TMI Blog2016 (9) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of commission or brokerage to the employee. In support of such finding, the AO has not placed any material on record suggesting that these payments were in the nature of brokerage or commission. In the absence of such material, in our considered view, merely on the basis of conjectures, the payments made to the employees would not partake the character of payment of brokerage or commission. Another aspect of the matter, which the AO has not appreciated that in the normal loan transaction, the bank mostly debit the amount of processing charges. The AO has also not verified from the banker whether the said expenditures were debited to the account of the loan beneficiary by the banker or not. Whether there was any agreement between the banker and the assessee company in this behalf. Even the assessee has not furnished the requisite details in support of its claim that such payments were nothing but reimbursement to the employees and such expenditure is allowable deduction. After considering the totality of the facts and circumstances of the present case, it would be in the interest of justice if the issue is restored to the file of the AO for decision afresh. Hence we set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded against revenue - ITA No. 129, 130 & 700/JP/2014, ITA No. 151, 152 & 755/JP/2014 - - - Dated:- 4-8-2016 - SHRI KUL BHARAT, JM SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri G.G. Mundra (CA) For The Revenue : Shri Raghuvir Singh Dagur (Addl. CIT) ORDER PER SHRI KUL BHARAT, JM. These are six cross appeals filed by the revenue and assessee pertaining to assessment years 2009-10, 10-11 and 11-12 against the different orders of ld. CIT(A)-I, Jaipur dated 27.12.2013 and 19.08.2014. Since identical grounds have been raised in all these years both by the assessee and revenue, these appeals are taken up together and are being disposed off by way of consolidated order for the sake of convenience. 2. The ld. Counsel for the assessee has submitted that the facts are identical in all these years which is not disputed by the ld. D/R. On the agreement of both the parties, we first take up revenue s appeal in ITA No. 129/JP/2014 pertaining to assessment year 2009-10 as lead case. The revenue has raised the following grounds of appeal :- ITA No. 129/JP/2014 AY 2009-10 : 1. Whether on the facts and in the circumstances of the case and in law the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lves examination of land title of farmer, report of Patwari, farm land inspection by Bank staff, legal and advocate fees, stamping of loan document and its typing stationery charges and refreshments entertainment expenses while on inspection by staff and connected officials. The company pays the said expenses incurred through its employees as per fixed norms of company which varies looking to distance of village of purchaser farmer. These expenses are debited in books of accounts of company as financial service charges and are claimed as deduction in its Profit Loss account which in the year under consideration amounted to ₹ 86,26,198/-. The ld. Counsel submitted that the expenses so incurred by the company are not covered under the provisions of section 194H of the Act since the nature of payment is neither commission nor brokerage within the meaning of said section. He further contended that the ld. CIT (A) also erred in holding that the payments are liable to be taxed under section 17(1) and 17(2) of the Act. He submitted that these payment would not come within the sweep of section 17. Therefore, he submitted that the AO was not justified in making disallowance and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebited to the loan account of the concerned beneficiary by the banker. This facility, the assessee is claiming to have been provided by itself for facilitating the loan transaction, in fact it is carried out by the banker itself. But it is also a fact that bankers have tie-up with the vehicle/tractor agency who carried out this kind of service to the prospective customers. Therefore, in our considered view, both the authorities below have misdirected themselves for not appreciating the fact that the nature of payment as made by the assessee is neither a payment in the nature of salary nor related to employer-employee relationship. The payment is made in respect of the expenditure claimed to have been incurred for facilitating the loan transaction. The AO in the assessment order has considered this claim of the assessee i.e. expenditure being the reimbursement to the employees, and rejected the same on the ground that not a single bill was available with the assessee. It was further observed that these expenses were incurred for the services provided by the salesmen and that there was an absolute absence of even a single supporting voucher or any other documentary evidence which cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO by invoking provisions of section 14A read with Rule 8D. 4.1. The ld. D/R supported the order of the AO and submitted that the ld. CIT (A) was not justified in deleting the addition. He further submitted that the ld. CIT (A) ought to have upheld the disallowance. He submitted that the assessment year under appeal is 2009-10 and Rule 8D was very much in the Statute. The assessee has earned the exempted income, therefore, the disallowance related to such income is required to be disallowed. 4.2. On the contrary, the ld. Counsel for the assessee reiterated the submissions as made in the written submissions and submitted that there is no illegality in the order of ld. CIT (A). He drew our attention to the fact that the AO without examining the factual position straight away applied provisions of section 14A read with rule 8D. He further submitted that the assessee received meager dividend of ₹ 30,000/- which was directly credited in its bank account. The ld. Counsel submitted that before making disallowance, the AO has to satisfy himself that the claim of nonincurring of expenditure is not justified and in that event only he can proceed for making disallowance. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, cannot be held as not amenable to verification. He, therefore, requested that the order of ld. CIT (A) be upheld. 5.3. We have heard rival contentions and perused the material on record. The ld. CIT (A) held that the expenses under the head salary and labour welfare are necessary for carrying on the business. He observed that there is no evidence to suggest that the expenses incurred by the assessee were either inflated or bogus. At the time of hearing of the appeal, the ld. D/R has not controverted these findings of the ld. CIT (A). We, therefore, do not find any reason to interfere in the order of the ld. CIT (A), the same is hereby upheld. The ground of the revenue is rejected. 5.4. Since the issues involved in the revenue s appeals in ITA No. 130 700/JP/2014 for the A.Ys. 2010-11 and 11-12 are identical to ITA No. 129/JP/2014 and there is no change in facts and circumstances of the case, therefore, by applying the decision arrived therein, all the revenue s appeals are partly allowed for statistical purposes. ITA No. 151, 152 755/JP/2014 (Assessee) : 6. The grounds raised in these appeals are common for all the assessment years. As we have decided these gr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
