Itta/114/2015 Of The Commissioner Of Income Tax Vi v. Sushen Oil And Foods

THE HON’BLE SRI JUSTICE G. CHANDRAIAHAND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAMI.T.T.A. No. 114 of 2015 ORDER:- (per Hon’ble Sri Justice G. Chandraiah) The assessment order was revised by theCommissioner whereby a sum of Rs.17,00,887/- was added tothe income returned by the assessee on the ground that theamounts correspond to the TDS certificates having beenoffered for tax. The first appellate authority had dealt with thisaspect in its orders dated 09.02.2009; paragraph 4 of whichreads as under: 4. The last ground of appeal is against the additionof Rs.17,00,887/-. 4.1 During the assessment proceedings, AOcross verified the accounts of seven seller parties& determined the difference at Rs.17,00,887/- inbrokerage receivable shown in the assessee’saccounts and sellers accounts. The detailedcomputation is mentioned in para 4 of theassessment order. The said amount ofRs.17,00,887/- was added as suppressed receiptsof the appellant. 4.2. During the appeal proceedings, Id. ARsubmitted that the aforesaid addition amounts todouble taxation since the brokerage amount ofRs.18,79,778/- was taxed on accrual basis as perthe TDS certificates. The AO added the difference under the mis-conception that the differencerepresented the amounts paid to the assesseewhile in fact they are the amounts debited onaccount of non payment by the buyers. 4.3 On perusal of the relevant partiesaccount, I agree with the contention of theappellant. AO has erred in ignoring the debitsmade to the assessee’s account by the sellerparties. He failed to appreciate that the credit &debit balances in the books of the sellers were noton account of brokerage alone but afteradjustment of the brokerage against the amountsdue from buyers for which the appellant wasresponsible to the sellers, being a del cre dereagent. As held above, the cash system ofaccounting followed by the appellant is anacceptable method of accounting. Hence, theaddition of Rs.17,00,887/- made by the AO isdeleted.” 2. Before the Income Tax Appellate Tribunal, there was nochallenge to this finding of fact, particularly the fact that theassessee, as a matter of fact, did not receive the sums forwhich the TDS was made and on account of the fact that theassessee was a del cre dere agent and as such the assesseedid not receive these amounts as it was following cash systemof accounting so far as these transactions are concerned. 3. The fact of the matter that the assessee was accountingthese transactions on cash basis has not been challengedbefore the Tribunal. The Tribunal, in fact, considered thisaspect in its orders dated 03.02.2014 and recorded as under: 2. Before the Income Tax Appellate Tribunal, there was nochallenge to this finding of fact, particularly the fact that theassessee, as a matter of fact, did not receive the sums forwhich the TDS was made and on account of the fact that theassessee was a del cre dere agent and as such the assesseedid not receive these amounts as it was following cash systemof accounting so far as these transactions are concerned. 3. The fact of the matter that the assessee was accountingthese transactions on cash basis has not been challengedbefore the Tribunal. The Tribunal, in fact, considered thisaspect in its orders dated 03.02.2014 and recorded as under: “….. In the circumstances, even the TDScertificates would not be a clinching material todetermine the actual income assessable in thehands of the assessee. In any event, the CIT(A)while accepting the claims of the assessee withregard to the returned incomes for th years underappeal, also held at the same time that theassessee is eligible to claim credit for TDS only inrespect of income offered for tax in the relevantyear. In that process, the CIT(A) also upheld theview taken by the Assessing Officer that theassessee cannot claim credit for the TDS unlessand until the income in relation to which TDS, wasmade was offered to tax in the relevant year. Sincethe assessee is found to be a del cre dere agent,the role of the asessee, as observed by the CIT(A)in the impugned order, does not cease simply onbooking the order for the seller or the delivery ofgoods to the purchaser, but extents till the time thesale proceeds are realized by the seller from thebuyer. Considering the nature of the assessee’sbusiness, as a del cre dere agent, in which actualreceipt of the brokerage would depend on theactual realization of the sale proceeds by the sellerfrom the purchaser, as claimed by the assesseeand accepted by the CIT(A), assessee is justified infollowing cash system of accounting, finding it tobe appropriate for its business. When theassessee claims to be following that method ofaccounting consistently, and it has beenrecognized by the statute, there is no justificationfor the Assessing Officer to disturb the bookresults disclosed by the assessee. In this view of the matter, we do not find any infirmity in theorders of the CIT(A) on this aspect. Weaccordingly uphold the same, rejecting thegrounds of the Revenue on this issue in theappeals for all the three years.” 4. Though a question of perversity is sought to be raisedbefore us, except raising the question, no material is placedbefore us to take a contra view and upset the finding recordedby the Tribunal. 5. In the circumstances, we see no question of law thatrequires to be answered in this appeal. 6. The appeal is, accordingly, dismissed. No costs. Miscellaneous petitions, if any pending, shall stand closed. ____________________ G. CHANDRAIAH, J 29[th] October, 2015 ksm ____________________________ CHALLA KODANDA RAM, J THE HON’BLE SRI JUSTICE G. CHANDRAIAH AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM ksm I.T.T.A. No. 114 of 2015 29[th] October, 2015