AI Drafter 
TaxTMI 
TaxTMI 
2023 (1) TMI 1383
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....g that the assessment order dated 28 December 2018 passed under section 143(3) of the Act is erroneous in so far as it is prejudicial to the interests of the revenue. 3. on the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax erred in not appreciating the fact that the issues which formed a part of revision under section 263 were already examined during the course of the assessment proceedings after considering the details/ submissions filed by the appellant. (B) Grounds on Merits: (I) Allowability of deduction under section 80G in respect of contributions towardsCorporate Social Responsibility (CSR): Rs. 52, 56,437: 4. On the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax erred in directing the Assessing Officer to examine the allowability of deduction under section 80G in respect of donations made to eligible institutions and shown as part of CSR contributions, and to frame a fresh assessment in this regard. 5. On the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax erred in observing that deduc....
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....stances of the case and in law, the Principal Commissioner of Income-tax erred in not appreciating the fact that the Assessing Officer, during the course of the assessment proceedings, had already made a disallowance in respect of 5% of the commission expenditure incurred in connection with sales to CSD, after going through the details/ documents furnished by the appellant, including party-wise details, ledger extracts, income-tax returns. T.D.S certificate, etc. 13. On the facts and in circumstances of the case and in law, the Principal Commissioner of Income-tax erred in not appreciating the fact that similar disallowance as made in the assessment order for the year under consideration has been made on a consistent basis since AY 2009-10 after verification of similar set of facts and documentation 14. On the facts and in the circumstances of the case and in law, the Principal Commissioner of Income-tax erred in not taking into considering the facts and submissions made during the course of the proceedings under section 263 on each point raised in the notice under section 263. 15. On the facts and in the circumstances of the case and in law, the notice i....
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....to be erroneous in so far as it is prejudicial to the interest of the revenue due to the following reasons • During the year under consideration assessee incurred CSR expenses of Rs. 135.95 lakhs and the same is disallowed by assessee itself but part of the same was claimed u/s 80G amounting to Rs. 1,05,12,873/-. As per ld. PCIT the deduction claimed by the assessee u/s 80G can't be allowed and AO was failed to examine the issue hence, the order passed is erroneous in so far as it is prejudicial to the interest of the revenue • Another objection of the ld. PCIT pertains to commission paid to agents on sale to CSD (canteen stores department). Assessee claimed commission of Rs. 24, 03, 65,153/- on sale to canteen stores Department (CSD). AO disallowed the 5% of commission claim as per last year. Sales to CSD was about 300 Crores against which commission works out to about 8%. The services stated to have been rendered by commission agents for canvassing and procurement of order, educate CSD staff etc. CSD's are defence ministry establishments where they purchases in a transparent method directly. There cannot be any middlemen in sales to CSD. Therefore AO....
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....extent order of the AO is erroneous but not prejudicial to the interest of the revenue, As the same has been duly explained with facts and law applicable on the same by the assessee before the Ld. PCIT itself we found based on the legal position in favour of assessee the same has been duly taken care of. This objection of Ld. PCIT no more stands against the assessee as erroneous in so far as prejudicial to the interest of the revenue. In this regard we rely upon the following decisions in favour of assessee as under: 1). CIT, Central Circle vs. Infosys Technologies Ltd. (2014) 43 taxmann.com 251 (Kar.) 2) FNF India Pvt. Ltd. vs. ACIT (2021) 133 taxmann.com 251 (Bang.-Trib.) 3). JMS Mining Pvt. Ltd. vs. PCIT (2021) 130 taxmann.com 118 (Kol.-Trib.) 4.) Nayak Sea Food Pvt. Ltd. vs. PCIT ITA No. 490/Mum. /2021 8. In the light of above it can be said that issue was not examined by the AO and on this front order is erroneous but not necessarily prejudicial to the interest of the revenue. Power of Ld. PCIT on the one hand empowers to verify any order on the criteria of being erroneous in so far as prejudicial to the interest of the ....
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....rores during the year under consideration. The Consumer Durables business operates in a highly competitive market with several players operating in the said segment The Company typically operates in this segment through its distributors/ dealers, and in certain areas directly through the retailers. The company has a chain of 2350 distributors and 5500 dealers across the country that help in procuring orders from institutions, housing projects, malls, municipalities, etc. besides maintaining a retailer network. 3.8 In addition, the company also makes sales to Canteen Stores Department (CSD'), a Government of India enterprise under the Ministry of Defence. Sales to CSD are one of the major sources of revenue under the Consumer Durable segment, accounting for 15% of the revenue in the said segment. This coupled with the fact that CSD is a Government enterprise, the company is required to incur additional efforts on this stream. The company makes sales to 34 CSD depots which cater to 4000+ canteens, many of which are in the remote locations in various parts of the country. Despite the company's reach in several states through its regional offices, it is difficult to ha....
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....y directly. There cannot be any middlemen in sales to CSD... AO should have examined role of such commission agents when there can't be any agent involved in CSD sales." In this regard, it is submitted as under (a) There is no process of tenders in the case of CSD sales. The company is required to it its products on the designated portal along with the price at which the sales are proposed to be made. Pursuant to such listing, the CSD may place orders basis the average sales made in the past 3 months. Thus, there is no system of floating tenders in case of sales to CSDS. (b) The role of the agents may not be relevant at the time of listing the products on the CSD portal, but the same is relevant to understand the feedback, likely sales, stocks, so that the pricing can be listed accordingly. Further, the role of these agents is not restricted to sales, but goes much beyond. As stated above, these agents provide services in relation to ensuring proper merchandising of the company's products, maintaining availability of products, managing company's schemes, ensuring after sales services, following-up for timely payments etc. It is for these services that ....
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....lers in respect of lighting and consumer durables business NIL Total 43,29,03,905 3.16 It is however submitted that out of the sum of Rs. 24, 03, 65,153 shown as CSD commission. a sum of Rs. 3,83,96,225 actually relates to the EPC business and the same has erroneously being clubbed into the CSD commission. Accordingly, the correct amounts are as under: Commission in respect of Amount of commission CSD Sales 20,19,68,928 E&P division 21,80,30,590 BPCL, IOCL, HPCL and Abhay Ispat 1,29,04,387 Sales to other dealers in respect of lighting and consumer durables business NIL Total 43,29,03,905 3.17 In this regard, it is submitted that commission is not paid in respect of all sales. It is payable only in cases where the sales are not made to distributors/ dealers. Where sales of consumer durables are made to distributors/ dealers of the company, the above services provided by them (which are similar to the services provided by agents in CSD sales) are compensated in the price at which the goods are sold to such distributors/ dealers and hence no separate commission is required to be paid to them. In the case of sales to CSD, t....