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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI RAJENDRA, HONBLE & SHRI C.N. PRASAD, HONBLE
O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the learned Commissioner of Income Tax (Appeals) – 22, Mumbai dated 28.11.2016 for the assessment year 2013-14.
The Revenue has raised the following effective grounds in its appeal: - “1 On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made by the Assessing Officer on account of interest on late payment of service tax without appreciating the fact that the interest on late payment of service tax is penal in nature and is an inadmissible deduction.
(A.Y: 2013-14) M/s. Shriram Chits (Maharashtra) Ltd., 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made by the Assessing Officer of Rs.15,62,53,405/- being difference between the foreman commission receivable of Rs. 35,55,89,905/- and the foreman commission actually received of Rs. 19,93,36,500/- while disregarding the fact that the assessee company would receive foreman commission @ 5 times of the agency commission paid to the agents, which is debited to the P & L A/c. at Rs. 7,11,17,981/-.
The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal
at any time before or at the time of hearing of appeal.
4. The appellant prays that the order of CIT(A) on the above ground be set- aside and that of the assessing officer be restore?”
3. At the very outset Learned Counsel for the assessee submitted that the issue in both the grounds are squarely covered by the decision of the Coordinate Bench of the Tribunal in assessee’s own case for the Assessment Years 2009-10, 2010-11 & 2011-12 and the Copies of the orders are placed in Paper Book.
4. Ld. Counsel for the assessee referring to Page Nos. 1 and 2 of the Paper Book which is the Copy of the order of the Tribunal in ITA.No. 7118/Mum/2012 dated 22.08.2014 for the Assessment Year 2009-10 submitted that the Coordinate Bench allowed the claim of the assessee for deduction of interest on late payment of service tax. Regarding Ground No.2 Ld. Counsel for the assessee referring to the Page No. 13 Para 10 of the Paper Book submitted that the addition made on account of difference between the foreman commission receivable and the foreman commission actually received has been deleted for the Assessment Year 2010-11 in ITA.No. 1789/Mum/2015 dated 17.03.2017. Ld. Counsel for (A.Y: 2013-14) M/s. Shriram Chits (Maharashtra) Ltd., the assessee also referring to Page No. 17 of the Paper Book submitted that similar addition was deleted by the Tribunal in ITA.No. 3639/Mum/2016 dated 18.01.2018 for the Assessment Year 2011-12.
Ld. DR fairly submitted that both the issues in the grounds of appeal of the Revenue are decided by the Coordinate Bench in favour of the assessee.
We have heard the submissions, perused the orders of the Coordinate Bench in assessee’s own case for the Assessment Years 2009-10 to 2011-12. In so far as the deletion of addition made towards interest on late payment of service tax, we find that identical issue came up before the Coordinate Bench for the Assessment Year 2009-10 and the Tribunal deleted the said addition observing as under: - “7. We have carefully perused the orders of the Authorities below. The undisputed fact is that the interest has been paid on the delayed payment of service tax u/s. 75 of the service tax Act, interest payment is of compensatory in nature and has the same character as service tax and it is an undisputed fact that service tax is a permissible deduction, Therefore, in our considered view, the interest should also be allowed in the same manner. We, accordingly direct the AO to delete the addition of Rs.7,90,996/-. Ground No. 1 is accordingly allowed.”
Respectfully following the said decision, we uphold the order of the Ld.CIT(A) and reject the ground of the Revenue.
Coming to the addition made towards foreman commission, we find that identical issue came up before the Coordinate Bench for the (A.Y: 2013-14) M/s. Shriram Chits (Maharashtra) Ltd., Assessment Year 2010-11 and the Tribunal deleted the addition observing as under:
“10. We have heard the counsel of both the parties and we have also perused the material placed on record as well as the orders passed by the revenue authorities. Before we decide the merits of the case it is necessary to evaluate the orders passed by Ld. CIT(A). The operative portion is reproduced below: - “I find that the appellant earns a commission of 5% on the total chit fund collection. Such, chit schemes are-normally-of-30. months to 50 months duration. Therefore, the said commission of 5% is spread over a period of more than 2 to 5 years. It is also seen that the assessee earns commission on a month to month basis on the monthly collection made and on the successful bidding by the subscribers. However, the agents are paid a commission of 1% of the total chit value, in respect of each subscriber enlisted by him provided such subscriber pays at least four months instalment, immediately on receipt of four such instalment. Thus there is no definite co-relation between the foreman commission earned and the agency commission paid. The appellant also may have to make additional expenditure on failed chit collections. Therefore, the addition made by the AO in computing the income of the appellant by applying 5 times of the payment of commission to the agents is not based on any objective yard stick. In view of the above, the addition of Rs.4,72,17,435/- made by the AO is deleted. After analyzing the aforementioned order passed by Ld. CIT(A) and after hearing the arguments of both the parties, we find that the CIT(A) has taken into consideration that the assessee earned commission of 5% on the total chit fund collection. The said commission is spread over the total period of scheme and in this way the assessee earns commission on a month to month basis on the monthly collection made and on the successful biding by the subscribers. As per the facts, the agents are paid a commission of 1% of the total chit fund value in respect of each subscriber enlisted by him provided such subscribers pays at least 4 months installment, immediately on receipt of 4 such installments and in this way there is no definite co-relation between the foremen commission earned and the agency commission paid. After appreciating the facts, the Ld. CIT(A) had rightly decided that the addition made by the AO in computing the income of the assessee by applying five times of the payment of the commission to the agents is not based on any objective yardsticks, therefore deleted the said additions. We have also noticed that the Ld. CIT(A) while deciding this issue had also taken into consideration the submission made by assessee which are contained in para no. 4 and also the findings of AO which are contained in para no. 3 of CIT(A)’s order. Apart from the above, the Ld. DR appearing for the appellant has not placed on record any new facts or contrary judgments of higher courts before us in order to controvert or rebut the findings recorded by learned CIT (A), and therefore, there are no reasons for us to deviate from or interfere into the well- reasoned findings recorded by the Ld. CIT (A). Therefore, after hearing both the (A.Y: 2013-14) M/s. Shriram Chits (Maharashtra) Ltd., parties and analyzing the impugned order, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and well-reasoned. Accordingly, we uphold the same and dismiss this ground of appeal filed by revenue.” Facts being identical following the said decision, we uphold the 9. order of the Ld.CIT(A) and reject the ground of the Revenue.
In the result, appeal of the Revenue is dismissed. 10.
Order pronounced in the open court on the 11th July, 2018.