TMI Blog2014 (3) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... e brokerage received as the books of account of the assessee were rejected and disallowed expenses relating to the brokerage business forming individual part of the Profit and Loss A/c prepared by the assessee - books of account of the assessee cannot be rejected –thus, there is no question of disallowance of proportionate business expenses – Decided against Revenue. Deletion of addition from undisclosed contract – Held that:- The assessee not brought anything on record to suggest that M/s. Mulkanoor Cooperative Credit Society itself sold rice to M/s. Emmsons International Ltd. and assessee is only receiving commission on it - In the absence of positive material to suggest that the rice has been sold by Mulkanoor Cooperative Society directly to M/s. Emmsons International Ltd. - the TDS certificate will be considered as genuine and the same has to be taxed as mentioned in the TDS certificate as income of the assessee – Decided in favour of Revenue. Disallowance of depreciation on vehicles – Held that:- The vehicle is in the name of the partner and the vehicle was used for the purpose of business of the assessee and a partnership cannot be said to be separate from partners and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax. The learned CIT(A) ought to have considered the fact that the amount did not accrue during the previous year and, therefore, is not liable for taxation. (2) The learned CIT(A) erred in confirming addition of Rs. 38,202 out of Rs. 86,152 made by the Assessing Officer holding that there is income not accounted for. 6. Facts of the case are that the assessee is a partnership firm carrying on trading in maize, brokerage in rice and share transactions. The assessee field return of income at Rs. 43,70,450 from this business. During the course of assessment proceedings under Sec. 143(3), the Assessing Officer required the assessee to furnish complete list of sundry creditors wherein the closing balances were more than Rs. 1.00 lakh. Accordingly, the assessee furnished the list. The Assessing Officer made enquiries invoking the provisions of Sec. 133(6) of the IT Act. All the creditors to whom the letters were issued by the Assessing Officer have complied with and submitted copies of account of the assessee as appearing in their books of account. This fact is agreed to by the Assessing Officer. During the course of such enquiry, the Assessing Officer noticed that there are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Sec. 145 of the IT Act rejected the books of account of the assessee. He estimated the income from brokerage at Rs. 3.15 per quintal of quantity supplied by the assessee to various parties. Thus he estimated the income from brokerage at Rs. 37,07,623/-. During the course of assessment proceedings, the assessee also brought to the notice of the Assessing Officer that under the mercantile system of accounting, taxability is attracted only when income is accrued and the income accrues when it falls due., brokerage can be claimed by the assessee when all the primary conditions of supply to the parties is fulfilled i.e. the receiver of the goods received them in good condition which are in accordance with the agreed quality, the actual quantity loaded received by them and the payment is received in full by the rice millers from the export houses either directly from them or through the assessee. In respect of the above two transactions, payments from them have disputed. It was also submitted that the above said parties disputed payment of brokerage to the assessee as a result the brokerage did not accrue to the assessee and hence the brokerage was not offered to tax durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord only those amounts which it had actually received, it would no longer be considered to be following the mercantile system. The brokerage on the business with these parties (5,84,106.35 quintals to M/s. Soubhik Exports and 4,71,967.65 quintals to PKS Ltd ), therefore, needs to be brought to tax. The AR has also objected to the brokerage rate of Rs. 3.15/- per quintal being adopted by the Assessing Officer. The CIT(A) observed that the assessee's grievance in this regard is justified. There is nothing on record to suggest that the assessee had been receiving brokerage ranging from Rs. 1.75/- to Rs. 5/- per quintal. On the other hand, the assessee in its letter dt. 29.12.2010 to the Assessing Officer had submitted that the rate of brokerage in respect of M/s. Soubhik Exports Ltd. was Rs. 1.75 per quintal and was Rs. 1 per quintal in respect of M/s. PKS Ltd. Therefore, the CIT(A) directed the Assessing Officer to compute the receipt of brokerage from these two parties at Rs. 1.75 per quintal for 5,84,106.35 quintals for M/s. Soubhik Exports Ltd and Rs. 1/- per quintal for 4,71,967.65 quintals for M/s. PKS Ltd., and bring it to tax. Against deletion of a portion of brokerage f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee entered into a transport contract with this company. During the year, in respect of M/s. Emmsons International Ltd., one party namely, Mulkanoor Coop. Credit Society Ltd. directly supplied rice to the above named company, instead of sending the same through the assessee. The Mulkanoor Coop. Credit Society Ltd. has paid transportation charges for the above goods supplied. As M/s. Emmsons International Ltd. was under the impression that the goods were received by them through the assessee, has reimbursed the transport charges of Rs. 47,950/- by crediting the assessee's account and made a TDS of Rs. 1,087/- and the TDS Certificate was accordingly sent to the assessee. Since the company has only made a credit entry in its books of account in the account of the assessee and no transfer of cash was made, the assessee has not made any entry in its books of account. In fact M/s. Emmsons International should have credited the amount of Rs. 47,950/- in its books to the account of The Mulkanoor Coop. Credit Society Ltd. and TDS certificate issued to them. As erroneously the TDS certificate has been issued in the name of the assessee, the assessee claimed the same in its retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had transactions and which were verified by the AO. It is also undisputed that there were no discrepancies found in the books of account relating to the other business of the assessee, of trading in maize as also in the books of account relating to the other sources. The CIT(A) observed that this does not constitute enough reasons for rejection of books of account per se and consequential estimation of income. Accordingly, he held that rejection of books of account is unwarranted. Against this, the Revenue is in appeal before us. 19. We have heard both the parties and perused the material on record. Regarding the findings of the CIT(A) that rejection of books of account is not warranted, the Revenue is in appeal before us. In this case, there was a discrepancy in respect of accounts of two parties i.e., M/s. Soubhik Exports and M/s. PKS Ltd. as noted in para 6 of this order. As argued by the AR, the discrepancies noticed in respect of these two parties cannot be generalised so as to reject the books of account. The AO caused necessary enquiry and found that all the sundry creditors' accounts are in correct position and there is no discrepancy in those accounts. Being so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and assessee is only receiving commission on it. In the absence of positive material to suggest that the rice has been sold by Mulkanoor Cooperative Society directly to M/s. Emmsons International Ltd., the TDS certificate will be considered as genuine and the same has to be taxed as mentioned in the TDS certificate as income of the assessee. This ground of the Revenue is allowed. 23. The next ground (additional ground) is with regard to disallowance of depreciation on vehicles. The vehicle is in the name of the partner and the vehicle was used for the purpose of business of the assessee and a partnership cannot be said to be separate from partners and the vehicle is in the name of partner and if it has appeared in the Balance Sheet of the assessee, depreciation on that asset is to be allowed. Accordingly, we confirm the order of the CIT(A). This ground of the Revenue is rejected. ITA No. 1224/Hyd/2012 is partly allowed. 24. In CO the assessee challenged sustaining addition on income from transaction with M/s. Soubhik Exports at Rs. 1.75 per quintal for 5,84,106.35 quintals and M/s. PKS Ltd. at Rs. 1 per quintal of 4,71,967.65 quintals. According to the assessee the above ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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