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TMI Blog2017 (12) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... ction from the sale bills under and details of discounts allowed to customers under various schemes provided by Maruti. We also find that the assessee had explained the nature of each scheme of discount before the ld AO vide letter dated 12.3.2014 together with the relevant annexures including the ledger accounts, monthly statement for April 2010 (as sample basis) and sample sale invoices. We hold that the ld AO had not appreciated the evidences submitted before them and had not taken any efforts to understand the business model of the assessee and proceeded to disallow the entire discount paid to customers. Addition towards advance from customers as unexplained cash credit u/s 68 - Held that:- It is very usual for a car dealer such as assessee, to receive booking advance from various prospective customers at the time of booking the vehicle and the same would be reflected as advance from customers, which would get adjusted with the sale invoice in subsequent period on delivery of the vehicle. In case if the customer wishes to cancel the order, the same would be refunded as per the terms and conditions agreed upon. This is the general practice followed by every car dealer in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount inadmissible u/s 14A of the Act in respect of expenditure incurred in relation to income which does not form part of total income at ₹ 5,22,194/-. However, the ld AO observed that no such expenses was disallowed by the assessee in the return of income. The assessee was show caused as to why the disallowance u/s 14A of the Act read with Rule 8D of the Rules should not be made in the facts of the instant case. The ld invoked the computation mechanism provided in Rule 8D(2) of the Rules for making disallowance u/s 14A of the Act and worked out the disallowance thereon as under:- Under Rule 8D(2)(ii) 28,25,249/- Under Rule 8D(2)(iii) 5,09,555/- 33,34,804/- This was made after placing reliance on the decision of the Hon ble Jurisdictional High Court in the case of Dhanuka Sons vs CIT reported in 339 ITR 319 (Cal) that the assessee had not proved the fact whether the investments were made out of own funds or borrowed funds in the relevant year and hence the proportionate interest thereon would be liable for disallowance under Rule 8D(2)(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 348 Unsecured Loans 2,19,00,000 1,05,06,250 Investments 10,90,23,790 9,98,53,636 Interest Paid 38,33,786 44,46,763 Apparently, there is sufficient own funds available with the assessee company for making the investments. But we find that the investments were carried over from the earlier years and whether the same were made out of own funds or out of borrowed funds, the details of which are not available before us. That is precisely the requirement of the Hon ble Jurisdictional High Court in the case of Dhanuka Sons vs CIT reported in 339 ITR 319 (Cal), warranting the assessee to prove the sources for making the investments in the respective years as to whether the same were made out of own funds or borrowed funds of the assessee. Hence we deem it fit and appropriate, to remand this issue to the file of the ld AO, to examine the sources for making investments in the respective earlier years of making investments and decide the same in accordance with law. If the assessee is able to prove that the investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash discount for the month of april as a sample for your kind perusal and record. .. Encl: 1. Discount break up 2. Cash discount ledger in columnar form with discount details for April 2010 3. ISL Discount statement for April 4. Various discount scheme of Maruti 5. Maruti Auditor Bill 3.1. The assessee also enclosed a detailed note on each discount allowed by it as under:- 1. Cash Discount- Vehicle The Company has given Cash Discount- Vehicle amounting to ₹ 3,17,97,164/- during the year. The discount has been given to customers as per discount policy of M/s Maruti Suzuki India Ltd. Month wise detailed ledgers are enclosed. The discount given to the customers are reflected in the Sale Bill. Few copies of Sale Bill are also enclosed. Copies of monthly discount scheme of MSIL are enclosed. 2. Special Discount (MSIL): The company has given Special Discount (MSIL) amounting to ₹ 1,75,815/- during the year. The discount has been given mainly through Sale Bill. Detailed ledger is enclosed. (Refer Voucher No.-VSL10000005 dated 06.04.2010 attached with Dealer Discount before VAT). 3.MSIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o customers. The ld AO further observed that it is noticed that the assessee has allowed discount for insurance, cash discount-accessories, discount on spares and others etc which are not supported by any documentary evidences. Accordingly, he proceeded to disallow the entire discount allowed in the sum of ₹ 3,74,41,906/- in the assessment. 3.3. Before the ld CITA, it was submitted that the discount is deducted direct from the value bills raised on the customers while billing for the price of car and only net payment is received after deduction of the discount and further credit on account of the initial advance or deposit paid by the customer while booking the car. It was emphasized that no discount was paid separately to customers rather the same was reduced from the bills raised on the cutomers and customer makes the final payment of the price of the car, accessories, insurance premium only after the credit for the aforesaid discount allowed to them. Infact VAT / Sales tax is also charged on the net value of bills after reduction of discount allowed to customers. It was stated that the monthly statement of sale invoices vis a vis the discount details provided before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars itself and the same is not separately paid whether for cars or for accessories or cash discount and discount on insurance. I also find that discount was being paid year to year on a continuous basis and the same was not disallowed in the past given the fact that the assessee was in the same business of dealership of Maruti cars for the past 35 years or so and most of the assessments were completed under scrutiny assessments. I find that the AO has not brought on record any cogent material that the discount was not paid to customers and that the same was reimbursed by MUL. In view of this, I do not find any merit in the action of the AO in disallowing the discount paid to customers. The disallowance is therefore directed to be deleted. This ground is allowed. 3.5. Aggrieved, the revenue is in appeal before us on the following ground:- 2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 3,74,41,906/- made by the AO on account of disallowance of discount allowed. 3.6. We have heard the rival submissions. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l advances received from various parties was ₹ 1,06,85,656/- ( 34,14,590 + 72,71,066) which was sought to be examined by the ld AO. In response, the assessee furnished a statement showing refund of advances made in subsequent years and amounts adjusted against sales invoices in subsequent years. The ld AO observed that the assessee failed to furnish any further explanation as to why the sums were received and part refunded. Further he observed that the assessee could not furnish any documentary evidence to substantiate its claim, i.e scheme under which sums were received, name of the party, complete address, PAN, assessment jurisdiction etc to verify the genuineness of aforesaid deposits of ₹ 1,06,85,656/-. He further observed that it is beyond the human probability that every party has advanced a sum of ₹ 10,000/- only to the assessee company. He accordingly added the entire advance from customers in the sum of ₹ 1,05,85,656/- as unexplained cash credit u/s 68 of the Act. 4.2. Before the ld CITA, the assessee submitted that for booking any car, customers have to deposit initial money. The ld AO has doubted the basic rule of the trade that for booking any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in deleting the addition of ₹ 1,06,85,656/- made by the AO as unexplained cash credit u/s 68 of the I.T. Act, 1961. 4.5. We have heard the rival submissions. We find that the assessee had shown advance received from customers in the liability side of the balance sheet and had filed the following details regarding the same :- a) Statement of advance received from customers under each head as on 31.3.2011 and amounts adjusted thereon either by way of refund or adjusted with sales invoices (enclosed in page 43 of paper book) ; b) Break up of advance received from customers as on 31.3.2010 date wise and party wise specifying the amount received thereon (enclosed in pages 44 to 53 of paper book) ; c) Break up of advance received from customers as on 31.3.2011 date wise and party wise specifying the amount received thereon together with the details of amounts either refunded or adjusted with sales invoices in the subsequent period (enclosed in pages 54 to 61 of paper book). We also find that the assessee had been showing the similar advances from customers under various heads and reflected the same under sundry creditors and no additions were made in this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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