M/s. Paramount Exports, Surat v. The Income tax Officer,Ward-6(1),, Surat

ITA 2262/AHD/2008 | 2005-2006
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 226220514 RSA 2008
Assessee PAN AADFC8961C
Bench Ahmedabad
Appeal Number ITA 2262/AHD/2008
Duration Of Justice 2 year(s) 9 month(s) 6 day(s)
Appellant M/s. Paramount Exports, Surat
Respondent The Income tax Officer,Ward-6(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 18-03-2011
Date Of Final Hearing 09-03-2011
Next Hearing Date 09-03-2011
Assessment Year 2005-2006
Appeal Filed On 12-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD BBENCH BEFORE SHRI G.D. AGARWAL HONBLE VICE-PRESIDENT (AZ) AND SHRI D.K. TYAGI HONBLE JUDICIAL MEMBER ITA NO.2262 & 2287/AHD/2008 [ASSTT.YEAR 2005-06] M/S. PARAMOUNT EXPORTS -VS- INCOME TAX OFFICER C/O MANOJ SHARMA 35/383 WARD-6(1) AAYKAR BHAVAN SATYANAGAR UDHNA SURAT MAJURA GATE SURAT PAN NO.AADFC8961C INCOME TAX OFFICER WARD-6(1) -VS- M/S. PARAMOUNT E XPORTS ROOM NO.614 6TH FLOOR C/O. MANOJ SHARMA 35/383 AAYAKAR BHAVAN MAJURA GATE SATYANAGAR UDHNA SUR AT SURAT (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K MADHUSUDAN SR-DR ASSESSEE BY: SHRI MANISH J SHAH AR O R D E R PER D.K. TYAGI JUDICIAL MEMBER :- THESE ARE CROSS-APPEALS AGAINST THE ORDER OF COMMI SSIONER OF INCOME-TAX (APPEALS)-IV SURAT IN APPEAL NO.CAS-IV/ 158/07-08 DATED 04-04-2008 FOR THE ASSESSMENT YEAR 2005-06. FIRST WE WILL TAKE ASSESSEES APPEAL IN ITA NO.2262 /AHD/2008. 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN C ONFIRMING THE ADDITION OF RS.1 80 034/- MADE BY THE ASSESSING OFFICER BEING ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 2 THE AMOUNT DEDUCTED BY THE APPELLANT AS COMMISSION DIRECTLY FROM THE TOTAL SALES AS PER SALES INVOICES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.7 51 200/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF EXCESS CLAIM OF PACKING CHARGES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF RS.4 06 664/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF DISALLOWANCE OF INTEREST. 3. THE FIRST GROUND RELATES TO DISALLOWANCE OF RS.1 80 034/- ON ACCOUNT OF COMMISSION. DURING THE ASSESSMENT PROCEE DINGS ASSESSING OFFICER AFTER VERIFICATION OF EXPORT INVOICE AND BA NK CERTIFICATES FOUND THAT ASSESSEE HAS PAID A COMMISSION ON THE GROSS INVOICE VALUE AT AROUND 5% OF THE BILL AMOUNT. THIS EXPENDITURE WAS NOT CLA IMED IN PROFIT AND LOSS ACCOUNT BUT IN THE INVOICE ITSELF. NO DETAILS OF THE PERSONS SERVICES RENDERED ETC. WERE PROVIDED IN RESPECT OF THIS EXPE NDITURE. THE ASSESSEE SIMPLY SUBMITTED THAT SUCH COMMISSION EXPE NSES WERE NORMALLY IN THE EXPORT BUSINESS AND THE ASSESSEE HA D RECEIVED ONLY NET AMOUNT ON THE SALES I.E. THE SALE VALUE AS PER INVO ICE MINUS COMMISSION. THIS EXPLANATION OF THE ASSESSEE WAS NO T ACCEPTED BY THE ASSESSING OFFICER AND HE HELD THAT TOTAL INCOME AS DEFINE IN SECTION 5 OF THE I.T ACT WOULD INCLUDE ALL INCOME WHICH ACCRUED OR AROSE OR DEEM TO HAVE ACCRUED OR AROSE IN INDIA OR OUTSIDE INDIA. TH EREFORE ASSESSEE WAS TO BE CHARGED ON ITS TOTAL INCOME ON ACCRUAL BA SIS. THE FOREIGN AGENT COMMISSION WAS NOT A TRADE DISCOUNT SINCE THE ASSESSEE HAS SHOWN IT AS COMMISSION IN WHICH THE PERSON RECEIVIN G THE COMMISSION MUST RENDER CERTAIN SERVICES WHICH WAS NOT THE CAS E HERE AND SINCE NO EVIDENCE IN SUPPORT OF SUCH CLAIM WAS FURNISHED THE AO TREATED THE SAID INCOME AS INCOME OF ASSESSEE U/S.37(1) AND SEC. 93 ALTERNATIVELY AFTER ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 3 REJECTING THE METHOD OF ACCOUNTING OF THE ASSESSEE U/S.145(3) OF THE ACT. AGGRIEVED BY THIS ORDER ASSESSEE WENT IN APPEAL BEF ORE FIRST APPELLATE AUTHORITY AND REITERATED THE SAME ARGUMENTS AS ADVA NCED BEFORE ASSESSING OFFICER. LD. CIT(APPEALS) CONFIRMED THE A CTION OF AO BY OBSERVING AS UNDER:- BEFORE ME ALSO THE LD. AR REITERATED THE ARGUMEN TS FILED BEFORE THE AO. HOWEVER I AM NOT INCLINED TO AGREE WITH TH E APPELLANT ON THIS ACCOUNT. THE EXPLANATION FILED BY THE APPELLAN T THAT ONLY NET SALES RATE HAS BEEN CHARGED FROM THE FOREIGN BUYER AND THAT THE NET AMOUNT WAS RECORDED IN THE BOOKS OF ACCOUNTS AP PEARS TO BE A VAGUE EXPLANATION. THERE IS NO REASON AS TO WHY THE ACTUAL SALE PRICE I.E. THE GROSS AMOUNT OF SALES WAS NOT TAKEN INTO THE BOOKS OF ACCOUNTS. THE SALE PROCEEDS HAVE BEEN REDUCED BY SO ME AMOUNT IN THE FORM OF COMMISSION. THERE IS NO EXPLANATION AS TO WHOM THIS COMMISSION WAS GIVEN OR WHY HAS IT BEEN SHOWN IN TH E EXPORT INVOICE. IF THE APPELLANTS EXPLANATION THAT ONLY N ET AMOUNT HAS BEEN REALIZED FROM THE CUSTOMER IS ACCEPTED THEN IT WOULD HAVE BEEN A TRADE DISCOUNT AND NOT COMMISSION. HOWEVER THAT IS NOT THE CASE HERE BECAUSE THE APPELLANT NEVER CLAIMED I T AS A TRADE DISCOUNT AND HAS ALWAYS CLAIMED IT AS A COMMISSION. THE TERM COMMISSION IS GENERALLY UNDERSTOOD AS AN AMOUNT W HICH IS ALLOWED AS COMPENSATION TO A THIRD PARTY FOR SERVIC ES RENDERED BY HIM. FOR EARNING COMMISSION THERE MUST BE AN AGEN T WHO SELLS OR BUYS GOODS FOR ONE OF THE PARTIES AND WHO RECEIVES REMUNERATION IN THE FORM OF COMMISSION FOR SERVICES RENDERED O N BEHALF OF THE APPELLANT. IN THE CASE OF THE APPELLANT THERE IS N O EXISTENCE OF A THIRD PARTY AS HAS BEEN CATEGORICALLY CLAIMED BY TH E APPELLANT THAT IT EVER PAID ANY COMMISSION TO ANY ONE. IN THE RE LATIONSHIP OF A BUYER AND SELLER NO SERVICES ARE RENDERED BY THE B UYER WHICH COULD ENTITLE HIM TO EARN COMMISSION FROM THE SEL LER. THE ABSENCE OF A THIRD PARTY IN THE CASE OF THE APPELLA NT MAKES IT TOTALLY INCONGRUOUS TO CLAIM PAYMENT OF COMMISSION TO THE BUYER WHO HAS NOT RENDERED ANY OTHER SERVICES THAN MAKING A P URCHASE FROM THE SELLER AND PAYING HIM THE