DCIT, Kanpur V. M/s. Goel Home Products India Pvt. Ltd., Kanpur

ITA 464/LKW/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6546 (ITAT-LUCKNOW)
• Duration Of Justice: 4 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 12-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Unexplained cash credit; Source of fund; Commercial expediency; Revenue expenditure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO.464/LKW/2009 ASSESSMENT YEAR: 2004 - 05 DCIT - 6 KANPUR V. M/S GOEL HOME PRODUCTS INDIA PV T. LTD. 509, CITY CENTRE 63/2, THE MALL, KANPUR PAN: AAACG5248F (APP ELL ANT) (RESPONDENT) ITA NO.108/LKW/2011 ASSESSMENT YEAR: 2003 - 04 DCIT - 4 KANPUR V. M/S GOEL HOME PRODUCTS INDIA PVT. LTD. 509, CITY CENTRE 63/2, THE MALL, KANPUR PAN: AAACG524 8F (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. R. K. RAM, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 15 0 5 2014 DATE OF PRONOUNCEMENT: 25 0 6 2014 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE REVENU E AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) ON COMMON GROUNDS. THEREFORE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. WE, HOWEVER, FOR THE SAKE OF CONVENIENCE ADJUDICATE THESE APPEALS ONE AFTER THE OT HER. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : I.T.A. NO.464/LKW/2009: 2 . IN THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF THE LD. CIT(A), INTER ALIA, ON FOLLOWING GROUNDS: - 1 . THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 10,08,163/ - ON ACCOUNT OF PURCHASES MADE FROM SPECIFIED PERSONS U/S 40A(2)(B) OF THE IT. ACT, 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAID PAYMENT WAS MADE TO THE ASSESSEE'S SISTER CONCERN FOR PURCHASE OF TEA AND THE ASSESSEE FAILED TO SUBS TANTIATE ITS CLAIM THAT HIGHER PRICE WAS PAID BECAUSE OF QUALITATIVE DIFFERENCE IN TEA PURCHASED FROM ITS SISTER CONCERN AND FROM OUTSIDE. 2 . THAT THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,45,000/ - BEING INTEREST PAID TO ITS SISTER CONCERN ON ACCOUNT OF LATE PAYMENT. THE CIT(A) FAILED TO APPRECIATE THE FACT THAT NO INTEREST WAS PAID TO ANY OTHER PARTY ON ACCOUNT OF LATE PAYMENT AND HENCE THE AO HAD RI GHTLY TREATED THE PAYMENT OF RS. 2,45,000/ - AS CHA RGED U/S 40A(2)(A) OF THE INCOME TAX ACT, 1961. 3 . THAT THE COMMISSIONER OF INCOME TAX(APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,00,000/ - ON ACCOUNT OF ADDITIONS MADE AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS OF THE PERSON MAKING THE PAYMENT. THE COMPANY HAS ALSO FAILED TO PROVE THE GENUINENESS OF TRANSACTION WORTH RS.15,00,000/ - . 4 . THAT THE COM MISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,50,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS, 1 ,50,000/ - WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE FAILED TO PROVE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : C REDITWORTHINESS OF ALL THREE LENDERS FROM WHOM THE MONEY WAS TAKEN AT RS.50,000/ - FROM EACH OF THEM. 5 . THAT THE COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,57,040/ - ON ACCOUNT OF ADVERTISEMENT AND PUBLI CITY WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE HAD A POLICY OF AMORTIZATION U/S 35D OF SUCH EXPENDITURE IN THE PAST, PUT IN THE YEAR UNDER CONSIDERATION IT HAS CAPITALIZED THE EXPENDITURE UNDER THE HEAD ADVERTISEMENT AN D PUBLICITY AGAINST ITS OLD POLICY. 6 . THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER RESTORED. 3 . APROPOS GROUND NO.1, IT IS NOTICED THAT THE ASSESSEE IS A BLENDE R OF TEA LEAVES AND IT HAS PURCHASED TEA LEAVES OF DIFFERENT QUALITY FROM DIFFERENT PERSONS IN DIFFERENT QUANTITY AT DIFFERENT RATES, AS THE RATES DEPENDS UPON GRADE/QUALITY OF PARTICULAR TEA LEAVES. 