AI Drafter 
TaxTMI 
TaxTMI 
2016 (2) TMI 297
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....iven on sale of motorcycles has been debited by assessee-company in P&L Account. Vide letters dt. 05-07-2006 & 08-11-2006, AO asked the assessee-company to furnish the details of discount given along with ledger extract of sales & sales invoices. The AR of assessee-company appeared on 13-11-2006 before the AO and failed to produce the same. AO has given further time till 20-11-2006 to furnish the same. On the said date, AR of assessee-company appeared before the AO and furnished some of the sales invoices. After verification of the same, AO has given time to AR of assessee-company to produce full details as per letter dt. 01-12-2006. On verification of the details furnished, AO noticed that there was no mention of discount given to the customers on the sales invoices. When the same was asked, AR of assessee-company replied that the discount portion was shown separately. On further verification, AO found that the same were not signed by the customers who had said to have received the discount. AO has given a final opportunity to assessee-company to prove the discount allowed to customers as genuine. For this purpose, assessee-company has to produce sales register, discount account a....
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....rned, Ld.CIT(A) held that 'discount is reduction to a basic price of goods or services. They can occur anywhere in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer, usually in written form). There are many purposes for discounting, including: a. To increase short-term sales; b. To move out-of-date stock ; c. To reward valuable customers; d. To otherwise reward behaviors that benefits the discount issuer. The Ld.CIT(A) further held that 'some discounts and allowances are in the form of sales promotion. Basically, automobile industry prefers non-cumulative quantity discounts. These are price reductions based on the quantity of a single order. The expectation is that they will encourage larger orders'. 5. On careful consideration, Ld.CIT(A) finally held as under: "6. I have carefully considered the submissions of the appellant and the remand reports of the Assessing Officer. The appellan....
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....fication and certification of the mechanic/person he believes. Under these circumstances, it may not be possible to prove each and every details of discounts offered to the customers/local mechanics etc. 6.3 The A.O.'s report dated 3-12-2008 also reveals that out of 20 customers enquired about receipt of discount on purchase of motor cycles, 10 have acknowledged the receipt of discount and balance 10 stated that they have not received the discount. Subsequently, the appellant submitted 8 affidavits out of 10 customers, confirming receipt of discount from the appellant company, except two. This may be due to non-availability of two customers for obtaining affidavits for confirming receipt of discount. 6.4 Thus, based on the above discussion, I am of the opinion that the AO has not brought anything concrete to prove that no discount was provided in cash by the appellant to its customers on sale of two wheelers. Accordingly, the ground taken by the appellant is thus allowed". Aggrieved by the orders of CIT(A), Revenue has come before us. 6. Ld. DR contended that the Ld. CIT(A) has erred in giving relief when there is evidence that assessee has not properly ....
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....er evidence. AO after due examination, disallowed the amounts as the claim was not substantiated to the satisfaction of the AO. Before the Ld. CIT(A), assessee could furnish only 41 confirmations out of 11,515 motorcycles sold during the year. As rightly contended by the Revenue, this is very small number. On enquiry by the AO, more than 50% have denied the receipt of amount and one has reported receipt of gold ring as prize. No evidence was placed on record before us whether there is any particular rate of discount granted to a customer or there is any policy by the company to grant discounts on each of the vehicles sold. The fact that customers are not acknowledging the voucher at the time of purchase of vehicle itself shows that company is not issuing the discount to the customer, but is claiming it in its Books of Accounts. We are not convinced with the order of the CIT(A) that assessee has genuinely given discount to the customers, when there is no evidence of those customers getting the discount and acknowledging the same. On the basis of 41 samples in which 50% of the people denied receipt of discount when enquired by the Department, even though subsequently filed confirmati....