Shri Rajesh Manikchand Jain, Surat V. The Income tax Officer,Ward-2(3), Surat

ITA 618/AHD/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50756 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAY RAJ KUMAR
• Assessee Lawyers: MANISH MALPANI
• Keywords: Double taxation relief; Corroborative evidences; Avoidance of tax
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI T.K. SHARMA ,JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.618 / AHD/2009 (ASSESSMENT YEAR 2005-06) RAJESH MANIKCHAND JAIN, 22, SANT TUKARAM SOC. RANDER ROAD, B/H NAVYUG COLLEGE, SURAT VS. ITO, WARD 2(3), SURAT PAN/GIR NO. : ABHPJ0574A (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI MANISH MALPANI, AR RESPONDENT BY: SHRI JAYRAJ KUMAR, SR. DR DATE OF HEARING: 05.10.11 DATE OF PRONOUNCEMENT: 20. 10.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) II, SURAT DATED 24.11.2008 FOR THE ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION BY WAY OF DISALLOWANCE OF RS.1,10,20,201/- ATTRIBUTABLE TO FOREIGN AGENTS COMMISSION DEDUCTED FORM EXPORT INVOICES. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) HAS ERRED IN SUSTAINING ADDITION BY WAY OF D ISALLOWANCE OF VARIOUS EXPENSE OF RS.2,57,703/-. 2. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 4 OF HIS ORDER WHICH IS REPRODUCED B ELOW: I.T.A.NO. 618 /AHD/2009 2 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPO RT OF FABRICS THROUGH HIS PROPRIETARY CONCERN, M/S JAIN CREATION. DURING THE YEAR, THE ASSES CLAIMED COMMISSION EXPENSES OF RS 1,10,20 ,201, ALLEGEDLY PAID TO FOREIGN AGENTS. THE RATE OF COMMI SSION WORKED OUT TO 12.50%. FROM THE INVOICES AND THE BANK REALIZATI ON CERTIFICATES (BRCS), THE AO FOUND THAT THE COMMISSION HAD BEEN R EDUCED FROM THE INVOICE VALUES AND THAT, NO REMITTANCE, HAD BEE N MADE FROM INDIA. IT WAS THEREFORE AN EXPENDITURE OF THE FOREI GN BUYER. IT WAS FOR THIS REASON THAT THE ASSES-SEE WAS UNABLE TO PROVID E ANY RELEVANT DETAILS, INCLUDING THE NAMES AND ADDRESSES OF THE S O-CALLED FOREIGN AGENTS OR EVEN THE SERVICES RENDERED. THE AO THEREF ORE ISSUED A SHOW-CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN WH Y THE COMMISSION EXPENSES SHOULD NOT BE DISALLOWED. THE A SSESSEE SUBMITTED THAT THE EXPORT/SALE PROCEEDS HAD BEEN SH OWN AS NET OF COMMISSION WHICH HAD BEEN DEDUCTED BY THE BUYER AT DUBAI. IT WAS THUS NOT IN THE HANDS OF THE ASSESSEE TO DECIDE WHE THER OR NOT COMMISSION WAS TO BE PAID. IT WAS SUBMITTED THAT TH IS WAS THE GENERAL TRADE PRACTICE, AND THEREFORE, NO DISALLOWA NCE SHOULD BE MADE. 4.1 THE AO REJECTED THE ASSESSEE'S SUBMISSIONS. HE OBSERVED THAT IT WAS ONLY ON INQUIRIES REGARDING THE RECEIPTS THAT T HE DEDUCTION OF COMMISSION FROM THE INVOICE VALUES HAD COME TO LIGH T, AND THE ASSESSEE HAD NOT CLAIMED ANY COMMISSION EXPENSE AS SUCH. IN SPITE OF SEVERAL OPPORTUNITIES PROVIDED TO THE ASSESSEE, NO DETAILS HAD BEEN FURNISHED REGARDING THE NATURE OF SERVICES REN DERED BY THE SO CALLED AGENT(S). COMMISSION HAD BEEN DEDUCTED AT TH E RATE OF 12.50% OF THE TOTAL INVOICE VALUES AND YET, THERE W AS NO INDICATION AS TO WHOM THE SAME WAS BEING PAID AND FOR WHAT PUR POSES. THERE WAS NO JUSTIFICATION FOR SUCH DEDUCTION ON ACCOUNT OF COMMISSION ALLEGEDLY PAID TO SOME UNKNOWN AND UNCONFIRMED FORE IGN AGENT FOR SOME SERVICES WHOSE ACTUAL RENDERING WAS NOT ESTABL ISHED. 4.2 IN REPLY, THE ASSESSEE PRESENTED SEVERAL ARGUME NTS, THE SUM AND SUBSTANCE OF WHICH WAS THAT, THE SUM OF RS.1,10,20, 201 WAS NOT IN THE NATURE OF COMMISSION BUT WAS ACTUALLY DISCOUNT ALLOWED TO THE BUYER. THE A.O. REBUTTED THE ASSESSEE'S ARGUMENTS O BSERVING THAT NO COMMISSION COULD BE PAID TO THE BUYER ITSELF AND NO BUYER HAD CONFIRMED THE RECEIPT OF COMMISSION. THE ARGUMENT T HAT .THE RATE OF COMMISSION IS DECIDED AT THE TIME OF EXPORT, AND ON THE BASIS OF THE SAME, THE GROSS INVOICE VALUE IS QUOTED, WAS NOT AC CEPTABLE. IT WAS I.T.A.NO. 618 /AHD/2009 3 ONLY THE NET AMOUNT WHICH SHOULD HAVE BEEN QUOTED I N THE INVOICES. SINCE, IN THE GR FORM SUBMITTED BEFORE THE BANK, TH E ASSESSEE HAD HIMSELF DECLARED THE SAID SUM AS COMMISSION, THERE WAS NO REASON WHY THE ASSESSEE SHOULD NOT HAVE RECOGNIZED THIS SU M IN THE BOOKS OF ACCOUNT UNDER COMMISSION HAD BEEN PAID TO THE BU YER YET, NO EVIDENCE HAD BEEN FURNISHED IN SUPPORT OF SUCH A CL AIM, THE AO THEN ENTERED INTO A DETAILED DISCUSSION THE ACCOUNT ING TREATMENT WHICH THE ASSESSEE SHOULD HAVE GIVEN TO SUE CLAIM IN THE BOOKS OF ACCOUNT. HE THUS OBSERVED THAT EVEN THOUGH COMMISSION HAD BEEN REDUCED FROM THE GROSS INVOICE VALUE, IT WAS I N EFFECT THE NATURE OF EXPENSES WHICH SHOULD HAVE BEEN DEBITED UNDER TH E HE AX COMMISSION ACCOUNT AND THE SALES AMOUNT REDUCED COR RESPONDINGLY. INSTEAD OF PASSING SUCH ENTRIES, THE ASSESSEE HAD O NLY ACCOUNTED FOR THE SALES NET OF THE COMMISSION AMOUNT WITHOUT MAKI NG A SEPARATE ENTRY OF THE COMMISSION CLAIMED TO HAVE BEEN PAID. THUS, THE ASSESSEE HAD MANIPULATED HIS ACCOUNTS SO THAT THE A CCOUNTS STILL BALANCED EVEN THOUGH IT WAS ESSENTIALLY A DISTORTED AND INCORRECT PICTURE OF TRADING AS WELL AS P &L ACCOUNT. BY NE TTING OF1 COMMISSION AGAINST THE SALES, THE ASSESSEE HAD COMP LETELY REMOVED THE OF COMMISSION EXPENDITURE FROM THE PROFIT AND L OSS ACCOUNT. COMMISSION PAYMENTS SHOULD HAVE BEEN ACCOUNTED FOR IN THE SAME WAY AND MANNER TRADE DISCOUNT IS ACCOUNTED FOR, WHICH IS ALSO NETTED OUT FROM PURCHASES/SALES AND YET, A SEPARATE CORRESPONDING ENTRY IS MADE UNDER HEAD OF TRADE DIS COUNT'. MOREOVER, AN ENTRY IN THE P&L ACCOUNT CAN BE N OFF ONLY WITH ANOTHER ENTRY IN THE P&.L ACCOUNT BUT NEVER AGAINST AN EN THE TRADING ACCOUNT. THE ENTRIES PASSED BY THE ASSESSEE WERE THUS BLATANTLY INCORRECT AND HENCE MISLEADING, WHICH COULD MAKE TH E BOOKS OF ACCOUNT TO REJECTION U/S.145 OF THE IT ACT. UNDER THE PROVISIONS OF SEC. 44AB ASSESSEE WAS REQUIRED TO SHOW EITHER THE 'TOTAL SALES' OR THE 'GROSS RECEIPT. BY SHOWING THE SALES AT NET VA LUE, THE ASSESSEE HAD VIOLATED THE PROVISION THE SAID SECTION. 4.3 REBUTTING THE ASSESSEE'S ARGUMENT THAT HE COULD NOT BE TAXED ON WHAT HE HAD NOT RECEIVED, THE AO OBSERVED THAT THE ASSESSEE WAS TO BE TAXED ON HIS TOTAL INCOME, WHICH IS DEFINED UNDE R SEC.5 OF THE IT ACT. THE ASSESSEE WAS TO BE TAXED ON HIS TOTAL INCO ME ON ACCRUAL BASIS, EVEN IF HE C RECEIVE SUCH INCOME. THEREFORE, IT WAS NOT RELEVANT FOR THE PURPOSE OF TAXATION AS TO WHETHER OR NOT THE ASSESSEE HAD SHOWN OR HAD C EXPENDITURE ON ACCOUNT OF COMMIS SION IN THE P&L A/C. THE EFFECT EXPENSES HAD ALREADY BEEN REFLE CTED IN THE I.T.A.NO. 618 /AHD/2009 4 SALES. THUS, REJECTING THE METHOD OF ACCOUNTING ADO PTED BY THE ASSESSEE, THE AO RECAST THE TRADING AND P&L A/C. IN ANNEXURE IV TO THE ASSESSMENT ORDER. AT THE SAME TIME, SINCE TH E ASSESSEE HAD FAILED TO SATISFY THE TEST OF COMPLETENESS AND CORR ECTNESS OF THE ACCOUNTS AS REQUIRED U/S.145 OF THE IT ACT, THE AO REJECTED THE ASSESSEE'S ACCOUNTS UNDER THE PROVISIONS OF SEC. 14 5(3). 4.4 THE AO THEN OBSERVED THAT SINCE THE ASSESSEE HA D ALLEGEDLY MADE PAYMENT OF COMMISSION OUTSIDE THE JURISDICTION AL TERRITORY OF INDIA, SUCH PAYMENT WOULD BE SUBJECT TO THE COMMERC IAL AGENCY LAW OF THE COUNTRY TO WHICH THE GOODS HAD BEEN EXPO RTED. SINCE MOST OF THE EXPORTS WERE MADE TO THE UAE, THE UAE C OMMERCIAL AGENCIES LAW (FEDERAL LAW NO. 18 OF 1981 AS AMENDED BY THE FEDERAL LAW NO. 14 OF 1988) WOULD COVER THE APPOINT MENT OF COMMERCIAL AGENT IN THE SAID COUNTRY. AS PER THE SA ID LAW, THERE ARE CERTAIN REQUIREMENTS AND CHARACTERISTICS OF COMMISS ION AGENCIES IN THE SAID COUNTRY WHICH THE AO LISTED OUT IN THE ASS ESSMENT ORDER, AND RECORDED THE PROCEDURES AND CONDITIONS FOR THE APPOINTMENT OF SUCH COMMERCIAL AGENTS. HE ALSO LISTED OUT THE COND ITIONS THAT HAVE TO BE SATISFIED IF THE AGENCY AGREEMENT IS SIGNED O UTSIDE THE UAE. THE AO THUS NOTED, THAT THE ASSESSEE HAD NOT FOLLOW ED OR COMPLIED WITH ANY OF SUCH REQUIREMENTS IN CASES OF THE EXPOR TS MADE TO THE UAE. NEITHER HAD ANY AGENCY AGREEMENT BEEN PRODUCED NOR HAD COMPLETE DETAILS OF THE AGENT BEEN FURNISHED. THE A SSESSEE HAD THUS VIOLATED THE LAW OF THE LAND OF THE UAE AND CONSEQU ENTLY, THE EXPENDITURE ON ACCOUNT OF COMMISSION PAYMENT WAS NO T ALLOWABLE UNDER THE EXPLANATION TO SEC. 37 (1) OF THE IT ACT. REFERRING TO THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND THE UAE THE AO NOTED THAT WHILE SHOWING COMMISSION PAYMENT TO AGENTS IN THE UAE THE ASSESSEE HAD REDUCED HIS TAXA BLE INCOME WHILE THE CORRESPONDING INCOME IN THE HANDS OF THE AGENTS IN THE UAE, WAS NOT TAXABLE AS PER THE EXISTING LAW OF THE LAND. THEREFORE, SUCH AMOUNT HAD ESCAPED TAX IN BOTH THE COUNTRIES, WHICH AS PER THE SPIRIT OF THE DTAA, WAS TO BE PREVENTED. 4.5 NEXT, THE AO FOCUSED ON THE ALLOWABILITY ON SUCH COMMISSION PAYMENT TERMS OF SEC. 37 OF THE IT ACT, AS PER WHIC H, SUCH PAYMENT COULD BE MADE ONLY AGAINST THE RENDERING OF SERVICE S. 'SINCE, THE ASSESSEE HAD CLAIMED TO HAVE PAID THE COMMISSION BY DEDUCTING IT FROM THE INVOICE VALUE ITSELF, THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THAT SERVICES WERE ACTUALLY RENDERED BY T HE SO-CALLED I.T.A.NO. 618 /AHD/2009 5 AGENTS, AND THAT, THE ASSESSEE'S BUSINESS HAD DERIV ED BENEFIT FROM SUCH SERVICES. ONLY IN SUCH A SITUATION COULD THE C OMMISSION EXPENDITURE BE TREATED AS WHOLLY AND EXCLUSIVELY IN CURRED FOR THE PURPOSE OF BUSINESS. ON THE OTHER HAND, THE PERSON RECEIVING THE COMMISSION OUGHT TO HAVE PROVED AND ESTABLISHED THA T THE SERVICES RENDERED BY HIM HAD SERVED TO INCREASE THE BUSINESS PROSPECTS OF THE ASSESSEE. THIS, BOTH THE ASSESSEE AND THE AGENTS HA D FAILED TO ESTABLISH. THE SIMPLE PAYMENT OF COMMISSION DID NOT SUCCEED IN ESTABLISHING ITS RELEVANCE FOR THE ASSESSEE'S BUSIN ESS. IN SUPPORT OF SUCH A VIEW OF THE MATTER, THE AO PLACED RELIANCE O N SEVERAL CASE LAWS. FINALLY, THE AO CAME TO THE CONCLUSION THAT T HE ASSESSEE HAD FAILED TO PROVE THE EXACT NATURE OF THE SERVICES PR OVIDED BY THE SO- CALLED COMMISSION AGENTS AND THEREBY HAD FAILED TO ESTABLISH THAT THE EXPENDITURE INCURRED HAD BEEN WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS. THE ASSESSEE HAD ALSO FAILED T O ESTABLISH THAT THE COMMISSION HAD BEEN ACTUALLY PAID TO THE ALLEGE D FOREIGN AGENTS. THE AO THEREFORE, TREATED THE ALLEGED COMMISSION PA YMENTS TOTALLING OF RS.1,10,20,201 AS INCOME OF THE ASSESS EE FOR THE YEAR IN QUESTION. 4.6 THE AO THEN PRESENTED AN ALTERNAT E ARGUMENT REFERRING TO THE PROVISIONS OF SEC.93 R.W. THE EXPLANATION BELOW, AND OBSERVED THAT BY TRANSFERRING TEXT ILE GOODS THROUGH EXPORT, TO A NON-RESIDENT BUYER, INCOME HAD ACCRUED TO THE ASSESSEE. BY ALLOWING COMMISSION FROM THE INVOICE VALUE TO TH E NON RESIDENT AGENT, THE ASSESSEE HAD FOREGONE ITS INCOME WHICH H ; THUS ACCRUED TO THE NON-RESIDENT. BY ALLOWING COMMISSION, THE ASSE SS BECAME ENTITLED FOR EXTRA DEPB. THE ASSESSEE HAD THUS NOT ONLY OBTAINED T BENEFIT BUT ALSO GOT INTO A POSITION TO CONTROL THE APPLICATION OF THE INCOME THE FOREIGN BUYER HAD PAID THE COMMISSION ON BEHALF OF THE ASSESSEE. THUS THE ASSESSEE HAD ARRANGED HIS AFFA IRS IN SUCH A MANNER THAT WHAT WOULD H; BEEN HIS INCOME, HAD BECO ME THE INCOME OF A NON-RESIDENT. HOWEVER, ASSESSEE COULD HAVE ESCAPED BEING HIT BY THE PROVISIONS OF SEC. 93(1) ONLY IT COULD BE SHOWN UNDER SUB SEC.(3) THAT THE TRANSFER AND ALL ASSOCIATE OPERA TIONS WERE BONA FIDE COMMERCIAL TRANSACTIONS AND WAS NOT FOR THE PURPOSE OF AVOIDANCE OF TAX LIABILITY. THIS HOWEVER, THE ASSE SSEE HAD FAILED ESTABLISH, ESPECIALLY THAT THE PAYMENT OF COMMISS ION TO THE AGENT BONA FIDE AND WAS NOT DESIGNED FOR THE PURPOSE OF A VOIDING TAX LIABILITY AO THEREFORE, DISALLOWED THE COMMISSION PAYMENT I.T.A.NO. 618 /AHD/2009 6 TO THE TO RS 1,10,20,201 AND TREATED THE SAME AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SEC. 93 OF THE IT ACT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS ADDITION AND NOW, T HE REVENUE IS IN APPEAL BEFORE US. LD. D.R. SUPPORTED THE ASSESSMEN T ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). IT IS ALSO SUBMITTED BY HIM THAT HIS ISSUE IS NOW FULLY COVERED IN FAVOUR OF THE ASS ESSEE BY THE FOLLOWING TRIBUNAL DECISIONS: I) SHRI SANJAY JAIN I.T.A.NO. 1533/AHD/2008 DATED 1 6.12.2009 PAGES 1-10 OF THE PAPER BOOK II) SHRI NARENDRA MODH I.T.A.NO. 453/AHD/2009 DATED 11.6.2010 PAGES 11-17 OF THE PAPER BOOK. III) M/S. RACHNA EXPORTS I.T.A.NO. 3791/AHD/2007 DA TED 24.3.2010 PAGES 18-43 OF THE PAPER BOOK. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND HAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS TRIBUNAL DECISIONS CITED BY THE LD. A.R. THE FACTS ARE IDENTICAL IN THE PRESENT CASE AND IN THESE CASES CITED BY LD. A.R. THE RELEVANT PARA 9-12 IN THE TRIBUNAL ORDER RENDERED IN THESE OF SANJAY J AIN ARE REPRODUCED BELOW: 9. IN FACT, IN THE SITUATION OF THE CASE, AS STATE D IN THE ABOVE PARAGRAPH, IT IS TO BE SEEN THAT THE EXPORT SALE PR OCEEDS RECEIVED BY THE ASSESSEE WAS NET AMOUNT ALONE AND NOT THE GROSS AMOUNT. IT IS ALSO TO BE SEEN THAT THE FOREIGN BUYER IS NOT BOUND TO PAY TO THE ASSESSEE THE AMOUNT COVERED BY THE COMMISSION OR DI SCOUNT AT ANY FUTURE DATE. THEREFORE, THE RIGHT/CLAIM OF THE ASSE SSEE IN RESPECT OF THE EXPORT SALES WAS TO RECEIVE ONLY THE NET INVOIC E AMOUNT AND NOTHING MORE. THEREFORE, THERE IS NOTHING LEFT OVER BY WAY OF BALANCE TO BE TREATED AS INCOME ACCRUING OR ARISING TO THE ASSESSEE OUTSIDE INDIA BY VIRTUE OF THE IMPUGNED EXPORT SALE S. THE ENTIRE INCOME ATTRIBUTABLE TO THE EXPORT SALES WERE ALREAD Y RECEIVED BY THE I.T.A.NO. 618 /AHD/2009 7 ASSESSEE IN INDIA IN THE FORM OF CONVERTIBLE FOREIG N EXCHANGE. THIS POSITION IS PROVED BY THE CERTIFICATES ISSUED BY TH E BANKERS AS WELL AS LETTERS OF CREDIT OPENED BY THE FOREIGN BUYERS. WHEN THE ASSESSEE HAS RECEIVED ONLY THE NET PROCEEDS AS PER THE INVOI CE, THERE IS NOTHING FURTHER LEFT OVER TO BE TREATED AS INCOME R ECEIVED OR TO BE RECEIVED OR ACCRUED OR DEEMED TO BE ACCRUED OR ARIS ING IN INDIA OR OUTSIDE INDIA. THEREFORE, THE RELIANCE PLACED BY TH E LOWER AUTHORITIES ON THE SECTION 5 OF THE INCOME TAX ACT IS RATHER MISLEADING. 10. AS THE ASSESSEE HAS NOT PAID TO THE FOREIGN BUYERS ANY AMOUNT BY WAY OF COMMISSION, BUT IT WAS ONLY ADJUSTMENT TH ROUGH THE EXPORT INVOICES BY WAY OF COMMISSION/DISCOUNT, SECT ION 94H ALSO HAD NO ROLE TO PLAY. THEREFORE, WE FIND THAT ALL THE DISCUSSIONS MADE BY THE LOWER AUTHORITIES TO MAKE ADDITIONS OF THE COMMISSION AMOUNT WERE BASED ON HYPOTHESIS AND NOT ON ANY FACT S PROVED. WHEN THE ASSESSEE HAD NO ADDITIONAL AMOUNT TO BE RE CEIVED FROM THE FOREIGN BUYERS, NO QUESTION OF ADDITIONAL INCOM E ARISES. THE INCOME OF THE ASSESSEE IS FULLY EMBEDDED IN THE NET SALE PROCEEDS RECEIVED AND ACCOUNTED BY HIM. WHEN THE INCOME ITSE LF IS NOT GENERATED, THERE IS NO QUESTION OF SUCH INCOME BECO MING ACCRUED OR DUE. WHEN THERE IS NOTHING LEFT OVER TO BE FURTH ER RECEIVED BY THE ASSESSEE, THERE IS NO QUESTION OF ANY INCOME AR ISING IN THE HANDS OF THE ASSESSEE. ATTRIBUTABLE TO THE QUANTUM OF COMMISSION RECORDED IN THE INVOICE, THEREFORE, WE FIND THAT TH E ENTIRE DISCUSSIONS, BUT WELL MADE BY THE LOWER AUTHORITIES , HAVE BEEN MADE UNFORTUNATELY IN A WRONG DIRECTION. 11. WHEN THE FACTUM OF ACTUAL RECEIPT OF SALE PROCE EDS TO THE EXTENT OF NET INVOICE AMOUNT IS ESTABLISHED BEYOND ANY DOU BT, THERE IS NO JUSTIFICATION IN OVERLOOKING UPON THOSE SPEAKING FA CTS ON THE TECHNICAL GROUND THAT THE ASSESSEE HAS CLAIMED THE DEPB BENEFIT ON THE GROSS AMOUNT OF THE INVOICE. THE DEPB CLAIM WAS MADE BY THE ASSESSEE ON THE BASIS OF PERMISSION GRANTED BY THE RBI AND THAT HAS NOTHING TO DO WITH THE ACTUAL AMOUNT OF EXPORT SALES PROCEEDS RECEIVED BY THE ASSESSEE IN THE FORM OF CONVERTIBLE FOREIGN EXCHANGE. 12. THEREFORE, IT IS QUITE OBVIOUS WITHOUT MUCH DIS CUSSION AND DELIBERATION THAT THE REVENUE HAS NO CASE TO HOLD T HE ASSESSEE I.T.A.NO. 618 /AHD/2009 8 RESPONSIBLE FOR AN ADDITIONAL INCOME OF RS.1,42,31, 458. THE SAID ADDITION IS ACCORDINGLY DELETED. 4. IN THE PRESENT CASE ALSO, THERE IS NO DISPUTE TH AT THE COMMISSION WAS DEDUCTED FROM THE INVOICE VALUE AND ONLY NET AM OUNT WAS RECEIVED BY THE ASSESSEE FROM THE BUYER. HENCE, THERE IS NO DIFFERENCE IN FACTS AND THEREFORE, BY RESPECTFULLY FOLLOWING THE VARIOUS TR IBUNAL ORDERS CITED BY THE LD. A.R., WE HOLD THAT THE ADDITION MADE BY THE A.O. IS NOT JUSTIFIED AND THE SAME IS DELETED. GROUND NO.1 OF THE ASSES SEE IS ALLOWED. 5. REGARDING GROUND NO.2, WE FIND HAT IT IS NOTED B Y THE A.O. IN PARA 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DEB ITED EXPENSES OF RS.12,88,513/- UNDER VARIOUS HEADS. HE FURTHER NO TED THAT ON BEING ASKED TO SUBMIT RELEVANT BOOKS OF ACCOUNTS AND OTHE R SUPPORTING EVIDENCE, ASSESSEE TOOK THE PLEA THAT ALL THE BOOKS OF ACCOUNTS WITH PAPERS ETC. WERE DROWNED IN DISASTROUS FLOOD THAT CAME IN THE CITY OF SURAT. THE A.O. ISSUED SHOW CAUSE NOTICE ASKING THE ASSESSEE T O SHOW CAUSE AS TO WHY FOR WANT OF DETAILS AND SUPPORTING EVIDENCES, 2 0% OF EXPENSES SHOULD NOT BE DISALLOWED. THE A.O. FURTHER NOTED T HAT IN RESPONSE TO THIS, ASSESSEE HAS NOT SUBMITTED ANY SATISFACTORY REPLY. THE A.O. THEN MADE DISALLOWANCE OF 20% OF THE TOTAL EXPENSES AND MADE ADDITION OF RS.2,57,703/-. BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. 6. LD. A.R. OF THE ASSESSEE REITERATED THE SAME ARG UMENTS WHICH WERE RAISED BEFORE THE AUTHORITIES BELOW. LD. D.R. OF T HE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND I.T.A.NO. 618 /AHD/2009 9 THAT A CLEAR FINDING IS GIVEN BY LD. CIT(A) IN PARA 10 OF HIS ORDER THAT THERE IS ABSOLUTELY NO EVIDENCE TO SHOW THAT THE AS SESSEES BOOKS AND OTHER RECORDS HAVE BEEN DESTROYED IN THE FLOOD IN A UG. 2006. HE HAS GIVEN A CLEAR FINDING THAT THERE WAS NO FIR FILED, NO INSURANCE CLAIM LODGED, NO PHOTOGRAPHS TAKEN, NO ASSESSMENT MADE BY SMC OR BY THE CONCERNED TRADE ORGANIZATION TO WHICH THE ASSESSEE BELONGS. HE HAS GIVEN A FINDING THAT THESE WERE THE EVIDENCES PRODU CED BY THE PEOPLE WHO HAD ACTUALLY SUFFERED SUCH LOSS. THE ASSESSEE HAS FAILED TO PRODUCE AN IOTA OF EVIDENCE TO SUBSTANTIATE HIS CLAIM OF LOSS. ON THIS BASIS, HE CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE. BEFO RE US ALSO, NO SUCH EVIDENCE HAS BEEN MADE AVAILABLE AND HENCE, WE DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISS UE. THIS GROUND OF THE ASSESSEE IS REJECTED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PAR TLY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCT., 2011. SD./- SD./- (T.K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 20 TH OCT., 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 618 /AHD/2009 10 1. DATE OF DICTATION 17/10 2. DATE ON WHICH THE TYPED. DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18/10OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.19/10 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 20/10 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.20/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20/10/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..