Itta/487/2012 Of Commissioner Of Income Tax-1, Hyderabad v. M/S. Gvl Balaji Chits

THE HON’BLE SRI JUSTICE GODA RAGHURAMAND THE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAO I.T.T.A.No.487 of 2012 Date: 19.11.2012 Between:Commissioner of Income Tax – I,Hyderabad M/s.GVL Balaji Chits,3-1-99/4, Kodangal Road,Tandur, Ranga Reddy District AND … Appellant … Respondent THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAOI.T.T.A.No.487 of 2012 JUDGMENT (Per the Hon’ble Sri Justice Goda Raghuram): The Revenue preferred this appeal under Section 260-A of theIncome Tax Act, 1961 (for short ‘the Act’) against the order of theIncome Tax Appellate Tribunal, Hyderabad ‘B’ Bench, dated12.11.2010, whereby the respondent-chit fund company/assessee’sappeal in I.T.A.No.1043/Hyd/2010 was allowed. The Assessing Officer and the Commissioner of Income Tax(Appeals) disallowed the rebate said to have been given by theassessee to subscribers of chits. In the course of businesstransactions, the assessee gave 1% discount/rebate to thosesubscribers, who paid subscriptions one day earlier to the next date ofauction. This was done apparently to encourage subscribers to paymonthly instalments in time. The Assessing Officer and theCommissioner of Income Tax (Appeals) disallowed rebate to thisextent as not falling within Section 37(1) of the Act on the ground that itwas for the subscriber of the chit to pay the monthly instalments in timeor face the coercive process of law; that it is the obligation of the chitfund company to recover its dues and in the circumstances thediscount/rebate cannot be said to be a business expenditure. The Tribunal disagreed, rightly so in our view and held thatwhen a businessman takes a decision to give discount/rebate tosubscribers, it is not open to the tax authorities to step into the shoes of the businessman and conclude that discount/rebate is not necessaryfor conducting business and that is an area that is left to the businessjudgment of the assessee. We concur. No question of law let alone a substantial questionof law arises for consideration in this appeal. Accordingly the appeal isdismissed at the stage of admission. No costs. JUSTICE GODA RAGHURAM Date: 19.11.2012 va JUSTICE M.S.RAMACHANDRA RAO THE HON’BLE SRI JUSTICE GODA RAGHURAMANDTHE HON’BLE SRI JUSTICE M.S.RAMACHANDRA RAO va Date: 19.11.2012