2013 (7) TMI 1189 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of commission expenses.
2. Disallowance of Batav expenses.
3. Addition for estimating the closing stock.
4. Addition for double claim of VAT.

Summary:

1. Disallowance of Commission Expenses:
The CIT(A) deleted the disallowance of Rs. 27,34,612/- made by the Assessing Officer (AO) regarding commission expenses claimed by the assessee. The AO disallowed the commission expenses due to lack of evidence for services rendered by commission agents. The CIT(A) observed that the assessee's business involved various activities facilitated by commission agents and payments were made through bank cheques, with agents reflecting these in their tax returns. The CIT(A) cited precedents and the rule of consistency, noting that similar expenses were allowed in previous years. However, the tribunal found that the CIT(A) did not adequately address the AO's findings and restored the matter to the AO for fresh consideration.

2. Disallowance of Batav Expenses:
The AO disallowed Rs. 1,95,170/- out of Batav expenses, which was reduced by the CIT(A) to Rs. 25,398/-. The CIT(A) found that the commission rate, including service tax, was 2.7575%, resulting in a commission amount of Rs. 9,04,622/-. The tribunal confirmed the CIT(A)'s findings and upheld the allowance of Rs. 9,04,622/- in commission expenses.

3. Addition for Estimating the Closing Stock:
The AO added Rs. 17,65,385/- to the income of the assessee for showing nil closing stock instead of the calculated closing stock. The CIT(A) reduced this addition to Rs. 2,79,801/- after verifying that some purchase bills were incorrectly categorized. The tribunal upheld the CIT(A)'s verification and findings, confirming the addition of Rs. 2,79,801/-.

4. Addition for Double Claim of VAT:
The AO disallowed Rs. 14,57,800/- for the double claim of VAT. The CIT(A) restricted this disallowance to Rs. 66,249/- after verifying the VAT figures and noting that this amount remained unpaid. The tribunal found no reason to interfere with the CIT(A)'s detailed findings and upheld the disallowance of Rs. 66,249/-.

Conclusion:
The tribunal allowed the appeal of the Revenue in part and dismissed the cross objection filed by the assessee. The order was pronounced in the open court on 19th July, 2013.