4 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER HAS NOTED FROM THE DETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO THE PURCHASE MADE FROM DIFFERENT PERSONS THAT THE ASSESSEE HAD PURCHASED TEA LEAVES WEIGHING 328392 KGS. FROM ONE M/S GOEL MARKETING COMPANY, A SISTER CONCERN OF THE ASSESSEE FO R RS.1,66,38,962/ - AT AN AVERAGE PRICE OF RS.50.67 PER KG OF TEA , A GAINST TH E PURCHASE S FROM OTHER PARTIES IN COMBINED TO THE TUNE OF 317658.600 KGS AT AN AVERAGE PRICE OF RS.47.60 PER KG. THE SISTER CONCERN, M/S GOEL MARKETING COMPANY IS A PROPRIETORSHIP CONCERN BEING RUN BY THE WIFE OF ONE OF THE DIRECTORS OF THE ASSESSEE - COMPANY. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 48A(2)(A) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') AND HAS MADE DISALLOWANCE OF THE EXCESS P RICE OF RS.3.07 PER KG. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : WORKED OUT THE DIFFERENCE BETWEEN THE AVERAGE PRICE OF TEA LEAVES PROCURED FROM M/S GOEL MARKETING COMPANY AND FROM OTHER PARTIES AND MADE ADDITION OF RS.10,08,163/ - . 5 . AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WIT H THE SUBMISSION THAT THE ASSESSING OFFICER HAS IGNORED THE FACT THAT TEA FROM OTHER PERSONS ALSO INCLUDES EX - U.P. PURCHASES WHICH IS WITHOUT THE INCIDENCE OF TRADE TAX I.E. TRADE TAX IS SEPARATELY LEVIABLE TO MATCH THEM WITH OTHER FIGURE. IT WAS ALSO CON TENDED THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED IN THE ASSESSMENT ORDER THAT HIGHEST AND LOWEST RATES OF TEA LEAVES PURCHASED FROM OTHER CONCERN, M/S OM TRADING COMPANY ARE RS.70.21 AND RS.45.16 PER KG. AND THE AVERAGE RATE COMES AT RS.57.66 PER KG. , WHEREAS THE HIGHEST AND LOWEST RATES OF TEA LEAVES PURCHASED FROM M/S GOEL MARKETING COMPANY ARE RS.72.70 AND RS.39.42 PER KG. IT WAS ALSO CONTENDED THAT THE TEA LEAVES IS AN AGRO PRODUCT AND RATES OF TEA LEAVES VARIES FROM RS.40/ - TO RS.80/ - PER KG. BA SED ON THE GRADE/QUALITY OF THE PARTICULAR TEA LEAVES, WHICH IS ALSO VERIFIABLE FROM THE RATES/QUOTATION OF TEA BOARD OF INDIA PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6 . THE LD. CIT(A) RE - EXAMINED THE ISSUE AND BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, HELD THAT THE PURCHASE RATE OF DIFFERENT TEA LEAVES ARE FULL OF VOLATILITY DEPENDING UPON THE GRADE/QUALITY OF THE PRODUCT. IN THE GIVEN CASE WHEREIN THE AVERAGE RATES OF PURCHASES MADE FROM OTHER PARTIES ARE COMPARED, IT SHOWS NO HIGHER VARIATION THAN THE OTHERS; AND IS NEARLY SAME IN COMPARISON TO THE RATES OF SISTER CONCERN. THE LD. CIT(A) ACCORDINGLY, FOLLOWING THE JUDGMENT OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. UDHOJI SHRIKRISHNADAS [19 83] 139 ITR 827 (MP) HAS DELETED THE ADDITION HAVING CONVIN C ED WITH THE EXPLANATIONS OF THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) IN THIS REGARD ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 8. I HAVE CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE, THE DISCUSSION OF THE AO IN THE ASSESSMENT ORDER, SUBMISSIONS AND ARGUMENTS OF THE APPELLANT. THE APPELLANT HAS PRODUCED THE QUOTATIONS FROM TEA BOARD OF INDIA CONFIRMING VOLATILITY IN THE RATES OF TEA LEAVES DEPENDING ON THE GRADES/ QUALITY OF TEA LEAVES. AUDITED FINAL ACCOUNTS AS WELL AS PURCHASE SUMMERY STATEMENT OF SISTER CONCERN M/S GOEL MARKETING CO. WERE ALSO PRODUCED BEFORE LD. ASSESSING OFFICER. AS PER THE PROFIT AND LOSS ACCOUNT OF SUCH SISTER CONCERN, NO MAJOR PROFITS WERE E ARNED BY THE SISTER CONCERN. SISTER CONCERN WAS WORKING AS CONSIGNMENT AGENT OF BIG COMPANIES AND OUT OF TOTAL PURCHASES BY APPELLANT, 2/3RD OF THE SALES WAS MADE BY SISTER CONCERN OUT OF CONSIGNMENT SALES. THE APPELLANT HAS RAISED AN IMPORTANT ISSUE THAT THE LD. ASSESSING OFFICER TAKEN WEIGHTED PURCHASES RATES FOR DETERMINING THE AVERAGE RATES. THE APPELLANT HAS PRODUCED A WORKING IN PAGE NO 30 OF THE PAPER BOOK WHEREIN APPELLANT HAS MADE COMPARATIVE STATEMENT APPLYING WEIGHAGE RATES WITH GENERAL RATES. TH IS CLEARLY SHOWS THAT WEIGHTED RATES CANNOT BE A CRITERIA FOR MAKING COMPARATIVE STUDY. IN THE GIVEN CASE AS ACCEPTED BY THE AO ALSO, AVERAGE RATE OF PURCHASE FROM ONE PARTY M/S OM TEA COMPANY IS RS.57.66 (HIGHEST RATE OF RS.70.21 AND LOWEST RATE OF RS. 45 .12) WHILE AVERAGE RATE OF PURCHASES MADE FROM SISTER CONCERN M/S GOEL MARKETING COMPANY IS RS.56.6 (HIGHEST RATE OF RS.72.79 AND LOWEST RATE OF RS.39.42). 