Debayan Bhattacharya, Kolkata V. ITO, Ward - 50(3),Kolkata, Kolkata

ITA 493/KOL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92022 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2010
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: N O N E
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 493 /KOL/201 0 ASSESSMENT YEAR : 200 6 - 0 7 DEBAYAN BHATTACHARYA VS. INCOME - TAX OFFICER, WD - 50(3), KOL. (PAN:AAJPB2128D) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 11 .0 6 .2015 DATE OF PRONOUNCEMENT: 11 . 0 6 . 2015 FOR THE APPELLANT: N O N E FOR THE RESPONDENT: S HRI A. BHATTACHARJEE , ADDL. CIT ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT (A) - XXXI I , KOLKATA VIDE APPEAL NO. 240 /CIT(A) - XXXI I /WD - 50(3)/08 - 09/KOL DATED 17 . 0 9 .20 09 . ASSESSMENT WAS FRAMED BY ITO, WD - 50(3) , KOLKATA U/S. 1 43(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSES SMENT YEAR 200 6 - 0 7 VIDE HIS ORDER DATED 1 6 . 12 .20 08 . 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF COMMISSION TO DIFFERENT CUSTOMERS OF VODAFONE REGARDING PREPAID CONNECTION AGGREGATING RS.64,900/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR NON - DEDUCTION OF TAX AT SOURCE. FOR WHICH, ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFI ED IN REJECTING THE EXPLANATION FURNISHED BY THE APPELLANT AND THEREBY CONFIRMING DISALLOWANCE OF COMMISSION TO DIFFERENT CONSUMERS OF VODAFONE PREPAID CONNECTIONS AGGREGATING TO RS.64,900/ - U/S. 40(A)(IA) OF I. T. ACT, 1961. 3. BRIEFLY STATED FACTS ARE THAT AO DISALLOWED COMMISSION EXPENSES OF RS.64,900/ - ON ACCOUNT OF PREPAID CONNECTION OF VODAFONE FOR NON - DEDUCTION OF TAX AT SOURCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFI RMED THE ACTION OF AO BY OBSERVING AS UNDER: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE A/R. ON PERUSAL OF THE FACTS OF THE CASE I DO NOT FIND ANY FORCE IN THE CLAIM OF THE A/R. THE ASSESSEE HAS CLAIMED THAT HE HAD PAID COM MISSION TO VARIOUS PERSONS AND PAYMENT TO EACH SUCH PERSON WAS LESS THAN RS.2,500/ - . BUT IT IS NOTICED FROM THE DETAILS FURNISHED 2 ITA NO. 493 /K/201 0 DEBAYAN BHATTACHARYA AY 200 6 - 0 7 BY THE A/R THAT PAYMENT FOR SUCH COMMISSION WAS PAID BY THE ASSESSEE BY WAY OF TWO CHEQUES OF RS.7650/ - AND RS.27980/ - . FURT HER, THE CLAIM OF PAYMENT TO VARIOUS PERSONS IS ALSO NOT SUPPORTED BY ANY EVIDENCE. THEREFORE, THE EXPLANATION OFFERED BY THE A/R IS REJECTED AND THE DISALLOWANCE OF RS.64,900/ - MADE BY THE AO IS CONFIRMED. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD LD. DR AND FIND THAT TH IS ISSUE IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE BY THE DECISION OF COORDINATE BENCH OF THIS ITAT IN THE CASE OF SHRI ASHIM MITRA VS. ITO IN ITA NO. 173/K/2012 FOR AY 2008 - 09 DATED 22.05.2015, WHEREIN THE TRIBUNAL HAS HELD AS UNDER: 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS IN THE BUSINESS OF MOBILE SET AND SIM CARDS OF RELIANCE COMMUNICATIONS AND MACRONET PVT. LTD. THE ASSESSEE RECEIVES ONLY COMMISSION. IN VIEW OF THIS FACT, WE FIND THAT THE ASSESSEE IS MERELY AN AGENT BETWEEN THE DISTRIBUTORS AND THE RETAILERS AND TAKE THE COMMISSION ON THE SALE. NO DOUBT THE ASSESSEE HAS ACCOUNTED FOR THE ENTIRE SALE BUT HE IS WORKING ON COMMISSION BASIS. ONCE THE ASSESSEE IS WORKING ON COMMISSION BASIS, THE ISSUE STANDS COVERED IN FAVOUR OF ASSESSEE AND AGAINST REVENUE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BHARTI CELLULAR LTD. VS. ACIT (2013) 354 ITR 507 (CAL), WHEREIN HON'BLE HIGH COURT HAS HELD THAT THE INDIRECT PAYMENT BY ASSESSEE TO THE FRANCHISEE IS COMMISSION AND COMMISSION WOULD ATTRACT THE PROVISIONS OF SECTION 194H OF THE ACT. ONCE THE SIM CARDS AND RECHARGEABLE COUPONS PURCHASED BY ASSESSEE/FRAN CHISEE ON COMMISSION BASIS NO DISALLOWANCE CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. ACCORDINGLY, THIS ISSUE OF ASSESSEE S APPEAL IS ALLOWED. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION CITED SUPRA, WE DELETE THE DISALLOWANCE OF COMMISSION AND ALLOW THIS ISSUE OF ASSESSEE S APPEAL. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF MOTOR CAR EXPENSES, SALES PROMOTION EXPENSES, TRAVELLING AND CON VEYANCE AND STAFF WELFARE EXPENSES TO THE EXTENT OF ONE - FIFTH. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN SUSTAINING DISALLOWANCE OF MOTOR CAR EXPENSES, SALES P ROMOTION EXPENSES, TRAVELLING & CONVEYANCE AND STAFF WELFARE EXPENSES TO THE EXTENT OF 20% ON ADHOC BASIS. 6 . WE HAVE HEARD LD. SR. DR AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES . WE FIND THAT THE AO HAS MADE DISALLOWANCE ON ACCOUNT OF MOTOR CAR EXPENSES, SALES PROMOTION EXPENSES, TRAVELLING AND CONVEYANCE EXPENSES AND STAFF WELFARE EXPENSES AT 30% FOR THE REASON THAT THE SAME WERE SUPPORTED BY ONLY SELF MADE VOUCHERS. THE CIT(A) WITHOUT GIVING ANY REASON RESTRICTED THE DISALLOWANCE AT 20%. BEF ORE US, ASSESSEE CONTENDED THAT NO DISALLOWANCE SHOULD HAVE BEEN MADE BECAUSE THE EXPENSES 3 ITA NO. 493 /K/201 0 DEBAYAN BHATTACHARYA AY 200 6 - 0 7 ARE INCURRED ON SELF MADE VOUCHERS BUT THESE ARE PETTY EXPENSES. IN VIEW OF THIS REASON, WE ARE OF THE VIEW THAT 10% OF DISALLOWANCE OF THESE EXPENSES WILL MEET THE END OF JUSTICE. WE ORDER ACCORDINGLY. 7 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART . 8 . ORDER IS PRONOUNCED IN THE OPEN COURT . SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 11 TH JUNE , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT SHRI DEBAYAN BHATTACHARYA, DB - 29, B - 4, SECTOR - 1, SALT LAKE CITY, KOLKATA - 700064. 2 RESPONDENT ITO, WD - 50(3), KOLKATA . 3 . THE CIT (A), KOLKATA 4. 5. CIT, KOLKATA . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .