PRINCIPAL COMMISSIONER OF INCOME TAX-3 vs. R.K. INDUSTRIES,

PDF · subscribers

TAXAP/287/2018HC GujaratGJHC24011255201804 April 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that all three questions raised by the Revenue were purely questions of fact and no question of law arose from the ITAT's order. Regarding the first issue, the Tribunal confirmed the CIT(A)'s view, noting that the AO's basis for rejecting the assessee's books was not doubted, especially after a remand report was called for and no objections were raised by the AO. Concerning the second issue, the Tribunal found that the commission expenses were admittedly paid to the assessee's agent, were genuine, and supported by evidence. For the third issue, the Tribunal concluded that the expenditure of Rs. 3,56,100/- on account of legal and professional fees was a revenue expenditure. The High Court found no error in the concurrent findings of the CIT(A) and the ITAT.

What were the facts?

The Revenue, identified as the Principal Commissioner of Income Tax-3, has filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) dated August 28, 2017. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which deleted certain additions and disallowances made by the Assessing Officer (AO). The assessee is R.K. Industries. The appeal concerns assessment year(s) not explicitly stated in the provided text. The disputed amounts are Rs. 51,10,131/- on account of gross profit, Rs. 10,51,382/- on account of commission expenses, and Rs. 3,56,100/- on account of legal and professional fees.

What were the issues?

The Tribunal had to decide three questions, framed as questions of law by the Revenue: 1. Whether, in the facts and circumstances, the Tribunal was right in upholding the CIT(A)'s deletion of the AO's addition of Rs. 51,10,131/- on account of gross profit? 2. Whether, in the facts and circumstances, the Tribunal was right in upholding the CIT(A)'s deletion of the AO's addition of Rs. 10,51,382/- on account of commission expenses? 3. Whether, in the facts and circumstances, the Tribunal was right in upholding the CIT(A)'s deletion of the AO's disallowance of Rs. 3,56,100/- on account of legal and professional fees? The Revenue contended that the Tribunal erred in upholding the deletions. The Assessee's contentions are not recorded in the judgment. The judgment does not mention any specific authorities, circulars, or precedents relied upon by either party.

AI-generated summary — verify with the full judgment below

C/TAXAP/287/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 287 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX-3 Versus R.K. INDUSTRIES, ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 04/04/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 28.08.2017 raising following question for our consideration: “1. Whether in the facts and the circumstances of the case, the Appellate Tribunal is right in upholding the order of the CIT(A) deleting the addition of Rs. 51,10,131/- on account of gross profit made by the Assessing Officer? 2. Whether in the facts and the circumstances of the case, the Appellate Tribunal is right in upholding the order of the CIT(A) deleting the addition of Rs. 10,51,382/- on account of commission expenses made by the Assessing Officer? 3. Whether in the facts and the circumstances of the case, the Appellate Tribunal is right in upholding the order of the CIT (A) deleting the disallowance amounting to Rs. 3,56,100/- on account of legal and professional fee made by the Assessing Officer?” Page 1 of 2

C/TAXAP/287/2018 ORDER 2. Having perused the orders on record with the assistance of the learned counsel for the Revenue, we notice that all three questions are purely questions of facts. The Tribunal and the CIT(Appeals) concurrently held that the Assessing Officer is not justified in making the additions and disallownace. With respect to first question, the Tribunal while confirming the view of CIT (Appeals) recorded that during the appellate proceedings the remand report was called from the Assessing Officer to which no objections were raised. Through additional evidence the very basis for the Assessing Officer to reject the assessee's books was not doubted. 3. Regarding the second question, the Tribunal noted that the commission was admittedly paid to the assessee's agent. Commissioner found that the payments were genuine and there was supporting evidence. 4. With respect to third question the Tribunal came to the conclusion that the expenditure of Rs. 3.56 lacs on account of legal and professional fees was revenue expenditure. 5. All issues are purely factual. No question of law arises. Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) JYOTI V. JANI Page 2 of 2

Recent GST High Court judgments

Search GST case law →