Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 4333 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
19-10-2016
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
07-09-2016
Assessment Year
2009-2010
Appeal Filed On
23-04-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER ITA NO.906/KOL/2013 ASSESSMENT YEARS:2009-10 ITO WARD-7(2) P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, KOLKATA-700 069 / V/S . M/S UMV TELE LINK 207, CHITTARANJAN AVENUE, KOLKATA-700 006 [ PAN NO.AAACW 2606 B ] /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI R.P.NAG, ADDL-CIT-DR /BY RESPONDENT SHRI SUBASH AGARWAL, ADVOCATE /DATE OF HEARING 15-09-2016 /DATE OF PRONOUNCEMENT 19-10-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA DATED 22.02.2013. ASSES SMENT WAS FRAMED BY ITO WARD- 7(2), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30.12.2011 FOR ASSESSMEN T YEAR 2009-10. THE GROUNDS RAISED BY THE REVENUE PER ITS APPEAL ARE AS UNDER:- 1. THAT THE LD. CIT(APPEALS)-VIII, KOLKATA HAS ERR ED IN FACTS IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER FOR RS.19,15 ,540.00 ON ACCOUNT OF INFLATED PURCHASE. 2. FOR THAT THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) IS NOT CORRECT BY DELETING THE ADDITION MADE BY THE AO FOR RS.34,528.00 ON ACCOUNT OF INFLATED PURCHASE. 3. FOR THAT IN THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS NOT CORRECT BY DELETING THE ADDITION MADE BY THE AO FOR RS.8,75,753.00 ON ACCOUNT OF BOGUS PURCHASE. ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 2 4. FOR THAT IN THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS NOT CORRECT BY DELETING THE ADDITION MADE BY THE AO FOR RS.5,25,577/- ON ACCOUNT OF CONCEALMENT OF INCOME. 5. FOR THAT IN THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS NOT CORRECT BY DELETING THE ADDITION MADE BY THE AO FOR RS.4,326.00 ON ACCOUNT OF CONCEALMENT OF INCOME. 6. FOR THAT IN THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) IS NOT CORRECT BY DELETING THE ADDITION MADE BY THE AO FOR RS.1,17,494.00 ON ACCOUNT OF DISALLOWANCE U/S. 14D READ WITH RULE-8D INFLATED PURCHASE. SHRI R.P.NAG, LD. DEPARTMENTAL REPRESENTATIVE APPEA RED ON BEHALF OF REVENUE AND SHRI SUBASH AGARWAL, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. FACTS IN BRIEF AS CULLED OUT FROM THE ORDER OF A UTHORITIES BELOW AND RELEVANT RECORDS ARE THAT ASSESSEE, A PRIVATE LIMITED COMPAN Y AND ENGAGED IN THE DISTRIBUTION BUSINESS OF MOBILE PHONE CONNECTION AND MOBILE PHON ES. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS FILED ITS RETURN OF INCOME DATED 25.09.2009 DECLARING TOTAL INCOME OF 4,97,425/- COMPRISING OF BUSINESS INCOME ONLY. THER EAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICES U/S 1 43(2)/142(1) WAS ISSUED UPON ASSESSEE ON DIFFERENT DATES. THE ASSESSMENT WAS FRA MED ON 31.12.2011 AT A TOTAL INCOME OF 40,12,513/- AFTER DISALLOWING / MAKING ADDITIONS OF VARIOUS EXPENSES CLAIMED BY ASSESSEE WHICH HAVE BEEN DISCUSSED IN TH E AFORESAID GROUNDS OF APPEAL. 3. THE FIRST ISSUE RAISED BY REVENUE IS THAT LD. CI T(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 19,15,540/- ON ACCOUNT OF INFLATED PURCHASE. 4. THE ASSESSEE, DURING THE YEAR HAS MADE PURCHASE TRANSACTIONS FROM M/S VODAFONE ESSAR SOUTH LIMITED (VESL FOR SHORT). DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, AO ISSUED A NOTICE U/S. 133(6) OF THE ACT TO VESL FOR THE CONFIRMATION OF THE SAID TRANSACTIONS. IN RESPONSE TO THE SAID N OTICE, VESL SUBMITTED THAT THE GOODS WORTH OF 3,01,93,940/- HAD BEEN SOLD TO THE ASSESSEE. HOWEVE R, AS PER ASSESSEE, THE PURCHASED AMOUNT WAS SHOWN AT AN AMOUNT OF 3,21,16,059.87 WHICH WAS SUBSEQUENTLY REDUCED TO 302,00,519.78 BY ASSESSEE. THE AO OBSERVED THAT ASS ESSEE HAS MADE ITS SUBMISSION TO REDUCE THE GAP BETWEEN A MOUNT OF PURCHASE SHOWN BY IT ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 3 AND SHOWN BY VESL. AS PER THE AO, THE ACTUAL PURCHA SE OF 321,16,059.87 WHICH IS EXCESS BY 19,22,120/- BEING THE DIFFERENCE BETWEEN THE AMOUNT SHOWN BY ASSESSEE AND SHOWN BY THE VESL. ACCORDINGLY, THE AO DISALLOW ED THE DIFFERENCE AMOUNT OF RS. 19,22,120.00 AND ADDED TO THE TOTAL INCOME OF A SSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE IT WAS SUBMITTED THE TOTAL PURCHASE IS AT 16,96,93,049.00 WHICH IS TALLYING FROM THE AUDITED PROFIT AND LOSS A/C. THERE WAS NO DIFFERENCE IN THE TOTAL AMOUNT OF PURCHASE BUT WHILE SUBMITTING THE DETAILS TO THE AO AT THE TIME OF ASS ESSMENT PROCEEDINGS A WRONG FIGURE HAS BEEN GIVEN BY MISTAKE. THE ASSESSEE FURTHER SUB MITTED THAT PURCHASE MADE FROM OTHER PARTIES WERE INCLUDED IN THE LIST OF THE PURC HASE FROM VESL. THE DETAILS OF PURCHASES FROM OTHER PARTIES STAND AS UNDER:- SL.NO NAME OF THE PARTY AMOUNT (RS) 1 TATA ENTERPRISE 960665.22 2 HUTCHISON MAX PAGING PVT. LTD 875752.95 3 HUTCHISON MAX PAGING (P)LTD TRANSFER OF STOCK FROM H.O. TO ASANSOL 71217.76 THE ONLY DIFFERENCE IS ONLY OF 6579.78. THE ASSESSEE FURTHER SUBMITTED THAT ALL TH E DETAILS AS MENTIONED AFORESAID WERE SUBMITTED AT TH E TIME OF ASSESSMENT. LD. CIT(A), ACCORDINGLY RESTRICTED THE ADDITION TO 6579.78 AND DELETED THE EXCESS AMOUNT OF ADDITION BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE RECORDS AND PAPERS SUBMITT ED BY THE APPELLANT. I AM OF THE VIEW THAT NON ACCEPTANCE OF RECONCILED OR REVISED S TATEMENT SUBMITTED BY THE APPELLANT DURING THE CURSE OF SCRUTINY PROCEEDING A MOUNTS TO DENIAL OF NATURAL JUSTICE TO THE APPELLANT. I DO NOT AGREE WITH THE VIEW OF T HE ASSESSING OFFICER THAT REVISION OF SUBMITTED PAPERS ARE ATTEMPTS TO BRIDGE THE GAP IN THE PURCHASE FIGURE GIVEN BY THE SAID PARTY AND PURCHASE FIGURES SUBMITTED BY THE AP PELLANT AT THE INITIAL STAGE OF SCRUTINY PROCEEDINGS AND FINALLY LOWERING ITS PURCH ASE FIGURE. I FULLY AGREE WITH THE CONTENTION OF THE APPELLANT THAT ALL THE REVISED ST ATEMENTS ARE FULLY REFLECTED IN BOOKS OF ACCOUNT AND BY DENYING THE ACCEPTANCE OF REVISED FIGURE SUBMITTED BY THE VERIFIED BY THE AO AND BY DENYING THE ACCEPTANCE OF REVISED FIGURE SUBMITTED BY THE APPELLANT AND MAKING THE UNWARRANTED ADDITIONS WHILE THE SAID REVISED DETAILS FURNISHED BY THE APPELLANT COULD HAVE BEEN AGAIN VERIFIED BY THE AO FROM THE SAID BOOKS OF ACCOUNT AND BY NOT DONG THAT AN INJUSTICE WAS DONE TO THE A PPELLANT. I HAVE ALSO GONE THROUGH THE APPELLANTS SUBMITTED BY THE APPELLANT IN THE F ORM OF PAPERS BOOK. FROM THOSE FIGURES IT CAN ONLY HOLD THAT THERE IS ONLY A MINOR DIFFERENCE OF RS.6579.78 ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 4 (RS.30200519.78 RS.301933940) WHICH THE ASSESSING OFFICER COULD HAVE ADDED HAD HE GONE THROUGH THE RECORDS AND DETAILS SUBMITTED B Y THE APPELLANT. IN VIEW OF THE ABOVE DISCUSSION AND FINDING, I HERE BY DIRECT THE ASSESSING OFFICER TO DELETE RS.19,15,540/- (I.E. RS.19,22,120/- - RS.658 0/-) OUT OF RS.19,22,120/- ADDED BY HIM IN THE RETURNED INCOME. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 6. BEFORE US LD. DR REQUESTED BEFORE THE BENCH TO R ESTORE THE MATER BACK TO THE FILE OF AO FOR FURTHER ADJUDICATION AS PER LAW. ON THE OTHER HAND, LD. AR FILED A PAPER BOOK WHICH IS COMPRISING OF PAGES 1 TO 94 AND SUBMI TTED THAT THE PURCHASES MADE FROM OTHER PARTIES WERE WRONGLY INCLUDED IN THE PUR CHASE LIST OF VESL. THE ASSESSEE IN SUPPORT OF HIS CONTENTION HAS SUBMITTED THE COPI ES OF LEDGER OF ALL THE PURCHASE PARTIES WHICH ARE PLACED ON PAGES FROM 50 TO 57 OF THE PAPER BOOK. THE LD. AR RAISED NO OBJECTION IF THE FILE IS RESTORED BACK TO THE AO FOR FRESH ADJUDICATION. THE LD. AR RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT ASSESSE E HAS SUBMITTED THE DETAILS OF THE PURCHASE FROM VESL WHICH WAS NOT MATCHING WITH THE SALES SHOWN BY VESL. THE ASSESSEE SUBMITTED RECONCILIATION AND EXPLAINED THA T THE DIFFERENCE IS ARISING MAINLY DUE TO THE NAMES OF OTHER PARTIES INCLUDED IN THE L IST OF PURCHASE FROM VESL. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THE MATTER TO THE FILE OF AO. NEEDLESS TO ADD THAT ANY MATERIALS, ADVERSE TO THE ASSESSEE, WILL HAVE TO BE CONFRONTED TO THE ASSESSEE BY THE AO, AND THAT, IN CASE AO INTENDS TO PASS ANY FRESH ORDER AS A RESULT OF THESE DIRECTIONS, HE WIL L DO SO ONLY AFTER GIVING DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDAN CE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. HENCE, THIS GROUND OF REVENUES APP EAL IS ALLOWED FOR STATISTICAL PURPOSE IN TERMS OF ABOVE. 8. THE SECOND ISSUE RAISED BY REVENUE IS THAT LD. C IT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 34,528/- ON ACCOUNT OF INFLATED PURCHASE. ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 5 9. ASSESSEE DURING THE YEAR HAS SHOWN PURCHASES FRO M M/S HUTCHISON MAX PAGING PVT. LTD. (HMPPL FOR SHORT) FROM KOLKATA ZON E FOR 24,45,113.47. HOWEVER, HMPPL HAS SHOWN SALES IN ITS BOOKS OF ACCOUNT FOR 23,10,585/-. THE AO OBSERVED THE DIFFERENCE OF 34,528/- AND TREATED THE SAME AS INFLATED PURCHASE AS SHOWN BY ASSESSEE WHICH WAS ADDED TO THE TOTAL INCOME OF ASS ESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE ACTUAL PURCHASE SHOWN BY ASSESSE E WAS OF 23,10,585/- AND ASSESSEE HAS REDUCED ITS PURCHASE BY THE AMOUNT OF 18677.85 AND 15850/- (TOTAL 34,528/-) ON ACCOUNT OF CLAIMED BY ASSESSEE FROM H MPPL. LD. CIT(A), ACCORDINGLY, DELETED THE ADDITION MADE BY AO BY OBS ERVING AS UNDER:- THE APPELLANT FURTHER CLARIFIED THAT DURING THE CO URSE OF RELEVANT YEAR, IT MADE CLAIMS OF RS.18677.85 ON AND RS.15850.95. THE TOTAL AMOUNT OF SAID CLAIM WAS RS.34528.80. THE SAID CLAIM AROSE DUE TO DEFECTIVE MATERIAL SUPPLIED BY THE SAID PARTY ON 2 ND JULY 2008 AND ON 25 TH SEPTEMBER 2008 RESPECTIVELY FOR THE AFORESAID AMOU NTS. THE PARTY ULTIMATELY ACCEPTED THE CLAIM AND EXTENDE D THE DISCOUNT. THE APPELLANT CONTENDED THAT IT DEBITED THE SAID AMOUNT TO PURCHA SE ACCOUNT. FROM THE SAID DETAIL AND ACCOUNTING, IT IS SEEN THA T THE APPELLANT HAS NOT INFLATED ITS PURCHASE FROM HUTCHISON MAX PAGING (P) LTD BY RS.34 528.80 BUT HAS DULY ACCOUNTED FOR THE SAID AMOUNT IN ITS INCOME BY DEDUCTING THE SAID FIGURE FROM THE AMOUNT OF TOTAL PURCHASE ALONG WITH OTHER ADJUSTMENTS. UNDER THE CI RCUMSTANCES, I FIND THAT THE SAID ADDITION IS WITHOUT ANY SUBSTANCE AND HENCE I DIREC T THE ASSESSING OFFICER TO DELETE THE SAID AMOUNT OF RS.34528/- BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 11. BEFORE US LD. DR SUBMITTED THAT LD. CIT(A) HAS GRANTED RELIEF TO ASSESSEE AFTER CONSIDERING THE CLAIM FILED BY ASSESSEE TO HMPPL FO R 34528/-. HOWEVER THIS CLAIM WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND H E REQUESTED THE BENCH TO RESTORE THE ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICA TION. ON THE OTHER HAND, LD. AR DREW OUR ATTENTION ON PAGE 58 OF THE PAPER BOOK WHE RE THE RECONCILIATION STATEMENT WAS PLACED FOR THE DIFFERENCE SHOWN BETWEEN ASSESSE E AND HMPPL AND HE RELIED ON THE ORDER OF LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS, WE FIND THAT ASSESSEE HAS M ADE THE CLAIM OF 34,528/- ON ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 6 02.07.2008 AND 25.07.2008 RESPECTIVELY AND THESE CL AIMED WERE DULY REDUCED FROM THE AMOUNT PURCHASED. HOWEVER, LD. AR DID NOT BRING ANYTHING ON RECORD WITH REGARD TO CLAIM MADE BY ASSESSEE. THEREFORE, IN THE INTERE ST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO CHECK WHETHER THE CLAIM MADE BY ASSESSEE HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. HENCE, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 13. THIRD ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 8,75,753/- ON ACCOUNT OF BOGUS PURCHASE. 14. THE ASSESSEE HAS SHOWN PURCHASE FROM HUTCHISON MAX PAGING (P) LTD (ASANSOL CLAIM ACCOUNT) FOR 8,75,753/-. HOWEVER, AO FOUND THAT THERE IS NO SALE S MADE BY HUTCHISON MAX PAGING (P) LTD. (ASANSOL) IN RESPONSE TO THE NOTICE ISSUED U/S. 133(6) OF THE ACT. ACCORDINGLY, AO HELD THE TR ANSACTIONS OF PURCHASE FOR 8,75,753/- AS BOGUS AND ADDED TO THE TOTAL INCOME O F ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- THE APPELLANT SUBMITTED THAT DURING THE CURSE OF I TS BUSINESS, IT RECEIVES VARIOUS AMOUNTS AS INCENTIVES ON ACHIEVING A SPECIFIED TARG ET SET BY THE PARTIES. THE SAID INCENTIVES ARE INFORM OF CASH AND ALSO IN KIND BY W AY OF FREE DELIVERY OF PRODUCTS MAINLY TELEPHONE HANDSETS. THE INCENTIVES GIVEN IN THE KIND FORM AS CALLED R C COUPON . THE APPELLANT RECEIVED A TOTAL AMOUNT OF SUCH R C COUPON FOR RS.943491.49 FROM HUTCHISON MAX PAGING (P) LIMITED DURING THE RELEVANT YEAR. THE AMOUNT OF AID R C COUPON WERE DEBITED TO PURCHASE A CCOUNT. OUT OF THE SAID R C COUPON CONVERTED INTO MOBILE HANDSETS, HANDSETS OF TWO VALUES AMOUNTING TO RS.46380.82 AND RS.21357.72 TOTALING RS.67738.54 WE RE RETURNED TO THE SAID PARTY LEAVING A SUM OF RS.875752.95 BEING DEBITED TO PURC HASE ACCOUNT. IT FURTHER CLARIFIED THAT AS THE APPELLANT WAS NOT REQUIRED TO PAY THE S AID AMOUNT FOR WHICH HE RECEIVED THE HANDSETS FOR FREE AS INCENTIVE, THE AMOUNT WAS CREDITED TO COMMISSION ACCOUNT. HOWEVER, THE PARTY DID NOT ACCOUNT FOR THIS AMOUNT TO ITS SALE TO THE APPELLANT BECAUSE THE SAME WAS GIVE TO THE APPELLANT FOR FREE. THIS I S ONLY DUE TO THIS ACCOUNTING DIFFERENCE THAT PROMPTED THE AO TO ADD THE SAID AMO UNT TO THE RETURNED INCOME OF THE APPELLANT. THE APPELLANT ALSO SUBMITTED THE DETAILS OF SUCH RC COUPON RECEIVED AND THE DETAIL OF COMMISSION WHERE THE SAID AMOUNT IS I NCLUDED. ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 7 IN VIEW OF THE ABOVE, AND AFTER CAREFULLY CONSIDERI NG THE SUBMISSION AND SAID DETAIL, I FIND THAT THE APPELLANT HAS ACCOUNTED FOR THIS AMOU NT OF RS.8,75,753/- BY INCLUDING THIS IN ITS PURCHASE FIGURE ON ONE SIDE AND CORRESP ONDINGLY INCLUDED THE SAME IN COMMISSION ON INCOME SIDE. AS SUCH I DO NOT FIND TH IS TO BE A CASE OF CONCEALMENT OF INCOME AND HENCE DIRECT THE ASSESSING OFFICER TO D ELETE THE SAID ADDITION OF RS.8,75,753/- FROM THE ASSESSED INCOME. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 16. BEFORE US LD. DR VEHEMENTLY RELIED ON THE ORDER OF AO WHERE AS LD. AR RELIED ON THE ORDER OF LD. CIT(A). LD. AR BEFORE US SUBMITTED THAT HUTCHISON MAX PAGING (P) LTD. HAS GIVEN INCENTIVE TO THE ASSESSEE WHICH HAS BEEN INCLUDED IN THE COMMISSION INCOME AS PER SCHEDULE-12 OF THE PROFIT AND LOSS ACCOUNT WHICH IS PLACED ON PAGE 9 OF THE PAPER BOOK. M/S HUTCHISON MAX PAGI NG (P) LTD. HAS GIVEN THIS COMMISSION IN THE FORM OF KIND BY GIVING FREE PRODU CTS WHICH WERE TREATED AS PURCHASE IN THE BOOKS OF ACCOUNT OF ASSESSEE IN ORD ER TO MAINTAIN STOCK REGISTER. 17. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS WE FIND THAT ASSESSEE HAS SHOWN THE INCENTIVE RECEIVED IN KIND AS PURCHASE WITH THE SOLE PURPOSE AND MAINTAINING THE QUANTITATIVE DETAILS OF THE STOCK. AT THE SAME TIME ASSESSEE HAS CREDITED THE COMMISSI ON AMOUNT BY THE AMOUNT OF INCENTIVE RECEIVED IN THE FORM OF FREE PRODUCTS. HO WEVER, ASSESSEE BEFORE US HAS NOT DEMONSTRATED BY PRODUCING THE DETAILS OF THE COMMIS SION SHOWN BY ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE BACK THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION AS P ER LAW WITH THE DIRECTION TO CHECK WHETHER THE PRODUCTS RECEIVED IN THE FORM OF INCENT IVE AT FREE OF COST HAS BEEN DULY ACCOUNTED FOR IN THE PURCHASE AND IN THE CORRESPOND ENCE COMMISSION ACCOUNT SIMULTANEOUSLY. THE FREE PRODUCES SHOULD HAVE ALSO BEEN INCLUDED IN THE STOCK REGISTER MAINTAINED BY ASSESSEE. HENCE, THIS GROUND OF REVEN UE IS ALLOWED FOR STATISTICAL PURPOSE. 18. BOTH INTER CONNECTED FOURTH AND FIFTH ISSUES RA ISED BY REVENUE IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FO R 5,25,577/- AND 4,326/-ON ACCOUNT OF CONCEALMENT OF INCOME. ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 8 19. THE ASSESSEE, DURING THE YEAR, HAS SHOWN INCOME OF 19,66,346/- AS COMMISSION FROM VODAFONE ESSAR EAST LTD. BUT THE AO FOUND FROM THE AIR INFORMATION THAT ASSESSEE HAS RECEIVED COMMISSION I NCOME FOR 24,91,923/-. ACCORDINGLY, AO HAS OBSERVED THE DIFFERENCE OF 5,25,577/- WHICH WAS ADDED TO THE TOTAL INCOME OF ASSESSEE. SIMILARLY THE COMMISSION INCOME WAS RECEIVED AS PER AIR FOR RS. 39,326.00 FROM TATA TELE SERVICES LIMITED B UT THE ASSESSEE HAS SHOWN FOR RS. 35,000.00 ONLY. ACCORDINGLY THERE WAS UNDERSTAT EMENT OF INCOME FOR RS. 4,326.00 WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . 20. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHERE A RECONCILIATION STATEMENT FOR JUSTIFYING THE DIFFERE NCE OF RS. 5,25,577.00 WAS SUBMITTED AS UNDER:- TOTAL AMOUNT CREDITED/PAID BY VODAFONE ESSAR EAST LTD. DURING FY 08-09 RS.2810459/- LESS: SERVICE TAX INCLUDED IN THE SAID AMOUNT BUT CREDITED TO SEPARATE ACCOUNT BY THE APPELLANT AS SERVICE TAX COLLECTION IS NOT AN INCOME BUT LIABILITY RS.305195/- RS.2505264/- LESS: AMOUNT OF INCOME U/S. 194A RS.36049/- RS.2469215/- LESS: INCOME INCLUDED IN PRECEDING AY I.E. 08-09 BY THE APPELLANT BUT SHOWN IN THE A.Y 09-10 BUY THE SAID PARTY RS.176637/- INCOME INCLUDED IN PRECEDING AY I.E. 08-09 BY THE APPELLANT BUT SOWN IN A.Y. 09-10 BY THE SAID PARTY RS.170805/- RS.347442/- RS.2121773/- LESS: INCOME INCLUDED IN SUCCEEDING AY I.E. 10-11 BY THE APPELLANT BUT SHOWN IN AY 09-10 BY THE SAID PARTY RS.48521/- INCOME INCLUDED IN SUCCEEDING AY I.E. 10-11 BY THE APPELLANT BUT SHOWN IN AY 09-10 BY THE SAID PARTY RS.106906/- RS.155427/- AMOUNT OF INCOME SHOWN BY THE APPELLANT IN THE RETURN FOR AY 09-10 RS.1966346/- ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 9 SIMILARLY THE ASSESSEE SUBMITTED THAT THE DIFFERENC E OF RS. 4,326.00 IS NOTHING BUT REPRESENTING THE AMOUNT OF SERVICE TAX CHARGED @12. 36% OVER AND ABOVE RS. 35,000/- THE LD. CIT(A) ACCORDINGLY DELETED THE ADDITION MAD E BY THE AO FOR RS. 5,25,577.00 BY OBSERVING AS UNDER : ON GOING THROUGH THE STATEMENT AND SUPPORTING DOCU MENTS FURNISHED BY THE APPELLANT, I DO NOT FIND ANY ANOMALIES SIN THE CONT ENTION OF THE APPELLANT. I AM ALSO OF THE VIEW THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND IN THE INSTANT CASE PARTICULARLY TO THE FACT THAT SERVICE TAX COLL ECTIONS ARE NOT CREDITED TO INCOME BUT ARE CREDITED TO A SEPARATE ACCOUNT ACCOR DING TO THE ACCOUNTING STANDARDS, EVEN THOUGH TAX IS REQUIRED TO BE DEDUCT ED BY THE PAYERS ON SERVICE TAX COMPONENTS. THE APPELLANT HAS ALSO PROVED ITS C ASE OF INCLUSION OF ABOVE TWO AMOUNTS OF RS.1,76,637/- AND RS.1,70,805/- IN A SSESSMENT YEAR 2008-09 AND ALSO THE INCLUSION OF TWO AMOUNTS OF RS.48,521/ - AND R.1,06,906/- IN AY 2009-10 ACCORDING TO THE DATE OF THE INVOICES AND A CCOUNTING PROCEDURE BEING FOLLOWED BY THE APPELLANT. THUS, IT IS CLEARLY EVID ENT THAT THE AO WHILE FRAMING THE ASSESSMENT ORDER HAD MADE THE ADDITIONS WITH PR EJUDICED MIND WITHOUT APPLYING THE PRINCIPLES OF JUSTICE AND IN THE PROCE SS IGNORED ALL THE FACTS, EXPLANATIONS AND SUPPORTING DOCUMENTS SUBMITTED BY THE APPELLANT. IN VIEW OF THIS, I HEREBY DIRECT THE ASSESSING OFFICER TO DELE TE THE SAID ADDITION OF RS.5,25,577/- MADE BY HIM FROM THE ASSESSED INCOME. THE LD. CIT(A) ACCORDINGLY DELETED THE ADDITION MAD E BY THE AO FOR RS. 4,326.00 BY OBSERVING AS UNDER : IN THIS REGARD IT IS OBSERVED THAT THE AO MADE AN A DDITION OF RS.4326/- ON THE GROUND SIMILAR TO THE ONE REFERRED TO IN PAR A 5.4 ABOVE. IN THIS CASE ALSO THE INCOME PAID/CREDITED BY TATA TELE SER VICES LTD AS PER FORM 26AS WAS RS.39326/- WHEREAS THE APPELLANT HAD SHOWN ONLY RS.35000/- AS INCOME. THE APPELLANT SUBMITS THAT RS .4326/- PRESENTS THE AMOUNT OF SERVICE TAX COLLECTED FROM THE PARTY @ 12 .36% WHICH DOES NOT FORM PART OF THE INCOME OF THE SERVICE PROVIDER I.E THE APPELLANT IN THIS CASE. AS STATED ABOVE IN IMMEDIATELY PRECEDING PARAGRAPH THAT SERVICE TAX COMPONENT IS NOT PART OF THE INCOME OF THE SERVICE PROVIDER, I HEREBY DIRECT THE ASSESSING OFFICER TO DELETE THE SAID ADD ITION OF RS.4326/- FROM THE INCOME ASSESSED BY HIM. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 21. BEFORE US BOTH THE PARTIES RELIED ON THE ORDER OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. BEFORE US LD. AR SUBMITTED THAT INCOME OF 347442.00 WAS ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 10 OFFERED TO TAX IN THE AY 2008-09 AND IN SUPPORT OF ITS CLAIM HAS SUBMITTED COPY OF LEDGER WHICH IS PLACED ON PAGE 87 OF THE PAPER BOOK . SIMILARLY THE COMMISSION INCOME OF 1,55,427/- WAS SHOWN IN THE AY 2010-11 AND THEREFOR E AS SUCH THERE WAS NO CONCEALMENT OF INCOME. 22. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, BOTH PARTIES AGREED TO RESTORE THIS ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICATION. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY WE ARE INCLINED TO RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO CHECK WHETHER THE CLAIM MADE BY ASSESS EE HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. HENCE, BOTH THE GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 23. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER FOR 1,17,494/- U/S 14A R.W.S RULE 8D OF THE IT RULES, 1962. 24. THE ASSESSEE, DURING THE YEAR HAS RECEIVED DIVI DEND INCOME OF 35,290/- WHICH WAS CLAIMED AS EXEMPTED INCOME. BUT ASSESSEE DID NO T MAKE ANY DISALLOWANCE. THEREFORE, AO HAS INVOKED THE PROVISION OF RULE 8D OF THE IT RULES, AND MADE A DISALLOWANCE OF 1,52,784/- IN AGGREGATE. 25. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO GAVE PARTLY RELIEF TO ASSESSEE BY OBSERVING AS UNDER:- THERE IS NO DENYING OF THE FACTS THAT RULE 8D OF I NCOME TAX RULES 1962 SUFFERS FROM VARIOUS CONTROVERSIES AND AMBIGUITIES. FROM THE JUD GMENTS CITED ABOVE, IT IS NOTED THAT THE AMOUNT OF DISALLOWANCE CANNOT EXCEED THE A MOUNT OF EXEMPT INCOME WHEN SEPARATE BOOKS OF ACCOUNT FOR EXEMPT AND NON EXEMPT INCOME ARE NOT KEPT OR WHERE THE ASSESSING OFFICER FAILS TO FIND NEXUS BETWEEN A NY DIRECT EXPENSES INCURRED BY THE ASSESSEE FOR EARNING ANY PARTICULAR EXEMPT INCOME. IN VIEW OF THE SAME I CONSIDER THAT DISALLOWING AN AMOUNT OF RS.1,52,784/- CALCULA TED BY APPLYING RULE 8D FOR AN EXEMPT DIVIDEND INCOME OF RS.35,290/- IS UNJUSTIFIE D ESPECIALLY IN THE LIGHT OF VARIOUS CONTROVERSIES SURROUNDING BLANKER APPLICATION OF RU LE 8D. HENCE, I DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE OF R S.35,290/- I.E. TO THE EXTENT OF ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 11 EXEMPT INCOME AND DELETE THE BALANCE RS.1,17,494/- (RS.1,52,784/- - 35,290/-) FROM THE INCOME ASSESSED BY HIM. THUS, THIS GROUND OF AP PEAL IS PARTLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. BEFORE US THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND ON THE CONTRARY THE LD. AR SUBMITTED THAT NO BORROWED FUND HAS BEEN UTILIZED I N MAKING THE INVESTMENT. THE LD. AR IN SUPPORT OF HIS CLAIM HAS DRAWN OUR ATTENTION ON PAGE 2 OF THE PAPER BOOK WHERE THE AUDITED BALANCE SHEET OF THE ASSESSEE IS PLACED . THEREFORE THE QUESTION OF MAKING THE DISALLOWANCE OF THE INTEREST DOES NOT ARISE. TH E LD. AR HAS CITED THE CASE OF CIT VS. HDFC BANK LTD. 366 ITR 505 IN SUPPORT OF ITS CLAIM. THE LD. AR RELIED IN THE ORDER OF THE LD. CIT(A). 26. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE FIND THAT IT IS THE DUTY OF THE AS SESSEE TO DEMONSTRATE WHETHER INVESTMENT OF IN SHARE CAPITAL IS MADE OUT OF THE B ORROWED FUND OR OWNED FUND. FROM THE BALANCE SHEET OF THE ASSESSEE WE FIND THAT THE THERE IS SUFFICIENT OWNED FUND AVAILABLE TO THE ASSESSEE FOR MAKING THE INVESTMENT . BUT IT IS NOT CLEAR WHETHER OWNED FUND WAS INVESTED OR BORROWED FUND. IN THIS CONNECT ION WE RELY IN THE CASE OF DHANUKA & SONS VS. CIT 12 TAXMANN.COM 227 WHERE THE JURISDICTIONAL HONBLE HIGH COURT OF CALCUTTA HAS HELD AS UNDER : SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDIT URE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME - ASSESSMENT YEAR 1998-99 - ASSESSEE EARNED DIVIDEND INCOME APART FROM INCOME FROM TRADING IN S HARE, INTEREST AND COMMISSION - ASSESSEE CLAIMED DEDUCTION OF INTEREST PAYMENT - AS SESSING OFFICER DISALLOWED INTEREST ON PROPORTIONATE BASIS ALLEGING THAT PART OF IT RELATED TO DIVIDEND INCOME WHICH IS EXEMPT UNDER SECTION 10(34) - ASSESSEE SUB MITTED THAT FOR LAST FEW YEARS BEFORE RELEVANT PREVIOUS YEAR, NO NEW SHARE HAD BEE N ACQUIRED AND, THUS, LOAN THAT WAS TAKEN AND FOR WHICH INTEREST WAS PAYABLE BY IT WAS NOT FOR ACQUISITION OF THOSE OLD SHARES AND, THEREFORE, AUTHORITIES BELOW ERRED IN L AW IN NOT ALLOWING DEDUCTION OF INTEREST - WHETHER MERE FACT THAT SHARES WERE OLD O NES AND NOT ACQUIRED RECENTLY WAS IMMATERIAL; IT WAS FOR ASSESSEE TO SHOW BY PRODUCTI ON OF MATERIALS THAT THOSE SHARES WERE ACQUIRED FROM FUNDS AVAILABLE IN ITS HAND AT R ELEVANT POINT OF TIME WITHOUT TAKING BENEFIT OF ANY LOAN - HELD, YES - WHETHER SINCE NO SUCH MATERIAL WAS PRODUCED BY ASSESSEE, AUTHORITIES BELOW HAD RIGHTLY DISALLOWED PROPORTIONATE AMOUNT OF INTEREST HAVING REGARD TO TOTAL INCOME AND INCOME FROM EXEMP T SOURCE - HELD, YES ITA NO.906/KOL/2013 A.Y.2009-10 ITO WD-7(2) KOL. VS. M/S UMV TELE LINK PAGE 12 WE ALSO FIND THAT THE LD. DR HAS NOT BROUGHT ANYTHI NG ON RECORD TO SHOW WHETHER THE BORROWED FUND HAS BEEN UTILIZED FOR THE INVESTMENT. THEREFORE IN THE INTEREST OF JUSTICE & FAIR PLAY WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION AS PER LAW WITH THE DIRECTION TO CHECK WHETHER BORROWED FUND HAS BEEN UTILIZED IN THE INVESTMENT OF SHARES. IN VIEW OF AB OVE THE GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 27. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 19/10/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - 19/10/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ITO WARD-7(2), P7 CHOWRINGHEE SQUARE, 5 TH FLOOR, KOL-69 2. /RESPONDENT-M/S UMV TELE LINK, 207, CHITTARANJAN AV ENUE, KOLKATA-06 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. /TRUE COPY/ BY ORDER/ , / '#,