PROCEEDS OF SUCH SALE S. IT IS FURTHER SEEN THAT THE ENTRIES IN THE BOOKS OF ACCOUNTS ARE NOT AS PER ACCOUNTING STANDARDS OR PRINCIPLES OF ACCOUNTING. I T IS ALSO IMPORTANT TO NOTE THAT THERE IS NO REMITTANCE OF CO MMISSION FROM INDIA. THE INVOICE/BILLS CLEARLY SHOW THAT THERE IS A DEDUCTION AND THE BANK HAS ALSO CONFIRMED IT. IN FACT THE APPELL ANT HAS PREFERRED THE COMMISSION AMOUNT TO BE DEDUCTED FROM THE INVOI CE VALUE ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 4 ITSELF SUO MOTTO AS PERMISSIBLE UNDER THE RBI GUID ELINES IRRESPECTIVE OF ACTUAL OBLIGATION OR COMPULSION. HE NCE IT CAN BE SAID THAT THE APPELLANT HAS NOT DIRECTLY PAID/REMIT TED THE COMMISSION AND AS SUCH THE EXPENDITURE PERTAINED TO THE APPELLANT ONLY. AT A FUTURE STAGE THE APPELLANT MAY CLAIM THAT THERE WAS DIVERSION OF INCOME BY OVER RIDING TITLE OF THE F OREIGN BUYER BUT THIS ARGUMENT WOULD BE MISPLACED AND BASED ON FLAWED INT ERPRETATION OF THE LAW. PAYMENT OF COMMISSION IS CLEARLY AN AP PLICATION OF INCOME AND THIS DOESNT SATISFY THE DOCTRINE OF DI VERSION OF INCOME. HERE THE COMMISSION HAS BEEN CLAIMED TO HAV E BEEN PAID BY THE APPELLANT AND THUS IT IS HIS EXPENDITURE OUT OF HIS PROFITS. THE INCOME FIRST ACCRUED TO THE APPELLANT IN ITS ENTIRE TY (GROSS) AND SUBSEQUENTLY THE COMMISSION PORTION WAS DEDUCTED BY THE FOREIGN BUYER AS CLAIMED BY THE APPELLANT. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ASSOCIATED POWER V CIT 218 ITR 195 THAT DOCTRINE OF DIVERSION OF INCOME APPLIES ON LY WHEN THE PROFIT EARNED BY THE ASSESSEE IS NOT REALLY HIS PRO FIT BUT IT BELONGS TO SOMEBODY ELSE AND THE ASSESSEE HAS NO TITLE ON I T. IN THE INSTANT CASE THE INCOME IN ITS ENTIRETY BELONGS TO THE APP ELLANT AND APPELLANT IS JUST APPLYING SOME PART OF ITS PROFIT TOWARDS COMMISSION EXPENSE ALLEGEDLY PAID TO THE FOREIGN BU YER. THERE IS NO PRIOR CLAIM OF THE BUYER ON THE INCOME. DURING THE PROCEEDINGS THE APPELLANT HAS CONTEND ED THAT HE HAS RECEIVED ONLY NET AMOUNT ON THE SALES I.E. THE ACTU AL RECEIPT OF THE APPELLANT AS BILLED SALES VALUE MINUS COMMISSION. T HEREFORE THERE WAS NO NEED OF SHOWING COMMISSION IN THE PROFIT & L OSS ACCOUNT AND SALES AT GROSS VALUE IN THE TRADING ACCOUNT. FU RTHER AS THE APPELLANT HAS NOT RECEIVED THE GROSS AMOUNT ONLY T HE NET AMOUNT SHOULD BE CONSIDERED FOR THE TAXATION PURPOSE. IT I S TO BE SEEN AS TO WHAT SHOULD BE THE ACCOUNTING TREATMENT OF COMMI SSION PAID AND WHETHER THE SALES SHOULD BE TAKEN AT GROSS OR N ET; AND WHETHER THE TAXABILITY ARISES WITH RESPECT TO NET R ECEIPT ONLY OR TO THE GROSS VALUE OF BILL. NETTING OFF OF THE COMMISS ION WITH SALES THAT LEADS TO COMPLETE VANISHING OF COMMISSION HEAD FROM THE PROFIT & LOSS ACCOUNT IS AN INCORRECT AND UNACCEPTABLE ACCOU NTING TREATMENT. IN FACT A TRADING ACCOUNT ENTRY CAN BE NET OFF WITH AN ENTRY OF TRADING ACCOUNT; FOR EXAMPLE TRADE DISCO UNT CAN BE NET OFF WITH THE PURCHASE OR SALES. SIMILARLY A PROFIT & LOSS ACCOUNT; FOR EXAMPLE INTEREST PAID CAN BE NET OFF WITH I NTEREST RECEIVED. BUT AN ITEM OF ENTRY OF PROFIT & LOSS ACCOUNT CAN N EVER BE NETTED ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 5 OFF WITH AN ENTRY OF TRADING ACCOUNT. SECTION 44 AB OF THE I.T ACT CLEARLY MENTIONS THE WORDS TOTAL SALES AND GROSS RECEIPTS. SO SHOWING THE SALES AT NET VALUE IS NOT CORRECT AND I T MAY LEAD TO THE VIOLATION OF THE LAW. FOR EXAMPLE IF AN APPELLANT HAS ACTUAL SALES TURNOVER OF RS.40 LAKHS AND HE DEDUCTS 10% COMMISS ION AMOUNT FROM SALES HIS TURNOVER WOULD BE REDUCED TO RS.36 LAKHS AND AS A RESULT AUDIT WOULD NOT BE COMPULSORY. SIMILARLY I F AN APPELLANT HAS EXPORT TURNOVER OF RS. 10 CRORES AND HE DEDUCTS 10% COMMISSION FROM SALES THEN AT RS.9 CRORES HE WOULD BE OUT OF THE EFFECT OF TAXATION LAW AMENDMENT ACT 2005. THUS IT IS EVIDE NT THAT THE NETTED OFF RESULTS REPRESENTS IMPROPER AND INCORR ECT ACCOUNTS. FURTHER NETTING OFF OF COMMISSION FROM SALES IS NOT IN ACCORDANCE WITH THE ACCOUNTING STANDARD-I WHICH IS NOTIFIED U NDER THE INCOME- TAX ACT. EVEN PART II OF SCHEDULE VI TO THE COMPANY ACT WHICH HAS BEEN REFERRED IN THE INCOME-TAX ACT AND INCLUDE D IN APPENDIX ONE OF THE ACT DOES NOT PERMIT THE APPELLATE TO HI DE THE PAYMENT OF COMMISSION IN THE PROFIT & LOSS ACCOUNT. THE ARG UMENT OF THE APPELLANT THAT SINCE HE HAS RECEIVED ONLY THE NET A MOUNT AND CANNOT BE CHARGED FOR WHAT HE HAS NOT RECEIVED IS A LSO WITHOUT ANY BASIS. THE APPELLANT IS TO BE TAXED ON ITS TOTAL IN COME AND SECTION 5 DEFINES TOTAL INCOME AS UNDER: THE TOTAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE D ERIVED WHICH (A) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDI A IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON; OR (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARI SE TO HIM IN INDIA DURING SUCH YEAR; OR (C) ACCRUES OR ARISES TO HIM OUTSIDE INDIA DURING S UCH YEAR THEREFORE THE APPELLANT IS TO BE CHARGED ON ITS TO TAL INCOME ON ACCRUAL BASIS. EVEN IF HE DOESNT RECEIVE THE INCOM E HE HAS TO PAY TAX ON ACCRUAL BASIS. THE COMMISSION IS NOT A SORT OF TRADE DISCOUNT. AT SOME POINT OF TIME IT CANNOT BE ARGUE D THAT THE APPELLANT HAS IGNORANTLY SHOWN THE TRADE DISCOUNT A S COMMISSION; BECAUSE AS PER THE RBI GUIDELINES ON UP TO 12.5% O F COMMISSION AMOUNT THE APPELLANT IS GETTING EXTRA CREDIT OF DE PB WHICH IS NOT APPLICABLE IN CASE OF TRADE DISCOUNT. THUS THE APP ELLANT HAS INTENTIONALLY DECLARED THE ALLEGEDLY PAID AMOUNT AS COMMISSION AND NOT AS A TRADE DISCOUNT IN THE G.R FORMS. THERE IS NO ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 6 AMBIGUITY ABOUT THE NATURE OF COMMISSION. IT IS NEI THER A TRADE DISCOUNT NOR ANY KIND OF INCENTIVE. THE APPELLANT H AS FAILED TO PROVE THAT TRANSFER OF AMOUNT RELATING TO COMMISSIO N BY DEDUCTION FROM INVOICE VALUE IS NOT FOR AVOIDING THE LIABILIT Y TO TAXATION. ANOTHER IMPORTANT POINT TO BE KEPT IN MIND IS T HAT AS PER THE RBI CIRCULAR NO.3 DATED 1.07.2003 ISSUED TO AUTHORIZED DEALERS IN FOREIGN EXCHANGE THE DEALERS MAY ALLOW PAYMENT OF COMMISSION AND SUCH REMITTANCE ON AGENCY COMMISSION MAY BE ALL OWED IF THE AMOUNT OF COMMISSION WAS DECLARED ON THE SPECIFIED FORM AND ACCEPTED BY THE CUSTOM AUTHORITIES AND IF THE COMMI SSION WAS NOT DECLARED ON SUCH A FORM REMITTANCE COULD BE ALLOWE D AFTER SATISFYING ABOUT THE REASONS ADDUCED BY THE EXPORTE R FOR NOT DECLARING SUCH COMMISSION ON EXPORT DECLARATION FOR M PROVIDED A VALID AGREEMENT BETWEEN THE EXPORTER AND THE BENE FICIARY FOR PAYMENT OF SUCH COMMISSION SUBSISTS. HERE IN THIS CASE NO SUCH WRITTEN AGREEMENT BETWEEN THE APPELLANT AND THE SO CALLED RECIPIENT OF COMMISSION HAS BEEN FURNISHED NOR IS A NY REMITTANCE OF SUCH COMMISSION AS ADMITTED BY THE APPELLANT ITS ELF. THE COMMISSION CAN ALSO NOT BE PRESUMED TO BE A TRADE D ISCOUNT SINCE THE APPELLANT ITSELF HAS CLAIMED IT TO BE A C OMMISSION PAID TO THE BUYER OF GOODS. IT IS ALSO RELEVANT TO MENTION HERE THAT WHEN GROSS SALE PROCEEDS HAVE BEEN SHOWN TO THE CUSTOMS & EXCISE DEPARTMENT IN SHIPPING BILL FOR EXPORT OF GOODS UNDER DEPB SCHEME IGNORING THE ALLEGED COMMISSION PAYMENT IN THAT ASSESSEE THE TOTAL SALE PROCESS CANNOT BE REDUCED B Y THE AMOUNT OF SO CALLED COMMISSION AND SHOWN AT REDUCED FIGURE OF SALE PROCEEDS TO THE INCOME-TAX DEPARTMENT. IT CANNOT BE AN ACCEPTABLE ARGUMENT THAT ONLY WITH A VIEW TO GET BE NEFIT OF DEPB THE APPELLANT HAS SHOWN GROSS SALES LESS COMMISSION TO THE DEPARTMENT. THE APPELLANT CANNOT BE ALLOWED TO GO B ACK ON HIS OWN STATEMENTS AND DOCUMENTARY EVIDENCE USED BY HIM AND FURNISHED BEFORE DIFFERENT AUTHORITIES. THEREFORE NO CREDENCE CAN BE GIVEN TO SUCH A SHIFTING STAND. THE DOCUMENTARY EVIDENCE IN THE FORM OF SALE INVOICES CLEARLY REVEALED THE SALE AMO UNT WHICH HAS BEEN ADMITTED BY THE APPELLANT TO BE PROVED AND THE REFORE IT IS POINTLESS TO MENTION THE REDUCED AMOUNT OF SALE VAL UE IN THE BOOKS OF ACCOUNTS. THE RBI GUIDELINES ALLOW A COMMISSION UP TO 12.5% WHEN THE APPELLANT COULD GET AN EXTRA CREDIT OF DEPB WHICH I S NOT AVAILABLE IN THE CASE OF A TRADE DISCOUNT. SINCE THE SAID AMO UNT IS NEITHER A COMMISSION NOR A TRADE DISCOUNT IT WOULD MEAN THAT THE SAID ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 7 AMOUNT HAS BEEN REDUCED FROM THE SALE PRICE OF GOOD S WITHOUT ANY JUSTIFICATION. THIS WOULD IMPLY THAT THERE IS OVER INVOICING OF THE SALE PRICE IN ORDER TO GET EXTRA CREDIT OF DEPB AND SALES HAVE BEEN SUPPRESSED. THE SO CALLED COMMISSION ALLOWED TO THE BUYER MIGHT HAVE BEEN KEPT IN RESERVE WITH THE BUYER OR SOMEONE ELSE ABROAD TO BE UTILIZED AT A FUTURE DATE FOR THE PURPOSE OF IMPORT OR SOME OTHER BENEFITS/EXPENDITURE. I AM THEREFORE OF THE C ONSIDERED VIEW THAT NO COMMISSION HAS BEEN PAID TO ANY ONE AND THI S IS JUST A COLOURABLE DEVICE TO REDUCE THE VALUE OF SALES PROC EEDS & EVADE DUE TAXES. THUS IT IS ABUNDANTLY CLEAR THAT THIS IS A CASE OF SUPPRESSION OF TOTAL SALE VALUE AND THEREFORE ADDIT ION MADE ON THIS ACCOUNT BY THE AO IS HEREBY CONFIRMED. FURTHER AGGRIEVED NOW ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE PLACED RELIANCE ON THE WRITTEN SUBMISSION FILED BY HIM WH ICH READS AS UNDER:- 2. THE AO ISSUED A SHOW CAUSE LETTER DATED 25.11.2 007 AND ASKED THE APPELLANT TO SHOW CAUSE AS TO WHY NOT THE AMOUNT OF COMMISSION ALLEGEDLY PAID TO FOREIGN BUYERS SHOULD BE DISALLOWED (PARA 5.3 OF ASSESSMENT ORDER PAGES 22 OF MEMORAN DUM OF APPEAL). THE ASSESSEE SUBMITTED THAT SUCH COMMISSIO N EXPENSES WERE NORMAL IN THE EXPORT BUSINESS AND THE APPELLAN T HAS RECEIVED ONLY THE NET AMOUNT ON THE SALES THAT ITS THE SALE VALUE AS PER INVOICE MINUS THE COMMISSION. (PARA 5.4 OF ASSESSME NT ORDER PAGE 22 OF MEMORANDUM OF APPEAL). THE AO HAS STATED THAT AS PER THE FACT OF THE CASE THE COMMISSION CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE ON THE GROUNDS THAT THERE IS NO REMIT TANCE OF COMMISSION FROM INDIA. THE INVOICE BILLS CLEARLY SH OW THAT THERE IS DEDUCTION OF COMMISSION AMOUNT AND THE AUTHORISED D EALER BANK HAS ALSO CONFIRMED IT. IN FACT THE ASSESSEE HAS PR EFERRED THE COMMISSION AMOUNT TO BE DEDUCTED FROM THE INVOICE V ALUE ITSELF AS PERMISSIBLE UNDER THE RBI THAT IT CAN BE SAID THAT THE ASSESSEE HAS NOT DIRECTLY PAID/REMITTED THE COMMISSION BUT ON BEHALF OF THE ASSESSEE THE FOREIGN BUYER HAS PAID IT. HOWEVER T HE EXPENDITURE PERTAINS TO THE ASSESSEE ONLY. THE AO DISALLOWED TH E COMMISSION AMOUNTING TO RS.1 80 034/- AS PER PARA 5.25 OF THE ASSESSMENT ORDER PAGE 31 OF MEMORANDUM OF APPEAL). THE APPEL LANT FURTHER FILED SUBMISSIONS BEFORE THE LD. CIT(A) BUT THE LD. CIT(A) DID NOT ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 8 TAKE INTO CONSIDERATION THE SAME AND CONFIRMED THE ADDITION. AS PER PAGE 6 OF CIT(A) ORDER PAGE 10 OF MEMORANDUM OF APPEAL. 3. IN THIS CONNECTION IT IS SUBMITTED THAT THE COM MISSION WAS PAID TO THE BUYER AS REDUCTION FROM SALES INVOICE. IT IS ALSO CONTENDED THAT IT IS AN USUAL PRACTICE OF ALLOWING COMMISSION TO BUYERS ON THE SALES PRICE. THE RATE OF COMMISSION WAS DECIDED FRO M THE BEGINNING BEFORE EXPORTING THE GOODS. IT IS ALSO SU BMITTED THAT THE ASSESSEE HAS NEVER DEBITED THE COMMISSION PAYMENTS IN THE BOOKS OF ACCOUNTS SINCE THE REDUCTION WAS ALLOWED T O THE BUYERS AND NOT TO THE THIRD PARTY. THE BUYERS HAD AID ONLY THE NET SUM AND ACCORDINGLY THE SALES ARE RECORDED NET OF COMMISSIO N IN THE BOOKS OF THE APPELLANT. SUCH DEDUCTION OF COMMISSION WAS ALLOWED BY THE APPELLANT ON INSISTENCE OF THE BUYER. IN SUPPOR T OF THE APPELLANTS CLAIM THE COPY OF FORM NO.1THAT IS BAN K CERTIFICATE OF EXPORT AND REALISATION WERE SUBMITTED BEFORE THE AO . THE AUTHORIZED DEALER BANK I.E. THE CENTRAL BANK OF IN DIA AFTER VERIFICATION ISSUED BANK CERTIFICATE OF EXPORT AND REALISATION. THE DETAILS OF FOREIGN BUYERS AGENT COMMISSION IS MENT IONED IN COLUMN 12 OF THE FORM SUBMITTED BY THE APPELLANT TO THE BANK (PAGE 26 28 ETC. OF THE PAPER BOOK). THE BANK HAS CERTIFIED THAT IT HAS VERIFIED THE RELEVANT EXPORT INVOICE CUSTOM AT TESTED E.P. COPY OF THE SHIPPING BILL AND THE RELEVANT DOCUMENTS AND FURTHER CERTIFIED THAT THE PARTICULARS IN COLUMN 1 TO 17 OF THE FORM HAVE BEEN VERIFIED AND FOUND TO BE CORRECT. THE FOB VALUE MEN TIONED IN COLUMN 14 OF THE FORM WHICH IS THE ACTUALLY REALIZE D VALUE IS ALSO VERIFIED BY THE BANK AS MENTIONED IN THE BANK CERTI FICATE. ON THE BASIS OF BANK CERTIFICATES THE ASSESSEE WAS GRANTED DEPB. THE AO HAS STATED IN (PARA 5.4 OF ASSESSMENT ORDER-PAGE 22 OF MEMORANDUM OF APPEAL) THAT THE ASSESSEE AND THE BA NK HAVE FOLLOWED THE RULES FRAMED BY RBI. IT IS TRUE THAT INCOME TAX AUTHORITY IS FREE TO VERIFY THE VALUE OF GOODS EXPO RTED AND THE EXPENDITURE INCURRED BY THE ASSESSEE. HERE THE COM PLETE VERIFICATION WAS MADE BY THE AUTHORITIES I.E. THE B ANK RBI ETC. AND THERE IS NO VIOLATION OF ANY PROVISION RELATING TO EXPORT OF GOODS AND THE QUANTUM OF AMOUNT RECEIVED AGAINST TH E EXPORT OF SALES. THE AO HAS CONCENTRATED ON THE POINT THAT CO MMISSION IS NORMALLY PAID TO THE AGENTS ENGAGED BY THE SELLER ( APPELLANT) AND REJECTED THE BOOKS U/S.145 AND MADE THE ADDITION U/ S.37(1) AND SECTION 93 ALTERNATIVELY. 4. YOUR HONOUR WILL APPRECIATE THAT THE REJECTION O F BOOKS IS NOT CORRECT IN LIEU OF THE JUDGEMENT IN THE CASE OF FIR ANCO FOOTWARE ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 9 FACTORY V. ITO (1989) 030 ITR 0457 (DEL) WHEREIN I T IS HELD THAT FOREIGN BUYERS AGENT COMMISSION AND INSPECTION COS T ARE EXPENSES WHICH STC INCURS ON BEHALF OF FOREIGN BUYE RS AND PAYS TO THE AGENTS CONCERNED. AND THEREFORE THE ASSESSEE S TURNOVER WILL BE THE NET AMOUNT WHICH IS RECEIVED BY THE ASS ESSEE. COPY OF THE JUDGMENT IS BEING ENCLOSED AS PER ANNEXURE-A. 5. THE LD. CIT(A) HAS REFERRED MASTER CIRCULAR NO.3 /2003-04 DATED 1.7.2003 ISSUED BY RBI (PAGE 5 OF THE APPELLATE ORD ER PAGE 9 OF MEMORANDUM OF APPEAL) AND OBSERVED AS UNDER: ANOTHER IMPORTANT POINT TO BE KEPT IN MIND IS THAT AS PER THE RBI CIRCULAR NO.3 DATED 1.7.2003 ISSUED TO AUTHORIZ ED DEALERS IN FOREIGN EXCHANGE THE DEALERS MAY ALLOW THE PAYMENT OF COMMISSION AND SUCH REMITTANCE ON AGENCY COMMISSION MAY BE ALLOWED IF THE AMOUNT OF COMMISS ION WAS DECLARED ON THE SPECIFIED FORM AND ACCEPTED BY THE CUSTOM AUTHORITIES AND IF THE COMMISSION WAS NOT DE CLARED ON SUCH A FORM REMITTANCE COULD BE ALLOWED AFTER S ATISFYING ABOUT THE REASONS ADDUCED BY THE EXPORTER FOR NOT D ECLARING SUCH COMMISSION ON EXPORT DECLARATION FORM PROVIDE D A VALID AGREEMENT BETWEEN THE EXPORTER AND THE BENEFI CIARY FOR PAYMENT OF SUCH COMMISSION SUBSISTS. HERE IN THIS CASE NO SUCH WRITTEN AGREEMENT BETWEEN THE APPELLANT AND TH E SO CALLED RECIPIENT OF COMMISSION HAS BEEN FURNISHED N OR IS ANY REMITTANCE OF SUCH COMMISSION HAS ADMITTED BY THE A PPELLANT ITSELF. COPY OF THE MASTER CIRCULAR NO.3 IS BEING ENCLOSED HEREWITH AS ANNEXURE-B. IN THIS MASTER CIRCULAR THE AUTHORIZED DEALER I.E. THE BANK MAY ALLOW THE PAYMENT OF COMMISSION EITHER BY REMITTANCE OR BY DEDUCTION FROM THE INVOICE VALUE ON APPLICAT ION SUBMITTED BY THE EXPORTER. THEREFORE THE APPELLANT IS ALLOWED TO DEDUCT THE COMMISSION DIRECTLY FROM THE INVOICE AND ACCORDINGL Y THE SAME IS DECLARED IN GR FORM I.E. FORM NO.1. IN VIEW OF THIS THERE IS NO REQUIREMENT OF AN AGREEMENT/DOCUMENT WHEN THE AMOUN T OF COMMISSION IS DECLARED IN THE FORM SUBMITTED BY THE APPELLANT TO THE AUTHORISED BANK. THE LD CIT(A) ALSO OBSERVED AC CORDINGLY AS MENTIONED ABOVE. THEREFORE FILING OF FORM GR IS SUF FICIENT EVIDENCE THAT COMMISSION WAS ACTUALLY ALLOWED TO BE DEDUCTED FROM THE SALES VALUE. ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 10 6. WE DO NOT SAY THAT THE AMOUNT DEDUCTED FROM THE SALES INVOICE IS EXPENDITURE HOWEVER IF IT IS TREATED SO IT WA S LAID OUT WHOLLY AND EXCLUSIVELY FOR THE BUSINESS ONCE THE GENUINENE SS OF COMMISSION DEDUCTED FROM SALE INVOICE AS WELL AS IT S JUSTIFICATION OF HAVING BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF APPELLANTS BUSINESS THE SAME CANNOT BE DISALLOWED U/S.37(1). IN THE CASE OF THE APPELLANT AND IN MANY SIMILAR CASES SINCE THE COMMISSION HAS BEEN DEDUCTED FROM THE GROSS INVOICE VALUE NO SEPARATE RECOGNITION WAS GIVEN IN THE BOOKS OF ACCO UNTS TO SUCH PAYMENTS AND CONSEQUENTLY NO EXPENDITURE WAS CLAIME D UNDER SUCH A HEAD IN THE P & L ACCOUNT. THEREFORE THE AS SESSING OFFICER'S OBSERVATION REGARDING THE INCORRECT ACCOUN TING TREATMENT GIVEN BY THE APPELLANT TO SUCH TRANSACTIONS WAS WIT HOUT ANY BASIS. IN (PARA 5.11 OF THE ASSESSMENT ORDER PAGE 25 OF MEMORANDUM OF APPEAL) THE AO HAS DISCUSSED ABOUT ACCOUNTING ST ANDARD-I. HOWEVER THE SAME IS NOT APPLICABLE TO APPELLANTS CASE GIVEN THE NATURE OF TRANSACTION ENTERED INTO BY THE APPELLANT IN (PARA 5.6 OF THE ASSESSMENT ORDER PAGE 23 OF MEMORANDUM OF APP EAL) DISCUSSED THE PROVISIONS OF SECTION 5. IN THIS REGA RD IT IS OBVIOUS IN THE NATURE OF TRANSACTIONS WHICH HAVE BEEN DISCUSSE D BEFORE THAT WHAT HAVE BEEN ACCRUED TO THE APPELLANT WAS THE GRO SS INVOICE VALUE. THE OUTGOING COMMISSION FROM THE INVOICE VAL UES IS REQUIRED TO BE REDUCED FROM THE GROSS AMOUNT AND TH E ACTUAL NET AMOUNT AGAINST EXPORT SALES AS VERIFIED BY THE BANK AND THE CUSTOMS AND APPROVED BY THE RBI IS THE TRADING RECE IPTS FROM THE EXPORT SALES WHICH IS DULY ACCOUNTED BY THE APPELLA NT. THE APPELLANT HAS NO LEGAL RIGHT TO RECEIVE MORE AMOUNT AGAINST EXPORT SALES AND THEREFORE THE AMOUNT OF COMMISSION DEDUCT ED FROM THE SALES INVOICES CANNOT BE TAXED. THEREFORE THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 5 OR SECTION 145. THEREFO RE THE REJECTION OF BOOKS IS NOT JUSTIFIED. 7. EVEN IF THE AMOUNT DEDUCTED AS COMMISSION FROM T HE SALE VALUE IS CONSIDERED AS AN EXPENDITURE THE SAME IS ALLOWAB LE IN CASE OF THE APPELLANT U/S.37(1). THE EXPENDITURE I.E THE A MOUNT OF COMMISSION DEDUCTED IS NOT IN THE NATURE AS DESCRIB ED I THE SECTION 30 TO 36 AND ALSO IT IS NOT IN THE NATURE O F CAPITAL AND PERSONAL EXPENSES OF THE APPELLANT. AS THE APPELLAN T WAS COMPELLED TO DEDUCT THE AMOUNT OF COMMISSION DUE TO THE INSISTENCE OF FOREIGN BUYERS AND ALSO AS PER THE PR EVAILING PRACTICE IN THE TRADE THE SAME IS LAID OUT WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF BUSINESS. NORMALLY IT IS THE TRADE PRACT ICE PREVALENT IN THE CASES OF TEXTILE GOODS SUCH MODUS OPEANDI IS F OUND IN THE ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 11 CASE OFF TEXTILE CASES PARTICULARLY AT SURAT. THIS PREVAILING PRACTICE IS ACCEPTED BY THE DEPARTMENT ALSO IN SOME SIMILAR CASES. WHAT IS IMPORTANT IS INCOME RECEIVED AGAINST EXPORT OF GOOD S. THE APPELLANT HAS ACCOUNTED THE SALE VALUE WHICH HE ACT UALLY RECEIVED AGAINST EXPORT SALES. IN THIS REGARD WE RELY UPON T HE FOLLOWING JUDGEMENT CATALYSTS AND CHEMICALS INDIA (WEST ASIA) LIMITED V. COMMISSIONER OF INCOME TAX (1987) 166 ITR 0769 (KER ): THE PRINCIPLES DEDUCIBLE FROM THESE RULINGS ARE: TH E PAYMENT MADE OR EXPENDITURE INCURRED THOUGH NOT OF NECESSITY AND WITH A VIEW TO A DIRECT AN IMMEDIATE BENEFIT TO THE TRADE BUT VOLUNTARILY AND ON THE GROUNDS OF CO MMERCIAL EXPEDIENCY AND PRINCIPLES OF ORDINARY COMMERCIAL TR ADING AND IN ORDER TO INDIRECTLY FACILITATE THE CARRYING ON OF THE BUSINESS WILL BE TREATED AS MONEY EXPENDED WHOLLY A ND EXCLUSIVELY FOR THE PURPOSES OF THE TRADE. IT IS IM MATERIAL EVEN IF A THIRD PARTY ALSO BENEFITS THEREBY COPY O F THE JUDGMENT IS ENCLOSED HEREWITH AS ANNEXURE-C. 8. THE AO HAS ALSO APPLIED THE PROVISIONS OF SECTIO N 93 (PARA 5.21 TO 5.23 OF THE ASSESSMENT ORDER PAGE 29 AND 30 OF M EMORANDUM OF APPEAL). IN THIS REGARD IT IS SUBMITTED THAT TH IS PROVISION IS NOT APPLICABLE TO APPELLANTS CASE FOR THE FOLLOWING RE ASONS: 1) THERE WAS NO TRANSFER OF ANY ASSETS IT WAS ONLY A SALE OF TEXTILE GOODS AGAINST WHICH THE ASSESSEE HAS RECEIV ED SALE PROCEEDS. 2) NO INCOME HAD BECOME PAYABLE TO A NON RESIDENT. 3) THE APPELLANT HAS NOT ACQUIRED ANY RIGHTS BY VIR TUE OF WHICH HE HAS ACQUIRED THE POWER TO ENJOY ANY INCOME OF A NON-RESIDENT PERSON. 9. THEREFORE THERE WAS NO QUESTION OF DEEMING THE COMMISSION PAID AGAINST THE SALES TRANSACTION AS INCOME OF THE APPELLANT. THE AO HAS MISAPPLIED THE PROVISIONS OF SECTION 93 WHIC H IS APPLICABLE ONLY TO TRANSACTIONS INVOLVING TRANSFER PRICING WH ERE A PERSON TRANSFERS HIS INCOME TO A NON RESIDENT AND YET RETA INS THE POWER TO ENJOY SUCH INCOME WITHOUT PAYING TAX ON THE SAME I N HIS OWN COUNTRY. ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 12 10. IN LIGHT OF THE ABOVE IT IS THEREFORE PRAYED T HAT THE ADDITIONS SO MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT(A) MAY KINDLY BE DELETED. THE AUTHORIZED REPRESENTATIVE ALSO PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF SHRI SANJAY JAIN V. DC IT SPL. RANGE-7 AHMEDABAD IN ITA NO.1533/AHD/2008 FOR ASSESSMENT YEAR 2004-05 VIDE ORDER DATED 16-12-2009 SUBMITTED THAT THE ISSU E IS NOW COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE. THE LD. SR-DR ON THE OTHER HAND PLACED HEAVILY RELIANCE ON THE ORDERS OF LOWER AUTHORITIES AND SUBMITTED THAT THE ISSUE IS NOT COVERED BY THE DECI SION OF THIS TRIBUNAL IN THE CASE OF SHRI SANJAY JAIN (SUPRA) AS THE FACTS A RE DISTINGUISHABLE. THEREFORE HE PRAYED THAT THE ORDER PASSED BY LD. C IT(A) MADE KINDLY BE UPHELD. 5. HEARD BOTH THE PARTIES AND PERUSED THE CASE RECO RDS AND THE CASE LAWS RELIED BY ASSESSEE. WE FIND THAT ISSUE IN HAND IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI SANJAY JAIN (SUPRA) RELEVANT PORTION OF THE ORDER READS AS UNDER:- 6. WE HEARD SHRI RASHESH SHAH LEARNED CHARTERED A CCOUNTANT APPEARING FOR THE ASSESSEE AND SHRI RAJIV AGARWALA THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E. THE MAIN PLANK OF THE ARGUMENT ADVANCED BY THE LEARNED CHART ERED ACCOUNTANT IS THAT THE COMMISSION PAID BY THE ASSES SEE WAS IN THE NATURE OF TRADITIONAL DISCOUNT EXTENDED TO FOREIGN BUYERS AND THE ASSESSEE HAD RECEIVED ONLY THE NET PROCEEDS AND THE REFORE THERE COULD NOT BE ANY CONCEPT OF INCOME AGAINST THE AMOU NT WHICH WAS NEVER RECEIVED BY THE ASSESSEE OR ACCRUED TO THE AS SESSEE. ON THE OTHER HAND THE MAIN THRUST MADE BY THE LEARNED COMMISSIONER IS THAT EVEN THOUGH THE ASSESSEE HAS R ECORDED THE ONLY NET RECEIPTS AS ITS EXPORT SALES THE ASSESSEE HAS CLAIMED THE BENEFITS OF IMPORT ENTITLEMENT LIKE DEPB ON THE AMO UNT OF GROSS VALUE OF INVOICE WHICH SHOWS THAT AS FAR AS THE ASS ESSEE IS ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 13 CONCERNED THE EXPORT SALE PROCEEDS IS REPRESENTED BY THE GROSS INVOICE VALUE AND NOT BY THE NET VALUE AS CLAIMED B Y THE ASSESSEE. 7. AT THIS JUNCTURE IT IS NECESSARY FOR US TO STAT E THAT THE ASSESSEE HAS ACCOUNTED THE EXPORT SALES TURNOVER AT THE NET FIGURE AND CLAIMED DEPB BENEFITS ON THE GROSS AMOUNTS IN A CCORDANCE WITH THE GUIDELINES ISSUED BY THE RBI IN THE LIGHT OF THE EXPORT IMPORT POLICY OF THE GOVERNMENT OF INDIA. THE ASSE SSEE HAS GIVEN THE DEDUCTION OF DISCOUNT TO THE FOREIGN BUYER BY W AY OF COMMISSION BEING REDUCED DIRECTLY IN THE SALES INVO ICE IN THE LIGHT OF THE REGULATIONS AND GUIDELINES OF THE RBI. THIS METHOD OF INVOICE AND GIVING DISCOUNT/COMMISSION AND RECEIVIN G THE FOREIGN EXCHANGE NET OF INVOICE ARE PERMISSIBLE UNDER THE L AW RELATING TO THE EXPORT AND FOREIGN EXCHANGE MATTERS. THE EXPORT IMPORT POLICY AND THE RBI REGULATIONS APPROVED THIS METHOD. THE EXPORT IMPORT POLICY AND THE RBI REGULATIONS FURTHER ALLOW AN ASS ESSEE TO CLAIM BENEFITS OF IMPORT ENTITLEMENT LIKE DEPB ON THE GRO SS AMOUNT OF INVOICE VALUE INSTEAD OF THE NET AMOUNT OF INVOICE VALUE. THEREFORE THE BENEFIT ACCRUES TO THE ASSESSEE IN R ESPECT OF DEPB ON THE DIFFERENTIAL INVOICE AMOUNT WHICH WAS NEVER RECEIVED BY THE ASSESSEE IN INDIA IN CONVERTIBLE FOREIGN EXCHANGE A S AN EXPORT PRIVILEGE ENJOYED BY THE ASSESSEE UNDER THE RELEVAN T RULES AND REGULATIONS. THEREFORE THIS DIFFERENCE REFLECTED I N THE NET INVOICE VALUE AND THE GROSS INVOICE VALUE FOR THE PURPOSE O F ACCOUNTING OF EXPORT SALE TURNOVER AND CLAIMING DEPB BENEFITS CAN NOT BE TAKEN AS A GROUND TO REJECT THE CONTENTIONS OF THE ASSESS EE. THEREFORE THE ISSUE HAS TO BE EXAMINED DEVOID OF THE ABOVE TE CHNICALITY POINTED OUT BY THE LEARNED COMMISSIONER OF INCOME-T AX. 8. THERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE HAS GIVEN COMMISSION/DISCOUNT IN THE EXPORT INVOICES IT SELF IN FAVOUR OF THE FOREIGN BUYER. THE FOREIGN BUYER HAS STATED THA T THIS DISCOUNT/COMMISSION WOULD BE DISTRIBUTED BY HIM TO THE INTENDING AGENTS ABROAD. THEY HAVE STATED THAT THE COMMISSION S ARE TO BE PAID BY THEM DIRECTLY TO THE AGENTS IN THE COUNTRIE S OF IMPORT. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE HAS RECEIVE D THE NET AMOUNT ONLY AS EXPORT PROCEEDS BY WAY OF CONVERTIBL E FOREIGN EXCHANGE. ALL THESE MATTERS HAVE BEEN CERTIFIED BY THE BANKERS OF THE ASSESSEE. ALL THE MATTERS ARE WELL WITHIN THE L AW REGULATED BY THE RBI FOR THE PURPOSE OF EXPORT OF GOODS OUTSIDE INDIA. IN SUCH CIRCUMSTANCES THE SIMPLE FACT THAT EMERGES OUT OF THE MAZE OF ARGUMENTS IS THAT AS FAR AS THE ASSESSEE IS CONCERN ED HIS EXPORT SALES TURNOVER IS THE NET AMOUNT OF THE EXPORT INVO ICE ISSUED BY ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 14 HIM. IT IS NOT PROPER TO TREAT THE GROSS INVOICE A MOUNT AS THE EXPORT SALES TURNOVER OF THE ASSESSEE. 9. IN FACT IN THE SITUATION OF THE CASE AS STATED IN THE ABOVE PARAGRAPH IT IS TO BE SEEN THAT THE EXPORT SALE PR OCEEDS RECEIVED BY THE ASSESSEE WAS NET AMOUNT ALONE AND NOT THE GR OSS AMOUNT. IT IS ALSO TO BE SEEN THAT THE FOREIGN BUYER IS NOT BOUND TO PAY TO THE ASSESSEE THE AMOUNT COVERED BY THE COMMISSION O R DISCOUNT AT ANY FUTURE DATE. THEREFORE THE RIGHT/CLAIM OF T HE ASSESSEE IN RESPECT OF THE EXPORT SALES WAS TO RECEIVE ONLY THE NET INVOICE AMOUNT AND NOTHING MORE. THEREFORE THERE IS NOTHIN G LEFT OVER BY WAY OF BALANCE TO BE TREATED AS INCOME ACCRUING OR ARISING TO THE ASSESSEE OUTSIDE INDIA BY VIRTUE OF THE IMPUGNED EX PORT SALES. THE ENTIRE INCOME ATTRIBUTABLE TO THE EXPORT SALES WERE ALREADY RECEIVED BY THE ASSESSEE IN INDIA IN THE FORM OF CO NVERTIBLE FOREIGN EXCHANGE. THIS POSITION IS PROVED BY THE CERTIFICAT ES ISSUED BY THE BANKERS AS WELL AS LETTERS OF CREDIT OPENED BY THE FOREIGN BUYERS. WHEN THE ASSESSEE HAS RECEIVED ONLY THE NET PROCEED S AS PER THE INVOICE THERE IS NOTHING FURTHER LEFT OVER TO BE T REATED AS INCOME RECEIVED OR TO BE RECEIVED OR ACCRUED OR DEEMED TO BE ACCRUED OR ARISING IN INDIA OR OUTSIDE INDIA. THEREFORE THE RELIANCE PLACED BY THE LOWER AUTHORITIES ON THE SECTION 5 OF THE INCOM E TAX ACT IS RATHER MISLEADING. 10. AS THE ASSESSEE HAS NOT PAID TO THE FOREIGN BUY ERS ANY AMOUNT BY WAY OF COMMISSION BUT IT WAS ONLY ADJUST MENT THROUGH THE EXPORT INVOICES BY WAY OF COMMISSION/DISCOUNT SECTION 94H ALSO HAD NO ROLE TO PLAY. THEREFORE WE FIND THAT ALL THE DISCUSSIONS MADE BY THE LOWER AUTHORITIES TO MAKE ADDITIONS OF THE COMMISSION AMOUNT WERE BASED ON HYPOTHESIS AND NOT ON ANY FACT S PROVED. WHEN THE ASSESSEE HAD NO ADDITIONAL AMOUNT TO BE RE CEIVED FROM THE FOREIGN BUYERS NO QUESTION OF ADDITIONAL INCOM E ARISES. THE INCOME OF THE ASSESSEE IS FULLY EMBEDDED IN THE NET SALE PROCEEDS RECEIVED AND ACCOUNTED BY HIM. WHEN THE INCOME ITSE LF IS NOT GENERATED THERE IS NO QUESTION OF SUCH INCOME BECO MING ACCRUED OR DUE. WHEN THERE IS NOTHING LEFT OVER TO BE FURTH ER RECEIVED BY THE ASSESSEE THERE IS NO QUESTION OF ANY INCOME AR ISING IN THE HANDS OF THE ASSESSEE ATTRIBUTABLE TO THE QUANTUM OF COMMISSION RECORDED IN THE INVOICE. THEREFORE WE FIND THAT T HE ENTIRE DISCUSSIONS BUT WELL MADE BY THE LOWER AUTHORITIES HAVE BEEN MADE UNFORTUNATELY IN A WRONG DIRECTION. ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 15 11. WHEN THE FACTUM OF ACTUAL RECEIPT OF SALE PROCE EDS TO THE EXTENT OF NET INVOICE AMOUNT IS ESTABLISHED BEYOND ANY DOUBT THERE IS NO JUSTIFICATION IN OVERLOOKING UPON THOSE SPEAKING FACTS ON THE TECHNICAL GROUND THAT THE ASSESSEE HAS CLAIMED THE DEPB BENEFIT ON THE GROSS AMOUNT OF THE INVOICE. THE DE PB CLAIM WAS MADE BY THE ASSESSEE ON THE BASIS OF PERMISSION GRA NTED BY THE RBI AND THAT HAS NOTHING TO DO WITH THE ACTUAL AMOU NT OF EXPORT SALES PROCEEDS RECEIVED BY THE ASSESSEE IN THE FORM OF CONVERTIBLE FOREIGN EXCHANGE. 12. THEREFORE IT IS QUITE OBVIOUS WITHOUT MUCH DIS CUSSION AND DELIBERATION THAT THE REVENUE HAS NO CASE TO HOLD T HE ASSESSEE RESPONSIBLE FOR AN ADDITIONAL INCOME OF RS.1 42 31 458. THE SAID ADDITION IS ACCORDINGLY DELETED. FOLLOWING THE SAME THE ADDITION OF RS.1 80 034/- MA DE BY AO AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. THIS GRO UND OF ASSESSEES APPEAL IS ALLOWED. 6. NOW COMING TO GROUND NO.2 WHICH RELATES TO DISAL LOWANCE OF RS.7 51 200/- OUT OF PACKING EXPENSES. THE ASSESSIN G OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN PAYMENT TO M/S. DHANLAX MI TEXTILES M/S. PAVAN TEXTILES AND M/S. PURSHOTTAM FASHIONS RESPECT IVELY. THE ASSESSEE FURNISHED CONTRACT ACCOUNTS OF THESE PARTI ES WHICH SHOWED NIL CLOSING BALANCE RECEIVABLE FROM ASSESSEE. THE ASSES SING OFFICER WAS OF THE VIEW THAT LIABILITIES WERE WRONGLY SHOWN AND WH EN REQUIRED TO SHOW IT WAS STATED THAT PAYMENTS TO THE ABOVE PARTIES WE RE MADE DURING THE YEAR DUE TO MISTAKE PACKING ACCOUNT WAS DEBITED INS TEAD OF THE THREE CREDITORS. THE AO THEREFORE HELD THAT THERE WAS EXC ESS DEBIT TO THE PACKING ACCOUNT CERTAIN THEREBY THE PACKING EXPENSE S WERE INFLATED. THIS WAS ADMITTED BY ASSESSEE ALSO AND THE AO MADE THE ADDITION ON THIS ACCOUNT. BEFORE CIT(A) ALSO ASSESSEE DID NOT F URNISH ANY EXPLANATION IN THIS REGARD. HE THEREFORE CONFIRMED THIS ADDITION. SINCE ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 16 BEFORE THE ASSESSING OFFICER ASSESSEE ADMITTED THA T PACKING EXPENSES WERE INFLATED AND NEITHER BEFORE CIT(A) OR BEFORE U S ANY EXPLANATION IN THIS REGARD WAS OFFERED BY ASSESSEE WE FIND NO INFI RMITY IN THE ORDER PASSED BY LD. CIT(A) AND SAME IS HEREBY UPHELD. THI S GROUND OF ASSESSEES APPEAL IS DISMISSED. 7. THE NEXT GROUND REGARDING ADDITION OF RS.4 06 66 4/- ON ACCOUNT OF INTEREST. THE ASSESSING OFFICER OBSERVED THAT ASSES SEE HAD CLAIMED INTEREST EXPENSES OF RS.1 93 726/- OVER AND ABOVE BANK INTEREST EXPENSES AT RS.2 12 938/- IT WAS FOUND THAT ASSESS EE HAD ADVANCED RS.60.70 LAKH OUT OF INTEREST BEARING FUNDS AND HAD NOT CHARGED ANY INTEREST ON THE SAID LOAN. THE AMOUNT OF RS.44 LAKH WAS ADVANCED TO THE SISTER CONCERN ALSO WITHOUT CHARGING INTEREST. WHEN REQUIRED TO SHOW CAUSE IT WAS STATED THAT MOVEMENT OF FUNDS AND TO THE SISTER CONCERN DID NOT CONTRACTS INTEREST AS A PRACTICE. THIS EXPL ANATION WAS NOT ACCEPTED THE ASSESSING OFFICER AND HE HELD THAT SIN CE INTEREST BEARING FUNDS WERE DIVERTED FOR GIVING INTEREST FREE ADVANC E THE INTEREST CLAIMED TO HAVE BEEN PAID ON THIS INTEREST BEARING FUND WAS NOT ALLOWABLE. BEFORE CIT(A) IT WAS ARGUED THAT RS.44 LAKH WAS ADVANCED TO SISTER CONCERN WAS A TRADING ITEM AND NOT A LOAN ACCOUNT AND THERE FORE NO INTEREST WAS CHARGED ON THE SAME. FURTHER LOAN WAS TAKEN BY ASSE SSEE FOR ITS EXPORT BUSINESS AND THEREFORE INTEREST WAS NOT CHARGED FRO M THE SISTER CONCERN. SINCE IT ASSISTED IN ITS THE ASSESSEE IN ITS EXPOR T BUSINESS. HOWEVER THE LD. CIT(APPEALS) CONFIRMED THE ADDITION MADE BY AS SESSING OFFICER BY HOLDING THAT THERE WAS A DIRECT NEXUS BETWEEN THE L OAN RAISED FROM THE BANK AND MONEY ADVANCED TO SISTER CONCERN AND OTHER S WITHOUT CHARGING INTEREST THEREON. THIS AMOUNT TO HAVE BEEN DIVERGEN T OF INCOME AND NOT CHARGING OF INTEREST ON ADVANCES AND PAYING INTERES T TO THE CREDITORS AS REDUCED THE TAX LIABILITY OF THE ASSESSEE AND THERE FORE THE ADDITION HAS ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 17 RIGHTLY BEEN MADE BY ASSESSING OFFICER BY TREATING INTEREST EXPENSES BEING NOT FOR BUSINESS PURPOSES. FURTHER AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE RELIED ON WRITTEN SUBMISSIONS WHICH READ AS UNDER:- 3. ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST RS.406664/- 12. THE AO HAS DISALLOWED RS.212938/- BEING THE INT EREST PAID TO THE BANK AND RS.193726/- BEING THE INTEREST PAID TO THE OTHER PARTIES (PARA 6.3 OF ASSESSMENT ORDER PAGE 33 OF ME MORANDUM OF APPEAL). THE AO OBSERVED THAT THE INTEREST BEARING FUNDS WERE DIVERTED FOR GIVING INTEREST FREE ADVANCE AND WHICH ARE NOT FOR ANY BUSINESS PURPOSE. THE AO HAS WORKED OUT THE INTERES T @ 9% ON SUCH ADVANCES OF RS.60.70 LAKHS WHICH COMES TO RS.5 46300/-. HOWEVER THE AO DISALLOWED THE INTEREST OF RS.40666 4/- TO THE EXTENT OF INTEREST EXPENSE CLAIMED. IN THIS REGARD IT IS SUBMITTED THAT THE APPELLANT HAD SUFFICIENT INTEREST FREE LO ANS OUT OF WHICH THEY COULD PROVIDE INTEREST FREE ADVANCE. THE CHART BELOW SHOW THE POSITION OF INTEREST FREE UNSECURED LOANS AVAIL ABLE AND INTEREST FREE LOANS GIVEN BY THE APPELLANT DURING THE YEAR. INTEREST FREE UNSECURED LOANS NAME AMOUNT IN RS. DATE ROHIT K KHAJANI 98268 1.4.2004 11732 3.5.2004 12000 12.5.2004 TOTAL 122000 AJAY POLYSTER 2100000 1.4.2004 300000 28.2.2005 500000 21.3.2005 TOTAL 2900000 MUNI TRADERS 600000 9.2.2005 390000 9.2.2005 TOTAL 990000 RISHABH SILK MILLS 500000 5.6.2004 300000 13.10.2004 TOTAL 800000 KOOBCHAND 500000 4.9.2004 ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 18 ROHERA TOTAL 500000 OPENING BALANCE IN THE ACCOUNT OF UNSECURED LOANS 2198268 RECEIVED DURING THE YEAR 3113732 TOTAL FUND AVAILABLE 5312000 LOANS AND ADVANCES GIVEN FREE OF INTEREST LOANS AND ADVANCES AMOUNT DATE ROHIT K KHAJANI 20000 20000 SIKWALA DYE & PRINT MILLS 500000 27.10.2004 200000 02.11.2004 700000 SONIA FABRICS PVT. LTD 1900000 AS ON 1.4.2004 500000 3.9.2004 1000000 4.9.2004 300000 9.9.2004 600000 9.2.2005 400000 9.2.2005 4700000 CHANDWANI SILK MILLS 450000 AS ON 1.4.2004 450000 VIKRAM INTERNATIONAL 500000 13.8.2004 500000 OPENING BALANCE 2350000 PAID DURING THE YEAR 4020000 ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 19 TOTAL FUNDS GIVEN 6070000 HE ALSO RELIED ON THE FOLLOWING CASE LAWS:- 1) GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. V. D CIT (2001) 73 TTJ 787 (AHD) 2) TORRENT FINANCIERS V. ACIT (2001) 73 TTJ 624 (AH D) 3) ACIT V. SHREE KRISHNA SALT INDUSTRIES (1998) 60 TTJ 125 (AHD) 4) MEENAKSHI SYNTHETICS (P) LTD. V. ACIT (2003) 84 ITD 563 (LUC) 9. LD. SR-DR ON THE OTHER HAND RELIED ON THE ORDERS OF AUTHORITIES BELOW. 