Case Law Details
Brief of the case:
ITAT Jaipur held in DCIT Vs. M/s Ashiana Ispat Ltd that if the facts and circumstances were same in the assesse’s own case of earlier years then, disallowance could not be made if the same was allowed in the earlier years by any appellate authority. It could not be the case that on one hand the revenue was accepting the facts and circumstances as genuine and on the other hand in the later years the same facts and circumstances were considered as non –genuine.
Facts of the case:
The assessee company was engaged in manufacturing and trading of TMT bars and MS ingots. The assessee had claimed expenses under the head brokerage and commission at Rs. 95,44,810/- which AO considered as non-genuine because assessee failed to put on examination the brokers and commission agents and made addition of the above amount which assessee argued by filing an appeal with CIT(A) because it had presented all the agreements and confirmation letters of the brokers and commission agents. So, CIT(A) allowed the appeal of assessee which revenue challenged the same with ITAT.
Contention of the assessee:
Assessee was of the view that similar commissions/brokerage were paid from A.Y. 2003-04 to 2009-10 and similar additions were made by the Assessing Officer, which was challenged before the ld CIT(A) and finally was allowed by ITAT. The assessee had filed copy of agreement with brokers, copy of confirmations of commission payment, list of brokerage/commission paid with name and address of brokers/commission agent. Further, the assessee was in ingots business and running a steel plant and most of the sales were made through brokers. It was a common practice in this line of business and no sales could be made without the help of brokers.
Moreover revenue should collect some concrete evidence to prove the show called nexus to prove his suspicion. Revenue merely held suspicion but the commission was paid wholly and exclusively for business purposes.
Contention of the revenue:
Revenue was of the view that as the payments were recorded at the last date of the accounting year and the payment had been made in the next year which gives the impression that the bills were issued at the insistence of the assessee as per its requirement to make adjustment in the P&L account to bring down the profit to the desired level of the assessee. It’s not possible that brokers claimed to provide services for the whole year and silently wait for next 6 months or more to receive payment against the service provided. No prudent person would like to do a job and demand remuneration against it after six months or a year. On verification of sale bills, it was noticed by the Assessing Officer that the name of any broker was not appearing on any sale bill for which the said brokers had arranged sales. It was a trade practice to mention the name of broker on the sale bill for the sales which had involvement of any broker to maintain record regarding claim of brokerage.
Moreover no broker was being presented for examination which was called twice by the AO. All the agreements were stereo type in nature and it appeared that these had been prepared by the assessee. Further these payments were made in round figures.
So these payments should be disallowed.
Held by ITAT:
ITAT held that as the same facts and circumstances were there which were there in the earlier years in the assessee’s own case which was considered as genuine at that time. Now also as all the facts and circumstances were same in the concerned assessment year. So at this time also the same should be considered as genuine as there were no change in the facts and circumstances.
