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TMI Blog2014 (2) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... rlines - Held that:- CIT(A) rightly held that since the assessee did not benefit or gain from the said transaction he has shown it as liability in his balance sheet as ‘creditor’ and due to dispute with the airlines, the assessee was unable to furnish the confirmation from the said airlines - till the time the payment is made by the said airlines to the assessee or vice-versa the value of the benefit would not be accruing to either of the parties - If the value of the benefit goes in favour of the assessee it would be deemed to be the profit and gains of business, which otherwise would not be the income - The value of the benefit would be made chargeable to income tax as the income of the previous year in which such benefit was obtained and not otherwise – the amount was obtained by the assessee for selling the said airlines tickets for FY 2004-05 and the said amount has not been transferred to the account of the airlines -the liability has not been discharged by the assessee during the relevant Assessment Year since the matter is sub-judice before the Hon’ble Delhi High court – There was no infirmity in the findings of the CIT(A) and the decision to delete the addition is valid – ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other expenses as stated above. Aggrieved by the said deletion of the disallowance of Rs. 2,96,519/- the revenue is before us. 6. The ld DR relied upon the decision of the Assessing Officer and contented that ld CIT(A) erred in deleting the disallowance of Rs. 2,96,519/- made by the Assessing Officer. So according to the ld DR, when the expenses were highly inflated by the assessee under the head bank charges and interest etc. the AO rightly disallowed 25% of the expenditure. On the other hand the ld AR contended that the assessee is having the business of a travel agency with two proprietary concerns, namely, M/s. Cosmos Travels Tours and M/s Sino Cosmos Travel Services. According to the ld AR, the Assessing Officer has made the aforesaid disallowance by separately comparing the turnover and expenses of the two proprietary concerns of the assessee with each other. The ld AR contented that the ld Assessing Officer turned a blind eye to the fact that though there were two proprietary concerns of the assessee; fact was that both the concerns dealt with the same business i.e. Travel Agency and the nature of business of both were also the same; and both the concerns were being ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) while considering the appeal against the said addition made by the Assessing Officer, finds that the assessee is an individual and a proprietor, doing business in the name of two concerns namely M/s Cosmos Travels and Tours and M/s. Sino Cosmos Travel Services. The ld CIT(A) has observed that the business of both the concerns of the assessee are neither different nor it incurs any separate expenses. The ld CIT(A) notes that all the expenses incurred by the assessee are for the common business of inbound tourism and for running both travel agencies. The ld CIT(A) has noted that the Assessing Officer has only compared the expenses between the two concerns managed and owned by the same individual. It was also observed by him that the Assessing Officer has disintegrated the assessee into the two separate entities instead of treating it as one integrated business. The ld CIT(A) also finds that the Assessing Officer did not reflect the amounts against each item that he intended to disallow nor has he mentioned the total amount of expenditure claimed out of which 25% of the expenses was disallowed. The ld CIT(A) also observes that the Assessing Officer did not mention any defect eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of outstanding credit to M/s. Tajikistan Airlines . 13. Brief facts of the case are that the assessee is engaged in the business of travel agency, ticketing etc. The assessee has shown M/s. Tajikstan Airlines as a creditor in the balance sheet of M/s Cosmos Tours and Travels with credit balance of Rs. 26,07,858/-. During the assessment proceedings, the assessee was asked to file the confirmation of the creditor in this regard and the assessee replied that since there is an ongoing dispute and litigation going on between the assessee and the creditor, the assessee expressed its inability to file the confirmation from M/s Tajikstan Airlines. However, to prove the fact of the on-going litigation, the assessee filed the sole arbitrators certificate from M/s. Dua Associates Advocates, and informed the Assessing Officer that the appeal against the Arbitration Award in favour of the assessee was preferred by the M/s. Tajikstan Airlines before the Hon ble Delhi High Court and the matter is sub-judice. However, the Assessing Officer was not satisfied with the reply of the assessee and added the said amount of Rs. 26,07,858/- as the income of the assessee for the Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee did not make the aforesaid sale consideration to the said airlines, it is a trading liability which has not ceased. In the said circumstances the ld CIT(A) observed that since the assessee did not benefit or gain from the said transaction he has shown it as liability in his balance sheet as creditor and due to dispute with the airlines, the assessee was unable to furnish the confirmation from the said airlines. The ld CIT(A) takes note of the certificate issued by M/s Dua Associated Advocates, which certifies that the sole arbitrator on 07.12.2006 passed an arbitration award in favour of the assessee for an amount of Rs. 1,14,49,670/- along with interest at 9% with effect from 23.09.2005 till the payment is made to the assessee by M/s. Tajikstan Airlines. From the said certificate the ld CIT(A) also points out that the said arbitration award has been challenged by the airlines and the matter is still pending before the Hon ble High Court. The ld CIT(A) rightly pointed out that till the time the payment is made by the said airlines to the assessee or vice-versa the value of the benefit would not be accruing to either of the parties. If the value of this benefit goes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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