9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (6) TMI 737 - AT - Income TaxDisallowance of commission on sales - HELD THAT - After considering the facts in totality and finding that the disallowance has been made on adhoc basis, as a percentage of gross profit, we are of the considered view that such disallowance is baseless and the ld. CIT(A) has rightly deleted the same, which calls for no interference. Common grounds in both the appeals of the Revenue are dismissed. Disallowance of difference in sales as per VAT Return and Sales as per the profit and loss account - HELD THAT - Assessee has furnished the details under Schedule 11 of the Financial Statements and had the Assessing Officer gone through the said Financial Statements, he would have seen that there is no such difference in the alleged turnover. It is not the case of the AO that the assessee has made sales outside its books of accounts. We find that rectification is available in the audited financial statement itself. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A). This ground is also dismissed. Credit appearing in the books of accounts which has not been accounted in the books of account of the assessee - HELD THAT - Explanation of the assessee that when the assessee does not receive any goods, it does not pass any entry and the other party, i.e. Reebok India Co. Ltd, having debited the assessee, passes credit entry in their books of account and, therefore, there is no difference. No error in such accounting treatment and, therefore, do not find any reason to interfere with the findings of the ld. CIT(A). This ground is also dismissed.
Issues involved:
The judgment involves cross appeals by the assessee and the Revenue against the order of the ld. CIT(A) for A.Y 2012-13, with the Revenue also filing an appeal for A.Y 2011-12. Issue 1: Disallowance of commission on sales - The Assessing Officer disallowed a portion of commission paid to a related party, stating it was not entirely for business reasons. - The assessee argued that the provisions of section 40A(2)(b) did not apply as both parties were fellow subsidiaries of the holding company. - The ld. CIT(A) held that adhoc disallowance without specific findings is impermissible and directed the Assessing Officer to delete the disallowance. - The Tribunal agreed, noting that the disallowance was baseless and upheld the deletion by the ld. CIT(A). Issue 2: Difference in sales figures - The Assessing Officer added an amount due to a variance in sales figures between the VAT Return and financial statements. - The assessee provided a reconciliation showing no difference in turnover and pointed out the Assessing Officer's oversight of Schedule 11 in the financial statements. - The ld. CIT(A) found no sales outside the books and deleted the addition, which was upheld by the Tribunal. Issue 3: Unaccounted credit entry - A credit amount from a transaction with another company was not reflected in the assessee's books, leading to an addition by the Assessing Officer. - The assessee explained that the other party corrected the entry in their books, and since no goods were received, no entry was made by the assessee. - The ld. CIT(A) accepted this accounting treatment and directed the deletion of the addition, which was upheld by the Tribunal. In conclusion, the Tribunal dismissed the appeal of the assessee and the Revenue, upholding the decisions of the ld. CIT(A) in all three issues.
|
