Income Tax Officer, Ward-4(1), Hyderabad V. Sri Anil Rathi, Hyderabad

ITA 702/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7637 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V RAGHURAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICAL MEMBER ITA.NO.702/HYD/2014 ASSESSMENT YEAR 2010-2011 THE INCOME TAX OFFICER, WARD 4(1) HYDERABAD. VS. SRI ANIL RATHI HYDERABAD PAN ABMPR-3739-E (APPELLANT) (RESPONDENT) FOR REVENUE : MR. SOLGY JOSE T KOTTARAM FOR ASSESSEE : MR. A.V. RAGHURAM DATE OF HEARING : 21.08.2014 DATE OF PRONOUNCEMENT : 03.09.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS REVENUE APPEAL AGAINST THE ORDER OF THE L D. CIT(A)-V, HYDERABAD DATED 31.12.2013 FOR THE A.Y. 2 010-2011. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO DISAL LOWANCE OF PAYMENT OF COMMISSION OF RS.14,84,090/-. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL AND I S HAVING PROPRIETARY CONCERN IN THE NAME OF M/S. ANIL RATHI TRADING CO. SUPPLYING GAS STOVES TO DOMESTIC GAS AGENCIES. IN T HE SCRUTINY ASSESSMENT, A.O. NOTICED THAT ASSESSEE HAS CLAIMED COMMISSION OF THE ABOVE AMOUNT PAYABLE TO VARIOUS AGENTS. THE REA SON FOR DISALLOWANCE WAS THAT ASSESSEE HAD MADE THE ENTRIES AT THE END OF THE YEAR AND ALL OF THEM ARE DOING BUSINESS OF COMM ISSION FOR THE FIRST TIME IN THE FIELD OF BUSINESS OF THE ASSESSEE . A.O. WAS ALSO OF THE OPINION THAT THERE IS NO NEED TO PAY ANY COMMIS SION AND ASSESSEE HAS DEVISED COLOURFUL PLAN TO REDUCE THE T AX LIABILITY. LD. 2 ITA.NO.702/HYD/2014 MR. ANIL RATHI, HYDERABAD CIT(A) HAS CONSIDERED THE DETAILED SUBMISSIONS AND DELETED THE ADDITION BY STATING AS UNDER : 6.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE REASONS STATED BY THE AO IN HIS ASSESSMENT ORDER FOR DISALLOWING THE SUM OF RS.14,8 4,090. I FIND FORCE IN THE SUBMISSIONS OF THE APPELLANT. I A M OF THE VIEW THAT 'THE STAND OF THE AO THAT THE AGENTS HAVE NOT RENDERED ANY SERVICE IS NOT ACCEPTABLE. IN THIS TYP E OF TRADE WHERE ONLY STOVES OF ISI STANDARD IS TO BE SOLD, TH ERE IS NO REQUIREMENT OF HAVING MUCH KNOWLEDGE ABOUT THE SAME . THEY ARE DOMESTIC GAS STOVES AND TO SAY THAT ONE WILL NO T HAVE MUCH KNOWLEDGE ABOUT THE SAME IS NOT CORRECT SINCE EVERYONE IS USING SUCH DOMESTIC GAS STOVES. WITH RE GARD TO STAND OF THE AO THAT MERE PROCURING ORDER DOES NOT AMOUNT TO SERVICE, I DISAGREE. IN THIS LINE OF BUSINESS THERE IS NOTHING MORE REQUIRED. I FIND THAT THE APPELLANT IN THE EAR LIER ASSESSMENT YEAR HAD TURNOVER OF RS.L,08,06,894 WHER EAS IN THIS ASSESSMENT YEAR HAD A TURNOVER OF RS.4,81,60,6 11. AS SUBMITTED BY THE AR OF THE APPELLANT, BEING AN INDI VIDUAL WHO CANNOT GO ROUND PLACES AND ENGAGED THE SERVICES FOR INTRODUCTION APPEARS TO BE CORRECT. IT IS EVERYONE KNOWLEDGE THAT A WHOLESALER HARDLY DOES ANY AFTER SALE SERVIC E AND HENCE THE QUESTION OF ANY FURTHER SERVICE OF THE AG ENT DOES NOT ARISE. THE BUYER OF THE STOVE FROM GAS AGENCY H AS TO GO THE SERVICE CENTRE OF THE BRAND PURCHASED BY HIM OR CALL THE GAS AGENCY FOR SERVICE. I ACCORDINGLY HOLD THAT THE REASONS OF THE AO TO THIS EXTENT IS NOT CORRECT. 6.2. THE OTHER VIEW OF THE AO IS THAT THE APPELLAN T HAS NOT OPENED INDIVIDUAL LEDGERS FOR THE AGENTS AND HA S NOT DEBITED THE SUMS AS AND WHEN SALES TOOK PLACE. THE AO THEREFORE OPINED THAT THE ENTRY AT THE END OF THE Y EAR IS ACCOMMODATION ENTRY. THE AO FURTHER STATED THAT THI S EXPENDITURE IS NOT INCURRED. I FIND FROM THE SUBMIS SIONS AND THE ASSESSMENT ORDER THAT THE APPELLANT HAS IN FACT PAID THE SUM AND DEDUCTED TAX. THE PERSONS WHO RECEIVED THEM ADMITTED THEM IN THEIR INCOME TAX RETURNS. THE APPE LLANT EXPLAINED THE REASONS FOR DEBITING AT THE END OF TH E YEAR TO BE THAT HE ARRIVED AT THE AMOUNT PAYABLE AFTER ASCE RTAINING THE RECEIPTS FOR SALES AND THE NUMBER SOLD. THE PER SONS WHO RECEIVED THEMSELVES STATED THE PERCENTAGE AT WHICH THE COMMISSION IS PAID. MERE ENTRIES AT THE END OF THE YEAR DOES NOT VITIATE THE CLAIM OF THE APPELLANT. IT IS ONLY ONE OF THE WAYS OF ACCOUNTING FOR THE EXPENDITURE. THEREFORE, THIS STAND 3 ITA.NO.702/HYD/2014 MR. ANIL RATHI, HYDERABAD OF THE AO IS NOT CORRECT AND THERE IS EVERY REASON TO HOLD THAT THERE IS COMMISSION PAYMENT. 6.3. THE AO FINALLY STATES THAT THERE IS NO REQUIR EMENT FOR PAYMENT OF COMMISSION IN THIS LINE OF TRADE OF GAS STOVES. HOWEVER, AS STATED BY THE APPELLANT, THE AO HAS NOT BROUGHT ON RECORD ANY COMPARABLE CASE TO HOLD THAT SALES AR E EFFECTED WITHOUT PAYMENT OF COMMISSION. ON THE OTHER HAND, T HE APPELLANT DEMONSTRATED THAT THERE ARE CASES. WHEREI N COMMISSION IS BEING CLAIMED. I AM ALSO OF THE VIEW THAT WITHOUT LOBBYING, A TRADE OF SALE OF GAS STOVES TO GAS AGENCIES IS NOT POSSIBLE AND SUCH LOBBYING CANNOT B E CARRIED OUT WITHOUT MAKING PAYMENT. I THEREFORE HOLD THAT T HE STAND OF THE AO THAT THERE IS NO REQUIREMENT OF PAYMENT O F COMMISSION IN THIS LINE OF TRADE ALSO IS NOT ACCEPT ABLE AND THE APPELLANT IS JUSTIFIED IN MAKING PAYMENT OF COM MISSION. THEREFORE, I DELETE THE ADDITION OF RS.14,84,090 IN CURRED TOWARDS COMMISSION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, EVEN T HOUGH REVENUE HAS RAISED 10 GROUNDS IN THE FORM OF SUBMIS SIONS, WE DO NOT SEE ANY MERIT IN THE REVENUE CONTENTIONS. LD. C IT(A) HAS RIGHTLY OBSERVED THAT THE COMMISSION PAYMENT IS REQ UIRED TO BE ALLOWED ON THE FACTS OF THE CASE. NOTHING WAS BROUG HT ON RECORD EXCEPT THE CONTENTIONS, TO CONTRADICT THE SAME OR T O SUBSTANTIATE THAT THE FINDINGS OF THE LD. CIT(A) ARE PERVERSE. I N VIEW OF THIS, ORDER OF THE LD. CIT(A) IS CONFIRMED AND GROUNDS OF THE REVENUE ARE REJECTED. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.09.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 03 RD SEPTEMBER, 2014 VBP/- 4 ITA.NO.702/HYD/2014 MR. ANIL RATHI, HYDERABAD COPY TO 1. INCOME TAX OFFICER, WARD 4(1), 5 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. MR. ANIL RATHI, PROP. M/S. ANIL RATHI TRADING CO . 1-4-2772/66, 2 ND VENTURE, KAWADIGUDA, HYDERABAD. 3. CIT(A)-V, HYDERABAD 4. CIT-IV, HYDERABAD 5. D.R. B BENCH, ITAT, HYDERABAD.