2016 (2) TMI 1076 - AT - Income Tax

Addition of claim of rebate and discount - CIT-A deleted addition - Held that - As gone through the relevant documentary evidences brought on record before us in the form of the paper book it shows that the assessee had filed complete details before the A.O, the rebate and discount in each bill has been accepted. We also find that the payments received by the assessee from its customers was net of rebate and discount since all these factual details have been examined and verified by the First Appellate Authority. We, therefore, decline to interfere with the findings of the ld. CIT(A) - Decided against revenue Addition u/s. 40(a)(ia) - assessee has deposited the tax deducted at source in contravention of the provisions of section 194A/194C/194H/194J - Held that - Factual matrix incorporated in detail by the A.O in his assessment order at pages 7 to 17 clearly shows that the assessee has deposited the tax deducted at source before filing of the return of income which is 29.09.2009.The amendment brought to the provisions of section 40(a)(ia) by Finance Act, 2010 squarely apply. The Hon ble Calcutta High Court in the case of Virgin Creations 2011 (11) TMI 348 - CALCUTTA HIGH COURT has held that the amendment in section 40(a)(ia) is retrospective. The Hon ble Jurisdictional High Court in the case of Omprakash Chaudhary (2015 (2) TMI 150 - GUJARAT HIGH COURT) has also taken a similar view. We decline to interfere with the findings of the ld. CIT(A). - Decided against revenue

Summary

Issues:
1. Deletion of addition of rebate and discount claimed by the assessee.
2. Deletion of addition made under section 40(a)(ia) of the Act.

Issue 1: Deletion of Addition of Rebate and Discount:
The appeal by the revenue concerns the deletion of the addition of Rs. 13,95,966 claimed as rebate and discount by the assessee for the assessment year 2009-10. The Assessing Officer (A.O) observed that the assessee had debited Rs. 25,05,495 towards Commission and Brokerage under Selling and Distribution expenses. The assessee explained that out of this amount, Rs. 11,09,530 was towards commission paid to sale agents, and the balance of Rs. 13,95,966 was for rebate and discount inadvertently recorded under the wrong account. The A.O disallowed the claimed amount, but the Commissioner of Income Tax (Appeals) [CIT(A)] accepted the explanation and directed the deletion of the addition. The tribunal upheld the CIT(A)'s decision after reviewing the documentary evidence and factual details provided by the assessee, concluding that the rebate and discount were correctly accounted for. The tribunal dismissed the revenue's appeal on this ground.

Issue 2: Deletion of Addition under Section 40(a)(ia) of the Act:
The second ground of the appeal relates to the deletion of the addition of Rs. 1,63,14,603 made under section 40(a)(ia) of the Act. The A.O disallowed this amount for non-compliance with tax deduction provisions after finding that the assessee had deposited tax deducted at source in contravention of the law. The assessee argued that the tax was paid before filing the return of income, invoking the amended provisions of section 40(a)(ia). The CIT(A) agreed with the assessee's contention and directed the deletion of the disallowance. The tribunal, after examining the detailed factual matrix presented by the A.O, noted that the tax was indeed deposited before filing the return of income, which aligned with the amended provisions. Citing relevant case law and the retrospective nature of the amendment, the tribunal upheld the CIT(A)'s decision and dismissed the revenue's appeal on this ground.

In conclusion, the Appellate Tribunal ITAT Ahmedabad ruled in favor of the assessee on both issues, upholding the deletion of the addition related to rebate and discount and the addition made under section 40(a)(ia) of the Act. The tribunal's decision was based on a thorough review of factual details, documentary evidence, and relevant legal provisions and precedents.