DCIT 14(3)(2), MUMBAI vs. SRIRAM CHITS ( MAHARASHTRA) LTD, MUMBAI

The grievance of the Revenue relates to CIT(A)’s action in deleting the addition made by the AO of Rs.12,85,02,550/- being difference between the foreman commission receivable of Rs.29,18,07,550/- and the Sriram Chits Rs.16,33,05,000/- 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 Profit & Loss at Rs.5,83,61,510/-.

At the outset the Ld. AR placed on record the order of the Tribunal in assessee’s own case for the A.Y. 2010-11 wherein similar issue was decided by the Tribunal in favour of the assessee vide order dated 17/03/2017 after observing as under:-

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 Sriram Chits 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 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.