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2015 (3) TMI 884 - AT - Income TaxDisallowance of trade discount expenses paid in Cash - sale of tractors to farmers - onus to prove genuineness of discount - difference in the expenditure recorded in the ledger account and the cash-book - Held that:- In the instant case, the appellant has not able to demonstrate, why it has offered cash discount to the customers sometimes after one month from the sale effected. It is also seen from the discount offered that the rate varies from 8 to 8.5%. This kind of cash discount is naturally unusual in this trade. More so, the appellant is a dealer and the margin for sale of tractors would normally will not be more than 10 to 15%. The appellant also heavily invested which incur interest component of such capital. Ina the tight scenario offering it 8 to 8.5% cash discount definitely not a viable business proposition. As the AO rightly observed that entry in ledger account do not tally with the cash book clearly indicates that the cash discount expenses was invented by the appellant much after the sales were affected. When the tractors were sold to the customers, they had already had bank accounts then why the appellant did not pay them in cheques the discount instead of paying in cash. The contention of the Id. AR that cash discounts are offered to the customers to avail full bank loan and to facilitate margin money also do not hold much water because the question of margin money arises before the loan sanctioned and it should have been in the account of the loanee. Further, the appellant should have given in cheques before the loan was obtained by the customers as it happens in normal cases. This obviously raised serious doubt about the genuineness of the discounts given in cash by the appellant. The appellant also had not brought any plausible explanation as to why other than cash discounts are not offered to the customers which are normal practice in this type of trade. The aforesaid finding of ld.CIT(A) is not controverted by the assessee. The contention of the assessee is that such trade discounts are allowable and is prevalent in the similar line of business. During the course of hearing, a query was raised as to how come the payment of discount to the purchasers of the tractors was made in installments and even before or after the tractor has been sold. The ld.counsel for the assessee could not give any satisfactory reply to the query. In our considered view, the assessee failed to prove the expenditure with satisfactory explanation, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld - Decided against assessee.
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