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TMI Blog2014 (4) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... is score. Even in the second round of proceedings, the Tribunal has set aside the issue purely for examination of expenditures only. In this order also, there is no whisper with regard to the plea which has been raised by the assessee in this round of proceedings. Once the mater has reached upto the stage of the Tribunal and categorical directions have been given for framing the assessment, the Assessing Officer cannot travel beyond the scope and ambit of the directions of the Tribunal. Appeal dismissed - Decided against the assessee. - ITA no. 8932/Mum./2010, ITA no. 8933/Mum./2010, ITA no. 5853/Mum./2012 - - - Dated:- 4-4-2014 - SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER For the Assessee- Mr. Dinesh S. Shah For the Revenue- Mr. Ashok Suri ORDER PER BENCH The aforesaid appeals have been preferred by the assessee challenging the impugned order dated 15th September 2010, for the assessment year 1996 97 and 1997 98 and order dated 16th July 2012, for the assessment year 1998 99 respectively, passed by the learned Commissioner (Appeals) I, Thane, for the quantum of assessment passed under section 143(3) r/w section 254 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side party. Income from this activity can be computed on the basis of sales made to outsider to whom, bills are issued for earning nominal commission. Therefore those bills on which Income is earned will be taken as turnover or Bills amounts be taken for a turnover and all the office running expenses should be allowed from Income computed on above turnover i.e. 1 % of commercial Hawala turnover. (c) In this type of business, Income can be earned on commercial turnover i.e. sales made to third party (other than Sister Concerns). Therefore Income should be computed accordingly. The sister Concern transaction on which no commission was earned so such transaction should be reduced from total turnover as follows:- Total Turnover Rs.15,57,00,478 Less: Turnover with Sisters concerns/Group Rs.10,91,00,478 Concerns sale. Commercial Hawala Turnover. ₹ 4,66,00,000 The business income will be 1 % of Hawala Commercial turnover of i.e. 1 % of ₹ 4,66,00,000/- which comes to ₹ 4,66,000/-. During the year under consideration, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not press the point further. He, however, submitted that not more than 2% net profit can be justified in such a line of activity. On the other hand, Shri Reddy submitted that even hawala commission is taken at 1% not more than 1% to 15% expenses can be justified. It was thus contended that 85% net profit is the least possible net profit from this line of activity. Respective stands were also reiterated before us. We are of the view that all that is required for us is to estimate a reasonable basis on which income from this activity can be computed. The guidance is available from the order of the Assessing Officer himself. The e Assessing Officer has observed that the normal rate of hawala commission ranges from 1% to 2%. That means, 1% hawala commission rate cannot be said to be an unrealistic rate. The next question then is as to what should be the expenses deductible from this to arrive at net profit rate. The assessee before us is an artificial juridical person and the assessee has to incur some expenses to have its continued legal existence, and to meet the costs of running the office etc. These expenses should be allowed as a deduction. The assessee has also contended that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliances have to be allowed and that the commission for promotion of sales is not to be allowed. The Assessing Officer in the fresh assessment as per the directions of the Tribunal has allowed directors; remunerations, auditor s fees, filing fees and other statutory expenses but out of the balance expenditure he has allowed only 60,000 as office expenses. The case of the assessee is that the entire administrative expenditure which had been actually incurred have to be allowed. On careful perusal of the expenses claimed we find that the assessee has also claimed expenses on account of warehousing charges, commission, sales promotion, brokerage, expenditure on sale promotion, commission and brokerage is actually not to be allowed as per the earlier directions of the Tribunal. Further, as the assessee is only providing hawala entries without any actual purchase and sale of goods, warehousing charges cannot be allowed has rightly held by the learned CIT(A). All the remaining expenses incurred by the assessee for the running of the office including office renovation, conveyance, etc. have to be allowed provided the same are found to be genuine. The Assessing Officer has estimated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after observing and holding as under: 5.3 As regards the plea of the appellant that the turnover with the sister concerns amounting to ₹ 10,91,00,478/- should be excluded from the total turnover for computing the Income at @ %, I find that, this is a new Issue raised for the first time before me in appeal. This issue has neither been raised before the AO during the three assessment proceedings nor before the CIT(A) two times earlier and not even before the ITAT twice. Accordingly I hold that this is an afterthought and also I find the plea to be devoid of any merit. While raising bills in the name of the sister concern also, there is a profit element incorporated. It could, therefore, not be said that the appellant has not earned income by way of commission in turnover with sister concern. Accordingly, I reject the ground Nos 1 to 3 on technical ground as well as on merit. The grounds No no.1 to 3 are thus dismissed. 11. However, the learned Commissioner (Appeals) gave some part relief of ₹ 27,790 on account of certain expenses. Aggrieved, by the said order, the assessee is in appeal before us. 12. The learned Counsel for the assessee, before us, submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the direction given by the Tribunal wherein the scope of the assessment was very limited. Thus, he strongly relied upon the observations and the findings of the learned Commissioner (Appeals) on this score. 15. We have heard the rival contentions, perused the findings of the authorities below as well as the material available on record. We have already recorded the chequred history of various rounds of proceedings in the assessee s case and this is the third round of proceedings which is in pursuance of the directions given by the Tribunal. In the first round, the Tribunal has set aside the matter to the file of the Assessing Officer only for the purpose of examining the expenses and insofar as the assessment of net commission is concerned, the same was upheld at 1% of the turnover as determined by the Assessing Officer i.e., the turnover of ₹ 15,40,95,410 for the assessment year 1996 97, which stood already crystallised. There is in fact also no dispute that the sales to the sister concern are also hawala transaction and not actual sales. Thereafter, no legal remedy was pursued and this inter alia means that the issue of commission income or total turnover has atta ..... 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