ASST 33(3), MUMBAI vs. RUKMANI M IYER, MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the revenue against the order of CIT(A) for the assessment year 2010-11 in the matter of order passed u/s.143(3) r.w.s. 144C of the IT Act. 2. The only grievance of Revenue relates to deletion of addition towards commission by invoking provisions of Section 40(a)(i) of the Act. 3. Rival contentions have been heard and record perused. 4. Facts in brief are that assessee is a merchant exporter. During the course of scrutiny assessment AO disallowed sales commission of Rs.2,43,95,715/- for non deduction of tax u/s. 40(a)(i). By the impugned order CIT(A) deleted the addition / disallowance after following the order of Tribunal in assessee’s own case for the Assessment Year 2009-10 dated 28/10/2015.

Smt. Rukmani M. Iyer 5. We have considered rival contentions and found that similar addition / disallowance made u/s.40 (a)(i) was deleted by the Tribunal vide order dated 28/10/2015 after having the following observation:- 2.7. We have considered submission made by both the sides, orders of lower authorities and material placed-before us as well as orders of the Tribunal of earlier years. The issue involved herein is that whether the amount of commission expenses debited by the assessee is allowable in the given facts and circumstances or not. The grievance of the Ld. AO was that the assessee was not able to show that expenses incurred were accrued and crystallized during the year. The Ld. CIT(A) has relied upon the orders of earlier years passed by his predecessors to decide this issue in favour of the assessee. It is noted that this issue has reached up to Tribunal, wherein in both the assessment years i.e. A.Ys. 2007 -08 & 2008- 09, the orders of Ld. CIT(A) have been confirmed, by dismissing the appeal of the Revenue on this issue. It is noted that in A.Y.2007-08, the tribunal in its order dated 09.04.2014, in has examined this issue in detail. The relevant para of the Tribunal containing observations is reproduced below. We have heard the Ld. Representatives of both the parties and also have gone through the records. The facts of the case reveal that in fact the commission claimed by the assessee at the rate of 12% of sales payable to the three parties in question was in fact a discount on the sales. The AO disallowed the same holding that the liability did not accrue during the year in question as almost 50% of the commission amount was deducted by the parties in the subsequent year. In our view, the finding arrived at by the AO was not correct. It is not disputed that alleged commission at rate of 12% of the sales was in fact a discount on sales. It is obvious that the purchaser 'would pay the sale price after deducting the discount given on the sale of the product. So far the question of accrual of the liability during the year under consideration is concerned, it may be noted that the sales in question were booked by the assesseee during the year. As and when the sales were booked by the assessee, at the same time the discount payable against those sales was also to be booked along with the sales. So the moment the sales along with discounts are booked, the liability to pay or the right of the purchaser to deduct the discount accrues. In view of this, we do not find any infirmity in the action of the Ld. CIT(A) in deleting the impugned additions. This ground of the appeal of the Revenue is accordingly dismissed. 2.8. Similarly in A.Y.2008-09 the Tribunal has decided this issue in favour of assessee vide order dated 1.06.2015 in ITA

Smt. Rukmani M. Iyer No.3233/M/2012, wherein the 'order of A.Y. 2007-08 has been followed by the Tribunal.