RISHABH BIRLA,NEW DELHI vs. JCIT, RANGE-24, NEW DELHI

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of learned

Commissioner of Income-tax(Appeals)-11, New Delhi, Appeal No.387/13-

14 dated 24.11.2017 against the order under Section 143(3) of the

Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated

30.01.2014 passed by JCIT, Range-24, New Delhi for the assessment

year 2011-12.

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as 1(a) to 1(i) on account of various disallowances made by the learned

Assessing Officer and confirmed by the learned Commissioner of Income-

Tax(Appeals).

to 1(i) are not pressed. Accordingly, these grounds are dismissed a not

pressed.

grounds, namely, ground no. 1(a) which is in respect of disallowance of

interest under Section 36(1)(iii) attributable to borrowed amount of

Rs.68,00,000 utilized for purchase of shop and allegedly not used for

business purposes; ground no.1(c) in respect of disallowance of

Rs.1,16,05,230 on account of rebate and discount and ground no.1(d) in

respect of disallowance of Rs.24,03,501 on account of commission

expenses. We deal with these three grounds seriatim.

disallowance of Rs.38,29,320 by holding that assessee has not utilised

the loan funds for business purposes but diverted them for acquiring

immoveable property, for giving advances against properties and for the

purpose of interest free loan and advances to sister concerns, family

members. In the first appellate proceeding, learned Commissioner of

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Income-Tax(Appeals) deleted an amount of Rs.14,24,034 and for the

balance amount of Rs.24,05,286 directed the learned Assessing Officer to

disallow the interest related to Rs.68,00,000 which was paid to the seller

directly. He directed the learned Assessing Officer to recompute the

disallowance by restricting it to the interest relatable to Rs.68,00,000.

This direction by him is based on decision taken in earlier years.

5.1 Before us, learned counsel at the outset, submitted that this issue

is squarely covered by the decision of coordinate Bench of ITAT Delhi in

assessee’s own case in the immediately preceding year i.e. assessment

year 2010-11 in ITA No.1933/Del/2016 dated 30.09.2020. In the said

decision, it is noted that for assessment year 2008-09 and 2009-10, this

issue was restored to the file of the Assessing Officer and the learned

Commissioner of Income-Tax(Appeals), respectively, with the direction to

recompute the interest attributable to Rs.68,00,000. In assessment year

2010-11 also, learned Commissioner of Income-Tax(Appeals) had given

direction to the Assessing Officer to recompute the interest attributable

to Rs.68,00,000. The co-ordinate Bench did not find any error in the

finding of the learned Commissioner of Income-Tax(Appeals) and thus

upheld it in giving such direction to the Assessing Officer. The relevant

finding in this respect is reproduced as under:

“5.0 We have heard the rival submissions and have also perused the material on record. As far as ground No.1 of the assessee’s appeal is concerned, it is seen that the total disallowance of interest made by the Assessing Officer was to the tune of Rs.26,05,634/- being interest in respect

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of properties at Saket and Gurgaon. When the matter came in appeal before the Ld. CIT (A), the Ld. CIT (A) deleted the disallowance to the tune of Rs.16,21,755/- in respect of the Saket Property. However, with respect to the interest disallowance pertaining to the Gurgoan property, the Assessing Officer was directed to re-calculate the disallowance by restricting it to interest portion related to Rs.68.00 lacs. It has been brought to our notice that in Assessment Years 2008- 09 and 2009-10, the issue was restored to the file of the Assessing Officer and the Ld. CIT (A) respectively with the direction to re-compute the interest attributable to Rs.68.00 lacs. We find that a similar direction has been given by the Ld. CIT (A) in this year also wherein the Ld. CIT (A) has directed the Assessing Officer to re-compute the interest attributable to Rs.68.00 lacs. Thus, there is no error in the finding of the Ld. CIT (A). In fact this is the relief which the assessee has also prayed for in its Ground No.1 and has also argued before us. Therefore, we uphold the finding of the Ld. CIT (A) in giving such direction to the Assessing Officer.”

5.2 Since, there is no change in the material fact in respect of the issue

before us and considering the Rule of Consistency, we also follow the

findings given by the coordinate Bench in the assessee’s own case

(supra) to recompute the interest attributable to Rs.68,00,000 in terms of

directions given by the learned Commissioner of Income-Tax(Appeals) to

the learned Assessing Officer. Accordingly, this ground of the assessee is

allowed for statistical purposes.

assessee had claimed an amount of Rs.1.16 crores under this head.

Learned Assessing Officer observed that since the genuineness of claim

has not been established, this amount was disallowed. Learned

Commissioner of Income-Tax(Appeals) confirmed the said disallowance.

6.1 Learned counsel submitted that, though, this amount had been

claimed under the head “rebate and discount” this, in fact, is in the

nature of bad debts allowable under Section 38(1)(vii). He referred to the

financial statement to point out that assessee had earned income from

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cargo transportation amounting to Rs.40,70,82,510 during the year.

Copy of ledger account of all the parties against which these bad debts

claimed were also placed on record to demonstrate that their accounts

have been duly credited for the impugned claim. Learned counsel also

claimed that for most of the parties, these are running account wherein

assessee is raising bills and receiving the payments. However, there are

certain transactions with these parties which undergo dispute and

therefore, becomes irrecoverable. Hence, such irrecoverable amounts are

claimed as bad debts under the nomenclature of rebate and discount.

Learned counsel referred to the ledger of “rebate and discounts” to

corroborate the contentions made by him. He placed reliance on several

judicial precedents to buttress the submissions so made.

6.2 From the perusal of the ledger accounts and details, furnished and

referred by the learned counsel forming part of the paper book, we find it

proper to remit the matter back to the file of the learned Assessing

Officer for the limited purpose of verification of the claim of bad debts

made by the assessee and be allowed in accordance with the provisions

of the Act and judicial precedents referred by the learned counsel.

Accordingly, this ground is allowed for statistical purposes.

expenses of Rs.24,03,510 incurred by the assessee on freight and

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brokerage. Learned Assessing Officer had called for details including

copies of agreement, particulars of business transaction, evidences of

services provided by the commission agents, details of business procured

through commission as well as identification and confirmation of the

concerned party to whom commission was paid. Learned Assessing

Officer having not satisfied with the submissions made by the assessee

disallowed this claim of expenditure which was confirmed by the learned

Commissioner of Income-Tax(Appeals).

7.1 Before us, learned counsel submitted that assessee is a clearing

and forwarding agent and provides services relating to air-cargo and

flight handling. Assessee has incurred commission expense on which

TDS was done and service-tax was also paid. Learned counsel referred to

party-wise details of commission paid along with their names, address,

PAN etc. He also submitted that payments were made through banking

channels. Also, a comparative chart of commission paid was furnished

for assessment years 2009-10 to 2011-12 which had been subjected to

scrutiny assessment under Section 143(3) wherein no such disallowance

was made. Learned counsel, thus, claimed application of Rule of

Consistency in this respect, there being no material change in the

business model and operations of the assessee.

7 ITA No.1150/Del/2018 Rishabh Birla, New Delhi- AY: 2011-12 7.2 In this respect, on a specific query by the Bench, as to details of

services rendered for the commission payments, learned counsel

submitted that there are plethora of documents by which this can be

substantiated. He prayed for remitting this matter back to the file of

learned Assessing Officer where all such record can be furnished for his

verification.

7.3 Considering the material on record and submission made by the

learned counsel, we are inclined to remit the matter back to the file of the

learned Assessing Officer on this issue for the limited purpose of

verification of the claim made by the assessee and its allowance in

accordance with the provisions of the Act. Accordingly, ground taken by

the assessee is allowed for statistical purposes.

In the result, appeal of the assessee is partly allowed for statistical 8.

purposes.

Order is pronounced in the open court on 18.09.2023.

Sd/- Sd/-

(C.M. Garg) (Girish Agrawal) Judicial Member Accountant Member

Dated: 18thSeptember, 2023 *Mohan Lal*

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