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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI V.DURGA RAO & SHRI G.MANJUNATHA
order of the learned CIT(A)-15, Chennai dated 30.04.2019 and pertains to assessment year 2014-15.
2. The assessee has raised the following grounds of appeal:-
The order of the Commissioner of Income tax (Appeals) is contrary to law, facts of the case and material on record.
The Commissioner of Income tax(Appeals) is not justified in deciding the appeal against the appellant without affording sufficient opportunity of being heard.
Though the appellant could not attend the appeal hearings due to other pressing pre-occupations, his subsequent attempts to meet the CIT(A) on couple of occasions to make oral/written submissions faiIed due to pre-occupation of the Commissioner of Income tax (Appeals). The CIT(A) could have been more liberal in affording another opportunity before deciding the appeal ex-parte.
3. The Commissioner of Income tax {Appeals) has erred in confirming the disallowance of selling expenses’ amounting to Rs.25,61,387/- representing discount allowed to customers on assaying and Hall marking charges without appreciating that similar expenditure was claimed and allowed in earlier years.
The Commissioner of Income tax (Appeals) failed to appreciate that there was no change in circumstances warranting different treatment to the expenditure claimed.
The Commissioner of Income tax (Appeals) grossly erred in not directing the Assessing officer to refer the valuation of the property to the DVO before adopting the guideline value u/s 5OC especially when the appellant had contended before the Assessing Officer that the guideline value did not reflect the realisable value.
For these grounds and such ether wounds as may be adduced either before or during the course of appeal proceedings, the tribunal may be pleased to direct the officers below to allow the claim of expenditure in the nature of discount on assaying anti Hall marking charges and also for referring the valuation of the property to the Valuation Officer for the purpose of assessing the gain arising on the sale of landed property and also pass such other order or orders as the Tribunal may deem fit and proper and render justice.”
Brief facts of the case are that the assessee company is engaged in the business of gold assaying and hall marking filed its return of income for the assessment year 2014-15 on 30.09.2014 declaring total income of Rs.95,56,606/-. The case was taken up for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that assessee has claimed huge expenses under the head other expenses and hence, called upon the assessee to file necessary details of expenditure debited under the head ‘other expenses’. In response, the assessee has filed details of expenses including selling expenses, discounts allowed to customers. The Assessing Officer on the basis details filed by the assessee was of the opinion that expenditure debited under the head discount allowed to customers is not supported by necessary evidences. The Assessing Officer further observed that as per Bureau of Indian Standards, a fixed rate has been specified per piece of jewellery certified by the assessee and hence, question of allowing discount to the customers does not arise. Therefore, he opined that expenditure debited under the head discount allowed to customers is non-genuine and accordingly disallowed deduction claimed under the head discount allowed to customers amounting to `25,61,387/-. Similarly, the Assessing Officer noted that the assessee has computed long term capital gain from sale of property, therefore, called upon the assessee to file necessary evidences including copy of sale deed. The Assessing Officer further noted that although, sale consideration was mentioned at ` 1.25 crores in the registered sale deed, but market value of property was assessed at `1.67 crores for the purpose of payment of stamp duty, therefore, by applying the provisions of 50C, recomputed long term capital gain by taking sale consideration at ` 1.67 crores.
4. The assessee carried the matter in appeal before learned CIT(A), but could not succeed. The learned CIT(A), for the reasons stated in his appellate order, confirmed additions made towards disallowance of discount allowed to customers and recomputation of long term capital gain by adopting market value determined for the purpose of payment of stamp duty as per provisions of section 50C of the Act. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us.
5. The learned AR for the assessee submitted that the learned CIT(A) has erred in confirming additions made towards disallowance of discount allowed to customers without appreciating the fact that similar expenditure was claimed and allowed in earlier years and hence, without there being any change in facts, no disallowance can be made on discount allowed to customers. The AR further submitted that assessee has filed all evidences to prove the expenses, but the authorities below have ignored all evidences filed by the assessee. Therefore, the issue may be set aside to the file of the Assessing Officer to give one more opportunity to the assessee to explain its case. The AR further submitted that as regards recomputation of long term capital gain, it was the case of the assessee before the Assessing Officer that when there is a difference in sale consideration recorded in registered sale deed and value determined for the purpose of payment of stamp duty, the Assessing Officer ought to have referred valuation to the DVO for determining correct market value of the property. In spite of request from the assesse, the Assessing Officer had not referred for valuation to DVO and simply adopted market value, ignoring specific provisions provided under sub-section (2) of section 50C of the Act.
Therefore, the issue may be set aside to the file of Assessing Officer to determine correct market value of the property by referring valuation to the DVO.
The learned DR, on the other hand, fairly agreed that appeal maybe set aside to the file of Assessing Officer to give one more opportunity to the assessee to explain its case with reference to disallowance of discount allowed to customers and determination of market value of the property for computation of capital gain .
We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. We find that both the counsels for the assessee as well as Revenue have agreed for set aside the appeal to the file of the Assessing Officer to reconsider the issue of disallowance of discount allowed to customers and recomputation of long term capital gains from sale of property by referring valuation to the DVO. Therefore, without considering merits of the case, we deem it appropriate to set aside the appeal to the file of Assessing Officer and direct him to reconsider the issue of disallowance of discount allowed to customers in light of claim of the assessee that it has furnished various evidences to justify its claim. Similarly, the issue of recomputation of long term capital gains has also been set aside to the file of Assessing Officer, with a direction to the Assessing Officer to determine correct market value of the property by referring valuation to the DVO, in accordance with the provisions of section 50C(2) of the Act. Needless to say, the assessee shall furnish necessary evidences before the Assessing Officer to justify its case.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.