TMI Blog2014 (5) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... partly in favour of Assessee. - ITA No.944/Hyd/2010 , CO No.51/Hyd/2010 - - - Dated:- 6-12-2013 - CHANDRA POOJARI AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : Smt K Haritha For the Respondent : Shri S Ravi ORDER:- PER : Asha Vijayaraghavan This appeal has been filed by the Revenue against the Order of the CIT(A)-V, Hyderabad dated 01.04.2010 for the assessment year 2006-2007. The assessee also filed Cross Objection. ITA.No.944/Hyd/2010: 2. Briefly the facts of the case are that the assessee company is engaged in the business of marketing of IMFL and related services. For the assessment year 2006-2007 and filed its return of income on 28.11.2006 admitting total income of Rs.99,81,650/-. The A.O. completed the assessment under section 143(3) of the Act determining the total income of the assessee at Rs.1,37,07,501/- by making the following additions : i) Disallowance of business promotion schemes of Rs.22,24,416/-. ii) Addition towards unexplained credits u/s. 68 of the Act of Rs.15,00,000/-. iii) Difference in the claim of commission paid of Rs.1,435/-. 3. With respect to addition made under section 68 of the I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made u/s 68 deserves to be deleted. b)Trade deposit from G.Suresh Kumar Rs.6,50,000/-. The assessing officer has acknowledged that the cash flow statement of the creditor shows that advance of Rs.6,50,000/- made to the appellant and also Rs.6,500/- as interest receipt from the appellant. The appellant cannot be held responsible if the interest paid by it is not offered for tax by the creditor. Since the creditor has confirmed the advance of Rs.6,50,000/- to the appellant, and the assessing officer could not counter this fact, the addition made u/s 68 deserves to be deleted. Trade deposit from A.Sainath Reddy Rs.,2,00,000/- The assessing officer could not dispute the transfer of Rs.2,00,000/- from the creditor's bank account to the appellant as is evident from the bank account of the creditor. Since the creditor has filed his return of income and confirmed the advance of Rs.2,00,000/- to the appellant, the appellant discharged its duty of establishing the genuineness of the credit and the burden of disproving the same shifted to the A.O. and he failed to discharge the burden. Therefore, the addition made U/s 68 deserves to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual business expenditure. Therefore, the Assessing Officer disallowed the same giving the following reasons: 2.5 Assessee's above contentions are not acceptable. With regard to the expenditure of Rs.5,68,224/- claimed by the assessee which was in fact a portion of discount allowed directly by the supplier i.e. Rhizome Distilleries Pvt. Ltd, it is definitely not an allowable expenditure as the assessee is not indulging in any sales and hence, it cannot claim any expenditure towards discount allowed to the customers. Moreover, there was no agreement between the supplier and the assessee to bear expenditure incurred by the supplier towards discount allowed on proportionate basis. The assessee is entitled to a commission on the number of cases sold to A.P. Bewerages Corporation Ltd. and it is not responsible for the expenses incurred by the supplier company. 2.6 With regard to the expenditure of Rs.16,56,192/- incurred by M/s Mahalakshmi Liquor Promoters Pvt. Ltd. in purchasing branded T shirts for distribution amount retailers, there was no agreement between the assessee and M/s Mahalakshmi Liquor Promoters Pvt. Ltd for bearing the expenditure on its behalf. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AP Beverages Corporation had been given a discount of Rs.25 lakhs on the supplies. Out of this discount, Rs.19,35,684/- had been borne by the distillery and the balance had been borne by the appellant on the directions of the distilleries. 5.6. An examination of facts on record shows that this argument is not based on any evidence. There is nothing in the agreement between the appellant and the distillery to show that the discounts are to be allowed partly by the appellant. In fact, the appellant is only to receive commissions and reimbursement of any marketing expenses specifically authorized by the distillery. Discounts if any, are directly allowed by the distillery and there is no relation whatsoever of the same with the business of the appellant. Clause 9 clearly states that the appellant cannot commit itself to any acceptance of discount or of any other matter without the prior written consent from M/s Rhizome Distillery Pvt. Ltd. This clause is quoted below: 'PRAYAG' shall represent 'RHIZOME' in all the discussions with Andhra Pradesh Beverages Corporation Ltd., in connection with fixation of prices of the IML Products of UB Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT(A) pointed out that the incongruency of the agreement of the assessee with the sub agent M/s. Mahalakshmi Liquor Promoters Pvt. Ltd. wherein the sub agent had higher commission than that what the assessee gets from the principals. The CIT(A) observed that the assessee gets Rs.3/- per case of liquor sold from M/s. Esveeaar Distilleries Pvt. Ltd. and Rs.2/- per case sold from M/s. Rhizome Distillery Pvt. Ltd. whereas, on the other hand, M/s. Mahalakshmi Liquor Promoters Pvt. Ltd. gets Rs.8/- per case from the assessee towards commission on sales made to A.P. Beverages Corporation Limited as per clause 11 of the agreement. 14. The CIT(A) pointed out that the assessee proposed to pay almost three times commission earned by its sub agent and doubted the genuineness of the agreement. The CIT(A) observed that M/s. Mahalakshmi Promoters Pvt. Ltd. were supposed to independently make purchase of promotion materials like branded T-shirts, the assessee is not liable to reimburse them for such promotion materials. The CIT(A) concluded that the addition of Rs.22,24,416/- made by the A.O. is to be confirmed. 15. Aggrieved, the assessee preferred C.O. before the Tribunal. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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