ROOP TIKAMDAS SACHANANDANI,MUMBAI vs. ACIT CIR-19(1), MUMBAI

The only grievance of the assessee relates to confirming the addition of Rs.3,17,922/- being commission paid by the assessee on domestic and international tickets sold by them in cash.

Rival contentions have been heard and record perused. Facts in brief are that assessee is a travel agent earning commission income on air ticket booked on behalf of the IATA. Out of the commission amounts so received from IATA assessee used to give discounts to its customers. In the course of scrutiny assessment, the AO accepted assesee’s claim of discount given to the customers from whom amount was received through account payee cheque but did not allow the claim in respect of customers from who cash was received. It was contended before the AO that the 2 assessee being non-IATA travel agents gets commission on purchase of tickets form registered IATA agents and shares the commission received with his customers, including walk-in-customers, who come with the other travel agents quotations of the fare for the required destination and the appellant quotes them his price after deducting discount from the commission received by him. The assessee having office in Khar area which is hub of travel agents. As such he has to be competitive in terms of net price which the customer is supposed to pay. However, the AO did not convince with assessee's contention. Accordingly, the AO disallowed commission/discount of Rs.3,17,922/-.

By the impugned order the CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.

Ld. AR drew my attention to the detailed chart filed with respect to each and every tickets sold by it giving detail of name of the passenger, face value of the ticket, amount of commission received, amount received from the passenger and the discount given to the customer with details of Cheque No./cash in whatever mode amount was received. My attention was also invited to the tickets sold for the same sector to different parties. In case of one party amount was received by the cheque whereas in case of other party amount was received in cash. The AO has accepted the discount given to the party from who cheque was received but did not accept the exactly similar discount given to the party from whom payment was received in cash.

I had considered rival submissions and found that the assessee is maintaining a record being ticket register in which the details of commission received, date of issue of tickets, name of the customer, amount received from the customer, net commission after discount given, mode of payment etc for all customers who pay by cheque and also who pay by cash. I do not find any merit in the action of AO insofar as he has not doubted sale of tickets and the commission income earned thereon. As per the nature of ticketing business in which assessee was engaged, allowing some discount to customers on sales, out of the commission income is a normal practice. Accordingly, assessee was in receipt of commission and also allowed discount to the customers. Out of the total commission of Rs.24,38,702/- so received by the assessee, the assessee has allowed discount of Rs.6,67,435/- to its customers. It is not a case of the AO that he has called any customers, who has stated that no discount was received by him in respect of ticket taken by him from the assessee. Nor any tangible material was brought on record by the AO to allege that assessee had not given the discount claimed by him. Under these circumstances, I do not find any merit in the action of AO for disallowing the discount given to customers out of commission income received by it.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on this 04/08/2016.