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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SANDEEP GOSAIN, Honble & SHRI O.P.MEENA, Honble
सुनवाईकीतारीख/ Date of hearing: 11.02.2020 उ�घोषणाक�तार�ख/Pronouncement on: 14.02.2020 आदेश /O R D E R
PER SANDEEP GOSAIN, JM:
This appeal by the Assessee is directed against the order of Ld.Commissioner of Income Tax(Appeals)-1, Surat dated 08.09.2017 for the assessment year 2012-13.
Grounds raised
by the Assessee read as under: “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the assessing officer in making disallowance of commission expense paid to Sumeet Industries Ltd to the extent of Rs.12,81,829/- considering total turnover.
2. It is therefore prayed that above disallowance confirmed by the CIT(A) may please be quashed and deleted.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
Kshitij Marine Services Pvt. Ltd., Vs.ITO, Ward-1(1)(3), Surat/ /A.Y.2012-13 Page 2 of 4
The brief facts of the case are that the assessee is engaged in the business of Marine related services and shown turnover of Rs.3,05,06,951/- and gross profit at Rs.14,20,259/- which is @4.66%. However, against the total receipt, commission @45% was paid by the assessee to Sumit Industries. The assessee had included the service tax collected from the customer, but the ld.Assessing Officer(AO) made the disallowance on the ground that service tax is collected on behalf of the Government and it is not accruing to the assessee company as the bill amount. Therefore, accordingly disallowance was made out of commission expenses and added back to the total income of the assessee.
Being aggrieved with the order of the ld.AO, the assessee filed appeal before the ld.CIT(A), and the ld.CIT(A) dismissed the appeal filed by the assessee by holding that the assessee himself has agreed for disallowance.
Being aggrieved with the order of the ld.CIT(A), the assessee filed appeal before us on the grounds mentioned hereinabove. The solitary ground raised
by the assessee relates to challenging the order of the ld.CIT(A) in confirming the disallowance of commission expenses paid to Sumit Industries. The ld.Authorised Representative(AR) reiterated the same argument as was raised Kshitij Marine Services Pvt. Ltd., Vs.ITO, Ward-1(1)(3), Surat/ /A.Y.2012-13 Page 3 of 4 before the ld.CIT(A) and also relied upon the decision in the case below: “1. Chhat Mull Agarwal vs CIT [ 116 ITR 0694] (Punjab & Haryana HC)
2. Gauri Sahai Ghisa Ram vs CIT [ 120 ITR 0338] ( Allahabad HC) 3. SR Koshti vs CIT [276 ITR 0165] (Guj HC) 4. CIT vs Bharat General Reinsurance Co. Ltd. [81 ITR 0303] (Del HC)
5. M/s. Kalindree Rail Nirman Enginers Ltd. vs CIT [ 88 taxmann.com 533] (Raj HC)”
6. It was submitted that the assessee had not agreed for making the disallowance and even otherwise, it was further submitted that identical ground has already been decided by the Co-ordinate Bench of ITAT in assesee’s own case for A.Y. 2010-11 and relied upon the decision in for A.Y. 2010-11.
On the other hand, the ld.Departmental Representative(DR) relied upon the orders passed by the Revenue Authorities.
We have heard both the Counsels and perused the material placed on records, judgments cited by the parties as well as orders passed by the Revenue Authorities. From the records, we noticed that the issue is squarely covered in assessee’s own in for A.Y. 2010-11 wherein para 9 as under: “10. We have heard the rival submissions and perused the material on record and we find that as per Clause 2.1 of the works order the remuneration was fixed @45% of the total invoices / billed amount receivable. Accordingly, the assessee has calculated the payment of commission @45% on gross amount invoices / bill including service tax payable which worked out at Rs.58,71,410/-. Accordingly, said amount was claimed as actually paid which has also been duly confirmed by M/s.Paras Petrofills Ltd. the recipient. Therefore, it is the method of calculation of commission payment as per the agreement entered into by the assessee and other party whereas the CIT is of the view that payment of Kshitij Marine Services Pvt. Ltd., Vs.ITO, Ward-1(1)(3), Surat/ /A.Y.2012-13 Page 4 of 4 commission @45% is excluding service tax. We are not persuaded with this argument as it is between the parties as how to calculate the payment of commission on the basis of works order entered into. Further, the recipient party has also confirmed the receipt of the said amount of commission. Therefore, we are of the considered opinion that disallowance of Rs.5,19,422/- worked out by CIT for disallowing the same from commission is not in accordance with the intention and payments made by the assessee, hence, the same is directed to be deleted.”
Even otherwise, the admission of the assessee is of no consequence as the assessee has specifically stated that he has never agreed for the disallowance. We are of the view that the rights of the assessee cannot be settle down only because he has agreed to do so. Therefore, respectfully following the above, we are of the considered opinion that the disallowance made by the ld.AO and upheld by the ld.CIT(A) is not in accordance with the intention and payments made by the assessee, thus the same is directed to be deleted, accordingly the solitary ground raised by the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 14-02-2020.