Sadhan Chandra Ghosh, Katwa V. ITO, Ward 1(4), Burdwan, Burdwan

ITA 994/KOL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1874 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY AD DL
• Assessee Lawyers: NARAYAN PD JAIN
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM] I.T.A NO. 994/KOL/201 7 ASSESSMENT YEAR : 2008-0 9 SADHAN CHANDRA GHOSH -VS.- I.T.O., WARD-1 (4) BURDWAN BURDWAN [PAN : ADNPG 5534 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI NARAYAN PD. JAIN, ADVOCATE FOR THE RESPONDENT : SHRI ROBIN CHOUDHURY, AD DL. CIT DATE OF HEARING : 11.12.2017. DATE OF PRONOUNCEMENT : 03.01.2018. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 21.02.2017 OF C.I.T.(A)-BURDWAN RELATING TO A.Y.2008-09. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GR OUNDS OF APPEAL IS AS TO WHETHER CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION OF RS..28,66,577/- MADE BY THE AO TREATING IT AS INCOME OF THE ASSESSEE RECEIVED FROM VODAFONE ESSAR SOUTH LTD.(HEREINAFTER CALLED VODAFONE). 3. THE ASSESSEE IS AN INDIVIDUAL. DURING THE RELEV ANT PREVIOUS YEAR HE ACTED AS DISTRIBUTION OF SIM CARDS, E-RECHARGE VOUCHERS OF V ODAPHONE THE SAID BUSINESS WAS CARRIED ON BY THE ASSESSEE OR SOLE PROPRIETOR OF SG COMMUNICATION. THE AO NOTICED THAT THE ASESSEE HAD CLAIMED IN THE RETURN OF INCOM E CREDIT FOR TDS OF RS.3,16,882/- (WRONGLY MENTIONED AS RS.3,16,852/- IN THE ORDER OF ASSESSMENT). THE AO CALLED UPON THE ASESSEE TO EXPLAIN AS TO HOW THE CORRESPONDING INCOME REFLECTED IN TDS CERTIFICATE ISSUED BY VODAFONE ESSAR SOUTH LIMITED WAS DECLARED IN THE TOTAL INCOME REFLECTED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. AS P ER THE PROVISIONS OF SEC.199 OF THE 2 ITA NO.994/KOL/2017 SADHAN CHANDRA GHOSH A.YR.2008-09 2 ACT CREDIT FOR TAX DEDUCTED AT SOURCE CAN BE GIVEN ONLY WHEN THE CORRESPONDING INCOME ON WHICH TDS IS DEDUCTED IS OFFERED TO TAX. 4. THE ASSESSEE EXPLAINED THAT THE SUM REFERRED TO IN THE TDS CERTIFICATE COMPRISES OF PAYMENT MADE BY VODAFONE NOT TO THE ASSESEE. THE ASSESSEE EXPLAINED THAT IT WAS THE DISTRIBUTOR OF SIM CARD AND E-CHARGE VOUCHERS OF VO DAFONE. VODAFONE HAD A SCHEME FOR GIVING COMMISSION/SPECIAL INCENTIVE/CAF TO RETAILER S AND RUNNERS. THE PAYMENT TO SUCH RETAILERS AND RUNNERS WERE ROUTED THROUGH THE ASSES SEE AND THE ASSESSEE HAD NO TITLE, RIGHT OR INTEREST WHATSOEVER ON THE AFORESAID PAYME NT. THE TOTAL AMOUNT OF COMMISSION/SPECIAL INCENTIVE/CAF PAYABLE TO THE RET AILERS WAS A SUM OF RS.25,65,832/- PLUS SERVICE TAX AT 12.36% OF RS.3,20,229/- IN ALL A SUM OF RS.28.82,061/-. VODAFONE HAD SETTLED THE AFORESAID DUE BY MAKING PAYMENT OF RS.28,78,150/-. THE SECOND COMPONENT COMPRISED IN THE TDS CERTIFICATE WAS PAYM ENTS TO RUNNERS OF RS.2,76,720- PLUS 12.3% SERVICE TAX OF RS.34,204/- IN ALL A SUM OF 3,10,924/-. THE BREAK UP OF THE COMMISSION/SPECIAL INCENTIVE/CAF TO RETAILERS WITH NAME OF EACH RETAILER IS AT PAGES 80 TO 87 OF THE ASSESSEES PAPER BOOK. THE BREAK-UP OF PAYMENT TO RUNNERS GIVING THEIR NAMES IS AT PAGE 88 OF THE ASSESEES PAPER BOOK. IT IS NOT DISPUTED BY THE AO THAT THE ASSESSEE ALSO FURNISHED THE ADDRESSES OF EACH OF TH E RETAILERS AND RUNNERS. APART FROM THE ABOVE THE ASSESSEE OWNS A VAN THAT WAS USED FOR THE PURPOSE OF DISTRIBUTORSHIP AND VODAFONE HAD REIMBURSED THE EXPENSES FOR USE OF THE VAN OF A SUM OF RS.94,381/-. THIS SUM OF RS.,94,381/- WAS DULY REFLECTED IN THE PROFI T AND LOSS ACCOUNT AND CONSIDERED WHILE COMPUTING THE TOTAL INCOME DECLARED IN THE RE TURN OF INCOME FOR A.Y.2007-08. 5. THE ASSESSEE FURTHER POINTED OUT THAT THE AMOUNT S DUE ARE PAYABLE TO THE RUNNERS AS COMMISSION/SPECIAL INCENTIVE WERE REFLECTED IN T HE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2008 AS OUTSTANDING LIABILITY. THE AMOUNTS SH OWN AS OUTSTANDING WERE ULTIMATELY PAID OVER A PERIOD OF TIME TO THE RETAILERS AND RUN NERS DURING THE SUBSEQUENT FINANCIAL YEARS. THE ASSESSEE ALSO POINTED OUT THAT VIDE LETT ER DATED 11.08.2010 THE ASSESSEES 3 ITA NO.994/KOL/2017 SADHAN CHANDRA GHOSH A.YR.2008-09 3 DISTRIBUTORSHIP WITH VODAFONE WAS TERMINATED AND TH E ASSESSEE WAS ASKED TO SETTLE ALL OUTSTANDING TO RETAILERS AND RUNNERS. 6. THE AO HOWEVER IGNORED ALL THE AFORESAID SUBMISS IONS AND MADE AN OBSERVATION THAT EXCEPT THE VAN CHARGE OF RS.94,381/- NONE OF T HE OTHER CHARGES WERE REFLECTED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND WAS TAK EN INTO ACCOUNT IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE AO ACCORDINGLY MADE AN ADDITION OF RS.28,66,577/- TO THE TOTAL INCOME OF THE ASSESEE (RS.29,60,958/- - RS.94 ,381/-) . 7. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREFER RED APPEAL BEFORE CIT(A). THE SUBMISSIONS MADE BEFORE AO WERE REITERATED BEFORE C IT(A). THE CIT(A) POSED TWO QUESTIONS TO THE ASSESSEE (I) THE MANNER IN WHICH T HE ASSESSEE HAS PAID THE RETAINERS THEIR COMMISSION/INCENTIVE AND PAYMENT TO RUNNERS (II) IF PAYMENTS ARE DUE TO THE THIRD PARTIES HOW THE ASSESSEE CAN CLAIM CREDIT FOR TDS W HEN THE SUM IN QUESTION IS NOT REFLECTED IN THE TOTAL INCOME DECLARED FOR THE RELE VANT ASSESSMENT YEAR IN THE RETURN OF INCOME FILED BY THE ASSESSEE. IN HIS OPINION BOTH T HE AFORESAID QUESTIONS WERE NOT SATISFACTORILY ANSWERED BY THE ASSESSEE. THE CIT(A) THEREFORE HELD THAT THERE WAS NO INDEPENDENT PROOF OF ACTUAL PAYMENT TO THE RETAINER S AND RUNNERS BY THE ASSESSEE. THERE WAS NO PASSING ON OF TDS CREDIT TO THE RETAILERS AN D RUNNERS BY THE ASSESSEE. THERE WAS NOTHING ON RECORD TO ESTABLISH THE ABOVE FACTS. IN THESE CIRCUMSTANCES, THE CIT(A) CONFIRMED THE ORDER OF AO. 8. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HA S PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 9. I HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE REVENUE AUT HORITIES. THE LD. DR RELIED ON THE ORDER OF CIT(A). 4 ITA NO.994/KOL/2017 SADHAN CHANDRA GHOSH A.YR.2008-09 4 10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND THE EVIDENCE ON RECORD. THE ASSESSEE HAD FILED COPIES OF E-MAIL FROM VODAFO NE TO THE ASSESSEE. THIS E-MAIL CONTAINS REFERENCE TO THE SCHEME OF INCENTIVE TO TH E RETAILERS . EACH OF THE RETAILERS AND THE RUNNERS HAVE BEEN IDENTIFIED IN THE BREAK-UP OF RETAILER INCENTIVE/COMMISSION AND BREAK-UP OF RUNNER CHARGE WHICH ARE AT PAGES 80 TO 88 OF THE ASSESSEES PAPER BOOK. THE INVOICE RAISED BY THE ASSESSEE OF VODAFONE ESSAR SO UTH LTD IN WHICH THERE IS A REFERENCE TO SCHEME COMMISSION IS ALSO AVAILABLE AT PAGES 69 TO 79 OF THE ASSESEES PAPER BOOK., THESE DOCUMENTS HAVE BEEN FILED BY THE ASSESEE BEFO RE THE AO. IDENTIFICATION OF ALL THE RUNNERS AS WELL AS RETAINERS WERE ALSO SHOWN TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AS IS EVIDENT FROM THE FOLLOWING ORDER SHEET MADE BY THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ON 02.09.2010. MR. UDAY KR. SAHA A/R APPEARED TODAY. HE SUBMITTED THE RETAILER SCHEME CLAIM STATEMENT AND BILL OF COMPANYS REGARDING THE SCHEM E CLAIMED, LIST OF RETAINER WITH FULL ADDRESS. THE CASE IS PARTLY HEARD. THE CASE IS ADJOURN ON 19/11/10. THUS IT IS CLEAR THAT THE FULL ADDRESS OF THE RETAI LERS HAD BEEN FURNISHED BEFORE THE AO. IN THE GIVEN CIRCUMSTANCES WE ARE OF THE VIEW THAT THE RE WAS NO BASIS FOR THE CIT(A) TO CONCLUDE THAT THE ASSESSEE HAS NOT EXPLAINED AS TO HOW THE SUM IN QUESTION IS PAYABLE TO THE RETAINERS. IT IS CLEAR FROM MATERIAL ON RECORD THAT THE SUM AS REFLECTED IN THE TDS CERTIFICATE GIVEN BY VODAFONE WAS NOT THE ASSESEES INCOME OR MONEY ON WHICH THE ASSESSEE HAD ANY TITLE EXCEPT TO THE EXTENT OF RS.9 4,381/- WHICH WAS REIMBURSEMENT OF VAN CHARGES. THE SUM REFLECTED IN THE TDS CERTIFICA TE CANNOT THEREFORE BE TREATED AS ASSESSEES INCOME. THE FACT THAT THE MONEY PAYABLE TO THE RETAILERS AND RUNNERS IS OUTSTANDING IN THE BALANCE SHEET CANNOT BE A GROUND TO HOLD THAT THE SUM REFLECTED IN THE TDS CERTIFICATE IS INCOME OF THE ASSESSEE. 11. ON THE QUESTION OF CREDIT FOR TDS THE ASSESSEE HAS REFLECTED A SUM OF RS.94,381/- IN THE TOTAL INCOME DECLARED FOR THE RELEVANT ASSES SMENT YEAR AND TO THIS EXTENT IS ENTITLED TO CREDIT. AS FAR AS THE REMAINING SUM IS CONCERNED SINCE THE SUM IN QUESTION IS 5 ITA NO.994/KOL/2017 SADHAN CHANDRA GHOSH A.YR.2008-09 5 NOT THE INCOME OF THE ASSESSEE AND FURTHER IT HAS N OT BEEN OFFERED TO TAX IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE CANNOT CLAIM CREDIT FO R TDS. TO THIS EXTENT THE ACTION OF THE REVENUE AUTHORITIES HAVE TO BE HELD AS PROPER. I THEREFORE DELETE THE ADDITION OF RS.28,66,577/-. 12. IN THE RESULT THE APPEAL BY THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 03.01.2018. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED : 03.01.2018. [RG SR.PS] COPY OF THE ORDER FORWARDED TO: 1. SADHAN CHANDRA GHOSH, C/O KAMALA TRANSPORT STAT ION BAZAR, KATWA 713130. 2. I.T.O., WARD-1(4), BURDWAN. 3. CIT(A)-BURDWAN. 4. C.I.T.-BURDWAN. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES