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TMI Blog2018 (2) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year (AY) 2013-14. 2. The appeal raises two issues, which we shall take up in seriatim. The first relates to disallowance of commission expenses. Verifying the assessee's claim for commission expenses, claimed at Rs. 15,21,434/-, in verification proceedings under the Act, it found by the Assessing Officer (AO) that the same is in respect of what may be termed as referral commission, i.e., for referring the customers. The assessee is an authorized dealer for Mahindra and Honda Vehicles, both in the commercial and personal space, and with pan India and, in fact, international presence. The commission was paid in small amounts. One, Mohini Sharma, to whom commission was allowed at Rs. 3.40 lacs, was examined. She confirmed referring custome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, thus, market the same. The market being a fast changing one, with new models being launched on a regular basis, she may not even be aware of the models currently in vogue. No wonder, the prices known to her were of the models sold in 2010. Buying a vehicle, a capital asset, with long term implications, is ordinarily a result of an informed decision. A customer intending to purchase a vehicle would visit an auto dealer directly, and on the basis of discussions, including demonstration, as well as other relevant factors, viz. past experience, reputation of the manufacturer, etc., take a decision, also co-opting the information gathered from other such dealers of the same or different manufacturers, i.e., as per his needs and budget. Why, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a loss, i.e., after including the proportionate share of rent, electricity, repair, etc., i.e., overhead expenses. Further, the assessee's method of accounting for various receipts and expenditure of this business was examined by him to find it as deficient in several respects. The accounts of the said business were therefore in his view neither complete nor correct so as to be considered as reliable for determination of the assessee's correct income arising from the said business. He estimated the income there-from at 8% of the expenditure incurred and, accordingly, made any addition for Rs. 15 lacs. The ld. CIT(A), in appeal, found that while the assessee was able to explain some aspects, it could not satisfactorily explain the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio of the profit, but if there are any discrepancies in the assessee's accounts, making them unreliable, which would entitle the AO to make an estimated addition in respect of the under-reporting of income. Toward this, the ld. AR was required to furnish an explanation or exhibit from its records the following areas of accounting found deficient by the Revenue, as gathered from the detailed submissions by the assessee before, as well as the orders by, the Revenue authorities, also reproducing the same, and which were extensively read out during the course of hearing: [[[[ a) veracity of the claim of expenditure on paint consumed. The assessee as per the AO had claimed the same at Rs. 59.09 lacs, while it had admittedly received a reba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has now prepared a chart apportioning the overhead expenditure on the basis of turnover, i.e., after allocation of direct expenditure, and which reflects the profit of the workshop segment at Rs. 18.72 lacs, furnishing a new set of papers (marked PB II, at pages 18, 19). Coming to the specific objections which had remained unaddressed, and specifically called for being addressed by the Bench, his submissions were as follows: [ a) opening and closing inventory of consumable stores, which includes paint material, was furnished (PB II, pgs. 2-5). Further, the rebate availed on paint material stands credited to the consumables stores account, so that the consumption of the paint material is at Rs. 47.68 lacs (and not Rs. 59.27 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012, at PB pages 70, 71), reflecting sale of used oil drum for Rs. 4778 and Rs. 7985 respectively. The same, upon, query, it was explained, is credited to the sale of spare parts. We are, on balance, satisfied with the explanations (including the corroborative material) furnished by the assessee (through the ld. AR) in respect of the queries raised qua the accounting of the job work segment of the assessee's business. We are, however, unable to appreciate as to how the sale of used oil is, as claimed, credited to the sale of spare parts inasmuch as there is no purchase thereof (used oil). However, where credited to a sale account, the same, irrespective of the account head, gets credited to the profit & loss account, so that the same is i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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