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M/s. Transcar India Pvt Ltd Versus Deputy Commissioner of Income Tax

2016 (1) TMI 250 - ITAT CHENNAI

Disallowance of discount on sale of car to various customers - Held that:- It is a normal practice in the business of selling new cars by the dealers of the car to grant discount in order to off-load stock and also to meet the target fixed by the manufacturers of the car. The discount is offered according to the market trends, competition by the other car manufacturers and also due various other marketing strategy and financial policies of the assessee. It is the prerogative of the assessee to d .....

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not be held as sham or not genuine. The Revenue has not brought out any convincing reasons to treat these transactions as not genuine. Therefore, we do not subscribe to the view of the Revenue for making such disallowances. - Decided in favour of assessee - ITA No. 2278/Mds./2014 - Dated:- 13-11-2015 - A. Mohan Alankamony, AM And Duvvuru RL Reddy, JM For the Appellant : Mr N C Prabhakar, Adv For the Respondent : Mr N C Prabhakar, Adv ORDER Per A. Mohan Alankamony, Accountant Member This appeal i .....

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that the assessee is a company, engaged in the business as a dealer of Mercedes Benz car & its spares and accessories, filed its return of income for the assessment year 2007-08 on 22.10.2007 admitting total income of ₹ 64,24,538. Thereafter the case was selected for scrutiny and assessment was completed U/s.143(3) r.w.s 115WE(2) of the Act, wherein the Ld. Assessing Officer amongst one of the disallowances, disallowed the claim of discount granted to the customers of the assessee on t .....

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w the MRP price and hence, on the total MRP price the discount was granted to the buyers of the car. However, the Ld. Assessing Officer rejected the submissions of the assessee by holding that the discounts were not supported by evidence in the form of valid documents and thus the assessee has failed to discharge its onus to prove the claim of discount. 4. On appeal, the Ld. CIT (A) upheld the view of the Ld. Assessing Officer by further reasoning as follows:- i) As per normal accounting practic .....

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there is no scope for granting discounts. v) The manufacturer of car does not allow the dealers to grant discount for their products. 5. Before us, the Ld. A.R. reiterated the submissions made before the Revenue authorities and argued by stating as follows:- a) The appellant has entered into an agreement with their principals, namely Daimler Chrysler India for selling Mercedes Benz Cars in India and in the state of Tamil Nadu excepting Coimbatore and Pondicherry. b) As per the agreement, the app .....

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facilitating speedy disposal of the vehicles. But, in the process, the appellant could not mention these discounts in the Invoices since the vehicles were delivered after the sales of the vehicles and in order to avoid paper work problems with the Transport Department namely the Registering Authority (i.e. RTO) and Sales tax department. d) If the vehicles remained unsold, they will become "debt stock" and the appellant will incur further loss. In order to avoid this situation, therefor .....

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