Case Law Details
Shri Virendra Kumar Jain Vs ITO (ITAT Jaipur)
We note that the business model of the mobile operators through distributor/dealers/retailers is such that the income of all the down stream inter-mediatory is only the discount/commission allowed by the Cellular operators. There is no dispute that the mobile operators are making the payment of such commission/discount to the distributors/dealers/retailers directly. However, for accounting purposes the payments are reflected through inter-mediatory. Thus when the actual transaction of payment is made directly by the mobile operators to the retailers, then the assessee being a dealer has carried out only the accounting entries for completeness of the account. It is also not in dispute that these payments are determined by the mobile operators and the assessee is having no discretion or role in the quantum of the alleged discount/commission to be paid to the retailers. Hence having considered the undisputed fact and business model where the payments are directly made by the company to the retailers and the assessee is only showing the entries in the books of accounts for receipts as well as payments without actual receipt and payment of the said amount, then the AO cannot made addition by looking one side of the transaction and overlooking the other side of no actual receipt by the assessee. Accordingly, we find that the addition made by the AO is not justified, hence the same is deleted.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the assessee is directed against the order dated 27th November, 2017 of ld. CIT (A)-3, Jaipur for the assessment year 2010-11. The assessee has raised the following grounds :-
“ 1. That under the facts and circumstances of the case the learned CIT (A) has erred in confirming the action of the learned Assessing Officer in making disallowance of Rs. 16,41,989/- u/s 40(a)(ia) of the Income Tax Act, 1961.
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