9911796707
TMI Blog2012 (10) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... d off on 23.2.2011, whereby the appeal was allowed. 1.1 The assessee is inter-alia carrying on the business of distributorship of products of TATA Tele Services Ltd., being hand sets, start up kits and recharge coupons. He entered into an agreement with aforesaid Tata Tele Services Ltd. on 31.3.005. On the basis of the agreement and other details, it has been mentioned by Ld. CIT(A) that his profit is around 4%, which is built into the invoices issued by the TATA or its sister concern. It is also seen from the assessment order that the assessee is carrying on the business of dealing in pharma and general goods. 2. Ground Nos. 1 and 2 taken up by the revenue are in respect of the addition of Rs. 72,71,713/- made by the AO on account of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led evidences regarding receipt of credit notes and disbursement to the dealers. He also filed the bank account and produced books of account before the Ld. CIT(A). It was submitted that credit notes are accounted for as and when received from M/s. Tata Tele Services Ltd. The payment to the dealers was made immediately thereafter. The amounts so received really belong to the dealers and such amounts do not constitute the income of the assessee. Confirmation letters were also filed from 595 dealers. These evidences were forwarded to the AO for remand report. In particular, the Ld. CIT(A) has noted in the impugned order that the AO has not doubted the payment to the dealers for which confirmation letters were filed. On the basis of these fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as the benefit was intended for dealers and not for him. 3. We have considered the facts of the case and submissions made before us. The whole dispute in this case is regarding the system of accounting of credit notes and payments made to the dealers by the assessee. The system adopted is that a credit note is accounted for when it is received from M/s Tata Tele Services Ltd. or its sister concern. Obviously, in absence of any information from the company, the assessee is not in a position to account for the amount likely to be given to him by way of credit note. Therefore, even on accrual basis, the amount can be accounted for only when credit note is received. The amount is debited when it is paid to dealers. In fact since the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the facts of the case and submissions made before us. It is seen from the submissions of the assessee before the Ld. CIT(A) that two cheques drawn on Indian Bank were debited in his account on 4.4.2007 and 5.4.2007. Thus, the payment was made on these dates and therefore the amount of Rs. 94,860/- stands paid against the liability of Rs. 95,710/-. There is no explanation furnished before us in respect of the difference of amount of Rs. 850/-. No explanation existed even before Ld. CIT(A). In these circumstances, he ought to have granted a benefit of Rs. 94,860/- only. Thus, this ground is partly allowed. 5. Ground No. 4 is in respect of disallowance of Rs. 1,42,100/-. In this connection, it is mentioned in the assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest free advances does not arise. In any case, it has not been shown that the money was lent from borrowed funds and not from interest free funds as mentioned above. Therefore, we are in agreement with the Ld. CIT(A) and no part of the interest liability could have been disallowed. Thus this ground is also dismissed. 6. Ground No. 5 & 6 are in respect of following disallowances :- S.No. Amount (Rs.) Distribution 1. Rs. 7400/- Telephone Expenses 2. Rs. 10,000/- Petrol expenses 3. Rs. 8,000/- Staff welfare expenses 4. Rs. 15,000/- Travelling expenses 6.1 In the aforesaid connection, it has been mentioned in the assessment order that the user of the telephone for family members cannot be ruled out. Similarly use of con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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