10. HEARD BOTH THE PARTIES AND PERUSED THE CASE REC ORDS AND WE FIND THAT SUBMISSIONS MADE BEFORE US ON BEHALF OF ASSESS EE THAT HE WAS HAVING SUFFICIENT INTEREST FREE LOANS OUT OF WHICH INTEREST FREE ADVANCES WERE GIVEN REQUIRES VERIFICATION AT THE END OF ASSE SSING OFFICER. THEREFORE THE MATTER IS RESTORED BACK TO THE FILE O F ASSESSING OFFICER FOR FRESH ADJUDICATION FOR SUCH VERIFICATION AFTER PROV IDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GR OUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. NOW COMING TO REVENUES APPEAL IN ITA NO.2287/AHD/2 008. 11. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A)-IV SURAT HAS ERRED IN DELETING THE ADDITION OF RS.9 90 000/- MADE BY THE ASSESSING OFFICER U/S.68 OF THE I.T. ACT 1961. ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 20 [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-IV SURAT OUGHT TO HAVE UPHELD THE O RDER OF THE ASSESSING OFFICER. 12. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT ASSESSE E HAS SHOWN UNSECURED LOAN OF RS.9.90 LAKH STANDING IN THE NAME OF M/S. MUNI TRADERS PVT. LTD WHEN REQUIRED TO PROVE THE GENUINE NESS OF THE SAID CREDIT IT WAS STATED THAT SAID LOAN WAS TAKEN THRO UGH ONE SHRI KAKUBHAI WHO WAS NOT COOPERATING WITH THE ASSESSEE AND WAS N OT GIVING BALANCE- SHEET AND COPY OF RETURN OF M/S MUNI TRADERS PVT. L TD. THE LOAN WAS TAKEN ONLY FOR A FEW DAYS BY ACCOUNT PAYEE CHEQUES AND REPAID BY ACCOUNT PAYEE CHEQUES ONLY. THE ASSESSING OFFICER D ID NOT ACCEPT THE EXPLANATION OFFERED BY ASSESSEE AND WAS OF THE VIEW THAT A CONFIRMATION FILED WAS WITHOUT PAN AND ADDRESS ETC. AND THEREFOR E IDENTITY AND GENUINENESS OF THE CREDITOR WAS NOT ESTABLISHED. TH E AO TREATED THIS AMOUNT AS UNEXPLAINED CASH CREDIT AND ADDED THE SAM E TO THE INCOME OF ASSESSEE. BEFORE CIT(A) ASSESSEE SUBMITTED THE COPI ES OF CERTIFICATE OF INCORPORATION OF M/S. MUNI TRADERS PVT. LTD ITS AD DRESS AND PAN NO. ALONG WITH BALANCE-SHEET OF THE COMPANY ESTABLISHIN G THE IDENTITY AND CREDITWORTHINESS OF THE COMPANY. THE CIT(A) ADMITTE D THIS ADDITIONAL EVIDENCE BY HOLDING THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN FURNISHING THE SAME BEFORE ASSESSING OFFICER. THE A SSESSING OFFICER WAS SHOWN THIS EVIDENCE ON THE DATE OF HEARING WHO DID NOT OFFER ANY ADVERSE COMMENT ON THIS. IN VIEW OF THE FACT THAT I DENTITY AND CREDITWORTHINESS OF THE CREDITOR WAS ESTABLISHED AN D THAT THE LOAN WAS RECEIVED AND PAID BACK THROUGH ACCOUNT PAYEE CHEQUE S LD CIT(A) DID NOT DOUBT THE GENUINENESS OF THE SAME AND THEREFORE HE DELETED THE AMOUNT OF RS.9.90 LAKH. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW REVENUE IS IN APPEAL BEFORE TRIBUNAL. ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 21 13. AT THE TIME OF HEARING LD. SR-DR SUBMITTED THAT LD. CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE WITHOUT CONFRONTING TH E SAME TO ASSESSING OFFICER WHICH IS IN VIOLATION OF RULE 46A OF THE I T RULES. MERELY BECAUSE THIS EVIDENCE WAS SHOWN TO THE ASSESSING OFFICER AT THE TIME OF HEARING OF THE APPEAL IT CANNOT BE PRESUMED THAT HE ASSENT ED FOR TAKING THE ADDITIONAL EVIDENCE ON RECORD. FOR MAKING THIS SUBM ISSION HE PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF HAJI LAL MOHD. BIRI WORKS V. CIT (2005) 275 ITR 496 (ALL) AND PRAYED THAT THE MATTER MAY KINDLY BE RESTORED BACK TO THE FILE OF ASSESSING OFFICER SO THAT HE CAN EXAMINE THE ADDITIONAL EVIDE NCE RELIED BY ASSESSEE BEFORE CIT(A). LD. COUNSEL FOR THE ASSESSE E DID NOT OBJECT TO THIS SUBMISSION OF LD. SR-DR BUT REQUESTED THAT ASS ESSING OFFICER SHOULD BE DIRECTED TO VERIFY THE VERACITY OF THE CR EDIT OF RS.9.90 LAKH FROM ASSESSMENT RECORD OF THE CREDITOR AS ALL THE DETAIL S IN THIS REGARD HAVE BEEN SUPPLIED BY WAY OF ADDITIONAL EVIDENCE BEFORE CIT(A) AND IF THE SAME IS FOUND CORRECT THEN RELIEF MAY BE GIVEN TO A SSESSEE. 14. AFTER HEARING BOTH THE PARTIES AND PERUSING THE CASE RECORDS WE FIND FORCE IN THE CONTENTION OF LD. DR THAT MERE S HOWING OF ADDITIONAL EVIDENCE TO THE ASSESSING OFFICER AT THE TIME OF HE ARING BY LD. CIT(A) DOES NOT FULFILL THE REQUIREMENTS OF RULES 46A OF I T RULES. THE RULE 46A CONTENTS PRINCIPLE OF NATURAL JUSTICE. THEREFORE LD . CIT(A) IN FACT SHOULD HAVE ASKED FOR THE COMMENTS OF ASSESSING OFFICER BE FORE ADMITTING THE ADDITIONAL EVIDENCE AND GIVING RELIEF TO THE ASSESS EE ON ITS BASIS. SINCE THE SAME HAS NOT BEEN DONE THE MATTER IS HEREBY SEN T TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER TAKI NG INTO CONSIDERATION THE ADDITIONAL EVIDENCE PRODUCED BY ASSESSEE BY WAY OF COPIES OF CERTIFICATE OF INCORPORATION OF M/S. MUNI TRADERS P VT. LTD. ITS ADDRESS AND PAN NO. ALONG WITH BALANCE-SHEET OF THE COMPANY. TH E ASSESSING ITA NO.2262 & 2287/AHD/2008 A.Y 2005-06 M/S PARAMOUNT EXPORTS V. ITO WD-6(1) SRT PAGE 22 OFFICER IS DIRECTED TO VERIFY THE UNSECURED LOAN OF RS.9.90 LAKH FROM THE ASSESSMENT RECORD OFM/S. MUNI TRADERS PVT. LTD. AS ALL THE DETAILS OF ITS INCOME-TAX FILE HAVE BEEN PROVIDED BY THE ASSESSEE AND IF THE SAME IS FOUND CORRECT THEN NO ADDITION BE MADE ON THIS ACCO UNT. THIS GROUND OR REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S. 15. IN THE RESULT APPEAL OF ASSESSEE AND THAT OF REVEN UE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS DAY OF 18 TH MARCH 2011 SD/- SD/- (G.D.AGARWAL) (D .K. TYAGI) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 18/03/2011 *DKP COPY OF THE ORDER FORWARDED TO:- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-IV SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY/ASSTT.REGISTRAR ITAT AHMEDABAD