ITO, New Delhi v. M/s. Mayank Auto Engineers Pvt. Ltd.,, Delhi

ITA 1435/DEL/2010 | 2004-2005
Pronouncement Date: 24-09-2010 | Result: Dismissed

Appeal Details

RSA Number 143520114 RSA 2010
Assessee PAN AACCM0011C
Bench Delhi
Appeal Number ITA 1435/DEL/2010
Duration Of Justice 5 month(s) 23 day(s)
Appellant ITO, New Delhi
Respondent M/s. Mayank Auto Engineers Pvt. Ltd.,, Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 24-09-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 24-09-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2004-2005
Appeal Filed On 01-04-2010
Judgment Text
ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 1435/DEL/2010 A.Y. : 2004-05 INCOME TAX OFFICER WARD - 6(3) ROOM NO. 185 C.R. BUILDING NEW DELHI VS. M/S MAYANK AUTO ENGINEERS PVT. LTD. A-15 ASHOK VIHAR PHASE-I DELHI - 110 052 (PAN: AACCM0011C) AND C.O. NO. 154/DEL/2010 (IN ITA NO. 1435/DEL/2010) A.Y. 2004-05 M/S MAYANK AUTO ENGINEERS PVT. LTD. C/O M/S RRA TAXINDIA D-28 SOUTH EXTENSION PART-I NEW DELHI 110 049 (PAN: AACCM0011C) (APPELLANT) VS. INCOME TAX OFFICER WARD - 6(3) ROOM NO. 185 C.R. BUILDING NEW DELHI (RESPONDENT) ASSESSEE BY : SH. ASHWANI TANEJA ADV. & DR. RAKE SH GUPTA ADV. DEPARTMENT BY : MS. SANGEETA GUPTA C.I.T.(D.R.) PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDERS OF LD. COMMISSIONER OF INCOME T AX (APPEALS) DATED 19.1.2010 PERTAINING TO ASSESSMENT YEAR 2006-0 7. REVENUES APPEAL (ITA NO. 1435/DEL/2010) 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) AHS ERRED IN DELETING THE ADDITION OF ` 8 2 30 000/- MADE BY ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 2 THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT ON ACC OUNT OF BOGUS SHARE APPLICATION MONEY. 2.1 ON THIS ISSUE ASSESSING OFFICER NOTED THAT INF ORMATION HAD BEEN RECEIVED THAT M/S MAYANK AUTO ENGINEERS PVT. LTDE. HAD INTRODUCED ITS UNACCOUNTED MONEY AS SHARE CAPITAL/SHARE PREMIUM OF ` 7 92 000/- IN THEIR BANK ACCOUNTS WITHOUT PAYING THE LEGITIMATE TAX WITH THE HELP OF CERTAIN ACCOMMODATION ENTRY OPERATORS. THE AMOUN T INTRODUCED IN THEIR BANK ACCOUNTS WERE UNDER:- A) SH. SANJAY GARG ` 4 09 220/- B) RAJESH MARKETING SERVICES LTD. ` 5 00 000/- C) SAN FINLEASE & INVESTMENT PVT LTD ` 3 00 000/- ASSESSING OFFICER FURTHER FOUND THAT ASSESSEE DI D NOT PROVIDE NECESSARY REPLY AS REQUIRED. HENCE HE HELD THAT IT IS CLEAR THAT M/S MAYANK AUTO ENGINEERS PVT. LTD. GETS ` 7 29 000/- IN HIS BANK ACCOUNT WHICH ADDED TO THE COMPANYS INCOME U/S 68 OF THE ACT . ASSESSING OFFICER FURTHER PROCEEDED AND HELD THAT SINCE THE COMPANY NAMED SAN FINLEASE & INVESTMENT P LTD. AND SHRI SANJAY GARG ARE ACCOMMODATION ENTRY PROVIDE. HE ADDED THE SHARE HOLDINGS BY THESE PERSONS IN ASSESSEE COMPANY NAMELY ` 39 40 000/- + ` 20 00 000/ - TOTAL ` 82 30 000/- AS UNDISCLOSED INCOME OF THE ASSESSEE U /S 68 OF THE IT ACT. 2.2 BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) ASSESSEE MADE WRITTEN SUBMISSION AND FILED PAPER BOOK AND ALSO REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF T HE IT RULES. LD. COMMISSIONER OF INCOME TAX (APPEALS) ASKED THE ASSES SEE TO EXAMINE THE SUBMISSION AND FURNISH A REMAND REPORT. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 3 2.3 WITH REGARD TO SHARE CAPITAL THE ASSESSING OFFI CER S REMAND REPORT SUBMISSION WERE AS UNDER:- 1. SHARE CAPITAL OF ` 82 30 000/- A) ` 20 00 000/- : M/S RAJESH MARKETING SECURITIES LTD. RECEIVED THROUGH CHEQUES DRAWN ON SYNDICATE BANK GREEN PARK NEW DELHI. THE STATEMENT OF SH. SUBHASH SHARMA DIRECTOR (RECORDED ON 23.10.2007) HAD ADMITTED THE INVESTMENT S OF ` 20 LAKHS. THE LIMITED COMPANY IS HAVING PAN AACCR174 8R AND HAVING FILED THE RETURN FOR A.Y. 2004-05 WITH T HE ITO WARD-15(3) NEW DELHI. THE AMOUNT OF ` 20 LAKHS FOUND CREDITED AS SHARE APPLICATION MONEY IS GENUINELY INV ESTED. B) ` 22 90 000/- : SHRI SANJAY GARG RECEIVED ` 15 LAKHS THROUGH CHEQUE DRAWN ON CANARA BANK KAMLA NAGAR (S.B. A/C). THE BALANCE OF ` 7 76 000/- WAS CONVERTED INTO SHARE C APITAL MONEY IN THE FORM OF UNSECURED LOAN FROM MAYANK AUTO ENGINEERS (P) LTD. THE UNSECURED LOANS FROM SANJAY GARG AS ON 1.4.2003 WAS ` 8 26 887/-. THE AMOUNT OF ` 22 76 000/- WAS RIGHTLY INVESTED SH. SANJAY GARG IS ASSESSED TO TAX WITH THE ITO WARD-47(1) VIDE PAN AAGPG1819B AND RETURN HA S BEEN FILED. A CERTIFIED COPY OF AFFIDAVIT DATED 2 9.12.2007 IS ALSO OBTAINED AND PLACED IN THE FILE. C) ` 27 00 000/- SH. SANJEEV KUMAR JHALAN IS CA. HE I S EMPLOYED WITH SUMI-MOTHER SON NOIDA. HE HAD INVESTED ` 27 0 0 000/- THROUGH CHEQUES DRAWN ON SYNDICATE BANK GREEN PARK NEW DELHI. THE DETAILS ARE: CH. NO. 766059 DT. 21.2.2004 - ` 10 00 000/-. CH. NO. 766060 DT. 28.2.2004 - ` 17 00 000/- ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 4 - ` 27 00 000/- D) ` 12 40 000/- : M/S SUN FIN LEASE AND INVESTMENT SH . SANJEEV KUMAR JAHALAN IS DIRECTOR. HIS STATEMENT IS RECORD ED AN AMOUNT OF ` 13 23 339/- WAS TRANSFERRED FROM AUTO ENG INEERS OUT OF THIS ` 12 LAKHS WAS CONVERTED INTO SHARE CAP ITAL. THE PVT. LTD. COMPANY IS ASSESSED AT PAN AAACAS2936J. 2.4 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT HE HAD CONSIDERED THE REMAND REPORT OF TH E ASSESSING OFFICER AS THE ASSESSING OFFICER HAS VERIFIED TH E AUTHENTICITY OF THE TRANSACTION AND GIVEN A CLEAR FINDING THAT THE SHAR E APPLICATION MONEY IS GENUINELY INVESTED THE RATIONALE FOR THE ADDITIO N NO LONGER EXISTS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETE D THE ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY. 2.5 AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 2.6 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THE REMAND REPORT THE ASSESSING OFFICER HAS CATEGORICALLY ACCEPTED THE AUTHENTICITY OF THE SHARE APPLICATIO N TRANSACTION. UNDER SUCH CIRCUMSTANCES LD. COMMISSIONER OF INCOME TA X (APPEALS) IS CORRECT IN HOLDING THAT THERE IS NO RATIONALE IN MAKING THE ADDITION IN AS MUCH AS ASSESSING OFFICER HAS EXAMINED THE SUBMIS SIONS AND PAPERS AND FOUND INVESTMENT TO IN ORDER. ACCORDIN GLY WE DO NO FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD AND WE AFFIRM THE SAME. 3. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 17 63 145/- MADE BY THE ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 5 ASSESSING OFFICER U/S 68 OF THE IT ACT ON ACCOUNT OF UNCONFIRMED UNSECURED LOANS. 3.1 ASSESSING OFFICER IN THIS REGARD HELD THAT SIN CE THE COMPANY COULD NOT ESTABLISH THE GENUINENESS OF UNSECURED LO ANS TAKEN FROM SH. SANJAY GARG AT ` 3 31 070/- AND ` 13 23 339/- FROM S AN FINLEASE & INVESTMENT (P) LTD. IS ALSO ADDED IN THE COMPANY INCO ME U/S 68 OF THE IT ACT. 3.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THE FOLLOWING REMAND REPORT OF THE ASSESSING OFFICER:- UNSECURED LOANS OF ` 17 63 145/- THE AMOUNT RECEIVED AS UNDER:- I) M/S SUNFIN LEASE INVESTMENTS ` 13 23 339/- II) SH. SANJAY GARG ` 3 31 070/- III) MS. RAKHI GARG ` 1 08 736/- ALL THESE AMOUNTS ARE TRANSFERRED FROM AUTO ENGINEER S (P) LTD. STATEMENT OF SH. SANJAY KUMAR JHALAN WAS RECORDED. HE ADMITTED THAT THE AMOUNT WAS TRANSFERRED FROM M/S AU TO ENGINEERS WHICH WAS TAKEN OVER BY SUNFIN LEASE AND INVESTMENT (P) LTD. STATEMENT OF SH. SANJAY GARG (HUSBAND OF MS. RAKHI GA RG) WAS ALSO RECORDED WHEREIN HE HAD ADMITTED HAVING ADV ANCED UNSECURED LOAN OF MAYANK AUTO ENGINEERS (P) LTD. THU S THE GENUINENESS OF UNSECURED LOAN IS ESTABLISHED. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 6 3.3 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ON THE ADDITION OF UNSECURED LOANS A MOUNTING TO ` 17 63 145/- THE ASSESSING OFFICER HAS GIVEN A CA TEGORICAL REPORT THAT THE GENUINENESS OF UNSECURED LOAN IS ESTABLISHED. THE ADDITION OF ` 17 63 145/- ON THIS ACCOUNT IS THEREFORE DIRECTED TO BE DELETED. 3.4 AGAINST THIS ORDER THE REVENUE IS IN APPEAL B EFORE US. 3.5 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S DELETED THE ADDITION UPON RECEIPT OF THE REMAND REPORT OF THE A SSESSING OFFICER ON THE ISSUE WHEREIN HE HAS ACCEPTED THE VERACITY OF T HE UNSECURED LOANS. UNDER THESE CIRCUMSTANCES THERE IS NO INFIRMITY IN THE LD. COMMISSIONER OF INCOME TAX (APPEALS)S DIRECTION REG ARDING THE DELETION IN ADDITION IN THIS REGARD. ACCORDINGL Y WE AFFIRM THE SAME. 4. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 1 01 26 741/- TO ` 5 32 327/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF BOGUS PAYMENTS. 4.1 IN THIS REGARD ASSESSING OFFICER MADE THE ADDI TION BY HOLDING AS UNDER:- IN SCHEDULE-10 WHICH COVERS MANUFACTURING EXPENSES . THERE IS AN ITEM SHOWN AS OTHERS AT ` 1 01 36 079/-. THE DETA ILS WERE CALLED VIDE QUESTIONNAIRE NO. 1. THE A.R. VIDE HIS LETTER DATED 27.12.2007 HAD SUBMITTED AS UNDER:- PARTICULARS UNIT I UNIT-II TOTAL JOB WORK 4301706/- 5825035 10126741 LAB. TESTING 7443/- 1896/- 9339/- ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 7 THE COMPANY FAILED TO ESTABLISH THE CLAIM OF JOB WORK PAYMENTS MADE THROUGH OUTSIDE PARTIES. THE CLAIM IS EXCESSIVE AND FURTHER THE ASSESSEE IS HAVING PLANT AND MACHINERY VALUED AS M ORE THAN 1 CRORE AS ON 31.3.2004. THE PAYMENT MADE TO JOB WORK WAS N OT MENTIONED. IN THE ABSENCE OF SUCH DETAILS ABOUT PAYMENT GENUIN ENESS REASONABLENESS ETC.; THE CLAIM OF ` 1 01 26 741/- IS NOT ALLOWED AS A BUSINESS EXPENDITURE. 4.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THE ASSESSEE SUBMISSION IN THIS REG ARD. HE NOTED THAT ASSESSEE HAS FURNISHED THE INFORMATION WITH REGARD TO JOB WORK OVER AND ABOVE ` 1 LAKH. HE DIRECTED THE ASSESSING OFFI CER TO CALL FOR THE COMPLETE DETAIL OF THE JOB WORK CHARGES ALONGWITH NAMES AND ADDRESSES OF THE PARTIES AND CARRYOUT VERIFICATION U/S 133(6). LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THE ASSES SING OFFICER S REMAND REPORT IN THIS REGARD AS UNDER:- THE LD. AUTHORISED REPRESENTATIVE FILED DETAILS O F JOB WORKS CHARGES OF ` 1 01 26 740/- . THE LIST CONTAINED IS BIFURCATED IN TWO PARTS ABOVE ONE LAKH AND BELOW ` 1 LAKHS. TO VERIFY THE PAYMENT OF JOB WORK CHARGES THE ASSESS ING OFFICER REQUISITIONED INFORMATION U/S 133(6) FROM 34 PARTIES . OF THESE PARTIES THE ASSESSING OFFICER DID NOT RECEIVE ANY REPLY FROM ONE M/S PRIYA ENTERPRISES L-161-B SHASTRI NAGAR DELHI AMOUNTING TO ` 4 87 002/-; AND IN 9 CASES THE ASSESSING OFFICER NOTED DISCREPANCIES IN ACCOUNTS AS PER THE RECIPIENTS BOO KS TO THE TUNE OF ` 45 325/-. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 8 THE ASSESSING OFFICER HAS THEREFORE REPORTED THAT .THE TOTAL ADDITION CAN BE RESTRICTED TO ` 5 32 327/-. 4.3 FURTHER CONSIDERING THE ABOVE LD. COMMISSIONER O F INCOME TAX (APPEALS) HELD THAT AS REGARD THE ADDITION OF JOB W ORK CHARGES THE ASSESSING OFFICER REPORTED THAT THE ADDITION MAY BE RESTRICTED TO ` 5 32 327/- AS ONE PARTY DID NOT RESPOND AND SOME DI SCREPANCIES IN ACCOUNTS WERE NOTED FROM THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY AND THE RECIPIENT OF THE JOB WORK CHARGES. 4.4 FURTHER CONSIDERING THE ASSESSEES REPLY LD. C OMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD HAS FOUND THAT ASSESSING OFFICER HAS TAKEN DUE CARE IN EXAMINING THE ADDITIONAL EVIDE NCE FILED BY THE ASSESSEE. THE ASSESSING OFFICER HAS REPORTED THAT TO THE EXTENT OF ` 5 32 327/- MAY BE SUSTAINED AFTER CONSIDERATION OF ALL EVIDENCES PRODUCED BY THE ASSESSEE AT REMAND STAGE. ACCORD INGLY LD. COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED ADD ITION TO ` 5 32 327/-. 4.5 AGAINST THIS ORDER BOTH THE ASSESSEE AND THE RE VENUE ARE IN APPEAL BEFORE US. 4.6 AS REGARDS THE REVENUES APPEAL IS CONCERNED ON THE ISSUE OF RESTRICTING THE ADDITION OF ` 5 32 327/- WE FIND T HAT THE SAME IS IN ACCORDANCE WITH THE REMAND REPORT SUBMITTED BY THE A SSESSING OFFICER. ASSESSING OFFICER HAS CLEARLY STATED THAT ADDITION IN THIS REGARD CAN BE RESTRICTED TO ` 5 32 327/-. 4.7 ASSESSEE IS ALSO IN APPEAL BEFORE US. ON THIS ISSUE THE ADDITION MADE IN THIS REGARD WAS ON ACCOUNT OF THE ASSESSING OFFICER MENTIONING THAT IN THE REPLY RECEIVED FROM THE JOB WORKED THERE WAS ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 9 DIFFERENCE TO THE EXTENT OF ` 45325/- AND IN THE CASE OF PRIYA ENTERPRISES NO REPLY WAS RECEIVED FOR ` 487002/- A ND THAT THE DISALLOWANCE MAY BE RESTRICTED TO ` 532327/-. IN T HIS REGARD LD. COUNSEL SUBMITTED THAT ASSESSEE HAS PRODUCED THE C OPY OF ACCOUNT OF PRIYA ENTERPRISES WHICH SHOWED THAT THERE WAS OPENING AND CLOSING BALANCE ALSO AND TDS WAS DEDUCTED AND PAY MENTS MADE THROUGH BANK ACCOUNTS. ALL THE COPIES OF BILLS OF M/S PRIYA ENTERPRISES TDS CERTIFICATES ISSUE TO PRIYA ENTERPRISES WAS ALS O PRODUCED. HENCE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ALL THE D OCUMENTARY EVIDENCE IS BEING SUBMITTED AND NO DISALLOWANCE IN T HIS REGARD HAS BEEN MADE IN EARLIER YEARS. THERE IS NO JUSTIFICATIO N OF DISALLOWANCE WITH REGARD TO PRIYA ENTERPRISES. 4.8 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. W E FIND THAT AS AGAINST THE JOB WORK DONE OF ` 1 01 26 740/- ASSESS ING OFFICER HAS ACCEPTED THE VERACITY OF ALL ASPECTS BUT HE HAS N OTED THAT NO REPLY HAS BEEN RECEIVED FROM PRIYA ENTERPRISES REGARDING ` 487002/-. HE HAS FOUND DISCREPANCIES OF RS. 45325/- WITH REGARD TO O THER ACCOUNT. AS REGARDS THE ACCOUNTS OF M/S PRIYA ENTERPRISES WE FIN D THAT THERE WAS OPENING BALANCE ALSO IN THE ACCOUNT. HENCE IT IS CLEAR THAT ASSESSEE HAD MADE TRANSACTION WITH THE PARTY IN EARLIER YEA RS ALSO AND NO DISALLOWANCE HAS BEEN MADE IN EARLIER YEARS IN THIS REGARD. ALL THE BILLS OF M/S PRIYA ENTERPRISES ARE AVAILABLE AND THE PAY MENT HAS BEEN MADE THROUGH ASSESSEES BANK ACCOUNTS TDS HAS ALSO DUL Y DEDUCTED. UNDER THESE CIRCUMSTANCES WE DO NOT FIND ANY MERIT IN DISALLOWANCE OF ` 487002/- MADE ON ACCOUNT OF M/S PRIYA ENTERPRISES. HENCE WE DELETE THE ADDITION OF ` 487002/- AND RESTRICT THE ADDITION DISCREPANCY FOUND BY THE ASSESSING OFFICER AMOUNTING TO ` 45325 /-. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 10 5. THE LAST ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 34 69 506/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ROYALTY PAID TO M/ S MINDA CORPORATION LTD. 5.1 ON THIS ISSUE ASSESSING OFFICER NOTICED THAT ASSESSEES BALANCE SHEET DISCLOSED ` 34 69 506/- ROYALTY CLAIMED AS E XPENDITURE. IT WAS SUBMITTED THAT ROYALTY @ 7% HAS BEEN CLAIMED AT SA LES OF ` 4 67 18 054/- AMOUNTING TO ` 34 96 596/-. IN SUPP ORT OF THIS THE ASSESSEE COMPANY FILED A SALES COMMISSION AGREEMENT BE TWEEN THE ASSESSEE AND MINDA HUF LTD. IT WAS EXPLAINED TH AT MINDIA HUF LTD. IS ENGAGED IN PRODUCTS FROM SALES MARKET. THE COMMISS ION IS PAYABLE TO SUCH PRODUCTS. ASSESSING OFFICER HELD THAT SI NCE THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF SUCH SERVICE S RENDERED. HE WAS OF THE VIEW THAT ROYALTY CLAIM WAS MADE TO REDUCE THE PROFITS OF THE COMPANY AND HE DISALLOWED THE SAME. 5.2 UPON ASSESSEES APPEAL IN THIS REGARD LD. COMMIS SIONER OF INCOME TAX (APPEALS) CALLED FOR A REMAND REPORT WHI CH READS AS UNDER:- ROYALTY DISALLOWANCE : ` 34 69 506/-:- IN ORDER TO VERIFY THE GENUINENESS FOR THE ROYALTY PAYMENTS THE MATTER HAS BEEN EXAMINE IN THE LIGHT OF DIRECTION. IT IS ADMITTED THAT MINDA CORPORATION LIMITED (FORMERL Y KNOWN AS MINDA HUF LTD. HAS FURNISHED A CERTIFICATE. THIS IS TO CERTIFY THAT MINDA CORPORATION LIMITED I S EARLIER KNOWN AS MINDA HUF LIMITED. THE COMPANY IS AN ASSESSE E UNDER THE PAN AAACM0344C AND ASSESSED IN COMPANY ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 11 CIRCLE -6(1) DELHI. DURING THE ASSESSMENT YEAR 20 04-05 PERTAINING TO F.Y. 2003-04 THE COMPANY RECEIVED ` 34 69 566/- FROM M/S MAYANK AUTO ENGINEERS PVT. LTD. A-15 ASHOK VIHAR PHASE-I DELHI. ASSESSMENT OF MINDA CORPORATION LTD. FOR A.Y. 2004-0 5 WAS COMPLETED U/S 143(3) OF THE IT ACT 1961 AT AN ASSES SED INCOME OF ` 4 11 38 997/-. INFORMATION WAS REQUISITIONED U/S 133(6) FROM SWITC H MASTERS LTD. TO WHOM THE PVT. LTD. HAD SOLD GOODS. THEY HAVE FURNISHED THE REPLY AS UNDER:- 1. COPY OF PURCHASE ACCOUNT OF MAYANK AUTO ENGINEER S PVT. LTD. FOR THE PERIOD FROM APRIL 2003 TO MARCH 2004 . 2. LIST OF NAME OF PRODUCTS SWITCH AND LOCK WITH A MOUNT OF PURCHASE ON WHICH TRADE MARK IS MINDA IS ENCLOSED. 3. COPY OF ITR FOR A.Y. 2004-05 ACKNOWLEDGEMENT NO . 0700000058 DATED 29.7.04. 4. NONE OF OUR DIRECTORS ARE RELATED TO THE DIRECTO R TO MAYANK AUTO ENGINEERES PVT. LTD. AS DEFINED UNDER SECTION 40(2)(B) OF THE IT ACT 1961. IN ORDER TO VERIFY THE GENUINENESS OF THEIR CLAIM INSPECTOR HAD VISITED THE PREMISES WHO ARE SELLING THE COMPAN Y PRODUCTS A) DEEPAK AUTOMOBILES PVT. LTD KAROL BAGH. B) BANSAL TRADERS KAROL BAGH. C) SHRINATH INTERNATIONAL KAROL BAGH. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 12 D) KOHLI AUTOMOTIVE KAROL BAGH. E) MODI AUTO TRADERS KAROL BAGH. ALL THE ABOVE PARTIES HAVE CONFIRMED IN WRITING THA T THE PRODUCTS WERE SOLD WERE MARKED TRADE MARK MINDA. 5.3 CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOM E TAX (APPEALS) HELD THAT ASSESSING OFFICER HAS OBTAINED THE CONFIRMATION FROM THE OWNER OF MINDA TRADEMARK I.E. M/S MINDA MINDA CORPORATION LIMITED (FORMERLY KNOWN AS MINDA ;(HUF) LTD.) THAT THE Y RECEIVED THE IMPUGNED AMOUNT AS ROYALTY BY THE ASSESSEE. HE FURTH ER NOTED THAT REQUISITIONED INFORMATION FROM THE BUYER OF ITS PROD UCTS M/S SWITCH MASTERS LTD. CONFIRMING PURCHASE OF GOODS BEARING TH E TRADEMARK MINDA. FURTHER HE NOTED THAT ASSESSING OFFICER HAD MARKET ENQUIRIES CONDUCTED FROM DIFFERENT DEALERS IN THE PR ODUCTS TO CONFIRM THAT THEY WERE SELLING PRODUCTS BEARING TRADEMARK MINDA. ACCORDINGLY LD. COMMISSIONER OF INCOME TAX (APPEALS ) HELD THAT IN VIEW OF THE CATEGORICALLY REPORT OF THE ASSESSING O FFICER CONFIRMING PAYMENT OF ROYALTY TO THE OWNER OF THE TRADEMARK MIN DA AS WELL AS HIS REPORT THAT PRODUCT BEARING THE TRADEMARK MINDA IS BEING TRADED IN THE MARKET HE FOUND NO JUSTIFICATION IN DISALLOWIN G PAYMENT OF ROYALTY AMOUNTING TO ` 34 69 506/-. 5.4 AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 5.5 REVENUE HAS URGED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE FACT THAT MANDATORY TDS WAS NO T DEDUCTED ON THE COMMISSION PAID TO M/S MINDA HUF LTD. IN TERMS OF TH E PROVISION OF SECTION 194H READ WITH SECTION 40(A)(IA) OF THE IT ACT. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 13 5.6 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER HAS INITIALLY DISALLOW ED THE PAYMENT HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH TH E GENUINENESS OF SUCH SERVICES RENDERED FOR THE PAYMENT OF ROYALTY. HOWEVER IN THE REMAND REPORT THE ASSESSING OFFICER HAS CATEGORICAL LY ACCEPTED THAT THE PAYMENT OF ROYALTY WAS JUST AND PROPER. NOW RE VENUE IS URGING THAT TDS HAS NOT BEEN DEDUCTED FROM THE PAYMENT. WE FIND THAT SECTION QUOTED BY THE REVENUE I.E. 194H IS APPLICAB LE FOR PAYMENT OF COMMISSION AND BROKERAGE. HERE WE ARE CONCERNED OF PAYMENT OF ROYALTY. HENCE THIS SECTION IS NOT AT ALL APPLIC ABLE. SECTION 194J WHICH ACTUALLY PROVIDES THAT TDS FOR ROYALTY WAS IN SERTED IN THE TAXATION LAWS (AMENDMENT) ACT 2006 W.E.F. 13.7.20 06. HENCE THE SAME IS ALSO NOT APPLICABLE FOR THE PRESENT ASSESS MENT YEAR. 5.7 IN THE BACKGROUND OF THE AFORESAID DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) AND ACCORDINGLY WE UPHOLD THE SAME. A AA ASSESSEES CROSS OBJECTION (154/DEL/2010) SSESSEES CROSS OBJECTION (154/DEL/2010) SSESSEES CROSS OBJECTION (154/DEL/2010) SSESSEES CROSS OBJECTION (154/DEL/2010) 6. THE FIRST ISSUE RAISED IN THE ASSESSEES CROSS OBJECTION IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LA W AND ON FACTS IN SUSTAINING THE ADDITION TO THE EXTENT OF ` 5 32 327/- OUT OF JOB CHARGES. 6.1 WE FIND THAT WE HAVE DEALT WITH THE ISSUE IN R EVENUES APPEAL IN PARA 4 ABOVE. ACCORDINGLY WE DELETE THE ADDITION T O THE EXTENT OF RS. 487002/- AND RESTRICT THE SAME TO ` 45325/-. 7. THE NEXT ISSUE RAISED PERTAINS TO ASSUMPTION OF J URISDICTION U/S 147. ITA NO. 1435/DEL/2010 & CO NO. 154/DEL/2010 A.Y. 2004-05 14 7.1 LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN TH IS REGARD HE SHALL NOT BE PRESSING THIS GROUND. ACCORDINGLY THIS G ROUND IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/09/2010 SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 24/09/2010 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES