ACIT, UDAIPUR V. Shri Kewal Chand Labana, UDAIPUR

ITA 508/JODH/2013

• Counselvise Citation: 50823314 RSA 2013
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL , JODHPUR BENCH: JODHPUR (BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER) IT A NO. 508 /JODH/201 3 [ ASSTT. YEAR 20 09 - 10 ] THE A.C. I.T. VS SHRI KEWAL CHAND LABANA CIRCLE - 1 P/O M/S TRIPATI TRACTOR UDAIPUR 48, GOVARDHAN VILAS UDAIPUR PAN : AAJPL 2870 N C.O.NO.40 /JODH/201 3 (A/O ITA NO. 508 /JODH/201 3 ) [A.Y. 2009 - 10] SHRI KEWAL CHAND LABANA VS. THE A.C.I.T. P/O M/S TRIPATI TRACTOR CIRCLE - 1 48, GOVARDHAN VILAS UDAIPUR UDAIPUR PAN : AAJPL 2870 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 19 /09 /2014 DATE OF PRONOUNCEMENT : 24 /0 9 /2014 2 O R D E R HARI OM MARATHA, J.M. TH E APPEAL BY THE REVENUE AND CROSS - OBJECTION (CO) BY THE ASSESSEE ARE DIRECT ED AGAINST THE ORDER OF L D. CIT (A) , UDAIPUR DATED 13 .0 8 .201 3 PASSED FOR A.Y. 20 09 - 10 . 2. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRACTOR DEALER OF TAFE MOTORS LTD. OF EICHER BRAND OF TRACTORS OF ENTIRE UDAIPUR DISTRICT SPREADING OVER A VAST GEOGRAPHICAL AREA INCLUDING JHADOL, MAVLI, SALUMBER, KHERWARA, KOTDA, GIRWA, GOGUNDA, ETC UNDER THE NAME AND STYLE OF M/S TIRUPATI TRACTOR S, UDAIPUR. IT FILED I T S RETURN OF INCOME (ROI) FOR A.Y. 200 9 - 1 0 ON 2 9.0 9 .200 9 DECLARING TOTAL INCOME OF RS. 16,63,790/ - . ASSESSMENT WAS COMPLETED U/S 143(3) ON 21.12.2011 AT A TOTAL INCOME OF RS. 33,26,760/ - . THE A.O HAS MADE ADDITION, INTER ALIA OF RS. 16,63,059/ - AFTER DISALLOWING COMMISSION ON SALES OF TRACTORS WHICH HAS BEEN CLAIMED BY THE ASSESSEE DURING THE YEAR ON THE REASONING THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE NATURE OF SERVICES PROVIDED BY THE PAYEES OF COMMISSION. THE CASE OF THE ASSESSEE IS THAT COMPLETE DETAILS OF COMMISSION PAID TO VARIOUS PERSONS INCLUDING NAMES AND THEIR COMPLETE ADDRESSES ALONGWITH THEIR PAN, COMMISSION BILL, AGREEMENTS, CONFIRMATIONS, COPIES OF I.T. RETURNS 3 AND STATEMENT OF ACCOUNTS AND PAYMENT OF VOUCH ERS ETC WERE PRODUCED BEFORE THE A.O. ACCORDINGLY, HE HAS DENIED THE ENTIRE CLAIM AND ADDED RS. 16,63,059/ - HOLDING THAT THIS AMOUNT WAS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CIT(A) AFTER CONSIDERING THE RIVAL SUBMISSIONS HAS FOUND THE LOGIC IN CLAIMING THIS EXPENDITURE ON ACCOUNT OF COMMISSION WHICH ACCORDING TO HIM, WAS ACTUALLY PAID TO THE PAYEES WHO RENDERED THEIR SERVICES IN GETTING THE PROSPECTIVE BUYERS OF THE TRACTORS. HOWEVER, HE HAS DELETED THE ADDITION BUT HAS SUSTAINED A SUM OF RS. 33,395/ - . THAT IS WHY BOTH THE PARTIES ARE NOW AGGRIEVED. THE ASSESSEE HAS EVEN DISPUTED THE SUSTAINED AMOUNT OF RS. 33,395/ - . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE GONE THROUGH THE ENTIRE RECORD INCLUDING THE PAPER BOOK AND WRITTEN SUBMISSIONS OF THE PARTIES. FROM THE RECORDS, WE ARE SATISFIED THAT HET IMPUGNED COMMISSION WAS PAID TO THOSE PERSONS WHO HELPED THE ASSESSEE IN GETT ING THE SALE OF TRACTORS AND THIS IS A PART OF BUSINESS OF THE ASSESSEE AND THIS EXPENDITURE IS RELATABLE TO THE BUSINESS WHOLLY AND EXCLUSIVELY. THE PAYMENTS AND ITS RELEVANT PROOF HAVE NOT BEEN DISPUTED BY THE A.O. 4 4. WE HAVE FOUND THE PROOF TO BE IN OR DER AS WELL. THE DETAILS OF THE SERVICES RENDERED BY THESE AGENTS ARE AS UNDER: MARKETING OF TRACTORS OF EICHER BRAND A) THE COMMISSION AGENTS PURSUE THE CUSTOMERS FOR PURCHASE OF TRACTORS FROM THE ASSESSEE ON A REGULAR BASIS WITHOUT WHOM THE ASSESSEE IS NOT IN A POSITION TO SELL A SINGLE TRACTOR. B) THE COMMISSION AGENT ARRANGES FOR THE FINANCE FACILITY FROM THE BANK FOR THE CUSTOMERS WHICH INVOLVE COLLECTION OF DOCUM ENT, SUBMITTING OF SAME WITH BANK, LIASIONING WITH BANK OFFICIALS AND DISBURSAL OF LOAN TO CUSTOMERS FOR BUYING OF TRACTORS. C) THE COMMISSION AGENT ARRANGES FOR THE DELIVERY OF TRACTORS ON COMPLETION OF PAYMENT AND OTHER FORMALITIES. D) THE COMMISSION AGENT ALSO ENSURES FOR MARKETING OF VARIOUS SCHEMES PROMOTED BY COMPANY ON BEHALF OF THE ASSESSEE FROM TIME TO TIME. E) THE COMMISSION AGENT TAKES THE RESPONSIBILITY OF ENSURING AFTER SALES SERVICES THROUGH THE ASSESSEE ONCE THE SALES HAVE BEEN EFFECTUA TED TO THE CUSTOMERS. THE PERSONS TO WHOM COMMISSION HAS BEEN PAID HAVE CLEARLY STATED IN THE STATEMENTS RECORDED THAT THEY KNEW THE ASSESSEE AND HAVE RENDERED THEIR SERVICES FOR WHICH COMMISSION HAS BEEN PAID TO THEM. THE PERSONS WHO HAVE RENDERED THEIR S ERVICES ARE EXPERT PEOPLE IN THEIR FIELD. HOWEVER ARE NOT HIGHLY EDUCATED. 5 THUS THE ONUS TO PROVE THE GENUINENESS OF EXPENDITURE HAS BEEN DISCHARGED BY THE ASSESSEE. 3.6 THE DETAILS OF COMMISSION PAID DURING THE LAST 4 YEARS ARE AS UNDER: 2006 - 07 - 4,72,00,183 48,99,292 10.37 % 305018 7,86,427 1.67 % AY SALES GROSS PROFIT GROSS PROFIT RATE COMMISSIO N PAID NET PROFIT AFTER DEP N P RATE AFTER DEP 2009 - 2010 6,62,04,506 1,03,18,088 15.56% 1663059 16,60,405 2.51% 2008 - 2009 6,71,85,292 86,51,248 12.87% 1188335 15,36,872 2.29 % 2007 - 2008 6,20,23,440 72,09,897 11.62% 1013783 10,04,148 1.62 % FURTHER CATEGORISATION OF COMMISSION EXPENSES IS AS UNDER S. NO NO OF PERSONS COMMISSION PAID DOCUMENTS AVAILABLE 1 5 1497350 BILL, CONFIRMATION LETTERS, INCOME TAX RETURNS AND STATEMENT OF ACCOUNTS 2 63 132314 CONFIRMATION VOUCHERS, ID PROOF 3 15 33395 VOUCHERS TOTAL 83 1663059 6 IN EARLIER A.YS ALSO, SIMILAR COMMISSIONS WERE ALLOWED. ACCORDINGLY, WE DO NOT FIND ANY REASON WORTH WHICH CAN CONTRIBUTE TO REFUSAL OF THIS CLAIM IN ITS ENTIRETY. ACCORDINGLY, WE ORDER TO DELETE THE ENTIRE DISALLOWANCE AND ALLOW THE ASSESSEES CO BUT DISMISS THE REVENUES APPEAL. 5 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS - OBJECTION IS ALLOWED. (ORDER PRONOUN CED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2014) SD/ - SD/ - (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH SEPTEMBER, 2014 VL/ COPY FORWARDED TO : - 1. ASSESSEE . 2. ACIT , UDAIPUR . BY ORDER, 3. CIT, UDAIPUR. 4 C IT(A), UDAIPUR. SR. PRIVATE SECRETARY 5 C IT,DR, ITAT, JODHPUR. ITAT, JODHPUR