THE DCIT, GANDHINAGAR CIRCLE,, GANDHINAGAR vs. M/S. WESTERN AGRI SEEDS LTD.,, GANDHINAGAR

The fact in brief is that assessee has filed return of income declaring income at Rs. 97,99,820/- on 29th Sep, 2013. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 15th Page No 2 Dy. CIT vs. M/s Western Agri Seeds Ltd. Sep, 2014. During the course of assessment, the assessing officer noticed that assessee has claimed an amount of Rs. 3,67,98,650/- as rate difference/discount expenses. The assessee has explained that rate different and discount are allowed to the dealer in the normal course of business. However, the assessing officer has not accepted the explanation of the assessee and disallowed the expenses on the basis of preceding assessment years 2010-11 and 20101-12. Further, during the course of assessment, the assessing officer has also noticed that assessee has made purchases of Rs. 44,10,34,655/- from associate concern namely Green India Seeds Company a person defined u/s. 40A(2)(b) of the act. The assessee has explained that the transactions were not covered u/s. 40A(2)(b) of the act as the Green India Seed Company has sold the seed under the name of its own “Green” in various varieties. The assessing officer has not agreed with the contention of the assessee. The assessee had made purchases of Rs. 44,10,34,655/- and the assessing officer has disallowed 3.75% of such purchases to the amount of Rs. 1,65,38,800/- as gross profit earned by the associate concern. The same amount was added to the income of the assessee.

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee.

During the course of appellate proceedings before us, the ld. departmental representative has supported the order of assessing officer. On the other hand, the ld. authorized representative has contended that the Co- ordinate Bench of the ITAT Vide and 2796/Ahd/2014 order Page No 3 Dy. CIT vs. M/s Western Agri Seeds Ltd.

We have heard both the sides and perused the material on record carefully. With the assistance of ld. representatives, we have gone through the decision of Co-ordinate Bench in the case of the assessee itself vide & 2796/Ahd/2016 and noticed that identical issue on similar facts has been adjudicated in favour of the assessee. Relevant part of the decision of aforesaid Co-ordinate Bench is reproduced as under:- In respect of addition made on account of rate difference, relevant part of decision of Co-ordinate Bench in the aforesaid decision is reproduced as under:- “7. We have heard the representative of the respective parties. We have also perused the relevant materials available on record. It appears that the assessee duly submitted the ledger account along with the complete details of the parties which is also part of annexure before us in the paper book the details whereof is also before us at Page No.37 of the Paper Book. The list of the parties and the ledger accounts of those parties are also reflecting from Page 38 to 190 of the Paper Book. We have gone through the same; the entire payment made by the assessee is reflected in those ledger accounts as on record before us which has not been alleged as non-genuine by the Learned AO. So far as the rate discount of Rs.1,89,160/- paid to M/s. Samarth Baparam Seeds Corporation is concerned the detail submission is also available in this respect made by the assessee at Page 4 & 5 of the assessment order. It appears that sufficient details were submitted by the appellant in support of his claim. Further that while allowing the claim of the assessee by deleting the addition made by the Learned AO the Learned CIT(A) observed as follows: “On careful consideration of entire facts it is observed that Appellant has established its business to provide high value research and hybrid seeds to farmers as a brand name "Western" since last twenty years. In any business, discount/rate difference is allowed to customers as per policy of the business and for which trade circulars are issued on time to time basis. The entire payment made by Appellant is duly reflected in ledger account of various dealers and supported by evidences. Even AO has not pointed out any defect in such evidences produced by Appellant. During the course of assessment proceedings, AO has raised one query relating to discount and rate difference of Rs.1,89,160/- paid to Shri Samarth Baparam Seeds Corporation and said query is reproduced at page No. 3 of the assessment order. Against this query, Appellant has made detailed submission, which is also reproduced on page-4 and 5 of the assessment order. On the basis of such submission, AO has not drawn any adverse inference which is apparent in the assessment order. The issue was raised from the details submitted by appellant, which prove that Appellant has produced evidences in support of its claim. It is pertinent to note that ratio of discount to turnover in A.Y. 2008-09 was 6.25%, 7.02 % in A.Y. 2009-10 and 6.66% in year under consideration, which supports the contention of the Appellant that discount/rate difference are allowed consistently. Further, in AY 2009-10, AO has Page No 4 Dy. CIT vs. M/s Western Agri Seeds Ltd.

In the result, the appeal of the revenue is dismissed.