Income Tax Appellate Tribunal - Ahmedabad
Shivam Sales Corporation, Palanpur vs Department Of Income Tax on 11 October, 2010
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ ''B'', अहमदाबाद
IN THE INCOME TAX APPELLATE TRIBUNAL AT
AHMEDABAD, "B" BENCH
सव[ौी ए.
ए.मोहन अलंकामोनी,
ामोनी लेखा सदःय एवं कुल भारत,
भारत, Ûयाियक
सदःय के सम¢ ।
BEFORE S/SHRI A. MOHAN ALANKAMONY,
ACCOUNTANT MEMBER AND
KUL BHARAT, JUDICIAL MEMBER)
ITA. No.3448/Ahd/2010
With
CO No.19/Ahd/2011
Asstt. Year : 2007-2008
ACIT, B.K. Circle बनाम/Vs. M/s.Shivam Sales Corporation
Palanpur Opp: Gayatri Temple
Delhi Highway, Palanpur.
PAN : AAHFS 7289 N
(अपीलाथȸ / Appellant) (ू×यथȸ / Respondent)
राजःव कȧ ओर से/ :
Revenue by Shri Y.P. Verma, Sr.DR
िनधा[ǐरती कȧ ओर से/ :
Assessee by Shri S.N. Divetia
सुनवाई कȧ तारȣख/ :
Date of Hearing 30th May, 2013
घोषणा कȧ तारȣख/ :
Date of Pronouncement 21-06-2013
आदे श / O R D E R
PER KUL BHARAT, JUDICIAL MEMBER: The Revenue and the
assessee has challenged the order of the Commissioner of Income Tax ITA. No.3448/Ahd/2010 With CO No.19/Ahd/2011 (Appeals)-XX, Ahmedabad dated 11.10.2010, by way of the appeal and the CO respectively. We first take up the appeal of the Revenue.
ITA No.3448/Ahd/20102. The Revenue has raised the following effective grounds.
"1. The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.2,57,000/- made by the AO regarding payment of incentive to five staff members.
2. The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.24,52,114/- made by the AO under section 40(a)(ia) on account of Jeep's transportation expenses."
3. Briefly stated facts are that the case of the assessee was selected for scrutiny assessment, and in the assessment so framed under Section 143(3) of the Income Tax Act, 1961 (hereinafter refer to as "the Act") , the AO made disallowance of expenditure in respect of payment of incentive and commission, and also made disallowance under section 40(a)(ia) of the Act qua jeep transportation expenses.
4. The first ground is against the deletion of addition of Rs.2,57,000/- made by the AO. The learned DR submitted that the assessee failed to substantiate its claim in respect of incentive and commission. He submitted that the AO was justified in disallowing the expenditure, since the assessee could not give confirmative letters from the persons to whom the incentive and commission was paid. On the contrary, the learned counsel for the assessee submitted that the assessee paid incentive and commission by way of cheque, and he submitted that the assessee is dealer of M/s.Mahindra & Mahindra Ltd. ("MML" for short), who being the principal, for the sale of vehicles by the assessee. The learned counsel submitted that in order to achieve the target, the assessee had given incentive and commission which is duly reflected in the ledger. He submitted that such expenditure is -2- ITA. No.3448/Ahd/2010 With CO No.19/Ahd/2011 allowable, and the Revenue itself has allowed in the past in assessee's own case. He submitted that only objection of the AO was that the person to whom the incentive and commission was paid had withdrawn the amount on the very next day.
5. We have heard rival submissions and perused the material available on record, and the orders of the authorities below. The AO had disallowed the claim of the assessee on the basis that on scrutiny of the confirmation letters revealed that the assessee had indicated the amount of commission, but identification of the sold, amount of bills of vehicles and incentive commission have not been narrated by the assessee. Further, it is observed that scrutiny of the bank account of the person revealed that the respective cheques issued by the assessee were credited in their respective account, and after clearance of these cheques immediately on the next date, the cash withdrawn from the said bank, and the purpose of the cash was not made available. However, the learned CIT(A) reduced the quantum of disallowance on the basis that the AO was not justified in disallowing the entire sum of Rs.7,26,000/- only on the presumption that no incentive was paid to staff members when sample sheets produced before him. We have given our thoughtful consideration to the facts of the present case. The assessee is required to establish that it has incurred expenditure in respect of the incentive paid to the persons. In the case in hand, the assessee has produced before the AO evidences of payment of incentives and also letter from "MML" setting target for the assessee. Therefore, it could not be presumed that the assessee has not paid any incentive. We find that before the authorities below, the assessee has given evidence of payment of commission, but has not got confirmation from the persons to whom the payment was made. Under such circumstances, the learned CIT(A) was justified in confirming the disallowance to the extent where the assessee -3- ITA. No.3448/Ahd/2010 With CO No.19/Ahd/2011 failed to give confirmation letter. Therefore, this ground of the Revenue's appeal is dismissed.
6. The next ground is regarding deletion of addition of Rs.24,52,114/- made by the AO u/s.40(a)(ia) of the Account on account of jeep's transportation expenses.
7. The learned DR submitted that the CIT(A) was not justified in deleting the addition. He submitted that the assessee was required to deduct on the payments made to M/s.Narayan Auto Works ("NAW" for short) with whom the assessee was having contract. On the contrary, the learned counsel for the assessee submitted that the AO had made disallowance under Section 40(a)(ia) of the Act, but the provision of section 194C of the Act was not applicable in the present case. He submitted that there was no contract between the assessee and the drivers, who have delivered the jeeps from the place of "MML" to the place of the assessee. He submitted that the AO failed to appreciate the fact that Rupees four thousand per vehicle was paid to the driver as reimbursement of the expenses inclusive of transit insurance, RTO Trade plate charges and other expenses. He submitted that there was no contract between "NAW" and the assessee.
8. We have heard rival submissions and perused the material on record. The AO in this case has allowed the expenditure of the assessee in respect of the jeep transportation on the ground that the assessee had failed to deduct tax on the payment made to the drivers. The AO considered the payment made to drivers, as payment made to "NAW", who being the authorised transporter of "MML". Under these facts and circumstances of the present case, we have to examine, as to whether the assessee was required to deduct tax under Section 194C of the Act or not. The provision of section 194C of the Act would be applicable if the assessee is -4- ITA. No.3448/Ahd/2010 With CO No.19/Ahd/2011 responsible for paying any sum to the contractor for carrying out any work. In the case in hand, the AO has made disallowance of the payment made by the assessee to the drivers holding that such payment was made to "NAW" under the contract. The undisputed facts are that "NAW" is an authorised transporter of "MML". It is not coming out of the order of the AO, whether, the assessee had made payment to "NAW", and such amount was credited to the account of "NAW". The AO has also not examined the claim of the assessee that Rs.4,000/- was inclusive of premium of freight charges and other expenses. The AO has made allowance on the presumption of contract between the assessee and "NAW" but no enquiry is made from "NAW" whether any payment for transportation of jeep was received by it under such contract. However, the learned CIT(A) has categorically given a finding that the AO has not made any inquiry with the "NAW". We find that the AO has only presumed that there were some contract between the assessee and the "NAW". However, no evidence to this fact was placed on record. In this view of the matter, we find no infirmity in the order of the ld. CIT(A) on this issue, and the same is hereby confirmed. This ground of the Revenue is dismissed.
9. In the result, the appeal of the Revenue is dismissed.
10. Now we take up the CO of the assessee. The assessee's has raised the following grounds in the CO:
"1. The ld.CIT(A) has erred in law and or on facts in upholding the addition out of incentive exps. to the extent of Rs.2,57,000/-
2. That in the facts and circumstances of the case, the ld.CIT(A) ought not to have confirmed disallowance out of incentive exps. To the extent of Rs.2,57,000/-"
11. In ITA No.3448/Ahd/2010 of the Revenue (supra), we have decided the identical issues against the Revenue, confirming the findings of the -5- ITA. No.3448/Ahd/2010 With CO No.19/Ahd/2011 CIT(A). The contention of ld. Counsel for the assessee that the amount of incentive paid is duly reflected in the books of accounts, merely on the ground that no letter of confirmation was furnished would not make the claim of the expenditure as not allowable, has no merit. The onus is on the assessee to prove that the expenditure is in fact incurred and he has also support his claim with material evidence. The person who received incentive has to confirm the receipt of such incentive in the absence of same adverse inference is justified. Therefore, taking our view above consistently, in the above appeal of the Revenue, this CO of the assessee is also dismissed.
12. In the result the appeal of the Revenue and the CO of the assessee are dismissed.
Order pronounced in Open Court on the date mentioned hereinabove.
Sd/- Sd/-
ए.मोहन अलंकामोनी/ A. MOHAN ALANKAMONY, कुल भारत /KUL BHARAT)
(क
लेखा सदःय /ACCOUNTANT MEMBER Ûयाियक सदःय /JUDICIAL MEMBER
Copy of the order forwarded to:
1) : Appellant
2) : Respondent
3) : CIT(A)
4) : CIT concerned
5) : DR, ITAT.
BY ORDER
DR/AR, ITAT, AHMEDABAD
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