9. IN VIEW OF THE ABOVE DISCUSSIONS, I FIND THAT THE PURCHASE RATES OF TEA LEAVES ARE FULL OF VOLAT ILITY DEPENDING UPON THE GRADES/QUALITY OF PRODUCT. IN THE GIVEN CASE WHEREIN 'AVERAGE RATES' OF PURCHASES MADE FROM OTHER PARTIES ARE COMPARED, IT SHOWS NO HIGHER VARIATION PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : THAN THE OTHERS; AND IS NEARLY SAME IN COMPARISON TO THE RATES OF SISTER CONCERN. THE EXPLANATION/ARGUMENT OF APPELLANT ON EX - UP PURCHASES FROM OTHER PARTIES SHOWING LOWER PRICE IS WITHOUT INCIDENCE OF TRADE TAX (PARA - 7(B) ABOVE). IN SUCH A SITUATION AFTER ADDING TRADE TAX, THE RATES BECOME SIMILAR TO ONE PURCHASED FROM SISTER CONCERN. THUS, THE FACTS REQUIRED FOR APPLICATION OF SECTION 40A(2) ARE NOT PRESENT IN THESE TRANSACTIONS. THE AVERAGE METHOD APPLIED BY AO IS INVALID ON PURCHASES WHICH ARE QUALITY ORIENTED AND ALSO VARIATIONS ARE EXPLAINED ON FACTUAL STATISTICS OF TRADE TAX. THE DECISIONS IN SC OF CTT VS UDHOJI SHRIKRISHN DAS (1983) MP (139 ITR), IT WAS CLARIFIED ASSESSEE SOLD GOODS TO ANOTHER WITH WHOM IT HAS CLOSE RELATION - LOWER SALE/HIGHER PURCHASE - AND THE BONAFIDE NATURE OF TRANSACTION WAS NOT M DISPUTE, AND WHERE NOTHING W AS PAID OUT OR AWAY BY THE ASSESSEE FROM THE SALE/PURCHASE PRICE, THERE WAS NO EXPENDITURE WHICH COULD BE DISALLOWED U/S 40A(2). THUS, THE ADDITION OF RS.10,08,163/ - MADE BY AO, AS WORKED OUT ON THE DIFFERENCE BETWEEN AVERAGE PRICE OF TEA PROCURED FROM M/S GOEL MARKETING COMPANY (AT RS.50.67 PER KG.) AND OTHER PARTIES (AT RS. 47.60 PER KG.) IS ERRONEOUS WHERE SECTION 40A(2) DOES NOT APPLY, HENCE DELETED. GROUND NO. 4 OF APPEAL IS ALLOWED. 7 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL A ND HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS INVITED OUR ATTENTION TO THE LITERATURE APPEARING AT PAGES 18 TO 23 OF THE COMPIL ATION OF THE ASSESSEE TO SHOW THAT THE TEA LEAVES ARE AVAILABLE IN DIFFERENT GRADE AND QUALITY. THEREFORE THE RATE OF DIFFERENT TEA LEAVES OF DIFFERENT QUALITIES CANNOT BE THE SAME. HE HAS ALSO INVITED OUR ATTENTION TO THE SAMPLE PURCHASES BILLS OF M/S G OEL MARKETING COMPANY APPEARING AT PAGES 26 TO 28 OF THE COMPILATION OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : ASSESSEE TO SHOW THAT THE MARKET RATE OF DIFFERENT TEA LEAVES OF VARIES FROM RS.49.25 TO RS.56.95 PER KG. A COMPARATIVE CHART IS ALSO PLACED BEFORE US SHOWING THE PURCHASES MADE F ROM M/S GOEL MARKETING COMPANY AND ALSO FROM OTHERS AND FROM THIS CHART IT IS QUITE EVIDENT THAT DIFFERENT GRADE OF TEA LEAVES WERE PURCHASED AT DIFFERENT RATES FROM M/S GOEL MARKETING COMPANY AND ALSO FROM OTHER PARTIES. 8 . WE HAVE GIVEN A THOUGHTFUL CONSI DERATION TO THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE CAREFUL PERUSAL OF THE LITERATURE APPEARING AT PAGES 18 TO 23 OF THE COMPILATION OF THE ASSESSEE SHOWING THE AVAILABILITY OF TEA LEAVES IN DIFFERENT GRADE AND QUALITY AND ALSO THE SAMPLE PURCHASES BILLS OF M/S GOEL MARKETING COMPANY APPEARING AT PAGES 26 TO 28 OF THE COMPILATION OF THE ASSESSEE, IT HAS BECOME ABUNDANTLY CLEAR THAT THE TEA LEAVES ARE AVAILABLE IN DIFFERENT GRADE AND QUALITIES AT DIFFERENT RATES. THERE CANNOT BE UNIFORM RATE OF ALL GRADES OF TEA LEAVES AND FROM THE COMPARATIVE CHART , IT IS ALSO CLEAR THAT THE ASSESSEE HAS MADE PURCHASES FROM OTHER PARTIES BESIDES ITS SI STER CONCERN AT DIFFERENT RATES . IN THE LIGHT OF THESE FACTS, IT IS VERY DIFFICULT TO AGREE WITH THE FINDINGS OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS PURCHASED TEA LEAVES AT HIGHER RATE FROM ITS SISTER CONCERN. NOTHING HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT A PARTICULAR GRADE AND QUALITY OF TEA LEAVES WAS PURCHASE D AT HIGHER RATE FROM ITS SISTER CONCERN. IN THE ABSENCE OF THESE FINDINGS , WE AGREE WITH THE VIEW OF THE LD. CIT(A), WHO HAS RIGHTLY HELD THAT THE PURCHASE RATES OF TEA LEAVES ARE FULL OF VOLATILITY DEPENDING UPON THE GRADE/QUALITY OF THE PRODUCT. WE AC CORDINGLY CONFIRM THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY ADJUDICATED THE ISSUE IN DISPUTE. 9 . APROPOS GROUND NO.2, THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT IC ED THAT THE ASSESSEE - COMPANY PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : HAS DEBITED A SUM OF RS.2.45 LAKHS TOW ARDS INTEREST PAYABLE TO SISTER CONCERN ON ACCOUNT OF LATE PAYMENT. 10 . THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INTEREST PAID TO DIFFERENT PARTIES AND FROM THE DETAIL S IT IS NOTICED THAT THE ASSESSEE HAS PAID INTEREST RANGING FROM 12% TO 19.20% TO VARIOUS PERSONS. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE NATURE OF PAYMENTS SHOWED THAT INTEREST HAD BEEN PAID EITHER ON UNSECURED LOANS TAKEN BY THE ASSESSEE FROM VARIOUS FINANCIAL INSTITUTIONS. SOME INTEREST WAS PAID BY THE COMPANY ON SECURITY DEPOSITS CLAIMED TO BE TAKEN BY IT. APART FROM IT, THERE ARE NO BORROWINGS ON WHICH THE ASSESSEE - COMPANY HAS CLAIMED PAYMENT OF INTEREST EXCEPT TO M /S GOEL MARKETING COMPAN Y TO WHOM INTER E ST HAS BEEN PAID DESPITE THE FACT THAT NO LOANS OR SECURITY DEPOSIT HAS BEEN TAKEN FROM IT. THE ASSESSING OFFICER HAS ALSO NOTICED THAT THE ASSESSEE - COMPANY HAS EXTENDED CREDIT TO ITS TRADE DEBTORS TO THE TUNE OF RS.1,13,58,703/ - AND MAJOR ITY OF WHOM ARE MORE THAN SIX MONTHS OLD, ON WHICH NO INTEREST HAS BEEN CHARGED. HE ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT AND DISALLOWED THE PAYMENT OF INTEREST TO M /S GOEL MARKETING COMPANY . 11 . AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A), WITH THE SUBMISSION THAT THE ASSESSEE HAS NO WORKING CAPITAL FACILITY WITH ANY BANK. THE ASSESSEE HAS AVAILED SUPPLIER CREDIT LIMIT FOR A LONG BECAUSE ASSESSEE IS A CONSUMER COMPANY WHEREIN ASSESSEE HAS TO OFFER CREDIT FACILITY TO ITS DEBTORS TO COMPETE THE MARKET. TOTAL DEBT OF THE ASSESSEE WERE RS. 1,13,58,703/ - AND ASSESSEE HAS PAID RS.2.45 LAKHS TO M /S GOEL MARKETING COMPANY TOWARDS INTEREST ON LATE PAYMENT OF PURCHASES. TDS WAS DEDUCTED ON SUCH INTEREST AND M /S GOEL MARKETING COMPANY IS ALSO AN INCOME TAX ASSESSEE. IT WAS FURTHER CONTENDED THAT CHARGING OF INTEREST IN THE MATTER OF COMMERCIAL EXPEDIENCY IS TO BE DECIDED BY THE ASSESSEE ON THE BASIS OF TRADE PRACTICES, TERMS AND COMMERCIAL CONSIDERATIONS. IT WAS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : FURTHER CONTENDED THAT TH E PAYEE HAS ALSO SHOWN RECEIPT OF INTEREST IN HIS FINAL ACCOUNT. 12 . THE LD. CIT(A) RE - EXAMINED THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND HAVING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, DELETED THE ADDITION AFTER MAKING THE FOLLOWIN G OBSERVATIONS: - 13. F ROM THE FACTS AND CIRCUMSTANCES NOTED ABOVE, I FIND THAT THE APPELLANT'S ARGUMENTS ARE ELABORATIVE OF BUSINESS FACTS IN THIS CASE. ASSESSEE/APPELLANT HAS NO WORKING CAPITAL FACILITY WITH ANY BANK. THE APPELLANT HAS AVAILED SUPPLIER CREDIT LI MIT FOR A LONG BECAUSE APPELLANT IS A CONSUMER COMPANY WHEREIN APPELLANT HAS TO OFFER CREDIT FACILITY TO ITS DEBTORS IN COMPETITIVE MARKET. TOTAL DEBTORS OF THE APPELLANT WERE RS.11,358,703/ - . THE APPELLANT HAS PAID RS.2,45,000/ - TO M/S GOEL MARKE TING CO. TOWARD INTEREST ON LATE PAYMENT OF PURCHASES. TDS WERE DEDUCTED ON SUCH INTEREST. THE NON AVAILABILITY OF WRITTEN AGREEMENT OR NON - CHARGING OF INTEREST FROM DEBTORS CANNOT BE A BASIS OF REJECTING THE CLAIM OF THE APPELLANT TO PAY INTEREST TO THE T RADE SUPPLIERS. THE DECISION IN DY.CIT VS MICROTEX SEPARATORS 293 ITR (KAR.) IS ELABORATIVE ON THIS ISSUE WHERE IT WAS HELD THAT 'SO LONG AS THERE IS NO INTENTION TO EVADE TAX AND SO LONG AS COMMISSION IS NOT SHOCKING, COMMISSION PAYMENT HAS TO BE ACCEPTED '. INTEREST ON DELAYED PAYMENT OF PURCHASES IS NORMAL BUSINESS PRACTICE, AS IN THE CASE OF APPELLANT ALSO. TDS HAS BEEN DEDUCTED AS SUCH PAYMENTS WHICH IS VERY IMPORTANT PART ON THIS ISSUE. THE RATE OF INTEREST PAID BY APPELLANT IS NOT 'SHOCKING'. AT THE S AME TIME THE CIRCUMSTANCES RELIED BY AO, AS NOTED ABOVE, DO NOT SHOW THAT