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Jayesh Industrial Suppliers Pvt. Ltd. Versus I.T.O. Ward 11 (4) Kolkata

2018 (2) TMI 742 - ITAT KOLKATA

Disallowance on account of supervision charges - guinity of expenditure - as contented by assessee no enquiry was made by the A.O. with the concerned contractors to verify the genuineness of claim of the assessee for supervision charges - Held that:- No agreement or contract entered into with the concerned parties is produced by the assessee on record to show the nature of services agreed to be rendered by the concerned parties and the terms and conditions on which such services were to be rende .....

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he A.O. on account of supervision charges. The same is accordingly upheld dismissing this appeal filed by the assessee. - I.T.A. No. 1994/Kol/2016 - Dated:- 9-2-2018 - Shri P.M. Jagtap, AM Shri I, Banerjee, FCA, appearing on behalf of the Assessee Shri Amitave Bhattacharya, Addl. CIT appearing on behalf of the Revenue ORDER Per P.M. Jagtap, AM This appeal filed by the assessee is directed against the order of Ld. CIT(A) - 18, Kolkata dated 29.07.2016 and although there are as many as five ground .....

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the said return, a sum of ₹ 35,00,000/- was debited by the assessee on account of supervision charges. Since no such expenditure on account of supervision charges was incurred by the assessee in the earlier years, the A.O. required the assessee to furnish the relevant details in order to justify its claim for deduction on account of supervision charges. The assessee was also called upon by the A.O. to furnish the details of past experience of the supervisors, their technical qualification .....

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e required work through the skilled and unskilled staff appointed by them. It was submitted that the expenditure on supervision charges thus was incurred for providing services to the customers which had resulted in increase volume of business. This explanation of the assessee was not found acceptable by the A.O. and he proceeded to disallow the expenditure incurred by the assessee on supervision charges for the following reasons given in the assessment order: 1. The assessee has not required to .....

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turn over the assessee made sales to 134 parties. On behalf of which company/companies appointed the supervisors. It is remain unclear. 7. Out of five supervisors two supervisors were resided at same address and another two were also resided at another same address. For example, Ghanshyam Agarwal and Kamla Devi resided at A-6, Ganesh Bihar, Bhatia Basti, Kadma. Jsr. Both of them may be husband & wife and they resided at own flat or on rented. The contract labours cannot be afforded to purcha .....

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ch in pursuance of the agreement with M/s. Usha Martin. The following submissions were also made by the assessee to support and substantiate its claim for deduction on account of supervision charges: 1.To increase customers satisfaction and services assessee was specifically required to appoint supervisors. 2. The payees were mere contractors. They were not technically expert but they had their own technical staff trained by Usha Martin to do the actual supervision. 3. Assessee denied that super .....

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opies of purchase orders of the clients, guarantee certificates issued by Usha Martin, documents relating to dealer policy etc. The said documents filed by the assessee were forwarded by the Ld. CIT(A) to the A.O. seeking his comments. In the remand report submitted to the Ld. CIT(A) on 31.05.2016, the Assessing Officer offered his comments on the issue as under: 1. A.O. pointed out that the appeal proceedings assessee had submitted that supervisors work for groupings, fixing the loops at the en .....

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ed staff of the contractors were engaged for supervision. In another submission assessee submitted that contractors have their own technical staff trained by Usha Martin Ltd. to do the supervision work. 4. During remand proceedings assessee was specifically requested to produce evidences which can prove the identity of person, their qualification and to prove that they had provided technical services in different sites, but the assessee did not comply. At this point of time assessee s only plea .....

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and also to bear all costs related to inspection Thus inspection is to be done by assessee in Usha Martin s premises as and when ropes are ready for dispatch. There is nothing mentioned about any services to be provided by assessee at buyer s premises. 6. Specifications in Guarantee Certificate issued by Usha Martin speak about the quality of product. Supervisors have no role in product quality. 7. A.O. has pointed out that each of the contractor was paid following amounts on the same day: a) &# .....

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shows that the bills are for Seamless Pipes and Polyster Sling and not for wire ropes. 10. Assessee did not produce TDS details for payments made to contractors. 5. When the remand submitted by the A.O. was confronted by the Ld. CIT(A) to the assessee, the later filed copies of acknowledgement of income tax returns filed by four contractors along with their Form 26AS. The assessee also offered following comments on the remand report submitted by the A.O.: 1. Assessee has given jobs of supervisio .....

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e entire material available on record including the additional evidence filed by the assessee, the remand report submitted by the A.O. as well as the comments offered by the assessee on the said remand report, the Ld. CIT(A) decided the issue vide paragraph no 6 of his impugned order which reads as under: I have carefully considered the facts of the case and the submissions of the assessee. In the assessment proceedings it was claimed that payment for supervisory changes were made as per Dealers .....

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they have any technically sound team to carry out the supervision. AO has pointed several discrepancies in the Remand Report but assessee has not been able to rebut these in the rejoinder. It only insists that payments have been made but even in this regard they have not submitted all details regarding payments and T.D.S. made. In the appeal proceedings, subsequent to filing of rejoinder, assessee submitted copy of acknowledgment of returns filed and form 26AS in respect of following 4 contract .....

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essee. However, in the return of income , she has claimed credit of only ₹ 7301/-. 3) In the case of Sri Ashok Sharma, he has shown income receipts from only Maa Vaishnovi Sponge Ltd. and Reliable Sponge Ltd. There no mention of the assessee Co. in Form 26AS. 4) In the case of Sri Ghanashyam Das Agarwal, income has been received from Jagdamba Commercial Pvt. Ltd., Suraj Solutions Pvt. Ltd. and the assessee company. However, in the return of income he has not claimed credit for TDS made by .....

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TDS returns. Secondly, the print out of these Form 26A3 have been taken as on 13th July, 2016. Hence the contractors who are not showing any receipt from assessee, have definitely not received any money. Other wise assessee would have uploaded the details in Form 26A5. Other set of assesses in whose case receipts appear in Form 26A5 but these are not shown in Return of Income, possibility is that assessee has uploaded the details in their Form 26AS without their knowledge and after filing of th .....

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nfirmed. The Ld. CIT(A) thus confirmed the addition of ₹ 35,00,000/- made by the A.O. on account of disallowance of supervision charges. Aggrieved by the same, assessee has preferred this appeal before the Tribunal. 7. The only contention raised by the learned counsel for the assessee in support of the assessee s case is that no enquiry was made by the A.O. with the concerned contractors to verify the genuineness of claim of the assessee for supervision charges. He contended that the A.O. .....

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ng the relevant documentary evidence was on the assessee and he clearly failed to discharge the same. He submitted that there was no agreement or contract entered into with the concerned parties that is produced by the assessee to show the terms and conditions of the contract stated to be for rendering the supervisory services. He also submitted that there was no other documentary evidence that is filed by the assessee to show the services claimed to be rendered by the concerned contractors for .....

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isfactorily discharged the onus that lay on it, it was not incumbent upon the A.O. to make any enquiry with the concerned parties before making disallowance on account of supervision charges. He, therefore, strongly supported the impugned order of the Ld. CIT(A) confirming the disallowance made by the A.O. on account of supervision charges and urged that the same deserves to be upheld. 9. I have considered the rival submissions and also perused the relevant material available on record. As right .....

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ch services were to be rendered. The assessee has also not produced any evidence to show that the services were actually rendered by the said parties for the purpose of the assessee s business. As pointed out by the A.O. in the remand report as well as by the Ld. CIT(A) in his impugned order, there were discrepancies and deficiencies in whatever documents that were produced by the assessee in support of its claim for supervision charges. At the time of hearing before the Tribunal, the learned co .....

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