Credit notes and cash discount additions deleted where the benefit was fully passed on to customers and the net figure was nil.

Credit notes and cash discount were found to have been fully passed on to dealers, leaving a nil net figure and no routing through the profit and loss account. On examination of the ledger, the Tribunal accepted that the assessee had in substance allowed the benefit to customers under a consistent accounting policy. The addition was therefore unsustainable and was deleted.

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Issues: Whether the addition made on account of credit notes and cash discount could be sustained when the assessee had passed on the benefit to its customers and the resultant figure was nil.

Analysis: The assessee showed that the credit notes and cash discount were fully allowed among dealers and that the net figure was zero, so the amounts were not routed through the profit and loss account. On perusal of the ledger account, the Tribunal accepted that the benefit had in substance been passed on to customers and that this was the assessee's consistent accounting policy.

Conclusion: The addition could not be sustained and was deleted in favour of the assessee.

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