2017 (9) TMI 429 - AT - Income Tax

Tribunal rules advance commission as regular income, dismissing Revenue's appeal

The Tribunal upheld the Ld. CIT(A)'s decision to delete the addition of advance commission, considering it as regular income and not as an advance. The ... Advance Commission shown as Sundry Creditors for advances - inaccurately treated the Commission as Advance Commission to defer the tax liability willfully adjusted in future P&L A/c and added back to income- Disallaowance of Commission paid to various parties including spouse - Recorded reason and notice u/s 148 is issued - Set off of House Property Loss against Business Income - penalty proceedings u/s. 271(1)(c) initiated for concealing/ furnishing inaccurate particulars of income - Held That :- Since this issue has been adjudicated by the then Ld. CIT(A)-XXIV, New Delhi in the assessee’s own case for the AY 2010-11 in detail in his favor. Hence, the Ld. CIT(A)-17, New Delhi has rightly followed the above decision and reject the ground raised by the Revenue Issues:1. Whether the CIT(A) erred in deleting the addition of advance commission on account of treating it as income.2. Whether the advance commission should be considered as regular income and not as an advance.Issue 1:The Revenue filed appeals against the Order dated 26.8.2015 of the Ld. CIT(A)-17 for AY 2011-12 & 2012-13. The appeals were heard together due to common issues. The AO made additions on advance commission and commission paid. The AO's contention was that the assessee inaccurately treated the commission as advance to defer tax liability. The AO issued notice u/s. 148 for reopening the case. The assessee argued that the commission received in AY 2010-11 was treated as income in the relevant year. The AO added back the advance commission amount for AY 2011-12 as regular income and initiated penalty proceedings. The Ld. CIT(A) deleted the addition, following the decision in the assessee's case for AY 2010-11.Issue 2:The AO held that the assessee, not being the OEM, inaccurately treated the commission as advance to defer tax liability. The AO found the assessee's contention regarding revenue recognition not tenable. The AO added the advance commission back as regular income for AY 2011-12. The Tribunal observed that the issue was adjudicated in the assessee's favor for AY 2010-11. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Revenue's appeal for both AY 2011-12 and 2012-13.In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision to delete the addition of advance commission, considering it as regular income and not as an advance. The Tribunal found the AO's treatment of the issue not acceptable based on the facts presented and the assessee's consistent approach. The appeals filed by the Revenue for both AY 2011-12 and 2012-13 were dismissed.