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TMI Blog2023 (4) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... see. Not even the statement showing the amounts of sales procured by these parties for the assessee from their respective regions, correlated with the accounts of the assessee, as mentioned in the agreements, has been filed, When as per the agreement this is an internal document which could have been easily available with the assessee. We therefore find that the evidences filed by the assessee were not sufficient to demonstrate the rendering of services by these distributors to the assessee. We therefore concur with the authorities below that the factum of any services rendered by the distributors/agents has not been established by the assessee at all, the evidences furnished by the assessee we hold are not sufficient to establish the said fact as dealt with by us. The contention of the ld. Counsel for the assessee therefore that the burden of proof shifted to the revenue does not merit consideration. Having found the evidences to be insufficient to prove the claim of the assessee, there was no need for the revenue to have made any enquiry with regards to the same and the onus rested on the assessee only to prove its claim. Principle of res judicata - Contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmon ground, belonged to the same group, and the issue in both being solitary and identical , relating to commission expenses disallowed in the backdrop of identical set of facts . The appeals by both the assesses have been filed against separate orders passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, (in short referred to as CIT(A)), both dated 18-12-2017, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2013-14. 2. In the case of Mangalya Ceramic in ITA No. 396/Ahd/2018, the disallowance of commission expenses related to that paid to: M/s. Sonali Traders amounting to Rs. 39,21,215/- 3. While in the case of Ravikiran Ceramic Pvt. Ltd. in ITA No. 397/Ahd/2018 the commission disallowed related to the following: (a)Shri Jyoti Electric Trading Company Rs. 48,23,618/-. (b)Parul Traders Rs. 17,50,952/- (c)Falguni Traders Rs. 20,29,229/- Total Rs. 86.03 Lakhs 4. A perusal of the order of the authorities below reveals that the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the commission was being claimed vis- vis the different parties is as under: In the case of Ravikiran Ceramic Pvt. Ltd. in ITA No. 397/Ahd/2018: (a)Shri Jyoti Electric Trading Company since 1976 (b)Parul Traders 25 years (c) Falguni Traders 10 years In the case of Mangalya Ceramics Pvt. Ltd. in ITA No. 396/Ahd/2018: (a) Sonali Traders More than 6 years. It was contended that having never been disallowed in the past or in succeeding years, it was an accepted position and could not be disturbed in the impugned year. In support, reliance was placed on the decision in the case of following case laws of Mobile Communication India Pvt. Ltd. vs. DCIT Circle-5(1), New Delhi reported in (2010) 125 ITD 309 (Delhi) (ii) that sufficient evidences were filed by the assessee which have not been disputed by the revenue nor any rebuttal evidences filed by the revenue nor the commission agents examined by the Revenue. The evidences filed by the assessee therefore could not be simply brushed aside. The bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levance in establishing the factum of services rendered by the distributors to the assessee for the allowability of claim of commission. 11. The contents of the distributors agreement entered into in the case of Ravikiran Ceramic Pvt. Ltd. in ITA No. 397/Ahd/2018 with two distributors i.e Jyoti Electric Trading Company and Falguni Traders placed before us at P.B reveals it is a distributorship agreement allotting different areas to each of them for selling the products of the assessee company. In the case of Jyoti, being Maharashtra, and in the case of Falguni, being Karnataka and Delhi. 12. The scope of work of distributors has been identically worded in both the agreements. The contents of the agreement in the case of Falguni Trades is being reproduced hereunder for convenience : 3. The distributors shall: (a) maintain an efficient sale organization and / or office at such place or places as may be mutually agreed upon by the parties hereto. (b) Canvass for secure orders and push the sale of the products manufactured by the manufacturers to the best of their ability with the territories of mutual understanding by both parties and finally decided by principal, (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree as the distributors. The said remuneration will be exclusive of any trade discount or rebates or allowance or compensation or sales - tax or central excise tax or octroi which may be allowed by the manufactures to all or any of the customers in respect of any contracts whether made directly by them and / or through their distributors, Para no. 6 states that the accounts between the manufacturer and the distributor is to be made up and adjusted every three month as under: 6. The accounts between the manufacturers and distributors shall be made up and adjusted every 3 months. 14. In the case of Parul Traders the agreement is for production cum marketing job work, requiring Parul Traders to carry out the entire job work of various ceramics items for Sud Chemie India Pvt. Ltd. on behalf of the assessee and to procure further orders from Sud Chemie. The contents of the agreement placed before us at paper book page no. 47(a) are as under: AGREEMENT FOR PRODUCTION CUM MARKETING THE PRODUCT Whereas Ravikiran Ceramics Pvt Ltd., AT. Anand, a Private Limited Company of the one part has obtained order to carry out job work of various ceramic items from Sud Chemie Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the job of ensuring sales of the goods of the assessee. While in the case of Parul Traders, the scope of work was confined to carrying out the job work order of Sud Chemie India Pvt. Ltd. and also to procure more job work orders. All the parties were to be remunerated by way of commission @ 4% of the sales. In the case of Parul Traders it was 4% commission on sales as well as job work value per annum as approved and confirmed by Sud Chemie India Pvt. Ltd. 16. In this backdrop of the scope of work of the agents as derived from the agreements entered into with them by the assessee, we shall now consider the evidences of services rendered by these distributors filed by the assessee. As stated above, they are copies of correspondence between the assessee and the distributors and between the distributors and the customers. A perusal of these evidences placed before us at page no. 20 to 43 in the case of Jyoti Trading company, page no. 49 to 53 in the case of Parul Traders and page no.68 to 80 in the case of Falguni traders reveals that the communication between the assessee and the distributors is with regard to C forms of certain parties not received by the assessee and regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strate the factum of actual services rendered by the distributors. We therefore concur with the authorities below that the factum of any services rendered by the distributors/agents has not been established by the assessee at all, the evidences furnished by the assessee we hold are not sufficient to establish the said fact as dealt with by us. 18. Since the evidences were not sufficient enough the onus/burden of proof for establishing the said facts remained with the assessee and did not shift to the revenue. The contention of the ld. Counsel for the assessee therefore that the burden of proof shifted to the revenue does not merit consideration. Having found the evidences to be insufficient to prove the claim of the assessee, there was no need for the revenue to have made any enquiry with regards to the same and the onus rested on the assessee only to prove its claim. Having said so, we shall now deal with the contention of the assessee that the claim having never been disallowed in the past or succeeding years, following the principle of consistency, the settled and accepted position ought not to have been distributed. In this regard, Ld. Counsel for the assessee has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was unable to demonstrate any service rendered by them as distributors. The principle of res judicata does not apply to Income Tax proceedings and the facts of each year have to be considered and merely because the claim has been allowed all these years without being examined, does not make the claim legitimate despite evidences on record proving to the contrary. The case laws relied by the Ld. Counsel for the assessee in this regard, are all distinguishable on facts. Therefore, this contention of the ld. Counsel for the assessee that following the principle of consistency the claim ought to have been allowed in those years is also rejected. 21. As per the third contention that the disallowance in any case could not have been made u/s. 40A(2)(b) of the Act where the genuineness cannot be brought into question and only the fair market value of the transaction with specified persons can be determined and the excess paid over it be disallowed, we find merits no consideration also. For the reason that the A.O. has not invoked Section 40A(2)(b) for the purposes of making the disallowance. The A.O. we find has only referred to the Section for pointing out that the agents were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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