The ACIT, Circle-5, RAJKOT-GUJARAT V. M/s. Sun Enterprise, RAJKOT-GUJARAT

ITA 44/RJT/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76369 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Assessee Lawyers: D M RINDANI CA
• Keywords: Depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA JM AND SHRI B. R. JAIN AM ITA NO. 44/RJT/2013 / ASSESSMENT YEAR 2008-09. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-5 RAJKOT. ( / APPELLANT V/S M/S SUN ENTERPRISES, LOKHAND BAZAR, LOHANAGAR MAIN ROAD, OPP. AHIYA APARTMENT, GONDAL ROAD, RAJKOT. PAN- ABAFS6628R / RESPONDENT ! '# / REVENUE BY DR. J.B. JHAVERI, D.R. $% ! '# / ASSESSEE BY SHRI D.M. RINDANI, C.A. ' & ' %( / DATE OF HEARING 07/01/2014 ) %( / DATE OF PRONOUNCEMENT 08/01/2014 / ORDER PER B. R. JAIN, A. M. : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 21/11/2012 OF SHRI YOGESH PANDE, THE LEARNED CIT(A)-IV, RAJKOT RA ISES THE FOLLOWING GROUNDS:- 1 THE LD. CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND F ACTS IN DELETING THE ADDITION OF RS. 18,62,308/- MADE BY TH E AO ON ACCOUNT OF DISALLOWANCE ON SALES COMMISSION. 2 THE LD. CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND FA CTS IN DELETING THE ADDITION OF RS. 18,295/- ON ACCOUNT OF DISALLOWANCE ON TELEPHONE, VEHICLE, DEPRECIATION ON CAR AND MOBILE PHONE. 3 ANY OTHER GROUND THAT THE REVENUE MAY RAISE BEFOR E OR DURING HEARING PROCEEDINGS BEFORE THE HONBLE ITAT. 4 IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CI T(A)-IV, RAJKOT MAY KINDLY BE SET ASIDE AND THAT OF ASSESSING OFFIC ER BE RESTORED. ITA 44/RJT/2013 2 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE RETURNED INCOME OF RS. 10,75,190/- FROM THE BUSINESS OF TRADING IN IRON AN D STEEL. THE ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED AND ACCOMPANIED BY TH E REPORT OF AUDITORS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED COMMISSION E XPENDITURE TO THE TUNE OF RS. 18,62,308/-. IN ORDER TO VERIFY THE GEN UINENESS OF THE CLAIM, SUMMONS U/S 131(1) OF THE I.T. ACT, 1961 (IN SHORT THE ACT) WERE ISSUED TO THE COMMISSION AGENTS. THE STATEMENT OF SMT. NAINAB EN JIGNESHBHAI PAREKH AND SHRI ATUL C. PAREKH, THE COMMISSION AGEN TS WERE RECORDED. THESE TWO PERSONS ADMITTED OF DOING WORK FOR GETTIN G ORDERS AND ALSO ACCEPTED THE FACTUM OF PAYMENT RECEIVED THROUGH ACC OUNT PAYEE CHEQUES. THE LD. ASSESSING OFFICER, HOWEVER, WAS OF THE OPIN ION THAT THERE WAS NO NEED OF MEDIATOR OR COMMISSION AGENT IN THE SALES M ADE BY THE PARTIES AND THEREFORE, DID NOT FIND ANY MERIT IN THE CLAIM SO MADE AND DISALLOWED THE ENTIRE COMMISSION OF RS. 18,62,308/-. 3. THE LD. CIT(A), HOWEVER, FOUND THAT OUT OF SIX S ALES COMMISSION AGENTS, THE ASSESSING OFFICER MADE ENQUIRIES ONLY W ITH THE TWO COMMISSION AGENTS NAMELY SMT. NAINABEN JIGNESHBHAI PAREKH AND SHRI ATUL C. PAREKH, PARTNER OF THE APPELLANT FIRM AND A LSO TWO OTHER PARTIES NAMELY M/S RAMAVAT CONSTRUCTION COMPANY AND M/S SMP CONSTRUCTION COMPANY PVT. LTD. BETWEEN WHOM AND APPELLANT. THE A BOVE MENTIONED COMMISSION AGENTS ACTED AS MEDIATORS RESPECTIVELY. HE FOUND THAT BOTH THE COMMISSION AGENTS HAVE CONFIRMED BEFORE THE ASS ESSING OFFICER THAT THEY ACTED AS MEDIATOR BETWEEN APPELLANT AND RESPEC TIVE PARTIES NAMELY RAMAVAT AND SMP RAMAVAT AND SMP HAVE SEPARATELY CON FIRMED VIDE THEIR LETTERS ADDRESSED TO THE ASSESSING OFFICER TH AT SMT. NAINABEN J PAREKA AND ATUL C PAREKH RESPECTIVELY WERE MEDIATOR S IN THE PURCHASE OF TMT BARS FROM APPELLANT. EACH OF THEM HAS SUBMITTED THE DETAILS OF ITA 44/RJT/2013 3 PURCHASES MADE FROM APPELLANT THROUGH SMT. NAINABEN J PAREKH AND ATUL C PAREKH. ATUL C PAREKH WAS FOLLOWING UP DISPATCH O F MATERIAL AND PAYMENT OF BILLS ON BEHALF OF APPELLANT AND THIS FA CT HAS BEEN CONFIRMED BY ALL THE THREE PARTIES, I.E. ATUL C PAREKH, SMP AND APPELLANT ITSELF. ATUL C PAREKH WAS PAID SALES COMMISSION OF RS. 2,78,599/- FOR SALE OF 1.01 CRORE OF TMT BARS BY APPELLANT OF SMP. THE PAYMENT IS MAD E THROUGH BANKING CHANNEL AND ATUL C PAREKH IS ALSO ASSESSED TO TAX. THEREFORE, THERE IS NO REASON TO DISALLOW THE SALES COMMISSION PAID TO HIM . SIMILARLY, RAMAVAT WAS PLACING PURCHASE ORDERS WITH SMT. NAINABEN J PA REKH FOR SUPPLY OF TMT BARS FROM APPELLANT. SHE WAS FOLLOWING UP DISPA TCH OF MATERIAL AND PAYMENT OF BILLS ON BEHALF OF APPELLANT AND THIS FA CT HAS BEEN CONFIRMED BY ALL THE THREE PARTIES I.E. SMT. NAINABEN J PAREKH, RAMAVAT AND APPELLANT ITSELF. SMT. NAINABEN J PAREKH WAS PAID SALES COMMI SSION OF RS. 4,53,017/- FOR SALE OF 1.81 CRORE OF TMT BARS BY AP PELLANT TO RAMAVAT. THE PAYMENT IS MADE THROUGH BANKING CHANNEL AND SMT. NA INABEN J PAREKH IS ALSO ASSESSED TO TAX. THEREFORE, THERE IS NO REASON TO DISALLOW THE SALES COMMISSION PAID TO HER. I FIND THAT ASSESSING OFFIC ER HAS REACHED AN INCORRECT CONCLUSION THAT SALES COMMISSION PAID TO SMT. NAINABEN J PAREKH AND ATUL C PAREKH IS FICTITIOUS WHEN THE EVI DENCES COLLECTED BY HIM SHOWED THE OPPOSITE POSSIBILITY, I.E. THE SALES COM MISSION PAID TO SMT. NAINABEN J PAREKH AND ATUL C PAREKH ARE GENUINE. MO REOVER, ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY IN RESPECT OF SALE S COMMISSION PAID TO REMAINING SIX SALES COMMISSION AGENTS AND HAS ARBIT RARILY DISALLOWED THE COMMISSION PAID TO THEM ALSO WHEN THE APPELLANT HAD PROVIDED THE PAN AND COMPLETE ADDRESSES OF THOSE COMMISSION AGENTS A LSO. HE, THEREFORE, FOUND THAT THE DISALLOWANCE OF SALES COMMISSION OF RS. 18,62,308/- IS ARBITRARY AND CONTRARY TO EVIDENCE ON HIS RECORD. A CCORDINGLY, HE DELETED THE DISALLOWANCE OF RS. 18,62,308/-. ITA 44/RJT/2013 4 4. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE PAPER BOOK LAID ON RECORD BY THE ASSESSEE HAS ALSO BEEN PERUSED. THE LD. CIT(A) AFTER DUE APPLICATION OF MIND, HAS FOUND THA T THE COMMISSION PAID IS FOR THE WORK DONE AND THE PAYMENTS THEREOF HAVE ALS O BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. TWO OF THE COMMISSION AGENTS WERE EXAMINED BY THE ASSESSING OFFICER. NO ENQUIRY FROM OTHERS WAS C ARRIED BY THE ASSESSING OFFICER, EVEN THOUGH, THE ASSESSEE HAD PR OVIDED PAN AND COMPLETE ADDRESS OF THOSE COMMISSION AGENTS AND LAI D CONFIRMATION ON RECORD OF THE ASSESSING OFFICER. HE, THEREFORE, FOU ND THAT THE CLAIM OF COMMISSION PAID IS GENUINE. SINCE THE COMMISSION PA ID BY THE RESPONDENT ASSESSEE IS FOR THE WORK DONE FOR PROCURING ORDERS AND PAYMENT THROUGH CHEQUES IS ALSO REAL AND THERE BEING NO CONTRARY MA TERIAL ON RECORD TO SUGGEST THAT THE CLAIM OF COMMISSION EXPENDITURE IS NOT GENUINE, WE FIND NO ERROR IN HIS ORDER. ACCORDINGLY, GROUND RAISED I N APPEAL BEING DEVOID OF ANY MERIT STANDS REJECTED. 5. IN SO FAR AS IN THE SECOND GROUND IN APPEAL, THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 18,295/- OUT OF TELEPHONE E XPENSES, VEHICLE EXPENSES, DEPRECIATION ETC. AGGREGATING TO RS. 91,4 78/- BEING 20% THEREOF FOR THE REASON THAT THE PREREQUISITES PARTNERS AND STAFF IN THE FORM OF USE OF VEHICLES AND TELEPHONE IF ANY HAS ALREADY BEEN TAXE D BY PAYING FBT BY APPELLANT. THE SAME DOES NOT REQUIRE DOUBLE TAXATIO N BY DISALLOWING THE CLAIM OF SUCH EXPENDITURE. 6. HAVING HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD, WE FIND NO REASON TO INTERFERE WITH THE DECISION REACHED BY TH E LEARNED CIT(A) AS THE DISALLOWANCE HAS BEEN DELETED BY ADVANCING SOUND RE ASONING THAT THE ASSESSEE HAS ALREADY PAID FBT ON SUCH PERSONAL USE OF TELEPHONE AND VEHICLE ETC. ACCORDINGLY, GROUNDS RAISED IN APPEAL STANDS REJECTED. ITA 44/RJT/2013 5 7. IN THE RESULT, APPEAL BY REVENUE STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 08/01/2014. SD/- SD/- ( T. K. SHARMA ) ( B. R. JAIN ) '* /JUDICIAL MEMBER #( '* / ACCOUNTANT MEMBER *#+ ,*-/ ORDER DATE 08/01/2014 /RAJKOT *RANJAN / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- THE A.C.I.T., CIRCLE-5, RAJKOT. 2. /RESPONDENT- M/S SUN ENTERPRISES, RAJKOT. 3. '-2- % & 3% / CIT-I, RAJKOT. 4. & 3%- / CIT (A)-IV, RAJKOT. 5. 789 % , , / DR, ITAT, RAJKOT 6. 9; <= / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.