A division bench of the Kerala High Court in CIT v. M/s Olam Exports (India) Ltd, held that the assessee could not have been taxed anything more than what it had received.
Assessee, while filing its income tax returns, claimed deduction towards the amount paid on account of sales commission to M/s. Lovely Enterprises, Delhi for consignment sales. However, the Assessing Officer rejected the claim by suspecting its’ genuineness.
On appeal, the tribunal after perusing the evidences, found that the assessee had received only 95% of the invoice price and that the assessee could not have been taxed for an income which they have not received.
Upholding the findings of the Tribunal, the division bench comprising Justice Antony Dominic and Justice Shircy V noted that there were transactions between the assessee and the said concern and the invoices which were raised by the assessee in the name of the Agent also contained the gross sale price and the net amount payable, after recovery of 5% towards commission and other expenses due. Based on such transactions, the amounts were realised by the assessee through banking channels and F forms under the CST Act were also obtained by them from the Agent.
“These admitted facts, therefore, shows that the assessee had received only 95% of the gross price and the Revenue has no material before it that the assessee had received anything in excess thereof either directly or otherwise.”
In terms with the the principles laid down by the Apex Court in Godhra Electricity’s case the bench held that the assessee could be taxed only for the income that it has derived. “If that be so, despite the contentions raised regarding the doubtful existence of the agent, the assessee having received only 95% of the gross value, could have been taxed, only for what it had actually received,” it said.
Read the full text of the Judgment below.
