TRACTOR S AND ADVICE TO CARRY THE SERVICE AT ASSESSEES WORKSHOP. THE ASSESSEE WITH T HE HELP OF ITS MACHINE CLEAN, LUBRICATE AND CHANGE OIL/GREASE TO PREVENT E ARLY WEAR/TEAR. THE SERVICE IS PROVIDED FREE OF COST. THE EXPENSES ON P ROVIDING FREE SERVICE IS DEBITED IN THE BOOKS, THE COST OF ANY PART WHICH IS UNDER GUARANTEE IS REIMBURSED BY THE DISTRIBUTORS. 3.2 THE AO HELD THAT EXPENDITURE DEBITED AS FREE SERVICE CHARGE ARE FULLY REIMBURSED BY THE DISTRIBUTOR AND THEREFORE H E DISALLOWED THE EXPENDITURE. 3.3 THE LD. CIT(A) VIDE PARA 4.5 AND 4.6 ACCEPTED THAT ASSESSEE HAS FILED COMPLETE DETAILS OF FREE CAMPS ORGANISED AND EXPENSES INCURRED FOR CARRYING OUT RECTIFICATION ON EACH TRACTOR OF THE C USTOMERS. HE VERIFIED FROM THE VOUCHERS THAT THESE EXPENSES ARE ON ACCOUN T OF OIL, FILTER, GREASE ETC. STILL HE HELD THAT COST OF THESE ITEMS CANNOT BE ACCEPTED AT FACE VALUE. HE THEREFORE RESTRICTED THE DISALLOWANCE AT RS. 40, 000/-. ITA NO. 439/JP/2014 M/S. VARDHMAN AGRO AGENCIES VS. ITO, WARD- 1(2) ALW AR . 4 3.4 THE LD. AR OF THE ASSESSEE FURTHER PLEADED THA T THE EXPENDITURE IS ACTUALLY INCURRED BY THE ASSESSEE AND EVERY ITEM IS NOT REIMBURSED BY THE DISTRIBUTOR. THEREFORE, THERE IS NO JUSTIFICATION F OR ADHOC DISALLOWANCE. 3.5 APROPOS GROUND NO. 2 , THE ASSESSEE HAS GIVEN THE DISCOUNT TO THE CUSTOMERS ON PURCHASE OF THE TRACTORS IN CASH/ IN S HAPE OF THE COMMODITY WHICH IS DEBITED UNDER THE HEAD REBATE AND DISCOUNT . FOR SUCH DISCOUNT SEPARATE RECEIPTS ARE OBTAINED FROM THE CUSTOMERS. 3.6 THE AO DID NOT ACCEPT ASSESSEE EXPLANATION AND DISALLOWED THE EXPENDITURE. 3.7 IN FIRST APPEAL, THE LD. CIT(A) PARTLY ACCEPTED THE CONTENTION OF THE ASSESSEE AND RESTRICTED THE DISALLOWANCE TO RS. 1.5 0 LACS OUT OF DISALLOWANCE OF RS. 2,01,200/- MADE BY THE AO. 3.8 THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED AS UNDER:- IT IS SUBMITTED THAT IN RESPECT OF CASH DISCOUNT ASSESSEE HAS SUBMITTED THE RECEIPT OF EVERY CUSTOME R MENTIONING THE ADDRESS AND THE BILL NO. OF THE TRAC TOR SOLD AGAINST WHICH THE CASH DISCOUNT WAS GIVEN. ALL THES E TRACTORS ARE FINANCED BY THE BANK/ FINANCE COMPANIES. THE AD DRESS OF THE CUSTOMER IS MENTIONED IN THE BILLS AND ALSO GIV EN IN THE RECEIPTS. COPY OF THE RECEIPTS GIVEN BY THE CUSTOME RS IS ENCLOSED. IT IS INCORRECT ON THE PART OF THE CIT(A) TO OBSERVE THAT AO COULD NOT VERIFIED THE EXPENSES IN ABSENCE OF ITA NO. 439/JP/2014 M/S. VARDHMAN AGRO AGENCIES VS. ITO, WARD- 1(2) ALW AR . 5 COMPLETE PARTICULARS. THEREFORE ONCE THE LOWER AUTH ORITIES ACCEPT THAT THE EXPENSES HAVE BEEN INCURRED, THERE IS NO JUSTIFICATION TO DISALLOW THE CLAIM OF THE EXPENSES . 3.9 THE LD. DR IS HEARD 3.10 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. APROPOS FIRST GROUND, THE FACT IS THAT SERVICE CAMP WAS HELD WHICH HAS NOT BEEN DISPUTED. THE EXPENDITU RE IS ACTUALLY INCURRED BY THE ASSESSEE AND THE GENUINENESS WHEREO F IN NOT IN QUESTION. NOTHING HAS BEEN BROUGHT ON RECORD THAT THE EXPENDI TURE INCURRED BY THE ASSESSEE HAS BEEN REIMBURSED. IN VIEW THEREOF, THER E IS NO JUSTIFICATION IN RETAINING THE ADHOC DISALLOWANCE OF RS. 40,000/- W HICH IS DELETED. THUS GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 3.11 APROPOS SECOND GROUND, THE TRACTORS ARE SOLD B Y ISSUING PROPER BILLS AND VOUCHERS. THEY ARE FINANCED BY THE BANK. THE DE TAILS ABOUT THE ADDRESS AND IDENTITY OF THE CUSTOMERS ARE DULY MAIN TAINED. THE DISCOUNT VOUCHERS ARE SIGNED BY THEM. WITH THESE EVIDENCE ON RECORD, IT CANNOT BE HELD THAT THE ASSESSEE HAS NOT PAID DISCOUNT TO THE CUSTOMERS. THE CASH DISCOUNT ON PURCHASE OF TRACTORS IS ALLOWABLE AS BU SINESS EXPENDITURE. THUS IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH ERE IS NO JUSTIFICATION IN ITA NO. 439/JP/2014 M/S. VARDHMAN AGRO AGENCIES VS. ITO, WARD- 1(2) ALW AR . 6 HOLDING A VIEW THAT EXPENDITURE IS NOT PROVED BY TH E ASSESSEE. THUS THE DISALLOWANCE OF RS. 1.50 LACS CONFIRMED BY THE LD. CIT(A) IS DELETED. 4.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/10/20 15. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. VARDHMAN AGRO AGENCIES, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1 (2), ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 439JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR