Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2007 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (3) TMI 409 - AT - Income TaxDisallowance of the Commission - adjustment in the accounts and that agents were not informed whenever the commission amount was credited to their account - failed to produce evidence as proof for the services rendered by the business agents - agents booked the orders from the Government agencies and public undertaking - Deductions under sections 80HH and 80-I - manufacture of pneumatic compressors, spares, tools - HELD THAT:- The assessee, is in this line of business for the number of years and allowance of commission in the earlier years paid by the assessee in the same manner is not in dispute. It is also not in dispute that sales made by the assessee in these locations through such parties directly or indirectly have been accepted as genuine. The assessee has established the fact of rendering of services by these parties by adducing ample evidences which have been placed on record, hence, genuineness of transactions cannot be doubted for this reason. We have also noted that the assessee, in case of goods purchased by these agents from the assessee, has sold such goods at a discounted price and these parties earned their profit by selling these goods at a higher price. In respect of commission payable to them, with regard to direct sales, the assessee has credited the accounts of these parties and made payment or adjusted the same from the amounts due from such parties, which, in our opinion, is a normal accounting practice, hence, merely for this reason the genuineness of transactions cannot doubted. The other reasons given by the Revenue authorities for disallowing the payment, in our considered opinion, are in the nature of directions to the assessee as to how he should conduct his business and such directions are beyond the scope of the jurisdiction of Revenue Authorities. Even otherwise, the assessee has established the fact that it’s business policies are commercially sound and are as per prevalent business models at the relevant time. Further, the interim report received from the concerned Assessing Officer also supports the case of the assessee. We also do not find any substance in the contention of Revenue that agreements of appointment of commission agents should have been executed on legal documents instead of letter form because this not so required under any law. Thus, taking into consideration of the facts and circumstances of the case, we find no justification for making the disallowance. Accordingly, we reverse the order of learned CIT(A) and direct the Assessing Officer to allow the commission as claimed by the assessee. Thus, Ground Nos. 1 & 2 stand accepted. Ground Nos. 3.1 to 5.1 are in the nature of arguments related to aforesaid ground Nos. 1 & 2, hence, no decision is required thereon as these have already been taken into consideration while deciding ground Nos. 1 & 2. Deduction under sections 80HH and 80-I - original return of income - It is a settled position that the Circulars issued by the Board are binding on the subordinate income- tax authorities and if C.B.D.T. issues directions which arc beneficial to the assessees although the same may not be directly in consonance with the provisions of law, even then these instructions have to be given effect and adhered to by the concerned authorities. Thus, there is a strong case for reciprocity to be shown by the Revenue Authorities while completing assessments and to avoid administrative hardships to the assessee. As far as the decision in the case of Goetze (India) Ltd.[2006 (3) TMI 75 - SUPREME COURT] is concerned, there is no dispute that the same is binding on everybody concerned. In the said decision, the Hon’ble Apex Court has also ruled that Appellate Tribunal may adjudicate the issue if a claim is made by any party subject to satisfaction of prescribed rules, hence, even the Hon’ble Apex Court has not barred the assessee raise it’s legal claim before Appellate Authorities. In our opinion, therefore, circulars of same nature which have been already issued would not become irrelevant or can be ignored. Admittedly, the circular issued in 1995 has not been withdrawn, hence, it has got binding force on the subordinate authorities even as on date. Accordingly, we hold that the Assessing Officer is bound to assess the correct income and for this purpose, the Assessing Officer may grant reliefs/refunds suo motu or can do so on being pointed out by the assessee in the course of assessment proceedings for which assessee has not filed revised return, although, as per law, the assessee is required to file the revised return. Having stated so, in our view, the learned CIT(A), having co-terminus powers with the powers of Assessing Officer and the fact that appellate proceedings are the continuation of original proceedings, should have entertained the claim of assessee and allowed if other conditions of the provisions of the law were satisfied. In this view of the matter, we accept both the grounds of the assessee and direct the learned CIT(A) to consider the claim of the assessee at the revised figures on merits and decide the same according to the provisions of sections 80HH and 80-I of the Act after hearing the assessee. Thus, this ground of the assessee stands accepted. In the result, appeal of the assessee stands partly allowed.
|