RAM KUMAR DAITAPATI,PURI vs. ITO, PURI WARD, PURI, PURI

This is an appeal filed by the assessee against the order of

the Commissioner of Income Tax(Appeals)-2, Bhubaneswar dated

30.11.2018 for the assessment year 2010-2011.

the time of hearing, the sole issue agitated is that the

Commissioner of Income Tax(Appeals) erred in confirming the

addition of Rs.7,96,948/- on account of Nilachal Service Station in

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the hands of the assessee as he is not the real owner off the

petrol pump.

that the assessee entered into agreement with Jayakrushna

Brahmachari for managing and running the petrol pump and

opened a bank account with State Bank of India, Temple Road

Branch, Puri and there are credits of Rs.2,35,60,423/-. Before the

Assessing Officer confirmed the credits are out of sale proceeds

from petrol pump. The Assessing Officer observed that the

assessee has purchased and sold petrol of 584 kl and diesel of 208

kl. Therefore, he considering the dealer commission @ Rs.1125/-

per kl of petrol to Rs.6,57,000/- and @ Rs.673/- per kl of diesel

amounting to Rs.1,39,984/, computed the total commission at

Rs.7,96,984/- and added the same as business profit of the

assessee to the income of the assessee.

Assessing Officer.

that the real owner of the petrol pump being ill and in old age,

vide an agreement empowered the assessee to manage the

Neelachal Service Station. Accordingly, the assessee opened a

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bank account with State Bank of India and deposited the sale

proceeds for smooth transaction. In support of this, he filed an

agreement between the assessee and Shri Jayakrushna

Brahmchari dated 1.9.2008, wherein, it is stated that the

assessee would receive Rs.5,000/- per month from the owner of

petrol pump till three years from the date of agreement. He

submitted that to manage the petrol pump, the assessee had

incurred incidental expenditure and other expenses on day to day

basis. However, without considering the expenditure, the

authorities below added the commission paid by the Indian Oil

Corporation to the income of the assessee, which is not correct.

authorities.

materials on record of the Tribunal. It is not disputed that the

assessee is not the owner of the petrol pump, which income is

computed in hands of the assessee. The assessee had entered

into an agreement with the owner of Neelachal Service Station, Mr

Jayakrushna Brahmachari to look after the service station on the

ground of his old age and ill health with a remuneration of

Rs.5000/- per month till three years from the date of the

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agreement. Accordingly, the assessee had opened a bank account

with State Bank of India and deposited the day to day sale

proceeds from the said petrol pump. It is the contention of the

assessee that to manage the petrol pump, the assessee had to

incur several expenditure, which has not been taken into

consideration by the lower authorities while computing the

commission income from IOCL. It is also evident from the order

of the CIT(A) that the assessee has not maintained the books of

account, for which, the actual expenditure incurred to manage the

petrol pump is not known. It is also not in dispute that the

assessee had not incurred any expenditure for smooth functioning

of the petrol pump. There are so many expenses to be incurred

such as Staff salary. Electricity bill. Fuel transportation expenses and loss

of petrol in transportation and Maintenance and accounting expenses. This

aspect has to be taken into consideration while determining the profit of the

assessee on the basis of dealers’ commission fixed by IOCL. However,

looking into the facts and circumstances of the case, I am of the considered

view that even though the assessee has not maintained books of account

for carrying out the petrol pump business, but at the same time has incurred

expenditure. Therefore, in order to render substantial justice, I deem it

proper to restrict the addition to 50% of Rs.7,96,984/- which comes to

Rs.3,98,492/-.

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Order pronounced on 16/05/2019. Sd/- (Chandra Mohan Garg) JUDICIALMEMBER Cuttack; Dated 16/05/209 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Sri Ram Kumar Daitapati, At: Matimandap Sahi, Nabat Khana Lane, Puri

Sr. Pvt. Secretary, ITAT, Cuttack

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