DCIT, New Delhi V. M/s Maruti Insurance Distribution Services Ltd., New Delhi

ITA 5479/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69349 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-10-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 29-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MRS REN UKA JAIN GUPTA SENIOR
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E: NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5479/DEL/ 2012 (ASSESSMENT YEAR: 2008-09) DCIT, CIRCLE 6 (1), VS. M/S. MARUTI INSURANCE DIS TRIBUTION NEW DELHI. SERVICES LIMITED, PLOT NO.1, NELSON MANDELA ROAD, VASANT KUNJ, NEW DELHI 110 070. (PAN : AADCM3497P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, ADVOCATE WITH MS. PRIYANKA JAIN RESPONDENT BY : MRS. REN UKA JAIN GUPTA, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF THE CIT (APPEALS)-IX, NEW DELHI DATED 27.07.2012. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF VEHICLE INSURANCE. IT IS A CORPORATE INSURANCE AGENT OF BAJAJ ALLIANZ INS URANCE COMPANY. THE COMPANY IS A 100% OWNED SUBSIDIARY OF M/S. MARUTI S UZUKI INDIA LIMITED. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF T HE DEDUCTION OF RS.16,86,477/- WAS TO BE EXCLUDED FROM THE TAXABLE INCOME ON ACCOUNT OF THE FACT THAT THIS SUM WAS ALREADY BOOKED AS INCOME IN ASSESSMENT YEAR 2007-08 ON ACCOUNT OF COMMISSION OF BAJAJ ALLIANZ INSURANCE COMPANY WHICH WAS NOT ITA NO.5479/DEL/2012 2 FOUND RECOVERABLE DURING THE YEAR UNDER CONSIDERATI ON. THE CIT (A) DELETED THE ADDITION BY HOLDING AS UNDER :- 5.5 I HAVE CAREFULLY CONSIDERED THE REASONING OF T HE AO AS WELL AS THE ORAL AND WRITTEN SUBMISSION MADE ON BEH ALF OF APPELLANT. I FIND THAT THE CLAIM OF THE APPELLANT I S PROPER AND LEGAL. THE APPELLANT FILED A VALID REVISED RETURN W HICH WAS ACCEPTED BY THE AO. NO DOUBT THE APPELLANT HAD SUFF ICIENT TIME TO REVISE ITS RETURN FOR ASSESSMENT YEAR 2007-08, B UT TO MY MIND THAT SHOULD NOT COME INTO THE WAY OF DISALLOWING TH E CLAIM OF THE APPELLANT, WHICH IS OTHERWISE PROPER AND BASED ON A PPROPRIATE FACTS. I AGREE WITH THE APPELLANT THAT THE SAME INC OME CANNOT BE TAXED TWICE AND FURTHER THAT NO PREJUDICE HAS BEEN CAUSED TO THE REVENUE BY SHOWING THE INCOME IN THE EARLIER YEAR T HEREBY PREPONING THE TAX LIABILITY. I ALSO FIND THAT THE A PPELLANT IS DECLARING SUBSTANTIAL INCOME AND I SEE NO REASON TH AT THE APPELLANT HAD TO POSTPONE OR PREP ONE ITS INCOME AS IN BOTH THE YEARS, IT HAS RETURNED POSITIVE INCOME. I AM, THERE FORE, OF THE CONSIDERED VIEW THAT THE AO WAS NOT JUSTIFIED IN DI SALLOWING THE CLAIM OF THE APPELLANT AND MAKING THE ADDITION. WHE N THE APPELLANT HAD NOT EARNED THE INCOME UNDER CONSIDERA TION, THERE IS NO QUESTION OF ITS BEING BROUGHT TO TAX. ACCORDINGL Y THE DISALLOWANCE MADE IS DIRECTED TO BE DELETED AND THE GROUND NOS. 3.0 TO 3.2 ARE ALLOWED TO THE APPELLANT. 3. GROUND NOS.1 & 3 ARE GENERAL IN NATURE AND DO NO T REQUIRE ANY ADJUDICATION, HENCE DISMISSED. 4. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.16,86,477/- ON ACCOUNT OF COMMISSION INCOME. 5. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFI CER AND LD. AR RELIED ON THE ORDER OF THE CIT (A). 6. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE A SSESSEE COMPANY IS AN INSURANCE AGENT OF BAJAJ ALLIANZ INSURANCE COMPANY AND WAS GETTING COMMISSION INCOME. THE COMMISSION INCOME OF THE COM PANY WAS ACCOUNTED FOR ON ACCRUAL BASIS. LD. AR SUBMITTED THAT W.E.F. 1 ST JANUARY 2007, THE ITA NO.5479/DEL/2012 3 INSURANCE REGULATORY DEVELOPMENT AUTHORITY (IRDA) C HANGED THE REGULATION ON COMMISSION FOR CORPORATE INSURANCE AGENTS. HOWEV ER, TO REVISE THE COMMISSION STRUCTURE, NEGOTIATIONS WERE ON BETWEEN THE ASSESSEE AND INSURANCE COMPANY FOR THE CORPORATE AGENCY COMMISSION. THIS I SSUE WAS SETTLED IN MAY, 2007. PENDING NEGOTIATIONS FOR THE ACCRUAL OF THE C OMMISSION FOR THE PERIOD JANUARY 2007 TO MARCH 2007 PART OF THE FINANCIAL YE AR 2006-07, THE ASSESSEE OFFERED THE INCOME AS PER THE THEN PREVAILING RATES (10% OF THE NET PREMIUM) AND WHEN THE ISSUE WAS FINALLY SETTLED AT THE LOWER RATE THE ASSESSEE SOUGHT THE REDUCTION IN THE INCOME BY RS.16,86,477/-. THIS ISS UE OF REVISION WAS SETTLED ONLY IN MAY 2007 IN FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YEAR 2008- 09 WHICH IS THE ASSESSMENT YEAR UNDER CONSIDERATION . THE ASSESSEE HAS WRITTEN OFF THIS BALANCE AMOUNT DURING THE YEAR AND IT IS A LSO CLAIMED THAT IT IS AN ALLOWABLE DEDUCTION U/S 36(1)(VII) OF THE INCOME-TA X ACT, 1961. IN OUR CONSIDERED VIEW, THIS WAS ALSO A BUSINESS LOSS WHIC H COULD NOT BE RECOVERED DURING THE YEAR AND WHICH HAS BEEN SETTLED BY NEGOT IATIONS WITH THE INSURANCE COMPANY PURSUANT TO THE IRDA NOTIFICATIONS DURING T HE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. CONSIDERING A LL THESE FACTS, WE AGREE WITH THE ORDER OF THE CIT (A) FOR DELETING THE SAME . 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF OCTOBER, 2013. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 18 TH DAY OF OCTOBER, 2013 TS ITA NO.5479/DEL/2012 4 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI