M/s. Uniway Distributors Pvt.Ltd.,, Surat v. The ACIT,Circle-4,, Surat

ITA 4157/AHD/2007 | 2004-2005
Pronouncement Date: 09-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 415720514 RSA 2007
Assessee PAN AAACU4690D
Bench Ahmedabad
Appeal Number ITA 4157/AHD/2007
Duration Of Justice 2 year(s) 9 month(s) 19 day(s)
Appellant M/s. Uniway Distributors Pvt.Ltd.,, Surat
Respondent The ACIT,Circle-4,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 09-09-2010
Date Of Final Hearing 31-08-2010
Next Hearing Date 31-08-2010
Assessment Year 2004-2005
Appeal Filed On 20-11-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ITA NO.4157/AHD/2007 (ASSESSMENT YEAR:-2004-05) M/S UNIWAY DISTRIBUTORS PVT. LTD. 2 ND FLOOR VISHWAKARMA ARCADE MAJURA GATE SURAT [PAN: AAACU 4690 D] V/S ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-4 SURAT [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI HARDIK VORA AR REVENUE BY:- SHRI K M MAHESH . DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DAT ED 06-09-2007 OF THE LD. CIT(APPEALS)-I SURAT RAISES THE FOLLOWING GROUNDS :- 1 THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDIT ION OF RS.10 31 952/- MADE BY THE LD. AO TO GROSS REMUNERATION RECEIVED B Y THE ASSESSEE COMPANY DURING THE YEAR. 2 THE LEARNED AO HAS ERRED IN DISALLOWING INTEREST TO THE EXTENT OF RS.32 095/- OUT OF TOTAL INTEREST PAID TO DEPOSITOR S. THE APPELLANT CRAVES LEAVE TO ADD ALTER MODIFY AN D/OR WITHDRAW IN FULL OR IN PART ANY OR ALL GROUNDS OF APPEAL. 2 AT THE OUTSET WE FIND THAT GROUND NO.2 IN THE AP PEAL RELATING TO DISALLOWANCE OF RS.32 095/- ON ACCOUNT OF EXCE SSIVE PAYMENT OF INTEREST DOES NOT EMERGE FROM THE IMPUGNED ORDER OF THE LD. CIT(A) THE ADDITION MADE BY THE AO HAVING BEEN DE LETED BY THE LD. CIT(A). THEREFORE THIS GROUND IS DISMISSED AS INFR UCTUOUS. 3. ADVERTING NOW TO GROUND NO.1 IN THE APPEAL FA CTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCO ME OF RS.14 22 480/-FILED ON 31-10-2004 BY THE ASSESSEE A CLEARING AND ITA NO.4157/AHD/2007 2 FORWARDING AGENT AFTER BEING PROCESSED ON 01-12-2 004 U/S 143(1) OF THE INCOME-TAX ACT 1961 [HEREINAFTER REFERRED T O AS THE ACT] WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NO TICE U/S 143(2) OF THE ACT ON 06-08-2005. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE ASSESSING OFFICER[AO IN SHORT] NOT ICED THAT THE ASSESSEE COMPANY HAD SHOWN GROSS RECEIPTS OF RS.58 65 066/- FOR THE F.Y. 2003-04 AGAINST RS.72 70 968/- FOR THE F.Y 2002-03. TO A QUERY BY THE AO THE ASSESSEE EXPLAINED THAT GROSS RECEIPTS WERE IN THE NATURE OF REMUNERATION RECEIVED FROM AMWAY INDI A ENTERPRISES FOR PERFORMING THE ROLE OF A CLEARING AND FORWARDIN G AGENT. ON PERUSAL OF 'SERVICE AGREEMENT' THE AO NOTICED THA T THE AMWAY INDIA ENTERPRISES MADE TWO TYPES OF PAYMENT TO THE ASSESS EE:- [I] FIXED MONTHLY REMUNERATION; AND [II] EXPENSES INCURRED UNDER 'SPECIFIED HEADS' AS P ER SERVICE AGREEMENT WHICH ARE REIMBURSED AT ACTUAL UPON SUBMISSION OF CLAIMS WITH PROPER DOCUMENTARY SUPPOR T. 3.1 MOREOVER SEPARATE 'SERVICE AGREEMENTS' WERE ENTERED INTO FOR A) HANDLING THE OPERATIONS OF THE AMWAY INDIA ENTER PRISES OFFICE AT SURAT AND B) AVAILING THE SERVICES OF THE ASSESSEE TO MANAGE THE DISTRIBUTION CENTRE AT SURAT. THE REMUNERATION PACK AGE FOR HANDLING THE OPERATIONS OF THE AMWAY INDIA ENTERPRISES OFFIC E AT SURAT AS PER SERVICE AGREEMENT' FOR THE F Y 2003-04 WAS AS UNDE R:- APRIL 2003 RS.5 05 867/- PER MONTH MAY 2003 TO MARCH 2004 RS.5 01 587/- PER MONTH ---------------- TOTAL RS.60 23 324/- 3.2 LIKEWISE THE REMUNERATION PACKAGE FOR HANDLI NG OPERATIONS OF WAREHOUSE AT SURAT AS PER SERVICE AGREEMENT' FOR T HE F.Y. 2003-04 WAS AS UNDER:- APRIL 2003 TO OCT 2003 RS.65 394/- PER MONTH NOV. 2003 TO MARCH 2004 RS.77 921/- PER MONTH ITA NO.4157/AHD/2007 3 -------------- TOTAL = 65 394 X 7 = RS.4 57 758/- 77 921 X 5 = RS.3 89 605/- ----------------- GRAND TOTAL RS.8 47 363/- 3.1 THE RELEVANT TERMS AND CONDITIONS OF PAYMEN T OF REMUNERATION FOR HANDLING THE OPERATIONS OF WAREHOUSE AT SURAT A S PER SERVICE AGREEMENT DATED 13-01-2003 W.E.F 1.11.2002 AS EXTRA CTED IN THE ASSESSMENT ORDER WERE AS UNDER:- 1 FIXED REMUNERATION RS.27 348 PER MONTH 2 VARIABLE CHARGES @ RS 1.00 PER KG FOR THE ACTUAL VOLUME OF STOCKS TRANSFERRED OUT FROM OUR WAREHOUSE AT SUR AT P.M. 3 CHARGES FOR 'PICK AND PACK' OF ORDERS FOR HOME DE LIVERY AS PER THE FOLLOWING SLABS: A] RS.20/- PER ORDER UPTO 2500 ORDERS PER MONTH B] RS.15/- PER ORDER FOR THE ADDITIONAL NUMBER OF ORDERS HANDLED BETWEEN 2501 TO 4000 P.M. . C] RS.10/- PER ORDER FOR THE ADDITIONAL NUMBER OF ORDERS HANDLED OVER AND ABOVE 4000 ORDERS P M 4 HOME DELIVERY CHARGES: RS.20/- PER SHIPPER FOR DE LIVERIES WITHIN SURAT CITY LIMITS. 5 TRANSPORTATION CHARGES FOR LOCAL STOCK TRANSFERS BETWEEN OUR WAREHOUSE TO PUC AT SURAT & VICE -VERSA. A) RS.900/- PER TRIP FOR FL B) RS.650/- PER TRIP FOR MOVEMENT OF CANTER C) RS 250/- PER TRIP FOR MOVEMENT BY 3 WHEELER 6. THE EXPENSES INCURRED UNDER THE FOLLOWING HEAD S AT OUR WAREHOUSE AT SURAT WOULD BE REIMBURSED AT ACTUAL UP ON SUBMISSION OF CLAIMS WITH PROPER DOCUMENTARY SUPPOR T. A] ELECTRICITY B] DIESEL ITA NO.4157/AHD/2007 4 C] WATER D] STATIONERY & PHOTOCOPYING E] TELEPHONE F] OCTROI G] AMC INSURANCE REPAIRS AND MAINTENANCE OF EQUIPMENTS H] LOADING & UNLOADING I] BINDING & PRINTING J] COURIER K] PEST CONTROL I] SALARY TO SECURITY GUARDS THE REMUNERATION AS PER POINT NOS. L TO 3 ABOVE WIL L BE SUBJECT TO A MINIMUM GUARANTEED MONTHLY REMUNERATION OF RS.65 394/- AND NO ADDITIONAL EXPENSES WOULD BE REI MBURSED UNDER THESE HEADS. 3.2 IN THE LIGHT OF AFORESAID TERMS AND CONDI TIONS THE AO WAS OF THE OPINION THAT THE GROSS RECEIPTS ON ACCOUNT OF TOTAL REMUNERATION WORKED OUT TO RS.68 70 687/- AS AGAINST ONLY RS.58 65 066/ - SHOWN BY THE ASSESSEE. IF RENT RECEIPTS OF RS.26 331/- WERE ALSO INCLUDED GR OSS RECEIPTS WORKED OUT TO RS.68 97 018/- FOR THE F.Y. 2003-04. IN RESPONSE T O A SHOWCAUSE NOTICE THE ASSESSEE SUBMITTED THAT GROSS RECEIPTS FOR THE YEA R WORKED OUT TO RS. 63 80 066 AND AFTER EXCLUDING AN AMOUNT OF RS. 5 15 000 FOR THE PRECEDING YEAR TOTAL WORKED OUT TO RS.58 65 066. HOWEVER THE AO DID NOT ACCEPT T HE SUBMISSIONS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS. 5 15 000 CLAIMED TO BE FOR T HE PRECEDING YEAR BESIDES AN AMOUNT OF RS.5 16 952/- WORKED OUT ON THE BASIS OF THE AFORESAID AGREEMENT WITH AMWAY RESULTING IN ADDITION OF RS.10 31 952/-. 4. ON APPEAL THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO IN THE FOLLOWING TERMS: 2.4 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT AND OBSERVATION OF THE AO. THE APPELLANT HAS ADMITTED T HAT DURING THE YEAR THE INCOME WAS RECEIVED BUT THE SAME WAS TRANSFERRED TO EARLIER YEAR BUT HAS NOT BEEN SHOWN EITHER IN THE CURRENT YEAR OR LAST Y EAR. HENCE THE ADDITION MADE BY THE AO ON THE BASIS OF DOCUMENTS AND ON THE CASH RECEIPT BASIS HAVING RECEIVED THIS INCOME DURING THE YEAR IS CORR ECT AND THIS GROUND OF APPEAL IS DISMISSED. ITA NO.4157/AHD/2007 5 5 THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LEARNED AR ON BEHALF OF THE ASSESSEE WHILE CARRYING US THROUGH THE IMPUGNED ORDERS CONTE NDED THAT THE AO WHILE ASSESSING REMUNERATION OF RS.5 16 952/- ON THE BASIS OF MINIMUM GUARANTEED MONTHLY REMUNERATION IN TERMS OF THE AGREEMENT WITH AMWAY DID NOT ALLOW THEIR CLAIM FOR EXPENDITURE . AS REGARDS AMOUNT OF RS.5 15 000/- THE LD. AR SUBMITTE D THAT THE AMOUNT HAD BEEN RETURNED TWICE-ONE ON 31.3.2002 AND THE OTHER ON 1.4.2002. THEREFORE THE LD. AR PLEADED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION. THE LEARNED DR ON THE OTHER HAND RELIED ON THE ORDER OF THE AUTHORITIES BELOW. SINCE THE LD. CIT(A) DID NOT ANALYSE THE ISSUE IN ITS PROPER PERS PECTIVE AFTER DISCUSSION BOTH THE PARTIES AGREED THAT MATTER NEE DS TO BE RESTORED BACK TO THE FILE OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. WE FIND THAT THOUGH THE AO ADDED AN AMOUN T OF RS. 10 31 952(68 97 018-58 65 066) THE LD. CIT(A) UPH ELD THE ENTIRE ADDITION ON THE BASIS THAT THE AMOUNT HAD NOT BEEN OFFERED TO TAX EITHER IN THE PRECEDING YEAR OR IN THE YEAR UNDER CONSIDERATION. THE LD. AR ON THE OTHER HAND EXPLAINED THAT THE AMOUNT OF RS. 10 31 952 COMPRISED RS.5 16 952/- ON THE BASIS OF MINIMUM GUA RANTEED MONTHLY REMUNERATION IN TERMS OF THE AGREEMENT WITH AMWAY WITHOUT CONSIDERING THEIR CLAIM FOR EXPENDITURE AND RS.5 15 000/- HAD BEEN RETURNED TWICE-ONE ON 31.3.2002 AND THE OTHER ON 1. 4.2002. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THE LD. CIT(A) DID NOT ANALYSE THE ISSUE IN ITS PROPER PERSPECTIVE WE ARE OF THE OPINION THAT THE AFORESAID ORDER OF THE LD. CIT(A) IS NOT A SPEAKING ORDER. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE A RGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE INCOME TAX AC T 1961 MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL S HALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION THE DECISION THEREON AND THE REASON FOR THE DECISION. AS IS APPARENT FROM THE IMPUGNED ORDER IN OUR OPIN ION THE ORDER PASSED BY THE ITA NO.4157/AHD/2007 6 LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE NAMELY THAT EVERY JUDICIAL/QUASI- JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. TH E REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECOR DING OF REASONS BY THE QUASI- JUDICIAL AUTHORITIES IS AN IMPORTANT SAFEGUARD TO E NSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE D ECISION-MAKING PROCESS. WE MAY REITERATE THAT A DECISION DOES NOT MERELY MEA N THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE C ONCLUSION.[MUKHTIAR SINGH VS. STATE OF PUNJAB (1995)1SCC 760(SC)]. AS IS APPARENT THE IMPUGNED ORDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKI NG ORDER. IN VIEW OF THE FOREGOING ESPECIALLY WHEN THE LD. CIT(A) HAS NOT P ASSED A SPEAKING ORDER ON THE ISSUES RAISED IN GROUND NO. 1 IN THE APPEAL WE CO NSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE T HE MATTER TO HIS FILE FOR DECIDING THE ISSUES RAISED IN THE SAID GROUND AFRESH IN AC CORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLES S TO SAY THAT WHILE REDECIDING THE ISSUE THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER KEEPING IN MIND INTER ALIA THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT. WITH THESE OBSERVATIONS GROUND NO. 1 IS DISPOSED OF. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF THE RESIDUARY GROUND ACCORDINGLY THIS GROUND IS DISMI SSED. 8. IN THE RESULT APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 9-09-2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 9 -09-2010 ITA NO.4157/AHD/2007 7 COPY OF THE ORDER FORWARDED TO: 1. M/S UNIWAY DISTRIBUTORS PVT. LTD. 2 ND FLOOR VISHWAKARMA ARCADE MAJURA GATE SURAT 2. ACIT CIRCLE-4 SURAT 3. CIT CONCERNED 4. CIT(A)-I SURAT 5. DR BENCH-C ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD