ACIT,CIR-8,, NAGPUR vs. SHRI ROSHANLAL RAMDEO JAISWAL,, GONDIA

PER AMARJIT SINGH, J.M.

The appeal filed by the Revenue and Cross Objection by the

assessee are directed against the order dated 15th October 2013,

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passed by the learned Commissioner (Appeals)–II, Nagpur, for the

assessment year 2009–10.

“1. Whether on facts and in the circumstances of the case, the CIT (Appeals) has erred in deleting the addition made by AO on a/c of disallowance u/s 40A(3) by holding that the relationship between BSNL and the assessee was principal and agent?

declaring total income to the tune of ` 10,66,770. the return of income

was processed under section 143(1) of the Income Tax Act, 1961 (for

short “the Act”). Thereafter, the case was selected for scrutiny under

CASS. Notice under section 143(2) dated 20h August 2010, was issued

and served upon the assessee. Subsequently, the notice under section

142(1) fo the Act was also issued and served upon the assessee. The

assessee was deriving his income from wholesale trading of Country

Liquor, Petrol Pump (Indian Oil Corp.), BSNL Franchise, retail liquor

shop. The books of account were maintained and were audited as

required under section 44AB of the Act. A copy of audit report along

with Balance Sheet, Profit & Loss account and other details were also

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filed. The assessment was completed after making various

disallowances and assessing the income to the tune of ` 1,39,05,095.

The assessee was not satisfied, therefore, the assessee filed an appeal

before the learned Commissioner (Appeals) who deleted the addition

made by the Assessing Officer on account of disallowance under

section 40A(3) of the Act. Therefore, the Revenue has filed the present

appeal before us.

ISSUE NO.1 AND 2

connection with the deletion of the addition made by the Assessing

Officer on account of disallowance under section 40A(3) of the Act. The

learned Commissioner (Appeals) has held the relationship between the

assessee and BSNL as “principal and agent”, therefore, he was of the

view that the provisions of section 40A(3) of the Act was not applicable

to the case of the assessee. Before going further, we deem it

necessary to advert the finding of the learned Commissioner (Appeals)

on record on these issues.

“6. I have carefully considered the facts of the case and written submission of the appellant. The issue of disallowance u/s 40A(3) in respect of purchases made from BSNL have been the subject matter of appeal in the immediately preceding year in the case of the appellant. The appellant has submitted a copy of order passed by the CIT(A)-II, Nagpur vide order No. CIT(A)-11/564/10-11 dated 12-03-2012 wherein the disallowance u/s 40A(3) on identical facts was dealt by my predecessor. The relevant portion of the order of CIT(A) is reproduced as under:-

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"However, appellant has claimed that there is relationship of principal and agents and between appellant and BSNL and hence appellant can give cash collected on behalf of principal and section u/s.40A(3) is not attracted. Appellant has placed reliance on the judgment of Kerala High Court in case of Vodafone Essar Cellular Ltd. vs. Asstt. CIT in IT A No. 1742, 1759, 1761 to 1764, 1773 & 1780 of 2009 dt. 17.08.2010 and ITAT, Cochin Bench 127 ITD 440 (2011). I find that relationship of principal / agent is there and appellant is getting only commission out of it. Hence, there is no sale purchase and section 40A(3) is not attracted. Hence, addition on this account is deleted.”

the learned Commissioner (Appeals) deleted the addition raised in

view of the provisions under section 40A(3) of the Act on the basis of

finding of the learned Commissioner (Appeals)-II, Nagpur, in which on

the basis of identical facts the addition deleted by the said appellate

authority raised in view of section 40A(3). The addition was deleted on

the basis of the judgment passed in the case of Vodafone Essar

Cellular Ltd. vs. Asstt. CIT in ITA no.1742, 1759, 1761 to 1764, 1773 & 1780 of 2009 dated 17th August 2014 and also relied upon the

findings of the Co-ordinate Bench of the ITAT, Cochin Bench, in the

case of S. Rahumathulla v/s ACIT,[2010] 127 ITD 440 (Cochin). The

Hon’ble High Court of Kerala and the Tribunal, Cochin Bench, have

held that the relationship between the assessee and the BSNL is

“principal and agent” in nature, therefore, the provisions under section

40A(3) has not been attracted and accordingly the learned

Commissioner (Appeals) also deleted the addition made by the

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Assessing Officer to the tune of ` 7,62,692. No distinguishable material

has been produced before us to deviate from the findings of the

learned Commissioner (Appeals) in question. The matter of

controversy has been adjudicated earlier in the above mentioned case

and the case of the assessee has duly been covered with the case

relied upon by the learned Counsel for the assessee mentioned above.

Finding no tangible material or any other law contrary to the law relied

upon by the learned Counsel for the assessee, we are of the view that

the learned Commissioner (Appeals) has passed the order in question

judiciously and correctly which is not required to be interfered with at

this appellate stage. Accordingly, these issues are decided against the

Revenue and in favour of the assessee. Thus, the grounds raised by

the Revenue are dismissed.

C.O. NO.3/Nag./2014

controversy which has been raised by the Revenue in its appeal in ITA

no.11/Nag./2014. Since the matter of controversy has been

adjudicated in favour of the assessee while deciding the issues no.1

and 2 in Revenue’s appeal being ITA no.11/Nag./2014, therefore, the

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cross objection filed by the assesee is hereby dismissed in view of the

above stated terms.

objection is hereby dismissed being infructuous.

Order pronounced in the open Court on 29.06.2017

Sd/- Sd/- P.K. BANSAL AMARJIT SINGH VICE PRESIDENT JUDICIAL MEMBER

NAGPUR, DATED: 29.06.2017

Copy of the order forwarded to:

(1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary

(Dy./Asstt.Registrar) ITAT, Nagpur