DCIT, New Delhi V. Abhay Khemka, New Delhi

ITA 477/DEL/2011

• Counselvise Citation: 47720114 RSA 2011
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: DR RAM SAMUJH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI R.P.TOLANI, JM AND SHRI SHAMIM, YAHYA SHAMIM, YAHYA SHAMIM, YAHYA SHAMIM, YAHYA, AM , AM , AM , AM ITA NO. ITA NO. ITA NO. ITA NO.477 477 477 477/DEL/2011 /DEL/2011 /DEL/2011 /DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007- -- -08 0808 08 ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF ASSTT.COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -23(1), 23(1), 23(1), 23(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. SHRI ABHAY KHEMKA, SHRI ABHAY KHEMKA, SHRI ABHAY KHEMKA, SHRI ABHAY KHEMKA, C CC C/O SHIV KUMAR LATH, /O SHIV KUMAR LATH, /O SHIV KUMAR LATH, /O SHIV KUMAR LATH, 48/33 48/33 48/33 48/33- -- -34, 2 34, 2 34, 2 34, 2 ND NDND ND FLOOR, FLOOR, FLOOR, FLOOR, DSIDC COMPLEX, DSIDC COMPLEX, DSIDC COMPLEX, DSIDC COMPLEX, OPP. MAYUR VIHAR PHASE OPP. MAYUR VIHAR PHASE OPP. MAYUR VIHAR PHASE OPP. MAYUR VIHAR PHASE- -- -I, I,I, I, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAFPK7272F. PAN : AAFPK7272F. PAN : AAFPK7272F. PAN : AAFPK7272F. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.Y.S.KAKKAR, SR.DR. RESPONDENT BY : DR.RAM SAMUJH, ADVOCATE. ORDER ORDER ORDER ORDER PER PER PER PER R.P.TOLAN R.P.TOLAN R.P.TOLAN R.P.TOLANI, JM I, JM I, JM I, JM : : : : THIS IS REVENUES APPEAL. SOLE GROUND RAISED IS A S UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE A DDITION OF RS.43,32,096/- MADE BY THE AO U/S 40(A)(IA) ON ACCO UNT OF DISCOUNT CLAIMED BY THE ASSESSEE. 2. THE LEARNED DR CONTENDS THAT CIT(A) WITHOUT ELUC IDATING ON THE FACTS HAS BEEN IMPRESSED BY THE ASSESSEES NOMENCLA TURE OF TERMING THE IMPUGNED PAYMENT AS DISCOUNT. THE IMPUGNED PAY MENT WAS ESSENTIALLY IN THE NATURE OF COMMISSION. THEREFORE , TDS OUGHT TO HAVE BEEN DEDUCTED THEREFROM AND ASSESSING OFFICER HAS R IGHTLY INVOKED PROVISIONS OF SECTION 40(A)(IA). 3. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, VEHEMENTLY ARGUED THAT THE ASSESSING OFFICER HAS MI SCONCEIVED THE ITA-477/DEL/2011 2 ENTIRE ISSUE. THE ASSESSEE IS A REAL ESTATE BROKER AND ARRANGES THE SALE OF FLATS BETWEEN THE BUILDER AND THE CONSUMER. FOR ITS BUSINESS, THE ASSESSEE HAD TO EMPLOY TWO METHODS TO SECURE BU SINESS :- (A) APPOINTING SOME BROKERS AND PAYING COMMISSION ON WH ICH TDS HAS BEEN DULY DEDUCTED. (B) OFFERING A PART OF ITS COMMISSION BY WAY OF DISCOUN T TO ACTUAL CONSUMERS WHICH HAS BEEN RIGHTLY TREATED AS DISCOUN T IN THE BOOKS OF ACCOUNT. 4. THE ASSESSING OFFICER BY MISCONCEIVING THE FACTS AND ON ASSUMPTIONS HAS HELD THAT THE DISCOUNT PAID BY THE ASSESSEE TO VARIOUS CUSTOMERS AMOUNTS TO COMMISSION AND TDS SHOULD HAVE BEEN DEDUCTED. CIT(A), RIGHTLY CONSIDERING THE NATURE O F PAYMENTS, MATERIAL AVAILABLE ON RECORD, HAS GIVEN A CLEAR CUT FINDING THAT :- (A) PAYMENT MADE TO BUYERS IS TERMED UNDER THE HEAD DI SCOUNT. (B) NATURE OF BOTH PAYMENTS I.E. SUB-BROKERAGE AND DISC OUNT ARE TOTALLY DIFFERENT. (C) ASSESSING OFFICER HAS NOT CHALLENGED THE ISSUE ABOU T NECESSITY OF THE ASSESSEE TO OFFER DISCOUNTS TO THE BUYERS TO ATTRACT THEM. 5. IT IS PLEADED THAT THE ORDER OF THE CIT(A) IS PE RFECTLY JUSTIFIED AND CRISP BY FOLLOWING OBSERVATIONS:- 4. I HAVE CONSIDERED THE BASIS OF ASSESSING OFFICE RS DECISION AND ASSESSEES ARGUMENT CLAIMING THE PAYME NT MADE TO HIS CLIENTS AS DISCOUNTS. IT IS A MATTER O F FACT THAT THE ASSESSEE HAS DEBITED SOME BROKERAGE AS WELL AS DISCOUNT IN THE P & L ACCOUNT. THE PAYMENTS MADE T O VARIOUS PERSONS OTHER THAN FLAT OWNERS FOR FACILITA TING THE SALE OF FLATS HAS BEEN CLAIMED UNDER THE HEAD SUB BROKERAGE WHEREAS PAYMENTS MADE TO THE BUYERS OF TH E FLAT IN ORDER TO MAKE THE DEAL ATTRACTIVE FOR THEM HAS BEEN ITA-477/DEL/2011 3 CLAIMED UNDER THE HEAD DISCOUNTS. THE NATURE OF BO TH THE PAYMENTS IS CLEARLY DISTINGUISHABLE AND THEREFORE, CANNOT BE CLUBBED UNDER THE HEAD OF COMMISSION. THE ASSES SING OFFICER HAS NOT CHALLENGED THE BUSINESS NECESSITY O F OFFERING DISCOUNTS TO THE BUYERS OF THE FLAT BUT HA S DISAGREED WITH THE TERMINOLOGY ON THE GROUND THAT PAYMENTS HAVE BEEN MADE BY CHEQUES AND MORE THAN ONCE AND THE DISCOUNTS HAD NOT BEEN REDUCED FROM TH E PRICE OF THE FLATS. THE ASSESSING OFFICER HAS FAIL ED TO UNDERSTAND THAT DISCOUNT COULD BE OFFERED EITHER BY THE BUILDER OR BY THE BROKER DEPENDING UPON THE MARKET CONDITIONS. IT IS NORMALLY ACCEPTABLE THAT THE BUI LDERS WOULD LIKE TO KEEP THE PRICE FIXED AND GIVE A SPECI FIC PERCENTAGE AS COMMISSION TO THE BROKERS TO SELL THE FLATS AND THE BROKERS IN TURN WOULD OFFER PART OF THE COM MISSION RECEIVED TO THE EVENTUAL BUYERS SO AS TO CLINCH THE DEAL. THEREFORE, THE NATURE OF PAYMENT MADE BY THE ASSESS EE TO HIS CLIENTS HAS BEEN CORRECTLY CATEGORIZED AS DISCO UNT AND THEREFORE, IT IS NOT SUBJECT TO DEDUCTION OF TAX AT SOURCE. HENCE THE DISALLOWANCE MADE BY THE ASSESSING OFFICE R UNDER SECTION 40(A)(IA) IS NOT WARRANTED AND THEREF ORE, DELETED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER REF ERS TO THE PAPER BOOK AND THE DETAILS OF COMMISSION PAID BY THE ASSE SSEE WHICH ARE AT PAGE 20. AGAINST THE BROKERAGE RECEIVED FROM UNITE CH LIMITED AND OTHER BUILDERS, IT PAID DISCOUNT TO VARIOUS CUSTOME RS WHOSE NAMES APPEAR AGAINST THE RESPECTIVE BUILDER. THE DETAILS ARE ON PAGES 20 TO 22. ALL THESE DETAILS WERE FILED BEFORE THE ASSESS ING OFFICER AND CIT(A). IN VIEW OF THE PLETHORA OF EVIDENCE, IT CANNOT BE H ELD THAT THE PAYMENT IN QUESTION WAS NOT DISCOUNT AND WAS LIABLE FOR TDS UNDER SECTION 40(A)(IA). THE ORDER OF THE CIT(A) WAS RELIED UPON . 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND MERIT IN THE ARGUMENTS OF THE LEAR NED COUNSEL FOR THE ASSESSEE. THE DETAILS OF DISCOUNT CLEARLY SHOW THA T AGAINST THE BOOKING OF BUILDERS, ASSESSEE GAVE A PORTION BY WAY OF DISCOUNT TO THE CONSUMERS/CUSTOMERS. THE ASSESSEE HAS MAINTAINED P ROPER DETAILS IN RESPECT OF SUB-BROKERAGE ON WHICH TDS HAS BEEN DEDU CTED AND DISCOUNT TO CONSUMERS I.E. IMPUGNED PAYMENTS. THE SAME BEING ITA-477/DEL/2011 4 DISCOUNT IS NOT LIABLE FOR TDS AS HELD BY THE ASSES SING OFFICER. IN OUR VIEW, THE CIT(A) HAS GIVEN PROPER REASONS FOR ACCEP TING THE ASSESSEES PLEA. WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS UPHELD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 28 TH NOVEMBER, 2011. SD/- SD/- ( (( (SHAMIM YAHYA SHAMIM YAHYA SHAMIM YAHYA SHAMIM YAHYA) )) ) (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI (R.P.TOLANI) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 28.11.2011 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR