Kalima Company, Chidambaram V. DCIT, Cuddalore

ITA 536/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58058 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR YOGESH KAMATH
• Assessee Lawyers: V D GOPAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.536 /MDS/2011 (ASSESSMENT YEAR : 2003-04) M/S. KALIMA COMPANY, GNANAGURU CONSULTANCY, 121-A, EAST CAR STREET, CHIDAMBARAM-608 001. PAN:AADFK6430D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-I(1), CUDDALORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.D.GOPAL, ADVOCATE RESPONDENT BY : DR. YO GESH KAMATH, JCIT DATE OF HEARING : 22 ND MARCH, 2012 DATE OF PRONOUNCEMENT : 22 ND MARCH, 2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED THAT COMMISSION PAYMENT OF ` 3,35,000/- CLAIMED WAS DISALLOWED BY THE ASSESSING OFFICER AND SUCH DISALLOWANCE WAS SUSTAINED BY THE LEARNED CIT(A). 2. THE FACTS APROPOS ARE THAT THE ASSESSEE, A GRANI TE PROCESSOR AND EXPORTER, HAD FILED ITS RETURN FOR TH E IMPUGNED ASSESSMENT YEAR DECLARING AN INCOME OF ` 5,65,930/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED COM MISSION ITA NO.536/MDS/2011 2 EXPENDITURE OF ` 3,35,000/-. EXPLANATIONS WERE CALLED FOR. REPLY GIVEN BY THE ASSESSEE WAS THAT SUCH COMMISSIO N WAS PAID TO M/S. KALIMA TEXTILES CENTRE FOR CANVASSING BUSINESS IN SINGAPORE, UAE AND SAUDI ARABIA. THE ASSESSING OFFI CER WAS OF THE OPINION THAT M/S. KALIMA TEXTILE CENTRE BEI NG LOCATED IN INDIA CANVASSING BUSINESS IN OTHER COUNTRIES COU LD NOT HAVE BEEN POSSIBLE. IN ANY CASE, ACCORDING TO THE ASSESS ING OFFICER, THE ASSESSEE WAS UNABLE TO FURNISH THE NAM ES AND ADDRESSES OF PARTIES WITH WHOM BUSINESS WAS CANVASS ED BY M/S. KALIMA TEXTILE CENTRE. IN THIS VIEW OF THE MAT TER, HE DISALLOWED THE CLAIM. 3. IN ITS APPEAL BEFORE THE CIT(A), THE ASSESSEE RE ITERATED THE SAME CONTENTIONS AS IT HAD TAKEN BEFORE THE ASS ESSING OFFICER. THE LEARNED CIT(A) CONFIRMED THE DISALLOWA NCE. ACCORDING TO HIM, THE ASSESSEE COULD NOT CLARIFY WH AT SERVICES WERE RENDERED BY M/S. KALIMA TEXTILE CENTRE AND AL SO WHY THE CANVASSING OF BUSINESS COULD NOT HAVE BEEN DONE BY THE PARTNERS OF THE ASSESSEE FIRM. 4. NOW BEFORE US, THE LEANED A.R. SUBMITTED THAT TH E PAYMENTS WERE GENUINE AND WERE FOR SERVICE RENDERED IN ITA NO.536/MDS/2011 3 CANVASSING ORDERS FOR THE ASSESSEE ABROAD. ACCORDIN G TO HIM, M/S. KALIMA TEXTILE CENTRE WAS LOCATED IN PORT NOVO AND IT WAS REQUIRED TO CANVASS AND CAMPAIGN THE PRODUCTS O F THE ASSESSEE FUNCTIONING FROM PORT NOVO WHICH IS SITUAT ED IN UAE. THE LEARNED ASSESSING OFFICER HAD NOT DOUBTED THE PAYMENT BUT ONLY THE APPREHENSION THAT NO SERVICES WERE RENDERED BY M/S. KALIMA TEXTILE CENTRE. 5. ON THE OTHER HAND, PER CONTRA, THE LEARNED D.R. SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. 6. WE HAVE PERUSED THE ORDERS AND CONSIDERED THE RI VAL CONTENTIONS. IT IS NOT DISPUTED THAT THE ASSESSEE H AD MADE THE PAYMENTS TO M/S. KALIMA TEXTILE CENTRE. THE ASSESSI NG OFFICER HAS DISALLOWED THE AMOUNT FOR THE REASON TH AT ASSESSEE WAS NOT ABLE TO FURNISH DETAILS OF WORK RE NDERED IN MARKETING ITS PRODUCTS ABROAD. IF A COMMISSION WAS INDEED PAID FOR THE WORK DONE BY M/S. KALIMA TEXTILE CENTR E, THE CLAIM HAS TO BE ALLOWED. NO DOUBT, THE ASSESSEE WAS REQUIRED TO JUSTIFY THE CLAIM BY THE ASSESSING OFFICER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. NEVERTHELESS WE CANNOT FIND FROM THE ASSESSMENT ORDER THAT WHAT TYPE OF EVIDENC E WERE ITA NO.536/MDS/2011 4 REQUIRED BY THE ASSESSING OFFICER. IN SUCH CIRCUMST ANCES, WE ARE OF THE OPINION THAT THE MATTER REQUIRES REVISI T BY THE ASSESSING OFFICER. IF THE ASSESSEE IS ABLE TO SHOW THAT COMMISSION HAS BEEN PAID FOR SERVICES RENDERED BY M /S. KALIMA TEXTILE CENTRE AND SUCH SERVICES HAD PROXIMA TE CONNECTION WITH THE BUSINESS OF THE ASSESSEE AND HE LPED THE ASSESSEE TO CANVASS THE BUSINESS ABROAD AND SUCH CL AIMS ARE SUPPORTED BY PROPER EVIDENCE, THE ASSESSING OFF ICER SHALL ALLOW THE CLAIM IN ACCORDANCE WITH LAW. 7. IN THE RESULT, WE SET ASIDE THE ORDERS OF AUTHOR ITIES BELOW AND REMIT THE ISSUE BACK TO THE FILE OF ASSES SING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. NE EDLESS TO SAY THAT THE ASSESSEE SHALL BE GIVEN AN OPPORTUNITY OF BEING HEARD TO PUT FORTH ITS CASE. THE APPEAL OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON 22 ND MARCH, 2012. SD/- SD/- ( VIKAS AWASTHY ) (ABRAHAM P.GEORGE) JUDICIAL MEMBER ACC OUNTANT MEMBER CHENNAI, DATED THE 22 ND MARCH, 2012. SOMU ITA NO.536/MDS/2011 5 COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.