M/s. Tirupati Biotech Ltd., New Delhi V. ITO, New Delhi

ITA 6529/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7232 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 22-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: SAURABH GOYAL
• Keywords: Business income; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH (SMC - II), NEW DELHI BEFORE : SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO. 6529/DEL./2014 ASSTT. YEAR : 2011 - 12 TIRUPATI BIOTECH LTD., VS. INCOME - TAX OFFICER, D - 14, 2 ND FLOOR, PREET VIHAR, WARD 16(3), NEW DELHI. NEW DELHI. (PAN: AABCT2560N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT GOYAL, CA & SHRI SAURABH GOYAL, CA RESPONDENT BY : SHRI AMRIT LAL, SR. DR DATE OF HEARING : 23.08.2016 DATE OF PRONOUNCEMENT : 30 .08.2016 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 04.08.2014 OF CIT(A) - 19, NEW DELHI. THE ONLY GROUND IN THIS APPEAL RELATES TO THE CONFIRMATION OF ADDITION OF RS.7,00,000/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF COMMISSION PAID. 2. THE FACTS OF THE CASE, IN BRIEF, ARE TH AT THE ASSESSEE FILED RETURN OF INCOME ON 16.09.2011 , DECLARING TOTAL INCOME OF RS.13,75,940/ - , WHICH WAS PROCESSED U/S. 143(1) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). ITA NO. 6529 /DEL./201 4 2 LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.7,00,000/ - TO ITS PROFIT AND LOSS ACCOUNT UNDER THE HEAD COMMISSION PAID . HE ASKED THE ASSESSEE TO JUSTIFY THE ALLOWABILITY OF THIS COMMISSION. IN RESPONSE, THE A SSESSEE SUBMITTED THAT THE COMMISSION WAS PAID TO RENU NARANG AND MISHRA REALTORS ON WHICH TDS HAD BEEN DEDUCTED AND THE AMOUNT WAS PAID FOR BUSINESS TRANSACTION RELATING TO BROKERAGE FOR ANSAL PROPERTY DEAL. THE AO OBSERVED THAT THE ASSESSEE STATED THAT T HE PAYMENT WAS MADE FOR BUSINESS TRANSACTION WHEREAS IT HAD NOT DECLARED ANY BUSINESS INCOME. ACCORDINGLY, THE AMOUNT OF RS.7,00,000/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. C IT(A) AND SUBMITTED THAT THE PAYMENT TO REAL ESTATE AGENTS WERE MADE THROUGH PROPER BANKING CHANNEL AND TDS @ 10% WAS DEDUCTED . IT WAS FURTHER STATED THAT THE COMMISSION WAS PAID IN RESPECT OF MEMORANDUM OF UNDERSTANDING (MOU) WITH M/S. ANSAL HOUSING & CON STRUCTION LTD. COPY OF THE SAID MOU WAS FURNISHED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE MOU WITH M/S. ANSAL HOUSING & CONSTRUCTION LTD. DID NOT MENTION THE PERSONS TO WHOM THE COMMISSION HAS BEEN PAID AND THERE IS ITA NO. 6529 /DEL./201 4 3 NOTHING TO SUGGEST THAT ANY SERVICES WERE RENDERED BY THOSE PERSONS. THEREFORE, HE CONFIRMED THE ACTION OF THE AO. NOW, THE ASSESSEE IS IN APPEAL. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FU RTHER SUBMITTED THAT THE COMMISSION WAS PAID IN ACCORDANCE WITH THE PROVISIONS IN MOU ENTERED BY THE ASSESSEE WITH M/S. ANSAL HOUSING & CONSTRUCTION LTD. AND IN THE SAID MOU, THERE IS NO PROVISION TO MENTION THE NAME OF THE PERSONS TO WHOM THE COMMISSION W AS TO BE PAID. 5. IN HIS RIVAL SUBMISSIONS, THE LD. DR REITERATED THE OBSERVATIONS MADE BY THE AO AND THE LD. CIT(A) AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 6. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFUL LY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSEE CLAIMED THAT THE COMMISSION WAS PAID AS PER MOU WITH M/S. ANSAL HOUSING & CONSTRUCTION LTD., BUT THAT MOU WAS NOT FURNISHED BEFORE THE AO. THE LD. CIT(A ) SUSTAINED THE ADDITION MADE BY THE AO ONLY ON THIS BASIS THAT THE NAME OF THE PERSONS TO WHOM THE COMMISSION HAD BEEN PAID, WERE NOT MENTIONED IN THE MOU. NO OTHER REASON HAS BEEN GIVEN. IT IS ALSO NOT CLEAR ITA NO. 6529 /DEL./201 4 4 AS TO WHETHER ANY DETAIL S OF THE SERVICES REND ERED BY THE PERSONS TO WHOM THE COMMISSION WAS PAID, HAD BEEN ASKED BY THE AO. THEREFORE, THE FACTS OF THE CASE ARE NOT CLEAR AND IT DESERVES TO BE SET ASIDE TO THE AO FOR FRESH ADJUDICATION. ACCORDINGLY, THE ISSUE UNDER CONSIDERATION IS SET ASIDE TO THE F ILE OF AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2016 . SD/ - ( N.K. SAINI ) ACCOUNTANT MEMBER DATED : 30.08.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI