Income Tax Appellate Tribunal - Jaipur
Gehlot Enterprises P. Ltd., Jaipur vs Dcit, Jaipur on 2 November, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ ITA No.124/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2012-13
M/s Gehlot Enterprises Pvt. Ltd., cuke DCIT, Circle-2, Jaipur
M.I. Road, Jaipur Vs.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAACG 8950 G
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ ITA No.201/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2012-13
DCIT, Circle-2, Jaipur cuke M/s Gehlot Enterprises Pvt.
Vs. Ltd., M.I. Road, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAACG 8950 G
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri G.G. Mundra (CA)
jktLo dh vksj ls@ Revenue by : Smt. Roshanta Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 26.10.2016
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 02/11/2016.
vkns'k@ ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
These are two cross appeals filed by the Assessee as well as by the Revenue against the order of ld. CIT(A)-I, Jaipur dated 07.12.2015 wherein the following grounds of appeal have been taken.
Assessee's grounds of appeal:
(i) That on the facts and in the circumstances of the case the ld. CIT(A) is wrong and has erred in law in holding that financial service charges of ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur Rs. 58,98,850/- claimed by appellant being expenses pertaining to reimbursement of expenses incurred by the staff of assessee company on travelling, conveyance etc. in respect to availing facility of Bank loan to customers for selling Tractors to them is payment of fee, commissions etc. to employees of company and the same is liable to be taxed u/s 17 of the IT Act.
(ii) The ld. CIT(A) is further wrong in directing that the AO should accordingly, initiate proceedings against the appellant for non deduction of TDS on the amount paid to the employees which direction given to the AO is beyond his jurisdiction.
Revenue's grounds of appeal:
(i) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs. 8,17,520/- made by the AO under the provisions of section 143A r.w. rule 8D of the IT Rules.
(ii) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs. 58,98,850/- made u/s 40(a)(ia) of I.E. Act, 1961 not appreciating the fact that the payment was made to the salesmen for providing services to the assessee for selling of tractors.
(iii) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.3,00,000/- out of telephone, conveyance, travelling expenses etc.
2. At the outset, the ld AR submitted that grounds raised by the Revenue as well as by the assessee have recently been decided by the Hon'ble ITAT, Jaipur Bench vide its consolidated order dated 04.08.2016 for AY 2009-10, 2010-11 and 2011-12 in assesse's own case in ITA Nos.129,130 & 700/JP/2014 & ITA Nos 151,152 &755/JP/14.
3. The ld AR submitted that since there is no change in facts and circumstances of the case, the earlier order passed by this very Bench of the 2 ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur ITAT may be considered. The ld DR fairly conceded that the issues are covered by earlier order of this Bench dated 4.8. 2016.
4. We now refer to relevant findings of in our earlier order dated 4.8.2016:
4.1 The relevant findings in respect of Revenue's Ground No.1 are as under:
"4.3 We have heard rival contentions and perused the material on record. As per section 14A of the Act, the AO has to satisfy himself in respect of the claim of expenditure. In the event the AO finds that the expenditure related to the exempt income have also been claimed by the assessee while computing its income, then the AO is empowered to make disallowance in the manner prescribed in rule 8D. In the instant case, the AO has not given any finding in respect of the disallowance of expenses. On the contrary, the assessee has pointed out that it had sufficient own funds and investment has been made out of its own funds. Therefore, the disallowance related to the interest was not justified. Thus we do not find any reason to interfere in the orders of the ld. CIT (A)."
4.2 The relevant findings in respect of Revenue's Ground No.2 and assessee's grounds 1-2 are as under:
3.4 Now the issue to be adjudicated is whether the expenditure claimed by the assessee in the form of payments made to the employees in the nature of Financial Service charges is amenable to the provisions of tax deduction at source or not. The AO has relied on the provisions of section 194H. As per the AO, these payments were brokerage and commission to the employees. Before the AO, the assessee has not furnished any independent evidence except the vouchers made by itself stating therein that cash payment on account of expenditure incurred on Bank, Customers, Patwari for arrangement of loan file of Tractor loan. It is a normal practice that wherever the loan facility is availed, certain paper work is carried out by the concerned banker and the amount incurred on such work, normally processing 3 ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur charges are debited to the loan account of the concerned beneficiary by the banker.
This facility, the assessee is claiming to have been provided by itself for facilitating the loan transaction, in fact it is carried out by the banker itself. But it is also a fact that bankers have tie-up with the vehicle/tractor agency who carried out this kind of service to the prospective customers. Therefore, in our considered view, both the authorities below have misdirected themselves for not appreciating the fact that the nature of payment as made by the assessee is neither a payment in the nature of salary nor related to employer-employee relationship. The payment is made in respect of the expenditure claimed to have been incurred for facilitating the loan transaction. The AO in the assessment order has considered this claim of the assessee i.e. expenditure being the reimbursement to the employees, and rejected the same on the ground that not a single bill was available with the assessee. It was further observed that these expenses were incurred for the services provided by the salesmen and that there was an absolute absence of even a single supporting voucher or any other documentary evidence which could prove assessee's claim that the said expenses were reimbursements to the salesmen. The AO treated such payment as the payment of commission or brokerage to the employee. In support of such finding, the AO has not placed any material on record suggesting that these payments were in the nature of brokerage or commission. In the absence of such material, in our considered view, merely on the basis of conjectures, the payments made to the employees would not partake the character of payment of brokerage or commission. Another aspect of the matter, which the AO has not appreciated that in the normal loan transaction, the bank mostly debit the amount of processing charges. The AO has also not verified from the banker whether the said 4 ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur expenditures were debited to the account of the loan beneficiary by the banker or not. Whether there was any agreement between the banker and the assessee company in this behalf. Even the assessee has not furnished the requisite details in support of its claim that such payments were nothing but reimbursement to the employees and such expenditure is allowable deduction. After considering the totality of the facts and circumstances of the present case, it would be in the interest of justice if the issue is restored to the file of the AO for decision afresh. Hence we set aside the impugned order and restore the matter to the file of the AO with the direction to verify from the bank whether any loan transaction was carried out as claimed by the assessee and also to verify whether the expenditure incurred in respect of documentation of the loan transaction, the expenditure related to verification of title deeds/ownership title was carried out by the banker or by the assessee company. He would also verify whether such amount relating to processing of loan transaction was claimed from the beneficiary of the loan transaction or not. If the AO finds that the assessee company had carried out such services on behalf of the bank and bank has not debited such expenditure to the account of the concerned beneficiary and borne by the assessee company, in that event, he would grant deduction of expenditure to the assessee, incurred during the course of business of the assessee. This ground of the revenue's appeal is allowed for statistical purposes."
4.3 The relevant findings in respect of Revenue's Ground No.3 are as under: "5.3 We have heard rival contentions and perused the material on record. The ld. CIT (A) held that the expenses under the head telephone, conveyance and travelling expenses are necessary for carrying on the business. He observed that there is no 5 ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur evidence to suggest that the expenses incurred by the assessee were either inflated or bogus. At the time of hearing of the appeal, the ld. D/R has not controverted these findings of the ld. CIT (A). We, therefore, do not find any reason to interfere in the order of the ld. CIT (A), the same is hereby upheld. The ground of the revenue is rejected."
5. Admittedly, there are no changes in the facts and circumstances of the case for the year under consideration as compared to the earlier years. Hence, following our earlier decision referred supra, the findings and directions contained in the said order shall apply mutatis mutandis for the impunged assessment year.
In the result the appeal filed by the Revenue is partly allowed for statistical purposes and appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 02/11/2016.
Sd/- Sd/-
(KUL BHARAT) (VIKRAM SINGH YADAV)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 02/11/2016
Pillai
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Gehlot Enterprises, Jaipur
2. izR;FkhZ@ The Respondent- DCIT, Circle-2, Jaipur 6 ITA No. 124 & 201/JP/16 M/s Gehlot Enterprises, Jaipur vs. DCIT, Circle-2, Jaipur
3. vk;dj vk;qDr@ CIT -I, Jaipur
4. vk;dj vk;qDr¼vihy½@The CIT(A)-I, Jaipur
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 124 & 201/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 7