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Income Tax Appellate Tribunal, DELHI BENCHES : C : NEW DELHI
Before: SHRI R.S. SYAL & SMT. BEENA A. PILLAI
& 6074/Del/2014 & 484/Del/2016 ORDER PER BENCH: This batch of three appeals comprises of two cross appeals for the assessment year 2009-10 and one appeal by the Revenue for the assessment year 2011-12. For the sake of convenience, we have clubbed these appeals for disposal.
Assessment Year 2009-10
The only issue raised by the assessee in its appeal is against the taxability of commission received in advance in respect of purchases accounted for in the next financial year.
Briefly stated, the facts of this ground are that the assessee declared advance commission received amounting to Rs.37.75 lac which was not offered for tax. The Assessing Officer opined that since the assessee was following mercantile system of accounting, such commission received was liable to be taxed. The ld. CIT(A) accepted the assessee’s contention to the extent of commission income of Rs.32,37,000/- which was brought forward from the assessment year 2008-09 and offered to tax during assessment & 6074/Del/2014 & 484/Del/2016 year 2009-10. The remaining amount was held to be chargeable to tax.
Both the sides are in appeal on their respective stands.
We have heard the rival submissions and perused the relevant material on record. It is noticed that similar issue came up for consideration before the Tribunal in the assessee’s own case for the immediately succeeding, viz., assessment year 2010-11. A copy of such order dated 07.02.2018 in has been placed on record. Relevant discussion has been made in para 8 by which it has been held that the advance commission received in respect of purchases accounted for in the succeeding year should not be brought to tax in the year of receipt. The facts and circumstances of the instant ground are, admittedly, similar. In view of the foregoing and respectfully following the precedent, we hold that the ld. CIT(A) was justified in deleting the addition of Rs.32.37 lac and erred in sustaining the remaining addition. Thus, the ground raised by the assessee is allowed and that by the Revenue is dismissed.
Ground No.2 of the Departmental appeal is against the deletion of addition of Rs.18,35,530/- out of addition of Rs.19,53,086/- made by the & 6074/Del/2014 & 484/Del/2016 Assessing Officer on account of Rebates and write offs. The facts apropos this ground are that the assessee debited a sum of Rs.19,53,086/- under the head ‘Rebate and written off expenses.’ In the absence of the assessee furnishing necessary details, the Assessing Officer made an addition for this sum. The assessee contended before the ld. CIT(A) that the amount of Rs.19,53,086/-, except for a sum of Rs.1,17,556/-, represented written off balances of debtors. A detail of such debtors written off was furnished to the ld. CIT(A), who sent the same to the Assessing Officer for remand report. Considering the remand report, the ld. CIT(A) deleted the addition to the extent of Rs.18,35,530/-. Remaining addition of Rs.1,17,556/- was upheld, which represented ‘Provisions for reserve and doubtful debts written off.’ The assessee accepted the confirmation of addition to the extent of Rs.1,17,557/- and the Revenue has assailed the deletion of addition of Rs.18,35,530/-.
After considering the rival submissions and perusing the relevant material on record, it is found that the amount receivable from debtors was, admittedly, written off during the year for which necessary details were also produced before the ld.CIT(A) and, in turn, before the Assessing 4 & 6074/Del/2014 & 484/Del/2016 Officer in remand proceedings. The Hon'ble Supreme Court in the case of TRF Ltd. vs. CIT (2010) 323 ITR 397 (SC), has held that claim for bad debt has to be allowed on a mere write off and there is no further need to prove that the amount of debt became bad during the year. In view of the above binding precedent, we hold that the ld. CIT(A) was justified in deleting the addition to the extent of Rs.18,35,530/-
Last ground of the Departmental appeal is against the deletion of addition of Rs.11,27,955/-. On going through the audit report furnished by the assessee, the Assessing Officer observed that the assessee paid sales-tax of Rs.11,27,955/- along with surcharge and such sales-tax paid during the year was debited under the head ‘Repairs and renewals.’ In the absence of any explanation, the Assessing Officer made an addition for the said sum.
The ld. CIT(A) deleted the addition after noticing that the sales-tax was raised by the sales-tax authorities which was paid during the year and challans of such payment were also produced. He, therefore, held that it was a payment of sales-tax and not any penalty etc., which was allowable in the year of payment in terms of section 43B of the Act. & 6074/Del/2014 & 484/Del/2016 8. Having heard both the sides and gone through the relevant material on record, we find that the ld. CIT(A) deleted the addition by noticing that Rs.11,27,955/- was the amount of sales-tax paid by the assessee during the year in respect of sales-tax assessments completed and such amount was not of a penal nature. The ld. DR could not controvert the findings recorded by the ld. CIT(A) with any cogent evidence. Since the said sum represented the payment of sales-tax made during the year, the same, in our considered opinion, was rightly allowed by the ld. CIT(A). We, therefore, uphold the impugned order on this score.
In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed.
Assessment Year 2011-12
The Department has filed this appeal on the solitary effective ground reading as under:-
“That the ld.CIT (Appeals) has erred in deleting the disallowance of Rs.30,68,760/- made by the A.O. on account of interest expenses as assessee has not capitalized proportionate interest cost allocable to Capital Work in Progress of Rs.2,55,73,000/-.”
& 6074/Del/2014 & 484/Del/2016 11. We have heard the rival submissions and perused the relevant material on record. It is seen that the ground reproduced above does not arise out of the impugned order. In fact, the Assessing Officer made two additions, namely, one u/s 14A to the tune of Rs.1,83,397/- and another on account of advance commission amounting to Rs.68,65,000/-, which the ld. CIT(A) dealt with in the impugned order. There is no reference whatsoever to subject matter encapsuled in the ground extracted above. The ld. DR also fairly admitted that this ground does not arise from the impugned order. Under these circumstances, we dismiss the ground taken above as not arising from the impugned order.
In the result, the appeal is dismissed.
The order pronounced in the open court on 19.09.2018.