M/s. Palvi Power Tech Sales Pvt.Ltd., Ahmedabad V. The ACIT.,Circle-4, Baroda

ITA 88/AHD/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9871 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: U S BHATI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.88/AHD/2014 / ASSTT. YEAR: 2010-2011 M/S.PALVI POWER TECH SALES PVT. LTD. 228, ARPAN COMPLEX NIZAMPURA MAIN ROAD BARODA 390 002. PAN : AADCP 8242NK VS. ACIT, CIR.4 BARODA. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI U.S. BHATI, AR REVENUE BY : SHRI JAMES KURIAN, SR.DR / DATE OF HEARING : 03/10/2016 / DATE OF PRONOUNCEMENT: 30/11/2016 +,/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST T HE ORDER OF THE LD.CIT(A)-III, BARODA DATED 21.10.2013 PASSED FOR T HE ASSTT.YEAR 2010-11. 2. SOLITARY SUBSTANTIAL GRIEVANCE OF THE ASSESSEE I S THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISSION PAID ON SALES AMOUNTING TO RS.20,07,294/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 11.9.2010 DECLARING TOTAL INCOME AT RS.86,83,905/-. THE ITA NO.88/AHD/2014 2 ASSESSEE WAS ENGAGED IN EXPORT OF CHEMICALS. THE A SSESSEE HAD PAID A SUM OF RS.1,14,71,228/- AS SALES COMMISSION. A SUM OF RS. 20,07,294/- OUT OF TOTAL AMOUNT WAS PAID TO TWO PERSONS. ACCORDING TO THE A O THEY ARE RELATIVES OF THE ASSESSEE. THELD.AO HAS NOTICED THE PAYMENT OF COMMISSION OF RS.9,55,206/- TO SHRI JASMINE BIPINCHANDRA LALA AND RS.10,52,088/- TO SHRI SEJAL DHAVAL LALA. SHE IS ALSO SISTER OF THE DIREC TOR. ACCORDING TO THE AO, THE ASSESSEE FAILED TO BRING ANY DEMONSTRATIVE EVIDENCE ABOUT THE NATURE OF SERVICE RENDERED BY THEM. HE FURTHER OBSERVED THAT IN THE ASSTT.YEAR 2009- 10, SIMILAR COMMISSION WAS DISALLOWED TO THE ASSESS EE, AND THE CIT(A) HAS ALSO UPHELD THE DISALLOWANCE. THE LD.AO HAS MADE R EFERENCE TO THE ORDER OF THE LD.CIT(A) DATED 21.6.2012 PASSED FOR THE ASSTT. YAR 2009-10. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE . 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT IN THE ASSTT.YEAR 2009-10, THIS DISALLOWANCE WAS CHALLENGE D BEFORE THE TRIBUNAL, AND THE TRIBUNAL HAS DELETED THE DISALLOWANCE. THE REFORE, THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE. 5. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT APA RT FROM PUTTING RELIANCE ON THE ORDER FOR THE ASSTT.YEAR 2009-10, T HE AO HAS FURTHER OBSERVED THAT THE ASSESSEE FAILED TO PROVE THE NATURE OF SER VICES RENDERED BY THESE PERSONS. HE FURTHER POINTED OUT THAT THE ASSESSEE FAILED TO EXPLAIN THE QUALIFICATION OF THESE PERSONS BY VIRTUE OF THAT TH EY WERE IN A POSITION TO CARRY OUT WORK AS CLAIMED BY THE ASSESSEE. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE TRIBUNAL HAS RECORDED THE FOLLOWING FINDING ON THIS ISSUE IN ITA NO.1891/AHD/2012. ITA NO.88/AHD/2014 3 14. WE FIND THAT THE CONFIRMATION OF M/S. GUNATIT BUILDERS WHICH IS PLACED AT PAGE NO. 131 OF THE PAPER BOOK FILED BY T HE ASSESSEE SHOWS THAT MR. BIPINCHANDRA N. ATTAWALA WAS INSTRUMENTAL IN ENTERING OF CONTRACT BETWEEN THE ASSESSEE COMPANY AND M/S. GUNA TIT BUILDERS. FURTHER, WE FIND THAT THE ASSESSEE COMPANY CLAIMED THAT THE BUSINESS PROPOSAL OF SETTING UP OF GALVANIZED PLANTS IN UAE AND IRAQ WAS BROUGHT TO IT BY MR. BIPINCHANDRA N. ATTAWALA, MS. JASMINE B. LALA & MS. SEJAL DHAVAL LALA AND THEY ASSISTED THE ASSESSE E COMPANY IN ENTERING INTO CONTRACT WITH M/S. GUNATIT BUILDERS A LSO FOR EXECUTING THE CONTRACT AND SETTING UP GALVANIZED PLANTS. 15. WE F IND THAT THE REVENUE HAS BROUGHT NO POSITIVE MATERIAL ON RECORD TO CONTR OVERT THE ABOVE CLAIM OF THE ASSESSEE COMPANY. MERELY BECAUSE IN TH E LEGAL CONTRACT WHICH WAS DIRECTLY ENTERED INTO BETWEEN THE ASSESSE E COMPANY AND AZADY TRADING FZCO AND PIONEER MACHINERY & EQUIPMEN T INDUSTRY LLC, THE NAMES OF THESE THREE PERSONS DID NOT APPEA R, DOES NOT EVIDENCE THAT THE BUSINESS PROPOSAL WAS NOT BROUGHT TO THE ASSESSEE COMPANY BY THESE THREE COMPANIES. FURTHER, IT WAS N OT NECESSARY FOR THESE THREE PERSONS TO PHYSICALLY VISIT IRAQ BEFORE BRINGING A BUSINESS PROPOSAL IN IRAQ TO THE KNOWLEDGE OF THE KNOWLEDGE OF THE COMPANY. IN ABSENCE OF ANY POSITIVE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER AFTER EXAMINING THE THREE RECIPIENTS OF THE COMMISSION TO SHOW THAT IN FACT NO SERVICES WERE RENDERED BY THESE THR EE PERSONS, IN OUR CONSIDERED VIEW, THE ADVERSE INFERENCE DRAWN BY THE ASSESSING OFFICER ON THE BASIS OF HIS SUBJECTIVE OPINION ONLY CANNOT BE SUSTAINED. 16. IN THE INSTANT CASE, THE GENUINENESS OF PAYMENT IS NOT IN DOUBT AS THE PAYMENT WAS MADE THROUGH BANKING CHANNEL AFTER DEDUCTING TAX AT SOURCE THEREFROM AND THE RECIPIENTS OF COMMISSION H AVE ALSO SHOWN THE SAME AS THEIR INCOME. THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF SWASTIK TEXTILE CO. PVT. LIMITED V/S CIT (SUPRA) HA S HELD THAT COMMISSION WAS ALLOWABLE AS DEDUCTION WHERE THE REV ENUE HAD FAILED TO CONTROVERT THE BROKER'S STATEMENT THAT HE HAD BR OUGHT THE PARTIES OF CONTRACT TOGETHER. IN THE CIRCUMSTANCES, IN OUR CON SIDERED VIEW, THE DISALLOWANCE OF COMMISSION PAYMENT OF RS 23,14,705/ - CANNOT BE SUSTAINED. WE THEREFORE, DELETE THE DISALLOWANCE OF RS 23,14,705/- AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 7. THE TRIBUNAL IN THE ASSTT.YEAR 2009-10 HAS RECOR DED A FINDING THAT THE PROPOSAL OF SETTING UP OF A GALVANIZED PLANT IN UAE AND IRAQ WAS BROUGHT TO THE ASSESSEE BY MR. BIPINCHANDRA N. ATTAWALA, MS. J ASMINE B. LALA AND MS. ITA NO.88/AHD/2014 4 SEJAL DHAVAL LALA. THEIR QUALIFICATION WAS NOT DOU BTED IN THE ASSTT.YEAR 2009-10, AND THE ASSESSEE HAS DEDUCTED TDS. THESE RECIPIENTS HAVE OFFERED THE AMOUNT FOR TAXATION. COPY OF THE RETURN OF MS. JASMINE B. LALA HAS BEEN PLACED AT PAGE NO.38. THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. SINCE THE AO HIMSELF HAS NOT ALLEGED DIS PARITY OF FACTS, HE RELIED UPON THE ORDER OF THE LD.CIT(A) IN THE ASSTT.YEAR 2 009-10. THEREFORE, IN OUR OPINION, THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE AND DISALLOWANCE CANNOT BE CONFIRMED MERELY ON THE GROU ND THAT THE ASSESSEE FAILED TO PRODUCE QUALIFICATION OF THE RECIPIENTS. THIS TYPE OF INFORMATION WAS NOT CALLED FOR BY THE AO DURING THE ASSESSMENT PROC EEDINGS. WE ALLOW APPEAL OF THE ASSESSEE AND DELETE DISALLOWANCE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER