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Income Tax Appellate Tribunal, “D”, BENCH KOLKATA
Before: SHRI S. S. GODARA, J.M &DR. A.L.SAINI, A.M
IN THE INCOME TAX APPELLATE TRIBUNAL “D”, BENCH KOLKATA
BEFORE SHRI S. S. GODARA, J.M &DR. A.L.SAINI, A.M आयकरअपीलसं./ITA No.1461/Kol/2016 ("नधा"रणवष" / Assessment Year: 2011-12) Smt. Usha Devi Kejriwal Vs. ACIT, Circle-41, Kolkata
C/o M/s Tirupati Enterprises, 11, 3, Government Place, Kolkata – 700 001. Robert Street, 1st Floor, Kolkata – 700 012. "थायीलेखासं./जीआइआरसं./PAN/GIR No. :AFYPK 0140 C (Assessee) .. (Respondent)
Assessee by :Shri S.M. Surana, Advocate Respondent by : Shri S.M. Tauheed, Addl. CIT सुनवाईक"तार"ख/ Date of Hearing : 06/06/2018 घोषणाक"तार"ख/Date of Pronouncement : 05/09/2018 आदेश / O R D E R Per Dr. A. L. Saini: The captioned appeal filed by the assessee, pertaining to Assessment Year 2011-12, is directed against an order passed by the Ld. Commissioner of Income Tax (Appeals)-13, Kolkata in Appeal No.09/CIT(A)-13/R-44/Kol/2014-15,dated 28.03.2016,which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 31.03.2014. 2. The grievances raised by the assessee are as follows:
“1. For that the order of the ld. CIT(A) is arbitrary, illegal and bad in law. 2. For that the ld. CIT(A) erred in confirming the disallowance of Rs.3,05,674/- under the head courier/transport charges on the ground that no TDS was deducted when no tax was deductable on the payments made and in any case the deductees were assessed to tax, their PAN was submitted and the income from the assessee was duly included by them in their return and tax paid. 3. For that the ld. CIT(A) erred in confirming the disallowances of commission/brokerage amounting to Rs.4,60,257/-, Rs.1,24,976/- and Rs.3,21,094/- paid to Abhishek Kejriwal, Assessment Year: 2011-12 Smt. Usha Devi Kejriwal Sweta Kejriwal and K.K. Kejriwal (Technical Engineer) when the services rendered by them were duly proved with reference to the documents produced, the expenditure were genuine, the fact that first two persons have been working with the assessee as employee and third one is purchasing/importing the materials from abroad and is fully involved and is not disputed and such commission was duly allowed on appeal in earlier years. 4. For that the ld. CIT(A) erred in confirming the disallowance of the commission of Rs.4,95,491/-, Rs.5,55,858/- and Rs.5,44,041/- paid to Shri Dayanand Agarwal, D.N. Agarwala and family and Sri Gazanand Agarwal when the sales personal were have been working for the assessee from earlier years, the services rendered were duly accepted after duly deliberation, no new facts having come to notice, the ld. CIT(A) was not justified in confirming the addition. 5. For that on the facts and circumstances of the case the order of the CIT(A) be modified and the assessee be given the relief prayed for. 6. For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing.”
Ground No.1 raised by the assessee relates to disallowance of Rs.3,05,674/- on account of non-deduction of TDS on courier and transport charges.
The brief facts qua the issue are that during the assessment proceedings, on perusal of the details of courier charges, it was found by the ld AO that courier charges of Rs.2,16,690/- and Rs.88,684/- was paid to M/s. PCIXPS andM/s. AFL Pvt. Ltd. respectively. It was also noted that no tax was deducted in respect ofpayment made to those above mentioned parties. Hence, the assessee was asked to explain as to why the expenses shouldnot be disallowed as no tax was deducted at source. However, the assessee remained silent and no explanation whatsoever was filed. The AO noted that as per the provisions of section 194C of the Act, the assessee was required to deduct tax at source. As the assessee failed to do so therefore, the expenditures referred above should be disallowed,as no tax was deducted on payment of Rs.3,05,374/- on account of Courier Charges, and, therefore, the same isnot an admissible expense as per provisions of section 40(a)(ia) of the I.T. Act, 1961 and hence the ld AO disallowed the same.
5 On appeal by the assessee, the CIT(A) confirmed the order passed by the A.O.Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. Assessment Year: 2011-12 Smt. Usha Devi Kejriwal 6. The ld. Counsel for the assessee begins by pointing out that the assessee is dealing in imported Computerparts and supplies them to customer throughout India from its Head Office at Kolkata and assessee has chain of Branches in various states in India. The Ld. Assessing Officer disallowed a sum of Rs. 3,05,374/- paid to the following Carriage Agents who transport thematerials from one place to another place and these are the renowned handlingagencies transporting materials from one place to another place safely:
Name Address (i) TCI - XPS 10, Rambagold Ronald Road, Delhi-110007 Rs.2,16,690/- (PAN: MACT 7966 R) 69, Institutional Area, Sec-32, Gurgaon-1220{A Division of Transport Corporation of (I) Ltd) (ii) AFL Pvt. Ltd. AFL House, lok Bharti Complex Marol, Rs. 88,684/- (PAN: FAB1F 6516 A)Maroshi Road, Andheri(East) Mumbai-400059 TOTAL= Rs.3,05,374/-
The counsel pointed out that assessee has submitted PAN Number of both the parties with complete postal address and therefore she discharged his owns and the Ld Assessing Officer ought to have inquiry by issuing summons to these parties to prove the genuineness of the transactions.
On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by A.O which we have already noted in our earlier para and is not being repeated for the sake of brevity.
8 We have given a careful consideration to the rival submissions and perused the materials available on record, we note that in assessee’s case under consideration, the assessee submitted PAN number and addresses of the deductees and all the deductees were assessed to tax. We note that if the payee has included the receipts in books of accounts and has offered for taxes then the disallowance on account of non- deduction of TDS will not arise. But in the assessee`s case under consideration it is not known whether deductees (payee) have shown these Assessment Year: 2011-12 Smt. Usha Devi Kejriwal receipts in their books and offered for tax. Therefore, in the interest of justice, we remit this issue back to the file of the assessing officer, with the direction to the assessee to submit the relevant evidence before the assessing officer to establish that payee has included the receipts in its books of accounts and has offered for taxes. Therefore, we allow this ground for statistical purposes.
The Ground No.3 & 4 raised by the assessee relates to commission and brokerage paid to various persons amounting to Rs.25,01,727/-.
The brief facts qua the issue are thaton perusal of the Schedule-J tothe Profit &Loss Account, it was noted by the assessing officer that Rs.25,15,477/- was debited to the Profit &Loss Account on account of Commission and Brokerage paid. In course of the hearing, the assessee was asked to furnish the details of commission expenses. In response, the assesseefurnished the details of commission expenses, which is given below: Sl. No. Name of the Commission agent Amount of Relation with commission paid the assessee, if any 1 Abhishek Kejriwal 4,60,257/- Son 2 Sweta Kejriwal 1,24,976/- Daughter-in- law 3 Krishna Kr. Kejriwal 3,21,094/- Husband 4 Dayanand Agarwal 4,95,491/- - 5 D.N. Agarwal & Family (HUF) 5,55,858/- - 6 Gajanand Agarwal 5,44,051/- -
The ld AO further asked to furnish details of services rendered by those parties. In response, assessee furnished the details of services rendered by those parties. The assessing officer also sent letter U/s 133(6) to all the parties who purchased goods through commission agents, however these parties stated that goods were not purchased through commission agents.That is, these parties denied having purchased goods from these commission agents. Therefore, the Assessing Officer made the addition to the tune of Rs.25,01,727/-. Assessment Year: 2011-12 Smt. Usha Devi Kejriwal 11. On appeal by the assessee, the ld. CIT(A) confirmed the addition made by the Assessing Officer. Aggrieved by the order of CIT(A), the assessee is in appeal before us. The ld. DR for the Revenue, has primarily reiterated the stand taken by A.O which we have already discussed in our earlier para and is not being repeated for the sake of convenience and brevity. On the other hand, ld Counsel for the assessee relied on the submissions made before the lower authorities.
We have given a careful consideration to the rival submissions and perused the materials available on record, we note that as regards disallowance of Commission & Brokerage, the Ld Assessing officer observed that a Sum of Rs.25,15,477/- was debited to Profit& Loss Account on account of Commission & Brokerage paid.The assessing officer askedfor details of Commission against which following details were furnished by the assessee: Sl. No. Name of the Commission agent Amount of Relation with commission paid the assessee, if any 1 Abhishek Kejriwal 4,60,257/- Son 2 Sweta Kejriwal 1,24,976/- Daughter-in- law 3 Krishna Kr. Kejriwal 3,21,094/- Husband 4 Dayanand Agarwal 4,95,491/- NA 5 D.N. Agarwal & Family (HUF) 5,55,858/- NA 6 Gajanand Agarwal 5,44,051/- NA
We note that M/s Tirupati Enterprise is a familybusiness of which Smt. Usha Devi Kejriwal is the Proprietor and her husband Mr.Krishna Kr Kejriwal is looking after the entire import from various countriesagainst which he is paid Commission at specific rate on total purchase every yearand during the year a sum of Rs.3,21,094/-was paid. In past also such commissionhas been paid and were also disallowed by the then Assessing officer but on appeal, it has been allowed by ld CIT(A).
We note that Sweta Kejriwal is the wife of Abhisekh Kejriwal and daughter in law of the assessee. During the relevant Assessment Year she has procured order from Assessment Year: 2011-12 Smt. Usha Devi Kejriwal one of the party Berlia Computer System for Rs 24.99 Lacs and has also taken care forpayments on which she has been paid commission.
Shri Abhisekh Kejriwal is Son of the Assessee and he is looking after the entire sales of the Tirupati Enterprise which consist of Head office at Kolkata along with 12 Branches all over the Country. He manages the entire sale through his team andsupporting hands working for commission. He also take care in supervising thecollection for the material sold by the firm and also take care to remind sellingassistant to get realized the money so that there is no bad debts. He is paidcommission on the entire sales at the specific rate .In past also he was paidcommission, and it was allowed in full.
In case of Dayanand Agarwal, D.N.Agarwal & Family (HUF), & Gajanand Agarwal, that is payment of commission to persons mentioned inSerial No.4, 5 & 6 in the table mentioned above, we note that all the above Commission Agents also rendered services to the assessee in Assessment Year 2008-09 and were paid commission which were allowed in full. The job of the Commission Agent is to find out the dealers who may buy theproduct and they inform to the management. The management in turn contacts thedealers and explain the products and take the order on the normal terms & conditions. The Agent takes care /remind for the dispatches of the material to the customer and get the payment collected from the customers. After the transactions are over including payment of material sold, the brokerage/commission is paid.
We note that the Ld. Assessing officer stated to have made references U/s 133(6) to the 17 Parties butthey declined to have purchased goods through commission agents and they stated that goods were purchased directly. We note that that in view of the company's business policy the names of the broker/commission agents are not disclosed to the dealers because in such cases they ask for more discount instead of payment to the brokers and the Assessee otherwise would not have been able to sell the material. The Assessee do not reveal to the customer that they are selling material through commission agent but in fact the dealer referred by the Assessment Year: 2011-12 Smt. Usha Devi Kejriwal commission agent are taken care by the assessee and the commission agent takes care for the dispatch of the material and collection of payment and that thus services are rendered by the commission agent and payment for the services are made. It is a policy decision of the assessee.
We note that all the payment of commission are made by the account payee cheque after deducting the TDS as per Law. All of them are income tax Assessee for last several years. The details of their income for the A. Y. 2011-12 are as under: Sl. Assessee PAN No. Commission Gross total Income tax No. received income paid by them including commission 1 D N Agarwal & Family (HUF) AABHD7885F 5,55,858 9,12,196 1,01,013 2 Gajanand Agarwal ACQPA7498E 5,44,051 11,64,469 1,64,121 3 Dayanand Agarwal ACHPA8995R 4,95,491 11,01,592 1,54,477 We note that during the A. Y. 2008-09Gajanand Agarwal (HUF)was paid a commission of Rs 2,50,000/- which after deducting of TDS Rs 25,750/- Net Rs. 2,24,250/- was made by account payee cheque.Similarly, D N Agarwal & Family (HUF) was paid commission of Rs 1,50,000/- whichafter deducting of TDS of Rs.15,450/-, Net Rs.1,34,550/- & Dayanand Agarwal was paid commission of Rs 1,00,482/- which after deducting of TDS Rs.10,350/- Net Rs.90,132/- was made by account payee cheque. These payments were allowed by the Assessing officer and no any addition was made. We note that it is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particularview or proposition in the past, it is not open for the Revenue to take an entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon’ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC). Assessment Year: 2011-12 Smt. Usha Devi Kejriwal 14. We have also relied on the judgment of the jurisdictional Calcutta High Court in the case of CIT vs. Alpha Hydronics Pvt. Ltd. in ITA No.549 of 2004 dated 10th November, 2014 wherein it was held as under:
"We have considered the rival submissions and gone through the facts of the case. We find that in the present case there is a binding contract between the parties by which the recipients of the commission had the right to enforce realization of commission stipulated between the parties. We also find from the communication between the parties that the payment was duly received by the parties and paid by the assessee by account payee cheques. The revenue has not alleged that the parties to the transactions are related to each other or that the payments are not genuine or that the payments having been made by the assessee to the recipients have found their way back to the assessee some way or the other. Such being the case, we find that the authorities below were not justified in rejecting the claim of the assessee for payment of commission. Since all the ingredients necessary for genuine business transaction exist in this case, we do not find any merit in the addition made by the AO and in the action of the CIT(A) in confirming the same. In reversing their orders, and respectfully following the decision of the Hon'ble Caalcutta High Court in the case of Masther& plant (India) Ltd. (Supra) and the case of the Tribunal, Mumbai Bench (Third Member) discussed herein above, we allow the appeal of the assessee." Heard Mr. Das, learned advocate appearing for the assessee revenue and Mr. J. P. Khaitan, learned senior advocate appearing for the respondent assessee. Before us the revenue could not demonstrate either the money was not paid or the money was paid and routed back to the assessee. In the circumstances interference with the order of the Tribunal is not warranted. No question arises for adjudication. The application and the appeal are dismissed.” We note that in the assessee`s case under consideration, the ld DR for the Revenue has failed to bring any cogent evidence on record to establish that payment of commission is bogus. The assessee has paid the commission for the purpose of business and therefore, it should be allowed. Accordingly, we allow the ground No.3 and 4 raised by the assessee and thus we delete the addition of Rs.Rs.25,15,477/-
In the result, appeal filed by the assessee is partly allowed.
Order is pronounced in the open court on 05.09.2018. (S. S. GODARA) (A. L. SAINI) "या"यकसद"य / JUDICIAL MEMBER लेखासद"य / ACCOUNTANT MEMBER कोलकाता /Kolkata; "दनांक/ Date:05/09/2018 (RS, Sr. PS) Assessment Year: 2011-12 Smt. Usha Devi Kejriwal
आदेशक"""त"ल"पअ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ"/The Assessee- Smt. Usha Devi Kejriwal 2. ""यथ"/ The Respondent- ACIT, Circle-41, Kolkata 3. आयकरआयु"त(अपील) / The CIT(A)-13 4. आयकरआयु"त/ CIT 5. "वभागीय""त"न"ध, आयकरअपील"यअ"धकरण, कोलकाता/ DR, ITAT, Kolkata गाड"फाईल / Guard file. 6. स"या"पत""तBy Order
Senior Private Secretary, Head of Office/D.D.O, I.T.A.T, Kolkata Benches, Kolkata.