Rohit Nandlal Trust, Ahmedabad V. The Income Tax Officer, Ward-3(4), Ahmedabad

ITA 476/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8328 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Section: 143(3)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO.476 AND 477/AHD/2014 / ASSTT. YEAR: 2009-2010 AND 2010-11 ROHIT NANDLAL TRUST PROP: MODERN TUBES 12, 2 ND FLOOR, SHANTI SADAN ESTATE MIRZAPUR AHMEDABAD 380 001. PAN : AABR 1227 R VS. DCIT, CIR.3 PANJARAPOLE AMBAWADI, AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : MS.URVASHI SHODHAN REVENUE BY : SHRI O.P. MEENA, SR.DR ! / DATE OF HEARING : 10/08/2017 '#$ ! / DATE OF PRONOUNCEMENT: 09 /10/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 27.12.2013 PASSED BY THE LD.CIT(A) IN ASSTT.YEARS 2009-10 AND 2010-11 RESPECTIVELY. ITA NO.476 AND 477/AHD/2014 2 2. SINCE COMMON ISSUES ARE INVOLVED IN BOTH APPEALS , THEREFORE, WE HEARD THEM TOGETHER AND DEEM IT PROPE R TO DISPOSE OF THEM BY THIS COMMON ORDER. 3. GROUND NO.1, IN BOTH THE YEARS IS GENERAL GROUND OF APPEAL, HENCE, IT DOES NOT REQUIRE ANY SPECIFIC ADJUDICATIO N. 4. IN GROUND NO.2, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTERES T TO BENEFICIARIES OF RS.7,09,397/- AND RS.2,78,158/- IN THE ASSTT.YEARS 2009-10 AND 2010-11 RESPECTIVELY. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TRU ST WAS RUNNING A PROPRIETOR-SHIP BUSINESS IN THE NAME AND STYLE OF MODERN TUBES. ACCORDING TO THE ASSESSEE, TRUST W AS SET UP WITH A CAPITAL OF RS.1,000/- WHICH HAS CAPITAL BALANCE O F THE BENEFICIARIES. THAT CAPITAL BALANCE WAS TREATED AS LOAN AND AS PER RESOLUTION PASSED IN THE YEAR 1992, BENEFICIARY WAS GIVEN INTEREST ON THAT LOAN. THE ASSESSEE HAS CLAIMED DEDUCTION O F INTEREST ON THE ALLEGED LAND FROM THE BENEFICIARIES. THE LD.AO HAS REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT IN THE BALANCE SHEET, THE ASSESSEE NOWHERE SHOWN LOAN FROM THE BEN EFICIARIES. ONLY LOAN SHOWN IN THE BALANCE IS FROM VORA FINANCE . THEREFORE, HE DISALLOWED CLAIM OF THE ASSESSEE IN BOTH THE YEA RS. 6. DISSATISFIED WITH THE ORDER OF THE AO, THE ASSES SEE CARRIED THE MATTER IN APPEAL. IT HAS FILED WRITTEN SUBMISS IONS WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) IN BOTH YEARS. SI NCE SUBMISSIONS ARE VERBATIM SAME, THEREFORE, WE TAKE N OTE OF THESE SUBMISSIONS FROM THE ASSTT.YEAR 2009-10, WHICH READ S AS UNDER: ITA NO.476 AND 477/AHD/2014 3 SHRI J. S. PANDIT, CA & AR ATTENDED ON BEHALF OF T HE APPELLANT AND FURNISHED THE WRITTEN SUBMISSIONS ON THIS ISSUE AS UNDER:- DISALLOWANCE OF INTEREST PAID TO BENEFICIARIES OF RS.7,09,397/- FOR THE DISALLOWANCE OF RS.07,09,397/- BEING INTERE ST PAID TO BENEFICIARIES THE LEARNED ASSESSING OFFICER IN PARA 3 OF THE ASSESSMENT ORDER HAS OBSERVED AS UNDER. INTEREST IS ALLOWABLE IF IT IS PAID ON LOAN PAYMENT IS CONTRARY TO PROVISION OF SECTION 40(BA ) OF THE I. T. ACT. AMOUNT PAYABLE TO BENEF ICIARIES IS NOT SHOWN AS LOAN , WE RESPECTFULLY CLARIFY AS UNDER. IT IS WELL SETTLED PROPOSITION OF LAW THAT MERE BOO K ENTRY IS NOT CONCLUSIVE PROOF OF THE INFERENCE THAT INCOME H AS ACCRUED OR THE ASSESSEE IS ENTITLED TO RECEIVE. THE FACT CAN BE INFERRED ONLY FROM THE REAL SUBSTANCE OF THE TRA NSACTION. THE ASSESSEE MIGHT UNDER BONAFIDE ERROR MAKE ENTRY WHICH WERE NOT IN CONFORMITY WITH* THE PROPER PRINCIPLE O F ACCOUNTING AND MERELY BY THAT COULD NOT BE REGARDED AS CONCLUSIVE PROOF IGNORING SUBSTANCE OF THE TRANSACT ION. THE FINDING OF THE LEARNED ASSESSING OFFICER IS THA T INTEREST IS ALLOWABLE ON LOAN AMOUNT, AND CERTAINLY IT IS BORRO WED FUND FROM BENEFICIARIES AND THEREFORE IT IS IN FAVOUR OF THE ASSESSEE THAT IT IS ALLOWABLE ON LOAN. IN FACT BENE FICIARIES CAN NOT CONTRIBUTE TOWARDS THE CAPITAL / CORPUS. THE SE TTLER DIRECTS IN THE DEED TO TRUSTEES TO DO CERTAIN ACTIV ITIES FOR THE BENEFIT OF BENEFICIARIES. BENEFICIARIES OWN THEIR O WN CANNOT DO ANYTHING IN THEIR CAPACITY AS BENEFICIARY TOWARD S ACTIVITY OF TRUST OR CAPITAL OF TRUST. SO ALSO FOR THE INFERENCE THAT IT IS CONTRARY TO PR OVISION OF SEC. 40 (BA) OF THE I.T. ACT 1961, IS NOT AT ALL RE LEVANT. FIRSTLY HOW AND WHY PROVISION CAN BE MADE APPLICABL E IS NOT SPELT OUT IN THE ORDER AND SECONDLY THE VERY PROVIS IONS ARE ITA NO.476 AND 477/AHD/2014 4 APPLICABLE TO AOP / BOI AND NOT TO YOUR ASSESSEE AND THEREFORE, INFERENCE THAT IT IS AGAINST THE SAID PR OVISION IS REDUNDANT. FINALLY AMOUNT BORROWED FROM BENEFICIARIES IS CERTA INLY SHOWN AS DISTINCT AMOUNT PAYABLE TO ONLY THING IS THAT INADVERTENTLY IN ANNEXURE RELATING TO PROPRIETORS' CAPITAL IT IS CLUBBED TOGETHER. A DURING THE COURSE OF ASSESSMENT PROCEEDING ITSELF IT HAS BEEN CLARIFIED AS UNDER. (1) FOR THE INTEREST PAID TO BENEFICIARIES WE CLAR IFY AS UNDER. ' IT HAS BEEN CATEGORICALLY PROVIDED IN THE DEED OF TRUST THAT FOR CARRYING OUT ANY BUSINESS ACTIVITIES, IF T HE NEED BE THE TRUSTEES ARE AUTHORIZED TO BORROW MONEY FOR THE PURPOSE OF BUSINESS. TRUSTEES OF THE TRUST HAVE BORROWED MONEY FROM BENEFICIARIES. AMOUNT PAYABLE T O BENEFICIARIES HAS BEEN UTILIZED FOR THE PURPOSE OF BUSINESS AND INTEREST HAS BEEN PAID ON THE FUNDS SO UTILIZED FOR THE PURPOSE OF BUSINESS. THUS THE PAYM ENT OF INTEREST TO BENEFICIARIES IS ON ACCOUNT OF MONEY UTILIZED BY TRUST FOR THE PURPOSE OF ITS TRADING AC TIVITY AND HENCE PAYMENT OF INTEREST TO BENEFICIARIES IS R IGHTLY CLAIMED AS ALLOWABLE EXPENSES. THAT CLAUSE (HI) OF SUB. SECTION (1) OF SECTION 36 OF THE INCOME TAX ACT DEA LS WITH THE PAYMENT OF INTEREST ON CAPITAL BORROWED FO R THE PURPOSE OF BUSINESS. THE CLAUSE ENVISAGED THE FULFILLMENT OF THREE CONDITIONS BEFORE INTEREST CAN BE ALLOWED AS A DEDUCTION ; THERE SHOULD BE BORROWINGS , CAPITAL MUST HAVE BEEN BORROWED FOR . BUSINESS PURPOSE AND INTEREST SHOULD HAVE BEEN PAID / PAYABL E IN RESPECT THEREOF. SINCE ALL THREE INGREDIENTS ARE FULFILLED, LEGITIMATE CLAIMS OF INTEREST PAYMENT TO BENEFICIARIES NEED TO BE ALLOWED. LOOKING TO THE NA TURE OF BUSINESS SUBSTANTIAL FUND IS REQUIRED FOR WORKIN G CAPITAL. THE AMOUNT WHICH OTHERWISE IS PAYABLE TO BENEFICIARIES IN FORM OF CASH/CHEQUE HAVE BEEN UTIL IZED TOWARDS THE PURPOSE OF BUSINESS AND SINCE SEPARATE ACCOUNTS OF BENEFICIARIES ARE MAINTAINED IN THE BOO KS OF ACCOUNTS OF TRUST, INTEREST HAVE BEEN DULY PAID / PROVIDED' ITA NO.476 AND 477/AHD/2014 5 YOUR ASSESSEE RELIED UPON THE DECISION OF THE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. TANVI SAJNI FAMILY T RUST REPORTED IN 209 ITR 497 WHEREIN IT WAS OBSERVED THA T ' AS REGARDS, THE PAYMENT OF INTEREST TO THE BENEFI CIARIES, IT WOULD APPEARS THAT THE INTEREST WAS PAID BY THE TRU STEES ON THE AMOUNTS WHICH WERE SHOWN AS LOANS STANDING IN T HE CREDIT OF THE BENEFICIARIES IN THE BOOKS OF ACCOUNT S OF THE TRUST. THE BENEFICIARIES WERE NOT OBLIGED TO KEEP T HESE AMOUNTS WITH THE TRUST AND THE FACT THAT THEY WERE TREATED AS LOAN ON WHICH INTEREST WAS PAYABLE BY THE TRUST CANNOT GO AGAINST THE ASSESSEE. A TRUST IS A DISTINCT LEGAL E NTITY AND DIFFERENT FROM THE BENEFICIARIES AND THEREFORE IT C ANNOT BE SAID THAT AFTER THE MONEY BECAME PAYABLE TO THE BENEFICIARIES UNDER THE DEED AS PER THEIR DETERMINA TE SHARE, IT COULD BE TREATED BY THE TRUST AS ITS OWN MONEY. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE TRUST WAS EN TITLED TO THE DEDUCTION OF INTEREST PAID TO BENEFICIARIES ON THE INCOME FROM THE TRUST WHICH WAS KEPT BY THE BENEFICIARIES AS LOAN' FURTHER YOUR CONTENTION THAT INTEREST TO BENEFICIAR IES IS INTEREST ON CAPITAL IS NOT CORRECT TO UNDERSTAND TR UST LAWS IT IS IMPORTANT TO UNDERSTAND KEY CONCEPTS INVOLVED IN SE TTLEMENT OF TRUST. SETTLOR HE IS THE PERSON WHO SETTLES THE TRUST BY APPOINTIN G TRUSTEES. TRUSTEES . JUST AS DIRECTOR ARE THE ORGAN BY WHICH A COMPANY F UNCTIONS, TRUSTEES ARE THE ORGAN BY WHICH TRUST FUNCTIONING. IN FACT RELATIONSHIP BETWEEN THE TRUST AND TRUSTEES ARE STR ONGER. THE TRUSTEES ARE SUBJECTED TO SEVERAL OBLIGATION AN D DUTIES AND HAVE RIGHTS AND POWERS UNDER THE PROVISIONS OF THE INDIAN TRUST ACT. AND AS PER THE TERMS OF THE DEED. BENEFICIARIES ITA NO.476 AND 477/AHD/2014 6 THE PERSON FOR WHOSE BENEFIT THE TRUST IS CREATED. INITIAL CORPUS IT IS THE SUM SETTLED ON THE TRUSTEES IN TRUST BY T HE SETTLOR. TRUST IS AN OBLIGATION ANNEXED TO THE OWNERSHIP OF PROPERTY AND ARISING OUT OF A CONFIDENCE REPOSED IN AND ACCE PTED BY THE OWNER, OR DECLARED AND ACCEPTED BY HIM FOR THE BENEFIT OF ANOTHER OR OF ANOTHER AND THE OWNER. IT IS GOVER NED UNDER THE INDIAN TRUST ACT, 1882. THEREFORE IT IS THE MISCONCEPTION THAT AMOUNT SHOWN AS DUE TO ROHIT NANDLAL TRUST IS CAPITAL A/C AND INTEREST THEREON IS NOT ALLOWABLE. CERTAINLY AMOUNT IS BORROWED FROM THE BENEFICIARIES . COPIES OF THE RESOLUTION PASSED FOR BORROWING FROM BENEFIC IARIES IS APPENDED -' ANNEXURE- A ' THUS IT IS THE BORROWED AMOUNT FROM BENEFICIARIES W HICH HAS BEEN UTILIZED FOR THE PURPOSES OF BUSINESS. AS PER THE PROVISIONS OF THE TRUST DEED, ASSUMING FOR THE SAKE OF ARGUMENT, THAT AMOUNT OF PROFIT GENERATED IS DISTRI BUTED TO BENEFICIARIES AND BENEFICIARIES IN TURN TAKE THEIR PROF ITS AWAY THAN FOR WORKING CAPITAL REQUIREMENT TRUSTEES WILL HAVE TO BORROW FUND FROM OTHER OUTSIDER AGENCIES SUCH AS BA NKS, FINANCIAL INSTITUTIONS, MONEY LENDERS ETC. ETC. INT EREST IN ANY CASE HAS TO BE PAID ON THE FUNDS BORROWED AND UTILI ZED FOR THE PURPOSE OF BUSINESS. TO SUM UP, AMOUNT LYING TO THE CREDIT OF BENEFICIAR IES ACCOUNTS IS NOTHING BUT LOAN FROM BENEFICIARIES FOR WHICH PROPER RESOLUTION EMPOWERING TO BORROW AND CONSENT WERE OBTAINED AS LONG BACK AS 1992. ROHIT NANDLAL TRUST IS PROPRIETOR OF' MODERN TUBES ' THERE ARE SEPARATE SETS OF BOOKS OF ACCOUNTS OF' MODERN T UBES ' WHICH IS A BUSINESS UNIT AND ROHIT NANDLAL TRUST WH ICH IS PROPRIETOR/ CONCERN. IN PROPRIETARY CONCERN ROHIT NANDLAL TRUST CAPITAL ACCOUNT SHOWN AN AMOUNT OF RS.1,000/- ONLY AS TRUST FUND ITA NO.476 AND 477/AHD/2014 7 WHEREAS AMOUNT DUE TO BENEFICIARIES IS THE SUBSTANT IAL AMOUNT AS FOLLOW. BENEFICIARIES A/C OPENING BALANCE 01.04.2008 CLOSING BALANCE 31.03. 2909 ROHITN. VORA RS. 25,25,985 RS. 9,35,544 HANSABEN B. VORA RS. 25,25,960 RS. 9,72,571 MILAN R. VORA RS. 10,84,168 RS. 4, 15,581 BIPIN N.VORA HUF RS. 10,84,168 RS. 3,75,394 TOTAL RS. 72,20,281 RS. 26,99,090 TRUST FUND RS. 1,000 RS. 1,000 RS. 72,21,281 RS. 27,00,090 THUS CAPITAL IS OF RS. 1,000/- ONLY WHEREAS INTERES T IS PAID ON LOAN FROM BENEFICIARIES AND NOT ON CAPITAL OF RS. 1 ,000/- OPENING BALANCE OF LOAN FROM BENEFICIARIES IS RS. 7 2,20,281/- THIS FUND IS BEING UTILIZED FOR THE BUSINESS PURPOS E. THUS, INTEREST PAID IS NOT ON CAPITAL ACCOUNT BUT ON BORR OWED FUND AND THEREFORE WE REQUEST NOT TO DISALLOW ANY PART O F INTEREST PAID TO BENEFICIARIES MORE SP WHEN ALL THE CONDITIO N NECESSARY FOR MAKING CLAIM OF INTEREST PAYMENT FOR THE BUSINESS PURPOSE AS PER THE PROVISION OF THE I. T.A CT. ARE DULY COMPLIED WITH. IT IS SIMPLY AN ERROR IN PRESENTING ACCOUNTS. EVEN IN THE ANNEXURE A TO THE BALANCE SHEET, CAPITAL ACCOUNT OF ROHIT NANDLAL TRUST IS SHOWN SEPARATELY. ALSO NAME OF THE BENEFICIARIES, AND THEIR ACCOUNTS ARE SHOWN SEPARATELY WHITE ' PRESENTING BALANCE SHEET THE AMO UNT DUE TO BENEFICIARIES WHICH IN ANY CASE IS LIABILITY HAS BEEN CLUBBED WITH ANNEXURE A AND SHOWN AS COMPOSITE AMOU NT. THEREFORE, MERELY .INCORRECT PRESENTATION CANNOT CH ANGE THE SUBSTANCE OF ACCOUNT AMOUNT DUE TO BENEFICIARIES IS ITA NO.476 AND 477/AHD/2014 8 BORROWED FUND AND THEREFORE -IT IS UNSECURED LOAN A ND RELYING UPON ABOVE CITED DECISION ADDITION MADE DES ERVES TO BE DELETED. THE LD.CIT(A) WAS NOT SATISFIED WITH THE EXPLANATIO N OF THE ASSESSEE, HENCE CONFIRMED THE DISALLOWANCE. 7. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS ADM ITTED THAT IT HAS COMMITTED AN ERROR IN THE PRESENTING ITS ACCOUN TS. IT WAS POINTED OUT THAT IN ANNEXURE-A TO THE BALANCE SHEET , THE CAPITAL ACCOUNT OF SHRI ROHIT N. VORA TRUST IS SHOWN SEPARA TELY. WITH THE HELP OF OTHER DETAILS THE ASSESSEE HAS DEMONSTRATED THAT BENEFICIARIES HAVE OPENING CAPITAL BALANCE AS ON 1. 4.2008 AT RS.72,20,281/-. CLOSING BALANCE AS ON 31.3.2009 WA S RS.26,99,090/-. SIMILARLY, CLOSING BALANCE AS ON 3 1.3.2010 WAS RS.46,62,141/-. THE OPENING BALANCE OF LOAN FROM T HE BENEFICIARIES WAS USED BY THE TRUST FOR THE PURPOSE OF BUSINESS. THERE IS SOME ERROR IN PRESENTING THE ACCOUNT, AND THEREFORE, THE LD.AO INSTEAD OF STRICTLY GOING THROUGH THE ENTRIES SHOWN IN THE BOOKS, OUGHT TO HAVE VERIFIED THE CONTENTIONS OF TH E ASSESSEE WITH OTHER DETAILS. IN THE GROUNDS, THE ASSESSEE HAS S PECIFICALLY POINTED OUT AS TO HOW THE BENEFIT MEANT FOR THE BEN EFICIARIES HAVE BEEN ACCUMULATED AND NOT PAID TO THEM OVER A PERIOD OF TIME. THESE UNDISTRIBUTED BENEFITS HAVE BEEN TREATED AS C APITAL OF THE BENEFICIARIES IN THE TRUST, WHICH HAS BEEN USED FOR THE PURPOSE OF BUSINESS. THERE ARE VARIOUS OTHER ASPECTS ALSO NAM ELY, THE LD.DR POINTED OUT THAT THE ASSESSEE HAS BEEN USING PAN OF A FIRM, WHEREAS IT SHOULD HAVE A SEPARATE ACCOUNT NUMBER. ALL THESE ASPECTS HAVE CONFUSED THE LD.AO. THERE MAY BE CERT AIN SHORT ITA NO.476 AND 477/AHD/2014 9 COMING IN MAINTAINING THE ACCOUNTS OR AVAILING PAN BUT THESE ARE NOT SO MAJOR WHICH CAN PERSUADE THE AO TO DISALLOW THE CLAIM. THEREFORE, TAKING INTO CONSIDERATION OTHER DETAILS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS UNDISTRIBUTED BENEFIT OF THE BENEFICIARIES WHICH HAS BEEN CONSTRUED AS CAPITAL B ALANCE, AND AS PER THE DECISION TAKEN BY THE TRUST, INTEREST HAS B EEN PROVIDED ON SUCH CAPITAL BALANCE OF THE BENEFICIARIES. THEREFO RE, THE DEDUCTION OUGHT TO BE ALLOWED TO THEM. 8. IN GROUND NO.3, THE ASSESSEE HAS PLEADED THAT TH E LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6,00 ,050/- AND RS.5,25,764/- IN THE ASSTT.YEARS 2009-10 AND 2010-1 1 RESPECTIVELY OUT OF THE COMMISSION PAYMENT. 9. BRIEF FACTS OF THE CASE ARE THAT IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS DEBITED COMMISSION EXPENSES TO VIM AL ENTERPRISES, CHETNA V. VORA AND V.T. VORA HUF AMOUNT ING TO RS.3,75,000/-, RS.1,50,000/- AND RS.75,000/- RESPEC TIVELY. IN THE ASSTT.YEAR 2010-11, SUCH COMMISSION PAYMENT WAS MADE TO ONLY VIMAL ENTERPRISES AND CHETNA B. VORA OF RS.3,75 ,000/- AND RS.1,50,764/-. THE AO HAS DISALLOWED THE COMMISSIO N PAYMENT BY OBSERVING THAT THE ASSESSEE FAILED TO DEMONSTRAT E NATURE OF SERVICES RENDERED BY THESE CONCERNS. ACCORDING TO THE AO, THESE ARE PERSONS FALLING WITHIN THE AMBIT OF SECTION 40A (2)(B) OF THE ACT. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 10. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OU TSET SUBMITTED THAT COMMISSION WAS PAID IN THE ASSTT.YEAR 2007-08 AND 2008-09 ALSO. THE AO HAS DISALLOWED CLAIM OF THE ASSESSEE. BUT THESE DISALLOWANCES HAVE BEEN DELETED BY THE TRIBUNAL VID E ITA ITA NO.476 AND 477/AHD/2014 10 NO.3286/AHD/2010 IN THE ASSTT.YEAR 2007-08 AND 1108 /AHD/2012 IN THE ASSTT.YEAR 2008-09. THE LD.DR WAS UNABLE T O CONTROVERT THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 11. ON DUE CONSIDERATION OF THE RECORD, WE FIND THA T IN THE ASSTT.YEAR 2007-08, THE TRIBUNAL HAS FOLLOWED ORDER OF THE ITAT IN THE ASSTT.YEAR 2008-09. IN THE ASSTT.YEAR 2008-09, THE TRIBUNAL HAS DELETED THE DISALLOWANCE BY OBSERVING AS UNDER: 4. WE HAVE HEARD BOTH THE SIDES. THE NAME, ADDRESS , PAN AND THE DETAILS OF THE COMMISSION PAID ALONG WITH T HE TDS DETAIL IN RESPECT OF ALL THE THREE PARTIES HAVE BEE N PLACED ON RECORD. THE COMMISSION WAS PAID @ 1 % OF THE AMOUNT OF SALES. THE COPIES OF RETURN OF INCOME FILED BY THOS E PARTIES HAVE ALSO BEEN PLACED IN THE COMPILATION. BEFORE US, IT WAS ALSO CONTESTED THAT IN A.Y. 2006-07 THE ASSESSMENT WAS MADE U/S. 143(3) VIDE AN ORDER DATED 19.3.2008, WHE REIN THE PROFIT AS DISCLOSED BY ASSESSEE WAS NOT DISTURB ED ON THE POINT OF PAYMENT OF COMMISSION AND THE FACTS OF THA T YEAR WERE IDENTICAL WITH THE FACTS UNDER CONSIDERATION. LD.AR HAS THEREFORE PLEADED THAT A CONSISTENT VIEW ON IDENTIC AL FACTS SHOULD HAVE BEEN TAKEN BY THE REVENUE DEPARTMENT. T HE ASSESSEE HAS FURNISHED THE DETAILS OF THE BROKERAGE PAID ALONG WITH THE PARTY-WISE BILLS RAISED. THE EXPLANA TION OF THE ASSESSEE WAS THAT THE COMPETITION IN MAHARASHTRA WA S INCREASING DAY-BY-DAY, HENCE ADVERSELY EFFECTING TH E BUSINESS, THEREFORE THE SAID THREE PARTIES WERE ENG AGED TO PROMOTE THE SALES. IT WAS THEIR DUTY TO COLLECT THE ORDER AS ALSO TO FOLLOW UP THE TRANSACTION. THE ASSESSEE HAS PAID THE SAID AMOUNT ONLY TO INCREASE THE SALES AND TO ENSUR E THE RECOVERY OF PAYMENT. SINCE THE EXPENDITURE WAS WHOL LY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, THEREF ORE IT WAS ARGUED THAT THE DISALLOWANCE WAS NOT IN ACCORDANCE WITH LAW. CASE LAWS RELIED UPON WERE; IN THE CASE OF CIT VS. SHREE SAJJAN MILLS LTD. 112 ITD 135 [ITAT INDORE ], IN T HE CASE OF ALUMINIUM CORPORATION OF INDIA LTD. VS. CIT 86 ITR 11(SC) AND IN THE CASE OF CIT VS. INDO SAUDI SERVICES (TRA VEL) (P) LTD. 310 ITR 306 (BOM.). RESPECTFULLY RELYING UPON T HESE DECISIONS AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY HOLD THAT THE TRUST HAS ITA NO.476 AND 477/AHD/2014 11 AVAILED THE SERVICES OF THESE PERSONS, THEREFORE TH E COMMISSION WAS LEGITIMATELY PAID ON THE BUSINESS BR OUGHT BY THEM. RESULTANTLY GROUND RAISED BY THE ASSESSEE IS ALLOWED. 12. RESPECTFULLY FOLLOWING ORDER OF THE CO-ORDINATE BENCH, WE ALLOW THIS GROUND OF APPEAL AND DELETE THE DISALLOW ANCE IN BOTH THE YEARS. 13. NO OTHER ISSUES ARE PRESSED BEFORE US. HENCE, GROUND NOS.4 AND 5 ARE REJECTED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 9 TH OCTOBER, 2017. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER