TMI Blog2014 (6) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... no effective yardstick for comparison and having regards to the above discussion, it would be deem it fair and reasonable to disallow 25% of discount forwarded to Shri Ashish and Smt. Urvashi as excessive – Decided against Revenue. Deletion of discount forwarded – Amount has been added twice but not reflected in ledger accounts - When BPTP Ltd. has given the commission to the assessee and has itself recovered part of the commission through raising debit notes, the genuineness of the discount forwarded cannot be doubted unless it is established that the discount forwarded to BPTP Ltd. was received back by the appellant in some other form – the AO has either not looked into the ledger account narrations properly or has drawn his adverse conclusion due to short time available for passing the order - the AO has also not given any adverse finding on this issue in the remand report – the order of the CIT(A) is upheld – Decided against Revenue. - ITA No. 3848/Del/2012 - - - Dated:- 21-5-2014 - Shri J. Sudhakar Reddy, AM And Shri Rajpal Yadav, JM,JJ. For the Appellant : Shri Gurjeet Singh, C. A. For the Respondent : Shri Gagan Sood, Sr. D. R. ORDER Per J. Sud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as business expenditure. Consequently, a sum of Rs.16,78,601/- has been added to the income. Besdies, the liability towards interest paid to BPTP and pertaining to the plots booked by the assessee was also debited in the said ledger account with BPTP which has been disallowed as not being a business expenditure but personal liability of the assessee. 3. On appeal the First Appellate authority accepted the contentions of the assessee and granted relief. Aggrieved, the Revenue has filed the present appeal before us on the following grounds. 1. On the facts and in the circumstances of the case, the Ld.CIT(Appeals) has erred on facts and in law in not sustaining the whole addition of Rs.40,58,883/- by observing that there is no effective yardstick for comparison, in the facts and circumstances of the case I deem it fair and reasonable to disallow 25% of discount forwarded to Shri Ashish and Smt.Urvashi as excessive and unreasonable and sustain the addition to the extent of Rs.10,14,720/-. Ld.CIT(Appeals) has ignored the fact that the discount forwarded to his family members is far beyond the limit of commission payable by BPTP to the assessee which proves that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee made payments of installments of plots/properties and interest owned by his family members out of his commission income and adjusted discount forwarded expenses against commission, which was not allowable as business expenditure. How the installment of the plots/properties and interest thereon owned by his family members can be allowed to be adjusted in the disguise of discount forwarded against the business income of the assessee. The assessee did not furnish any details as to how much commission he received on these plots/properties in the name of his family members against which he paid heavy discount and the assessee can only be allowed to pay maximum discount to the extent of commission received by him on these plots/properties from BPTP. In absence of any details, discount as indicated in the show cause notice @ 50,000/- on each plot/ property totaling Rs. 2,00,000/ - for four properties/plots in the name of his family members has been allowed by treating them at par with other customers. The excess payment claimed as discount forwarded to his family members of RsAO,S8,883/- has accordingly been disallowed under the provisions of section 40A(2)(b) of the Act. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of Rs.2,72,325/- to the appellant in respect of booking of a plot No. D-46 in the name of Mrs. Urvashi and Commission of Rs.2,12,500/- in respect of plot No. D-43 in the name of Shri Ashwani Sood. Out of the commission of Rs.2,12,500/- received for plot No. D-43, the discount of Rs.1,88,250/- has been forwarded in the BPTP ledger on 31.03.2009 i.e. subsequently which refers to total discount on that plot. The AO has accepted the figures ranging from Rs.10,000/ - to Rs.50,000/ - which are not in respect of total consideration but on the amounts so paid till that amount of commission was received. Thus the AO has erred in estimating the quantum of discount forwarded by the appellant. The discount forwarded as per the records made available from BPTP ranges from Rs.20,000/- to 2,72,325/- and this is a matter of fact which cannot be disputed. Secondly, the AO has treated the discount forwarded of Rs.35,03,883/- to Shri Ashish in respect of one plot No.D-36, which in not the discount forwarded but the amount actually paid towards the installments of this plot through the discount forwarded account. It is clearly established from the narrations given in the ledger account with BPT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it derived from the expenditure. If there is some connection or nexus between the expenditure and the business carried on by the assessee it would amount to an expenditure incurred in the course of business and for the purpose of the same. The discount forwarded to the family members by the appellant has also to be considered in the light of provisions of section 40A(2)(b) of the Act. The AO has allowed deduction for adhoc amount of Rs.50,000/- on imaginary basis which is contrary to the facts discussed above. It remains an admitted fact that the family members of the appellant have utilized the entire business setup, infrastructure, clientele, contacts, goodwill and reputation of the appellant in earning commission from BPTP and, therefore, retaining meager part of commission by the appellant is not commensurate with these facilities provided by the appellant which appears only because of close relation. Though there is no effective yardstick for comparison, in the facts and circumstances of the case and having regards to the above discussion, I deem it fair and reasonable to disallow 25% .of discount forwarded to Shri Ashish and Smt. Urvashi as excessive and unreasonable and sust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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