TRANSACTIONS ARE COLOURED OR SHAM. AT BEST SUCH CIRCUMSTANCES QUESTION THE BUSINESS - PRACTICES EXPEDIENCY OF THE ASSESSEE, WHICH HAS TO BE LEFT TO THE DISCRETION OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : ASSESSEE/APPELLANT AS LONG AS IF DOES NOT BECOME MALAFIDE OR A COLOURABLE DEVICE. I DO NOT FIND ANY UNDUE BENEFIT RELEASED TO SISTER CONCERN IN PAYMENT OF INTEREST ON DELAYED PAYMENT OF PURCHASES, AS IT IS NOT ALIEN TO BUSINESS PRACTICE, AT THE MARKET RATES, WHETHER IT IS S INGLE OR MULTIPLE, PARTICULARLY SO WHEN TDS IS MADE ON SUCH PAYMENTS. UNDER THE CIRCUMSTANCES, THE ADDITION OF RS.2,45,000/ - MADE BY AO IS DELETED. THUS, GROUND NO. 5 OF APPEAL IS ALLOWED. 13 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 14 . THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE HAS NO WORKING CAPITAL FACILITY WITH AN Y BANK AND HAS AVAILED SUPPLIER CREDIT LIMIT FOR A LONG PERIOD. THEREFORE, INTEREST WAS PAID ON ACCOUNT OF COMMERCIAL EXPEDIENCY WHICH IS TO BE DECIDED BY THE ASSESSEE ON THE BASIS OF TRADE PRACTICE, TERMS AND COMMERCIAL CONSIDERATIONS. 15 . HAVING GIVEN A THO UGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT UNDISPUTEDLY THE ASSESSEE DID NOT AVAIL ANY CREDIT FACILITY FROM ANY BANK. THEY AVAILED CREDIT FACILITY FROM THE SUPPLIERS. THO UGH IT MAY NOT BE A WRITTEN DOCUMENT BUT IN THE COMMERCIAL PRACTICE WHENEVER PAYMENT IS DELAYED, REASONABLE RATE OF INTEREST WOULD BE CHARGED ON THE DELAYED PAYMENT AND THE ASSESSEE HAS MADE PAYMENT OF INTEREST ON THE DELAYED PAYMENT WHICH SHOULD NOT BE VI EWED DIFFERENTLY WITHOUT ANY COGENT MATERIAL. WE ARE, THEREFORE, OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.2.45 LAKHS PAID AS INTEREST ON THE DELAYED PAYMENT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) IN THIS REGARD . PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : 16 . APROPOS GROUND NO.3, THE FACTS IN BRIEF CULLED OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT FROM A PERUSAL OF COPY OF ACCOUNT OF THE ASSESSEE , THE ASSESSING OFFICER NOTED THAT THE ASSESSEE - COMPANY HAS RECEIVED DEPOSITS BEGINNING FROM 25.11.2003 TO 24.2.2004, TOTALING TO RS.15 LAKHS FROM THREE PERSONS I.E. AMIT ENTERPRISES RS.5 LAKHS; KULDEEP ENTERPRISES RS.5 LAKHS AND MAA VAISHNOO TRADING COMPANY RS.5 LAKHS. 17 . IN THE CASE OF KULDEEP ENTERPRISES AND AMIT ENTERPRISES , CONFIRMATION WAS FILED, BUT IN THE CASE OF MAA VAISHNOO TRADING COMPANY , CONFIRMATION OF SOME OTHER PERSON WAS FILED. THE ASSESSING OFFICER FOUND FAULT IN THE CONFIRMATION LETTERS AND THE AGREEMENTS EXECUTED BETWEEN THE PARTIES AND TREATED THE ENTIRE AMOUNT OF CASH DEPOSIT OF RS.15 LA KHS AS UNEXPLAINED CASH CREDIT AND MADE ADDITION OF THE SAME UNDER SECTION 68 OF THE ACT. 18 . AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS APPOINTED THREE DEPOT STOCKIEST DURING THE YEAR AND TAKEN RS.5 LAKHS EACH AS SECURITY FROM ALL THE THREE PERSONS. THE SECURITY AMOUNT WAS RECEIVED THROUGH CROSSED ACCOUNT PAYEE BANK DRAFTS WHICH WERE DEPOSITED IN BANK ACCOUNT AND THE PROCEEDS WERE REALIZED THROUGH BANKING CHANNELS. THE FULL ADDRESS AND PAN OF THE D EPOSIT OR S WERE ALSO FURNISHED TO THE ASSESSING OFFICER. INTER E ST WAS PAID TO THEM AND TDS WAS DEDUCTED ON INTEREST AMOUNTS. THE ASSESSEE HAS ALSO PAID COMMISSION TO THEM AFTER DEDUCTING TDS. THEREFORE , THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF PRO VING THE GENUINENESS OF THE TRANSACTION BEFORE THE ASSESSING OFFICER. IT WAS ALSO CONTENDED BEFORE THE LD. CIT(A) THAT THESE ARE TRADE TRANSACTIONS. THEREFORE, ADDITION UNDER SECTION 68 OF THE ACT IS NOT CALLED FOR. 19 . THE LD. CIT(A) RE - EXAMINED THE ISSUE IN THE LIGHT OF CONFIRMATIONS AND VARIOUS OTHER DOCUMENTS AND WAS OF THE VIEW THAT ALL THE PERSONS ARE ACTED AS SALE AGENT OF THE ASSESSEE - COMPANY AND THEY HAVE BEEN PAID PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : INTEREST ON THE SECURITY AMOUNT AS WELL AS COMMISSION ON SALES MADE THROUGH THEM AFT ER DEDUCTING TDS. IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THAT T HIS AMOUNT OF INTEREST AND COMMISSION WAS ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER , T HEREFORE, THERE IS NO JUSTIFICATION IN MAKING THE ADDITION OF THE SAME AFTER INVOKING TH E PROVISIONS OF SECTION 68 OF THE ACT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - 17. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS OF THE APPELLANT. IT IS ON RECORD THAT TH REE CONCERNS HAD FILED THEIR CONFIRMATIONS IN RESPECT OF SECURITY DEPOSIT AND THEIR EXISTENCE IS NOT DOUBTED BY THE AO. IT IS ALSO ON RECORD THAT THE TRANSACTION OF SECURITY DEPOSIT HAS TAKEN PLACE OVER A PERIOD OF YEARS (25.11.2003 TO 24.02.2004) THROUGH BANKING CHANNELS. THESE PARTIES ARE ASSESSED TO TAX VIDE PANOS. ABSPD5865D, AFFPG9899F AND AHAPA7166N HAVING DIFFERENT ADDRESSES AT VARANASI, AGRA AND GORAKHPUR. THESE DETAILS WERE PLACED BEFORE AO AND ARE PART OF PAPER BOOK BEFORE ME. THE COPY OF CONFIRMA TIONS IS ALSO PLACED BEFORE ME CONTAINED IN THE PAPER BOOK. COPIES OF FORM NO. 16A IN RESPECT OF THESE PARTIES HAS ALSO BEEN FILED BEFORE AO AND ARE CONTAINED IN THE PAPER BOOK. THE AO HAS HEAVILY RELIED ON THE DISCREPANCIES IN THE AGREEMENTS BETWEEN THE A PPELLANT AND THESE PARTIES CONCLUDING THAT SUCH AGREEMENTS ARE NOT LEGALLY ENFORCEABLE. THE DISCREPANCIES AND ASSUMING IN - GENUINENESS OF SUCH AGREEMENTS DOES NOT HELP -- (A) ON THE ISSUE OF EXISTENCE OF CREDITORS (BECAUSE THEY ARE ASSESSED TO TAX AND THEY HAVE FILED CONFIRMATIONS); (B) THE CREDITWORTHINESS OF SUCH PERSONS (BECAUSE THEY ARE HAVING SOURCE OF INCOME AND BUSINESS SEEN FROM THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : REGULARLY MAINTAINED LEDGER ACCOUNT, COPY OF THESE PARTIES HAVE BEEN FIELD BY APPELLANT AND SAME HAVE BEEN CONFIRMED BY THEM); AND (C) ON THE GENUINENESS OF THE TRANSACTION (BECAUSE THE DOCUMENTARY EVIDENCE OF THESE TRANSACTION OF SECURITY DEPOSITS ARE THROUGH BANKING CHANNELS AND NO LACUNA/DEFICIENCY HAVE BEEN FOUND BY AO IN THESE EVIDENCES). 18. THE CONCLUSION DRAWN BY AO THAT THE UNACCOUNTED MONEY OF APPELLANT HAS BEEN ROUTED THROUGH THESE THREE PERSONS IS NEITHER SUPPORTED BY ANY ENQUIRY/3RD PARTY DOCUMENT/EVIDENCE NOT THERE IS ANY ELEMENT OF INFIRMITY AND DISCREPANCY IN THE EVIDENCES AND DOCUMENT FILED BY APPELLANT BEFORE AO FOR DISCHARGING THE ONUS TO EXPLAIN THESE CREDITS. THE AO HAS NOT QUESTIONED AND HAS NOT GATHERED ANY MATERIAL TO INDICATE/DETERMINE THE CREDITWORTHINESS OF THESE THREE PARTIES WHICH COULD INDICATE THAT THEY ARE ONLY NAME LENDERS. IN FACT, THEY ARE EXISTING ASSESSEES OF INCOME - TAX DEPARTMENT AS PER THE DOCUMENT AND CONFIRMATIONS FILED BY THE APPELLANT BEFORE THE AO AS CONTAINED IN THE PAPER BOOK. I WILL ALSO OBSERVE THAT DEFECTS IN THE AGREEMENT BETWEEN THE APPELLANT AND THESE THREE PARTIES HAS N OT BEEN CONFRONTED TO THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. DEFECTS NOTED BY AO, ONLY SHOW THAT DOCUMENTATION OF THE TRANSACTION WAS DONE SUBSEQUENT TO THE TIME OF ACTUAL TRANSACTION, WHICH IN ITSELF DOES NOT NEGATE OR FALSIFY THESE TRANSACTIONS . AS FAR AS SATISFACTORY EXPLANATION WITHIN THE MEANING OF SECTION 68 OF THE I.T. ACT IS CONCERNED, THE APPELLANT SEEMS TO HAVE DISCHARGE THE SAME AND, THEREFORE, THESE CREDITS ARE NOT LIABLE TO BE ADDED U/S 68, ALSO FOR THE REASON THAT AS THE COPY OF ACCO UNT, SAME ARE SCATTERED OVER OTHER YEARS ALSO WHICH CANNOT BE INCLUDED IN THIS YEAR. FINALLY, IT SEEMS TO BE A CASE OF ADDITION ON PRESUMPTION OF ONE IS ALL AND ALL IS ONE THAT IS TO SAY THE INFIRMITY IN THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : AGREEMENT/DOCUMENT HAS BEEN WRONGLY EXTENDED T O BE INFIRMITIES ON ALL OTHER ASPECTS OF THE TRANSACTIONS NAMELY; IDENTITY, CREDITWORTHINESS AND GENUINENESS, WHICH IS AGAINST THE RULES OF EVIDENCE AND ALSO CONTRARY TO THE FACTS OF THE CASE -- ALL THE PERSONS ARE PAN HOLDERS AND INCOME TAX ASSESSEES, THE RESPECTIVE PARTIES CONFIRMED ALL THE AMOUNTS, ALL THE PERSONS HAVE ACTED AS SALES AGENTS OF APPELLANT COMPANY AND THEY HAVE BEEN PAID INTEREST ON THIS SECURITY AMOUNT AS WELL AS THE COMMISSION ON THE SALES PAID THROUGH THEM AFTER DEDUCTING TDS. SUCH AMOUN TS OF INTEREST AND COMMISSION WERE ALLOWED BY AO IN THE ASSESSMENT ORDER. LOOKING TO THE FACTS OF THE CASE, I DO NOT SEE ANY JUSTIFICATION IN ADDING RS. 15,00,000/ - RECEIVED FROM PARTIES AS DEPOT SECURITY. IN VIEW OF ABOVE, ADDITION OF RS. 15,00,000/ - MADE BY AO IS DELETED AND GROUND NO. 6 OF APPEAL IS ALLOWED . 20 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND HAS PLACED HEAVY RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS ALONG WITH ADDRESSES AND PAN NUMBERS OF THE DEPOSITORS. MOREOVER, THE DEPOSITORS WERE APPOINTED AS SALE AGENT OF THE ASSESSEE TO WHOM THE COMMIS SION AND INTEREST ON DEPOSITS WERE PAID TO THEM AFTER DEDUCTING TDS. 21 . AFTER GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THOUGH THE ASSESSING OFFICER HAS FOUND FAULT IN THE CONFIRMATION LETTERS AND MADE ADDITION OF THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT, BUT HE HAS LOST SIGHT OF THE FACT THAT THESE DEPOSITORS WERE APPOINTED AS SALE AGENT OF THE ASSESSEE COMPANY TO WHOM ASSESSEE HAS PAID PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 15 - : COMMISSION , B ESIDES INTEREST ON DEPOSITS AFTER DEDUCTING TDS. THE PAYMENT OF INTEREST AND COMMISSION WAS ALLOWED BY THE ASSESSING OFFICER. THEREFORE, IN THE LIGHT OF THESE FACTS, WHEN THE INTEREST AND COMMISSION WERE ALLOWED TO THE DEPOSITORS, HOW THE DEPOSITS CAN BE CONSIDERED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. WE, THEREFORE, FIND NO MERIT IN THIS ADDITION. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) , WHO HAS RIGHTLY ADJUDICATED THE ISSUE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE . 22 . APROPOS GROUND NO.4, THE FACTS IN BRIEF BORNE OUT FROM THE ORDERS OF THE LOWER AUTHORITIES ARE THAT THE ASSESSING OFFICER HAS NOTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.50,000/ - EACH FROM S HRI. S. P. SRIV ASTAVA, S HRI. PRASANT SRIVASTAVA AND MS. MADHU SRIVASTAVA. SINCE THE ASSESSEE COULD NOT FURNISH EVIDENCE TO PROVE THE CREDITWORTHINESS OF THE LOAN, THE ASSESSING OFFICER HAS TREATED THE AGGREGATE AMOUNT OF RS.1.50 LAKHS AS UNEXPLAINED CASH CREDIT AND MADE ADDITION UNDER SECTION 68 OF THE ACT. 23 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT SHRI. S. P. SRIVASTAVA IS A RETIRED PERSON HAVING PAN NUMBER AND WAS WORKING AS AN ACCOUNTANT WITH THE ASSESSEE. HE HAS GIVEN THE AMOUNT OUT OF HIS SAVINGS AND AMOUNT RECEIVED ON RETIREMENT. COPY OF THE BANK ACCOUNT WAS ALSO FILED ALONG WITH CONFIRMATION. WITH REGARD TO SHRI. PRASHANT SRIVASTAVA, IT WAS STATED THAT HE WAS A MEDICAL GRADUATE RESIDING AT USSR. THE AMOUNT WAS GI VEN THROUGH ACCOUNT PAYEE CHEQUE OUT OF HIS PROFESSIONAL INCOME. HIS FATHER HAS CONFIRMED THE BALANCE AND MS. MADHU SRIVASTAVA WAS WIFE OF THE ACCOUNTANT OF THE ASSESSEE - COMPANY AND SHE HAS GIVEN THIS AMOUNT OUT OF FUNDS KEPT IN HER JOINT ACCOUNT WITH HER HUSBAND. SHE WAS ALSO AN INCOME - TAX ASSESSEE. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 16 - : 24 . NOW THE REVENUE IS BEFORE US AND HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNS EL FOR THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTERS AND EVIDENCE WITH REGARD TO THE CREDITWORTHINESS BEFORE THE ASSESSING OFFICER, BUT HE WAS NOT CONVINCED WITH THE SAME. SINCE THE ASSESSEE HAS DISCHARGED THE PRIMARY ONU S WITH REGARD TO THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS, THE ADDITIONS MADE UNDER SECTION 68 OF THE ACT IS NOT CALLED FOR. 25 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ASSESSEE HAS FURNISHED CONFIRMATION LETTE RS, BESIDES SOURCE OF FUNDS TO PROVE THE CREDITWORTHINESS OF THE CREDITORS. THUS, W E FIND NO JUSTIFICATION IN THE ADDITION MADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 26 . APROPOS GROUND NO.5, IT IS NOTICE D THAT THE ASSESSEE HAS INCURRED AN EXPENDITURE OF RS.15,57,040/ - ON ACCOUNT OF ADVERTISEMENT, BUT THE ASSESSING OFFICER HAS DISALLOWED THE SAME FOR WANT OF DETAILS AND EXPLANATION. 27 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) , WITH THE SUBMISSIO N THAT THE ASSESSEE - COMPANY HAS PAID ADVERTISEMENT EXPENSES DURING THE COURSE OF BUSINESS. THESE ARE REVENUE EXPENDITURES AND THE INCOME - TAX ACT DOES NOT RECOGNIZE THE CONCEPT OF DEFERRED REVENUE EXPENDITURE EXCEPT IN CASE OF PRELIMINARY EXPENSES UNDER SE CTION 35D OF THE ACT WHEREIN SPECIFIED EXPENDITURE ARE AMORTISED IN A SPAN OF FIVE YEARS. IT WAS FURTHER CONTENDED THAT THE ADVERTISEMENT EXPENDITURES INCURRED BY THE ASSESSEE ARE REVENUE EXPENDITURE, THEREFORE, IT SHOULD BE ALLOWED IN THE YEAR UNDER ACCO UNT. 28 . THE LD. CIT(A) HAS ALLOWED ADVERTISEMENT EXPENSES AS REVENUE EXPENDITURE IN THE YEAR UNDER ACCOUNT HAVING OBSERVED THAT THE METHOD OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 17 - : ACCOUNTING EMPLOYED BY THE ASSESSEE - COMPANY IN EARLIER YEAR OR CURRENT YEAR HAS NO RELEVANCE AS FAR AS ALLOWABILITY O F EXPENDITURE IN THE RELEVANT YEAR IS CONCERNED. B ENEFIT OF SUCH EXPENDITURES WILL ACCRUE TO THE ASSESSEE IN CURRENT YEAR OR IN COMING YEARS HAS NO RELEVANCE IN VIEW OF EXPLICIT PROVISIONS OF INCOME - TAX ACT. ACCORDINGLY THE ADDITION WAS DELETED BY THE LD . CIT(A). 29 . AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND PLACED HEAVY RELIANCE UPON THE ASSESSMENT ORDER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT RAISED ANY DISPUTE WITH REGARD TO TH E GENUINENESS OF THE ADVERTISEMENT EXPENSES INCURRED BY THE ASSESSEE. THE MAIN OBJECTION RAISED BY THE ASSESSING OFFICER IS THAT THE ADVERTISEMENT E XPENSES SHOULD BE CAPITALIZED AS THE DEFERRED REVENUE EXPENDITURE UNDER SECTION 35D OF THE ACT. 30 . HAVING GIVE N A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT UNDISPUTEDLY THE ASSESSEE HAS INCURRED ADVERTISEMENT EXPENSES. NOW THE QUESTION ARISES WHETHER THIS EXPENDITURE CAN BE DE FERRED UNDER SECTION 35D OF THE ACT. ON PERUSAL OF PROVISIONS OF SECTION 35D OF THE ACT, ONLY PRELIMINARY EXPENSES ARE TO BE A MORTISED AND TO BE ALLOWED IN DEFERRED IN SUCCEEDING YEARS. THE ADVERTISEMENT EXPENSES ARE NOT IN THE NATURE OF PRELIMINARY EXP ENSES, THEREFORE, IT IS TO BE ALLOWED IN THE YEAR IN WHICH IT IS INCURRED. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PROPERLY ADJUDICATED THE ISSUE IN DISPUTE AND WE FIND NO INFIRMITY THEREIN. ACCORDINGLY WE CONFIRM THE ORDE R OF THE LD. CIT(A) ON THIS ISSUE. ITA NO.108/LKW/2011 : 31 . IN THIS APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF THE LD. CIT(A) MAINLY ON TWO GROUNDS ONE IS WITH REGARD TO THE ADDITION OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 18 - : RS.17,23,427/ - OUT OF PURCHASES MADE FROM THE SISTER CONCERN, HAVING INVOKED THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT AND THE OTHER IS WITH REGARD TO THE ADDITION OF RS.6,24,184/ - INCURRED TOWARDS ADVERTISEMENT EXPENSES. 32 . WITH REGARD TO THE FIRST GROUND RELATING TO ADDITION ON ACCOUNT OF PURCHASES FROM SISTER CONCERN I S CONCERNED, AN IDENTICAL ISSUE WAS EXAMINED BY US IN THE FOREGOING APPEAL, IN WHICH WE HAVE OBSERVED THAT SINCE THE PRICE OF DIFFERENT TEA LEAVES DEPENDS UPON DIFFERENT GRADE AND QUALITY, THEREFORE, NO ADDITION IS CALLED FOR ON ACCOUNT OF PURCHASE AT HIGH ER RATE FROM SISTER CONCERN. FOLLOWING THE SAME RATIO, WE DECIDE THIS ISSUE AGAINST THE REVENUE. 33 . THE OTHER ISSUE RELATING TO ADDITION OF RS.6,24,184/ - ON ACCOUNT OF ADVERTISEMENT EXPENSES WAS ALSO EXAMINED BY US IN THE FOREGOING APPEAL, IN WHICH WE HAVE H ELD THAT SINCE THE ADVERTISEMENT EXPENDITURE WAS INCURRED IN THE YEAR UNDER ACCOUNT, THE SAME MAY BE ALLOWED AS REVENUE EXPENDITURE. WE, ACCORDINGLY, FOLLOWING THE SAME, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A ) STANDS CONFIRMED. 34 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.6.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH JUNE , 2014 JJ: 1606 PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 19 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )