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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: Shri Pramod Kumar]
SMC-ITA No. 644/Ahd/2016 Sharad V Mehta Vs. ACIT (OSD) AY : 2008-09 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD [ Before Shri Pramod Kumar, Accountant Member ] ITA No. 644/Ahd/2016 Assessment Year : 2008-09 Sharad V. Mehta ......…………......Appellant B-402, Nirman Complex, Opp. Havmor Restaurant, Navrangpura, Ahmedabad [PAN : ABSPM 6911 H] Vs. ACIT (OSD) .......................Respondent Circle-10, Ahmedabad
Appearances by: PB Parmar, for the appellant VK Singh, for the respondent Date of concluding the hearing : 20.06.2018 Date of pronouncing the order : 12.09.2018 O R D E R 1. By way of this appeal, the assessee appellant has challenged correctness of learned CIT(A)’s order dated 9th February 2016, in the matter of assessment under section 143(3) r.w.s. 147 of the Income-tax Act, 1961, for the assessment year 2008-09. 2. Grievance of the assessee, in substance, is that the CIT(A) has erred in upholding the addition of Rs.2,29,518/- on account of brokerage income. That is the only grievance pressed by the appellant.
The issue in appeal lies in a very narrow compass of material facts. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that while the TDS certificates reflect brokerage payment of Rs.31,02,199/-, the profit and loss account shows brokerage income of only Rs.25,33,924/-. In the reconciliation statement submitted by the assessee, this difference was explained as follows:-
“Brokerage income as per TDS Certificates - 31,02,199 Less : Service tax on brokerage - (3,41,561) Less : Late payment charges deducted by Electrotherm- (2,27,000) Less : Late payment charged deducted by Electrotherm- (2,518) Add : Kasar - (2,804) Brokerage as per P&L a/c 25,33,924”
SMC-ITA No. 644/Ahd/2016 Sharad V Mehta Vs. ACIT (OSD) AY : 2008-09 Page 2 of 3 4. Not satisfied with the above reconciliation, the Assessing Officer proceeded to make an addition of Rs.5,71,079/- by observing as follows:-
“6. The submission of the assessee has been perused but the same is not acceptable in view of following observations:- (i) On verification of bills and ledger, a discrepancy was found in amounts as per bills raised and the ledger maintained by the assessee. Assessee was asked to produce bills raised which are in reconciliation with the final ledger prepared for Electrotherm. However, the assessee vide submission dated 18/12/2013, failed to provide bills, in reconciliation with the amounts of each bill as per the ledger of Electrotherm. (ii) Assessee was once again given an opportunity to produce bills on 18/12/2013 and was given time to produce bills. However, assessee has placed no bills in reconciliation of the same. (iii) Assessee was asked to produce confirmation of Electrotherm regarding late payment and service tax reimbursement vide order sheet entry dated 27/11/2013. And, assessee was given opportunities again on 17/12/7013 and 18/12/2013 (as requested by assessee) to produce the same. (iv) Assessee has not produced any confirmation regarding service tax reimbursement and as per the TDS certificate, assessee has received Rs.31,02,199/-. In response to the confirmation with respect to late payment charges, no confirmation from Electrotherm has been placed on record. The assessee has submitted a copy of ledger account of Sharad Mehta, allegedly signed by Electrotherm (India) Ltd. This in no way certifies that late payment charges were deducted by the company and assessee has received lesser amount. Hence, an addition of Rs.3,41,561/-, Rs.2,27,000/- and Rs.2,518/- is being made which is in reconciliation with the TDS certificate.”
Aggrieved, assessee carried the matter in appeal but without complete success. Learned CIT(A) confirmed the addition of Rs.2,29,518/-, on account of late fee charges, by observing as follows:- “……. With regard to late payment charges deducted by the company the contention of the appellant is not acceptable. The Electrotherm India Pvt Ltd has deducted tax on the payment made to the appellant. From the details filed by the appellant, it is not verifiable that the Electrotherm India Ltd has deducted tax on the amount which was deducted by it as late payment charges from the brokerage due. Therefore, the addition of Rs.2,27,000/- and Rs.2,518/- is confirmed and the ground of appeal is partly allowed.”
The assessee is not satisfied and is in further appeal before the Tribunal.
SMC-ITA No. 644/Ahd/2016 Sharad V Mehta Vs. ACIT (OSD) AY : 2008-09 Page 3 of 3 7. I have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
I have noted that the assessee has duly furnished the copy of account of Electrotherm, and the bank statement etc., which shows the short realizations due to late payment charges. There is no dispute on this aspect of the matter anyway. There is also no dispute that the assessee has written off the same in the books of accounts as such. Therefore, it does not make any difference whether an addition is made in the brokerage account and the deduction for short realization is allowed or whether actual amount received is shown as brokerage income. The accounting treatment will be completely tax neutral. The mere fact that the assessee has not been able to obtain confirmation from Electrotherm, particularly when complete details are placed on record, cannot be reason enough to disallow the deduction for late payment charges and make corresponding addition to brokerage income. In view of these discussions, as also bearing in mind entirety of the case, I deem it fit and proper to delete the impugned addition of Rs.2,29,518/-. Ordered, accordingly.
In the result, the appeal is allowed. Pronounced in the open court today on the 12th day of September, 2018.
Sd/-
Pramod Kumar (Accountant Member) Ahmedabad, the 12th day of September, 2018 **bt Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad
Date of dictation: ....as per 4 pages manuscripts of hon’ble AM-......12.09.2018...... 2. Date on which the typed draft is placed before the Dictating Member: ... 12.09.2018... 3. Date on which the approved draft comes to the Sr. P.S./P.S.: …12.09.2018….. 4. Date on which the fair order is placed before the Dictating Member for Pronouncement: .. 12.09.2018 5. Date on which the file goes to the Bench Clerk : .. 12.09.2018……. 6. Date on which the file goes to the Head Clerk : ……………………………. 7. The date on which the file goes to the Assistant Registrar for signature on the order: …. 8. Date of Despatch of the Order: ………………......