ITO, New Delhi v. M/s Makalu Consulting Engg. P Ltd, New Delhi

ITA 3327/DEL/2010 | 1996-1997
Pronouncement Date: 15-11-2011 | Result: Dismissed

Appeal Details

RSA Number 332720114 RSA 2010
Bench Delhi
Appeal Number ITA 3327/DEL/2010
Duration Of Justice 1 year(s) 4 month(s) 8 day(s)
Appellant ITO, New Delhi
Respondent M/s Makalu Consulting Engg. P Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 15-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 15-11-2011
Date Of Final Hearing 15-11-2011
Next Hearing Date 15-11-2011
Assessment Year 1996-1997
Appeal Filed On 07-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI A.D. JAIN AND SHRI SHAMIM YAHYA ITA NO. 3327(DEL)2010 ASSESSMENT YEAR: 1996-97 INCOME TAX OFFICER M/S. MAKALU CO NSULTING ENGG.(P)LTD. WARD 6(2) NEW DELHI. V. B-4/75 SAFDARJUNG ENCLAVE NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. NEGI SR. DR RESPONDENT BY: SHRI SANJEEV KAPOOR CA ORDER PER A.D. JAIN J.M . THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 1996-97 TAKING THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS AN D CONTRARY TO THE FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(APPEALS) HAS ERRED IN DIRECTING THE AO TO I NCLUDE THE LOCAL SALES MADE THROUGH M/S. GULAB IMPEX ENTERPRISES LTD . FOR CALCULATING DEDUCTION U/S 80HHC OF THE ACT. 2.1 THE LD. CIT(A) IGNORED THE FACT THAT THE ASSE SSEE DID NOT MAINTAIN ANY LEDGER ACCOUNTS OF THE PARTIES/CONCERNS TO WHOM SALES WERE MADE BY M/S. GULAB IMPEX ENTERPRISES LTD. 2. GROUND NO.1 IS GENERAL. ITA 3327(DEL)2010 2 3. APROPOS GROUND NO.2 THE AO RESTRICTED THE DEDUC TION U/S 80HHC OF THE ACT TO ` 45 26 275/- BY TREATING THE ENTIRE TURN OVER OF ` 26.72 CRORES AS SPECULATIVE IN NATURE AND REDUCING THE SAME FROM TH E TOTAL TURN OVER. THE AO OBSERVED THAT THE ASSESSEE COMPANY HAD EARNED A NOMINAL G.P. OF ` 6 507/- ON ALLEGED SALES OF ` 26.72 CRORES WHEREAS NO EXPENSES WERE INCURRED RESULTING IN A NET PROFIT OF ` 6 507/-. IT WAS FOUND THAT THE ENTIRE WORK OF ARRANGING IMPORT LICENCE DOING IMPORT PAY ING SALES TAX AND CUSTOMS CLEARANCE HAD BEEN DONE BY M/S. GULAB IMPEX ENTERPRISES LTD. AND THE ASSESSEE HAD DEBITED AND CREDITED THE ACCOUNT O F THIS PARTY IN ITS BOOKS OF ACCOUNT; THAT THE ASSESSEE HAD NOT MAINTAINED LEDGE R ACCOUNT OF PARTIES TO WHOM THE SALES HAD BEEN MADE BY GULAB IMPEX ENTERPR ISES LTD. FROM THIS IT WAS OBSERVED THAT THE ASSESSEE HAD NO INTE NTION TO DO ANY TRADING BUSINESS. 4. BY VIRTUE OF THE IMPUGNED ORDER THE LD. CIT(A) DIRECTED THE AO TO RECOMPUTE DEDUCTION U/S 80 HHC OF THE ACT AS PER LA W BY INCLUDING THE CONSIGNMENT SALES IN THE TOTAL TURN OVER OF THE ASS ESSEE. 5. BEFORE US THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO INCLUDE THE LOCAL SALES MADE TH ROUGH M/S. GULAB IMPEX ENTERPRISES LTD. FOR CALCULATING DEDUCTION U/S 80HH C OF THE ACT IGNORING ITA 3327(DEL)2010 3 THE FACT THAT THE ASSESSEE DID NOT MAINTAIN ANY LED GER ACCOUNT OF THE PARTIES TO WHOM THE SALES WERE MADE BY M/S. GULAB IMPEX ENT ERPRISES LTD. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT MERELY BECAUSE THE ASSESSEE HAD CARRIED OUT THE BUSINESS THROUGH THE CONSIGNMENT AGENT I.E. GULAB IMPEX ENTERPRISES LTD. AND HAD EA RNED NOMINAL PROFIT THIS WAS NOT REASON ENOUGH TO HOLD THAT EITHER THE TRADI NG ACTIVITY WAS NOT CARRIED OUT AT ALL OR IF CARRIED OUT IT WAS A SPECULATIV E ACTIVITY; THAT IN THE ASSESSEES CASE THERE WAS AN ACTUAL IMPORT OF GOO DS WHICH WAS PROVED ON RECORD; AND THAT THEREFORE THE LD. CIT(A) HAS CORR ECTLY DIRECTED THE AO TO RECOMPUTE THE DEDUCTION U/S 80 HHC OF THE ACT BY IN CLUDING THE CONSIGNMENT SALES IN THE ASSESSEES TURN OVER. 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IT IS SEEN THAT THE LD. CIT(A) WHILE HOLDING THAT THE CONSIGNMENT SALES OF THE ASSESSEE WERE TO BE INCLUDED IN THE TURN OVER OF TH E ASSESSEE HAS DULY TAKEN INTO CONSIDERATION THE FACT THAT THE ACTUAL IMPORT OF GOODS HAD INDEED BEEN CARRIED OUT; THAT THE GOODS HAD BEEN GOT CUSTOMS CL EARED BY THE ASSESSEES AGENT GULAB IMPEX. IT WAS ONLY AFTER THE ASSESSEE HAD PAID THE CUSTOMS DUTY THAT THE GOODS WERE ALLOWED TO BE SOLD IN TH E DOMESTIC MARKET. FURTHER THE SALES TAX ON THE DOMESTIC SALE HAD BEE N DEPOSITED BY GULAB ITA 3327(DEL)2010 4 IMPEX ON BEHALF OF THE ASSESSEE. THE SALES TAX ASS ESSMENT ORDER WITH REGARD THERETO WAS PASSED ASSESSING CONSIGNMENT SA LES TO THE TUNE OF ` 26 72 53 919/- IN THE HANDS OF THE ASSESSEE COMPANY ON 30.8.99. IT WAS ALL THESE DOCUMENTARY EVIDENCES WHICH PERSUADED THE CI T(A) TO ACCEPT THE ASSESSEES CONTENTION THAT TRADING IN SILVER/GOLD H AD INDEED BEEN CARRIED OUT BY THE ASSESSEE BY APPOINTING GULAB IMPEX AS ITS CO NSIGNMENT AGENT. PERTINENTLY FOR THE SERVICES RENDERED BY GULAB IMP EX TO THE ASSESSEE GULAB IMPEX CHARGED AN AMOUNT OF ` 10/- PER KG. FROM THE ASSESSEE COMPANY WHICH FACT WAS CONFIRMED BY THE AO ALSO DURING ENQU IRIES U/S 131 OF THE I.T. ACT. GULAB IMPEX WAS FOUND TO HAVE REFLECTED COMM ISSION INCOME FROM THE ASSESSEE COMPANY IN ITS PROFIT AND LOSS ACCOUNT . A VARIETY OF JOBS HAD BEEN DONE BY GULAB IMPEX FOR THE ASSESSEE LIKE ARR ANGING IMPORT LICENCE CUSTOMS CLEARANCE AND PAYMENT OF SALES TAX ARISING FROM THE DOMESTIC SALES ON BEHALF OF THE ASSESSEE. THESE ACTIVITIES HAD B EEN CARRIED OUT BY GULAB IMPEX FOR THE ASSESSEE COMPANY ON CHARGING A CERTA IN COMMISSION PROVING THAT GULAB IMPEX WAS THE ASSESSEES AGENT. FURTHE R IN THE FACE OF THE VOLUMINOUS DOCUMENTARY EVIDENCE CONSIDERED BY THE L D. CIT(A) IN ISSUING THE IMPUGNED DIRECTIONS TO THE AO THE FACTUM OF TH E ASSESSEE NOT HAVING MAINTAINED ANY LEDGER ACCOUNT DOES NOT IN OUR CONS IDERED OPINION CAUSE ANY DETRIMENT IN THE CASE OF THE ASSESSEE. ITA 3327(DEL)2010 5 8. IN VIEW OF THE ABOVE FINDING NO FORCE THEREIN THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF GROUND NOS. 2 AND 2.1 IS HEREBY REJECTED. 9. IN THE RESULT THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.11.2011. SD/- SD/- (SHAMIM YAHYA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.11.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR