M/s. Safal Organisers, Ahmedabad V. The Addl.CIT.,Range-9, Ahmedabad

ITA 882/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80474 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 23-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA. NO. 882/AHD/2011 (ASSESSMENT YEAR:2007-08) M/S. SAFAL ORGANISERS 4 TH FLOOR, SATHIK ANNEXURE, FUN REPUBLIC, SATELLITE ROAD, AHMADABAD 380015 APP ELLANT VS. ADD. CIT, RANGE 9, AHMADABAD AHMEDABAD RESPONDENT & I. T.A. NO. 1092/AHD/2011 (ASSESSMENT YEAR: 2007-08) ADD. CIT, RANGE 9, AHMADABAD AHMEDABAD APP ELLANT VS. M/S. SAFAL ORGANISERS 4 TH FLOOR, SATHIK ANNEXURE, FUN REPUBLIC, SATELLITE ROAD, AHMADABAD 380015 RESPONDENT I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 2 PAN: ABAFS9404R / BY REVENUE :SHRI B. L. YADAV, SR. D.R. / BY ASSESSEE : SHRI VIJAY RANJAN, A.R. /DATE OF HEARING :28.10.2014 !'# /DATE OF PRONOUNCEMENT : 31.10.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE CROSS APPEALS ARE ARISING OUT FORM THE ORDER OF CIT(A)-XV, AHMEDABAD, DATED 25.01.2011 FOR THE ASSE SSMENT YEAR 2007-08. SO, THEY ARE BEING DISPOSED OF BY WA Y OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 882/AHD/2011, ASSESSEE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN CONSIDERING IT A CASE FIT FOR SOME DISALLOWANCE FRO M THE BROKERAGE EXPENSES CLAIMED BY THE ASSESSEE FIRM . 2. WITHOUT PREJUDICE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN QUANTIFYING SUCH DISALLOWANCE IN A SUM OF RS.11,51,800/-. I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 3 2. IN I.T.A. NO. 1092/AHD/2011, REVENUE HAS FILED T HE APPEAL ON THE FOLLOWING GROUNDS: 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMADABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.16,34,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BROKERAGE EXPENSES. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMADABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 2. ASSESSED FIRM IS IN BUSINESS, INTER ALIA, OF DEV ELOPING AND SELLING IMMOVABLE PROPERTIES. ASSESSING OFFICER MAD E DISALLOWANCE OF BROKERAGE PAYMENT OF RS.24,80,000/- . OUT OF TOTAL BROKERAGE EXPENSES OF RS.27,85,800/- CLAIMED BY ASSESSEE FOR BOOKING UNITS IN SARTHIK SQUARE SCHE ME. ASSESSING OFFICER STATED THAT THIS AMOUNT WAS CREDI TED IN THE ACCOUNTS OF ALLEGED BROKERS IN THE MONTH OF MARCH 2 007 BY DEBITING THE BROKERAGE AMOUNT. IT HAS ALSO BEEN ST ATED BY ASSESSING OFFICER THAT THE TWO MEMBERS/BROKERS WERE NONE OTHER THAN THE LAND OWNERS OF THE SCHEME VIZ SARO J AGARWAL AND RAMAVTAR AGARWAL (HUF). IT HAS BEEN STATED THA T THE BROKERS WERE ASKED TO BE PRODUCED BUT THEY WERE NOT PRODUCED FOR EXAMINATION BEFORE THE A.O. ACCORDINGLY, ASSES SING OFFICER MADE DISALLOWANCE OF BROKERAGE. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE MADE AND HAVING CO NSIDERED I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 4 THE SAME, CIT(A) OBSERVED THAT PAYMENT HAS BEEN CLA IMED TO BE MADE TO THE 11 PARTIES. DETAILS ARE AS UNDER: NO. NAMES OF BROKERS BROKERAGE 1 SUJIT KUMAR BHATIA 8100 2 VIKRA M ASSOCIATES 24800 3 CHHAGULAL SOMNATH & SONS 100000 4 SAROJ AGRAWAL 90000 5 RAM AVTAR AGRAWAL (HUF) 75000 6 RAJSHREE MADANMOHAN 250000 7 RATNADEEP PADMANATH 350000 8 JAYDEEP PADMANATH 350000 9 MADANMOHAN BHOGILAL 450000 10 NARENDRA S VORA 215000 11 SOMNATH NARESHBHAI & SONS 800000 TOTAL 27,85,800 HE FURTHER OBSERVED THAT COPIES OF FIRST SHEET OF R ETURN WERE FURNISHED FOR ALL NAMES BUT NOT FOR NAME AT SERIAL NO. 7 & 8 OF RATNADEEP PADMANTH AND JAYDEEP PADMANATH EACH OF WH OM HAD BEEN SHOWN PAYMENT OF RS.3,50,000/- AS BROKERAG E. COPY OF ACKNOWLEDGEMENT PAGE OF THE RETURN OF THE NAME A T SR. NO.11 IN THE TABLE ABOVE SOMNATH NARANBHAI & SONS DOES NOT SHOW RECEIPT OF RS.8,00,000/- BROKERAGE AS GTI OF JUST RS.1,94,568/- HAS BEEN SHOWN WITH NO DEDUCTIONS CLA IMED UNDER CHAPTER VIA. AS FULL PROOFS HAVE NOT BEEN FU RNISHED FOR BROKERAGE CLAIMED AS DISCUSSED BY CIT(A) IN HIS ORD ER, HE OBSERVED THAT IT WOULD SERVE JUSTICE IF THE ALLOWAN CE OF BROKERAGE IS LIMITED TO 2% OF THE SALES COLLECTION OF RS.8,17,00,000/- INSTEAD OF AT 3.4% CLAIMED BY ASSE SSEE. BROKERAGE ALLOWED CAME TO RS.16,34,000/- WHEREAS TH E I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 5 ASSESSEE HAS CLAIMED RS.27,85,800/-. THE DISALLOWA NCE WAS RESTRICTED TO RS.11,51,800 (RS.27,85,800 RS.16,34 ,000). REVENUE IS IN APPEAL FOR RELIEF GRANT TO THE ASSESS EE WHILE ASSESSEE HAS COME IN APPEAL AGAINST PARTIAL SUSTAIN ING OF THE DISALLOWANCE. 2.2 AFTER GOING THROUGH RIVAL SUBMISSIONS AND PERUS ED THE RECORD, WE FIND THAT ASSESSEE FIRM IS IN BUSINESS, INTER ALIA OF DEVELOPING AND SELLING IMMOVABLE PROPERTIES. HE HA S CLAIMED TO PAY BROKERAGE EXPENSES OF RS.27,85,800/-. OBJEC TION OF THE ASSESSING OFFICER HAS BEEN THAT SAME AMOUNT WAS INI TIATED IN MONTH OF MARCH AND TWO PARTIES WERE NONE OTHER THAN LAND OWNER OF THE SCHEME VIZ SAROJ AGARWAL AND RAMAVTAR AGARWAL (HUF). IT IS NOT IN DISPUTE THAT ASSESSEE HAS FILE D DETAILS OF ALL PARTIES, THEIR ADDRESSES, PAN NOS., VIS--VIS UNIT AND BROKERAGE. MAIN PLANK OF OBJECTION OF ASSESSING OF FICER IS THAT BROKERS WERE NOT PRODUCED FOR CROSS EXAMINATION AND SOME OF THE PAYMENTS HAD BEEN MADE TO RELATED PARTIES LAND OWNERS, BUT ADDITIONS HAVE NOT BEEN MADE BY INVOKING PROVIS IONS OF 40A(2)(A) OF ACT. THERE IS NO DISPUTE THAT ASSESSE E HAS FURNISHED DETAILS ALONGWITH DETAILS OF BROKERAGE AN D DATE OF BROKERAGE. CIT(A) HAS NOT DOUBTED THE WORK DONE BY THE BROKERS WHICH IS EVIDENT FROM THE FACT THAT OUT OF TOTAL SALES COLLECTION OF RS.8,17,00,000/-, HE HAS RESTRICTED T O 2% INSTEAD OF 3.4% CLAIMED BY ASSESSEE. IT MEANS THAT CIT(A) IS NOT DISPUTING THE SERVICES TO THE ASSESSEE FOR BROKERAG E PAYMENT I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 6 BUT CIT(A) IS DISPUTING PERCENTAGE OF BROKERAGE THE REON. PERCENTAGE OF BROKERAGE IS A MATTER OF ESTIMATE. I T CAN BE DONE ONLY IF BOOKS OF ACCOUNTS OF ASSESSEE ARE REJECTED. THERE IS NOTHING ON RECORD TO SUGGEST THAT BOOKS OF ACCOUNT HAS BEEN REJECTED. MOREOVER, BROKERAGE SERVICES VIS-A-VIS U NIT NOS. HAVE NOT BEEN DISPUTED BY REVENUE AUTHORITIES. ALL DETA ILS INCLUDING PAN NO. HAS BEEN FURNISHED BEFORE ASSESSING OFFICER THEN BURDEN OF PRODUCING BROKER CANNOT BE SHIFTED TO ASS ESSEE IN CASE HE IS NOT ABLE TO PRODUCE THEM FOR ANY REASON. THESE VIEWS ARE FOLLOWED BY THE DECISION OF HONBLE GUJAR AT HIGH COURT IN CASE OF CIT VS. SHREE RAMA MULTI TECH LTD. (2013) 40 TAXMANN.COM 540 (GUJARAT), WHEREIN ASSESSING OFFICE R DISALLOWED A PART OF COMMISSION EXPENSES OBSERVING THAT IN PRECEDING YEAR COMMISSION WAS PAID AT A LOWER PERCE NTAGE OF TURNOVER THAN IN CURRENT YEAR. IN SUCH SITUATION, HONBLE HIGH COURT HELD THAT DISALLOWANCE COULD NOT BE MADE IN A BSENCE OF ANY DEFECT IN RECORDS AND MAINTENANCE OF BOOKS OF A CCOUNT. THUS, ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE. SIM ILAR VIEW HAS BEEN TAKEN BY HONBLE GUJARAT HIGH COURT IN CAS E OF COMMISSIONER OF INCOME-TAX-I VS. NANGALIA FABRICS ( P.) LTD. (2013) 40 TAXMANN.COM 206 (GUJARAT), WHEREIN ISSUE OF ALLOWABILITY OF COMMISSION AROSE WHEREIN COMMISSION WAS PAID THROUGH ACCOUNT PAYEE CHEQUES FOR SALES CANVASSED B Y A PARTY AND ALSO IN CONSIDERATION OF COLLECTION RECOVERED F ROM PURCHASER. THE SAID COMMISSION PAYMENT WAS NOT HEL D TO BE BOGUS. IN VIEW OF OUR DISCUSSION, WE ARE OF THE OP INION THAT I.T.A. NOS. 882 & 1092/AHD/2011 FOR A.Y. 07-08 (SAFAL ORGANISERS VS. ACIT) PAGE 7 ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING DISAL LOWANCE AND CIT(A) WAS NOT JUSTIFIED IN RESTRICTING 2% OF THE T URNOVER OF SALE COLLECTION INSTEAD OF 3.4% BECAUSE BOOKS OF ACCOUNT HAS NOT BEEN DISPUTED BY REVENUE AUTHORITY. MOREOVER, THE S ERVICES FOR COMMISSION HAVE NOT BEEN DISPUTED. ACCORDINGLY SAM E IS DIRECTED TO BE DELETED. 3. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D AND THAT OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF OCTOBER, 2014. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER TRUE COPY S.K.SINHA $ $ $ $ &' &' &' &' ('# ('# ('# ('# / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. -- . / CONCERNED CIT 4. .- / CIT (A) 5. '23 &, , / DR, ITAT, AHMEDABAD 6. 367 89 / GUARD FILE. BY ORDER / $ , :/ - , <