M/S. TIRUPATI BIOTECH LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 6529/DEL/2014Status: DisposedITAT Delhi30 August 2016AY 2011-124 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the facts were not clear as the MOU was not furnished to the AO and details of services rendered were not sought. Therefore, the matter was set aside to the AO for fresh adjudication.

What were the facts?

The assessee debited Rs. 7,00,000/- as commission paid for a business transaction related to a property deal. The Assessing Officer (AO) disallowed this amount as the assessee had not declared any business income.

What were the issues?

Whether the commission paid was an allowable business expenditure when the assessee had not declared business income and the supporting documentation was insufficient.

Which sections of the Income-tax Act were involved?

Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH (SMC-II

Before: SHRI N.K. SAINI

For Appellant: Shri Amit Goyal, CA &, Shri Saurabh Goyal, CA
For Respondent: Shri Amrit Lal, Sr. DR
Hearing: 23.08.2016Pronounced: 30.08.2016

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH (SMC-II), NEW DELHI BEFORE : SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA No. 6529/Del./2014 Asstt. Year : 2011-12 Tirupati Biotech Ltd., vs. Income-tax Officer, D-14, 2nd Floor, Preet Vihar, Ward 16(3), New Delhi. New Delhi. (PAN: AABCT2560N) (Appellant) (Respondent) Appellant by : Shri Amit Goyal, CA & Shri Saurabh Goyal, CA Respondent by : Shri Amrit Lal, Sr. DR Date of hearing : 23.08.2016 Date of pronouncement : 30.08.2016 ORDER

This is an appeal by the assessee against the order dated 04.08.2014 of CIT(A)-19, New Delhi. The only ground in this appeal relates to the confirmation of addition of Rs.7,00,000/- made by the AO on account of disallowance of commission paid.

2.

The facts of the case, in brief, are that the assessee filed return of income on 16.09.2011, declaring total income of Rs.13,75,940/-, which was processed u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).

Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the assessee has debited an amount of Rs.7,00,000/- to its profit and loss account under the head ‘commission paid’. He asked the assessee to justify the allowability of this commission. In response, the assessee submitted that the commission was paid to Renu Narang and Mishra Realtors on which TDS had been deducted and the amount was paid for business transaction relating to brokerage for Ansal Property deal. The AO observed that the assessee stated that the payment was made for business transaction whereas it had not declared any business income. Accordingly, the amount of Rs.7,00,000/- was disallowed and added to the income of the assessee.

3.

Being aggrieved, the assessee carried the matter to the ld. CIT(A) and submitted that the payment to real estate agents were made through proper banking channel and TDS @ 10% was deducted. It was further stated that the commission was paid in respect of Memorandum of Understanding (MOU) with M/s. Ansal Housing & Construction Ltd. Copy of the said MOU was furnished. The ld. CIT(A) after considering the submissions of the assessee observed that the MOU with M/s. Ansal Housing & Construction Ltd. did not mention the persons to whom the commission has been paid and there is nothing to suggest that any services were rendered by those persons. Therefore, he confirmed the action of the AO. Now, the assessee is in appeal.

4.

The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the commission was paid in accordance with the provisions in MOU entered by the assessee with M/s. Ansal Housing & Construction Ltd. and in the said MOU, there is no provision to mention the name of the persons to whom the commission was to be paid.

5.

In his rival submissions, the ld. DR reiterated the observations made by the AO and the ld. CIT(A) and strongly supported the impugned order passed by the ld. CIT(A).

6.

I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it appears that the assessee claimed that the commission was paid as per MOU with M/s. Ansal Housing & Construction Ltd., but that MOU was not furnished before the AO. The ld. CIT(A) sustained the addition made by the AO only on this basis that the name of the persons to whom the commission had been paid, were not mentioned in the MOU. No other reason has been given. It is also not clear as to whether any details of the services rendered by the persons to whom the commission was paid, had been asked by the AO. Therefore, the facts of the case are not clear and it deserves to be set aside to the AO for fresh adjudication. Accordingly, the issue under consideration is set aside to the file of AO to be decided afresh in accordance with law after providing due and proper opportunity of being heard to the assessee.

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