Speed Eicher, Navsari vs Assessee

आयकर अपील सं./I.T.A. No.3073/Ahd/2010 ( नधा रण वष / Assessment Year : 2007-08) M/s.Speed Eicher बनाम/ The Income Tax Officer College Road Vs. Ward-4 Opp.Aayesha Park Navsari At & Post:Chikhli Dist.Navsari - 396 445 थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AARFS 3643 N (अपीलाथ% /Appellant) .. (&'यथ% / Respondent)

अपीलाथ% ओर से / Appellant by : Shri Mitish S.Modi, AR &'यथ% क) ओर से/Respondent by : Shri Santosh Karnani, Sr.DR

ु वाई क) तार,ख / सन Date of Hearing 24/02/2015 घोषणा क) तार,ख /Date of Pronounce ment 19/03/2015

आदे श / O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-Valsad ('CIT(A)' in short) dated 31/07/2010 pertaining to Assessment Year (AY) 2007-08. The assessee has raised the following grounds of appeal:-

(1) The learned CIT(Appeals) erred in law as well as on facts while confirming the order of the ITO, Ward 4, Navsari making ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -2-

disallowance of trade discount expenses to the extent of Rs.49,90,640/-.

(2) The learned CIT(Appeals) failed to allow the appellant an opportunity of being heard and rebutting the issues involved in the Grounds of Appeal raised by placing cogent and authentic evidences and materials before him and therefore, the order passed by him in gross violation of principles of natural justice, is liable to be quashed.

(3) The learned CIT(Appeals) has erred in overlooking and in summarily rejecting the detailed statement of facts submitted along with memorandum of appeal, various documents and evidences placed in the written submissions filed, while accepting the lop-

sided and factually incorrect version of the AO and hence, the disallowance of trade discount confirmed by the CIT(Appeals) on misleading, misconceived, baseless and conjectural observations, is unjustified.

(4) Both the lower authorities ought to have consider in the right perspectives that the trade discount, deducted in each individual sale transaction and actually passed on to the respective customers by the appellant firm and therefore, being actually incurred wholly and exclusively for the purposes of business, is an allowable deduction for computation of business income.

(5) Your appellant further reserves his rights to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal.

2. The only effective ground in this appeal is against the confirmation of disallowance of trade discount expenses amounting to Rs.49,90,640/-.

3. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 04/12/2009, thereby the Assessing Officer (AO in short) made ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -3-

disallowance of trade discount expenses of Rs.49,90,640/-, disallowance of office expense of Rs.5,571/- and disallowance of repair & maintenance expense of Rs.7,236/-. Against this, the assessee filed an appeal before the ld.CIT(A), who after considering the submissions, partly allowed the appeal. While allowing the appeal, the ld.CIT(A) confirmed the addition made on account of trade discount expenses and other disallowances amounting to Rs.5,571/- and Rs.7,236/- were deleted.

4. The ld.counsel for the assessee reiterated the submissions as were made in the written submissions. He submitted that the authorities below have failed to take note of the fact that such trade discount expenses are allowable expenses.

4.1. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that the finding on fact has been given by the ld.CIT(A) does not require any interference under the facts and circumstances of the present case. He submitted that the AO has noted in the assessment order that there was difference in the expenditure recorded in the ledger account and the cash-book. He submitted that the AO has pointed out that trade discount payments range between Rs.60,000/- to Rs.80,000/-, whereas in cash-book the payments are below Rs.20,000/-.

ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -4-

5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The assessee has made written submissions as under:-

"Your honours', for the grounds raised in the appeal for the disallowance of trade discount to the extent of Rs. 49,90,640/- on sales , I would like to humbly submit as under:-

(1) The facts of the case, in brief, are that the appellant is the partnership firm engaged in the business of purchase and sale and services of Eicher Brand Tractors and their accessories and spare parts under the dealership agreement entered into with TAPE Motors & Tractors Ltd. since the F.Y. 2005-06 and accordingly, showing the income earned from this business activities in the return of income filed year to year. The return of income for the year under appeal has been filed by the appellant firm showing the total taxable income of Rs. 3,10,170/- accompanied with the tax audit report u/s 44AB (in Form No. 3CB and 3CD) of the Act, audited financial statements such as Trading A/c, Profit & Loss A/c and Balance Sheet with annexures/schedules and the statement of Computation of Total Income. The books of accounts are duly audited by the independent auditor and nowhere in the audit report, the auditor has pointed out/reported any discrepancy/defect in the books of accounts maintained with all the supported vouchers, bills, statements, etc., following the same method of accounting as that of in the earlier years.

(2) Being the dealer in the business of tractors of Eicher Brand, the appellant has to allow the trade discount to the purchasers who are basically the agriculturists as the practice prevailing in this line of business. In other words, the appellant has to maintain the target of sales/turnover for its survival and for that purposes, the trade incentive under the sales promotion programme has been given on catalogue price of tractors, to the purchasers of tractors only on prompt payment received through Demand Drafts from the purchasers. Thus, the trade discount is in the nature of early payment discount. Unfortunately, both the lower authorities have failed to understand in the right perspectives that in this line of business i.e. dealership in tractors and other vehicles, in the market, the keen competition is prevailing on account of introduction of numbers of Companies of Tractors of various makes increased and therefore, for the survival of the business in such cut-throat competition in the open market, the appellant firm has to allow trade discount on sales of tractors but the said transaction of trade discount has been disbelieved by both the lower authorities ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -5- capriciously, arbitrarily, merely on suspicion and doubt, in spite of all the details of trade discount on sales of tractors has been furnished. More particularly, the appellant firm has furnished on their records the complete names, addresses and identity proofs with the confirmations and affidavits of the purchasers, date of demand draft received with amount, date of invoice issued, total bill amount and trade discount given to the customers, but rejected the same only on the allegations that the trade discount has not been given to the customers at the time of sales, that the cash discount has been paid in cash, the claim of trade discount is an afterthought, that no vouchers produced, that mismatch of signature on challans/bills with the confirmation letters filed by the customers. Kindly see pages 30 to 54 and pages 90 to 180 appeal papers being the confirmation letters, affidavits, identity proofs of the purchasers, their bank loan statements, insurance policies, RTO registration proof, sales invoices, etc. which simultaneously goes to prove that the trade discount has been given only at the time of sale of tractors.

(3) As a matter of fact, during the course of assessment proceedings, the appellant furnished all the details of sales of 74 tractors to various customers (agriculturists) and explained the transactions of sales and trade discount given " thereon by furnishing date wise bank statement showing the deposit of demand draft against sale of tractors and the invoices with complete narrations on which the trade discount given to the particular customer. In other words, the appellant has established the direct nexus of trade discount given to the customers only at the time of sale of the tractors and not before or after the sales as alleged by both the lower authorities.

Your honours kind attention is invited to the pages 1 to 15 being the detailed statement showing the transactions of sales and trade discount thereon establishing direct co.-relation with the demand drafts deposited in the bank account, which amply demonstrate that there is not a single instance of allowing trade discount to the customers before or after the date of sale of tractors and thus, the allegations of both the lower authorities has no weightage in the eyes of law. As a matter of fact, both the lower authorities have grossly failed to understand in the right and proper perspectives the crucial facts of the case that the buyers of the tractors are purely the agriculturists purchasing tractors through bank loan (agriculture loan) to carry out the agriculture activities and to earn agriculture income. For that purposes, the Bank has issued the Demand Draft on the same date of the invoice issued and presented by the customers to their Bank for loan purposes and only after depositing the Demand Draft on sale of tractors, the appellant firm has given the trade discount in cash to all the customers at the prevailing rate of trade discount in the open market. Merely because the trade discount has been given in cash to the various customers, the learned AO disallowed the same purely on suspicion and doubts even though; the appellant has furnished before him the confirmation letters of such customers duly ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -6- confirming of receiving trade discount in cash so as to meet the requirement of margin money on tractor banks loan taken by them.

(4) Your honours, it is the settled law position that the trade discount on sales is not an expenditure at all. It is not rightly disputed by both the lower authorities that it the claim of trade discount on sale of tractors but treating the same as an in genuine expenditure, the same has been added to the income completely under misconception and misappreciation of the facts of the case. Merely because, the appellant firm has shown separately in the Debit side of Trading A/c, the amount of Rs. 49,90,640/- as trade discount, it could not be termed as an expenditure, but in true effect, it is on the sales of tractors. In this regard, I may draw your honour's kind attention to the relevant judgment of the Hon'ble High Court of Delhi in United Exports Vs. CIT reported in (2011) 230 ITR 549 (Delhi) in which the Hon'ble High Court held that -

"This provision in the Act pertains to disallowance to an expenditure which is made by the assessee Le. an amount actually spent by the assessee as an expenditure. The expression used in this provision is "incurs and expenditure in respect of which payment has been or is to be made to any person" (emphasis supplied). The emphasized words clearly show that actual payment must be made and there has to be an expenditure incurred before the provision can be said to be applicable. A trade discount, and admittedly it is not in dispute that the subject-matter of the claim is a trade discount, and not an expenditure, clearly therefore there does not arise the question of applicability of section 40A(2)(b)"

Sir, the above judgment of Delhi High Court has been followed by the Hon'ble ITAT, Delhi in the case of ACIT Vs. Grandprix Fab. (P) Ltd. reported in (2010) 128 TTJ (Del.) Page 60 in which it has been held that the trade discount is not an expenditure and therefore, there is no lawful reason to make disallowance of the same as expenditure under the law.

Your honours will certainly find in the audited Trading A/c attached herewith at Pages 16 to 49 that the appellant firm has, completely under bonafide impression, from the initiation of the business, shown the Gross Sales of tractors at Credit side of the Trading A/c and separately shown the trade discount given to the purchasers in the debit side of the Trading A/c. Merely because, the trade discount has been shown separately in the audited books of accounts, it does not tantamount to the claim of an expenditure as alleged as an afterthought, moresowhen, both the lower authorities have rightly accepted the sales of tractors made to the various customers during the ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -7- relevant year. To put it differently, both the lower authorities have failed to understand and appreciate in the right perspectives that the trade discount is only at the instance of sales, based on the quantum of sales, which could not be denied simply because it has been shown separately in the audited books of accounts. It is further enlightened to your honours that the books of accounts are the audited books of accounts and nowhere in the audit report, the independent auditor has pointed out any discrepancy/defect as to the genuineness of trade discount given to the customers at the time of sales of tractors. Not only that, the learned AO has not pointed out any defect or discrepancy so far as claim of trade discount during the verification of the audited books of accounts and other relevant records containing the entries passed for the trade discount at the sale of tractors. Kindly see pages 21 of 28 of appeal papers being the ledger of trade discount given to the various customers at the time sales with detailed explanations given to both the lower authorities.

Unfortunately, the trade discount has been disbelieved on the another allegation of mismatch of trade discount in ledger account and so called cash book. As a matter of fact, during the course of assessment proceedings, all the ledger and cash and bank book, purchase and sales register and other relevant records were produced, demonstrating the customer wise tally of trade discount on sales. The learned AO has also asserted that the total trade discount tallies with the audited books of accounts. In spite of it has been explained to him that due to ignorance of the accountant who is not professionally qualified and inadvertent mistake while taking out printout of cash transactions, some technical error occurred in the computer accounting , software, which has resulted into bifurcation of cash expenditure on different dates, otherwise, the total amount of trade discount and the sales duly tallied with the audited cashbook and ledger. Sir, the appellant firm is carrying on its business in the village area of Chikhli, Dist: Navsari having not any standard accounting software and therefore, such inadvertent mistake on the part of accountant occurred, which has been treated as the in genuine transaction of trade discount brushing aside all the other credible and authentic evidences i.e. bank statements, confirmation letters with their identity, etc. Your honours will also agree with the contention that when the appellant has explained the so-called difference in the transaction of trade discount as alleged by the AO, by producing all the credible and authentic evidences to establish the co.-relation of trade discount on sales of tractors, there is no lawful reason to make addition on account of trade discount merely on suspicion, allegations and assumptions.

In this regard, I may rely upon the judgment of the Hon'ble High Court of Allahabad, Lucknow Bench in the case of Asstt.CIT Vs. Vikram Tractors reported in (2008) 5 DTK (All.) Page 323 (copy attached) ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -8- (5) Without prejudice to the above, I would like to further submit that in accounting principles, considering the nature of transaction of sales of goods (i.e. tractors), the appellant could have directly deducted trade discount from sales, since, it is on the sales of goods and accordingly, the sales or turnover could have been shown "net of trade discount. It is the settled law position that the trade discount is not forming part of the sales or turnover and as clarified in the guidelines of tax audit issued by The Institute of Chartered Accountants of India. As held by the Hon'ble ITAT, Calcutta in Ahmed Hassan & Co. Vs. ITO reported in (1993) 44 ITD 669 (Cal.) (SMC), the amount of trade discount of forming part of sales or turnover in so far as levy of penalty u/s 271B of the Act.

Sir, the appellant firm has followed the same method of accounting consistently in as much as the gross sales of goods and trade discount has been shown separately in Trading A/c, which has been accepted by the department in the earlier as well in the subsequent years. Kindly see pages 50 to 66 being the ITRs and computation of income from the AssttYear; 2006-07 to 2009-10 as well as regular assessment order u/s 143(3) of the Act for the AssttYear; 2009-10 passed by the same ITO rightly accepting the same method of accounting for followed consistently showing trade discount separately in the Trading A/c of the year. Alternatively, the sales/turnover for the relevant year would be shown "net off trade discount i.e. Rs.3,72,74,099 - 49,90,640/- = 3,22,83,549/- which would certainly not affect the G.P. ratio nor the N.P. ratio nor it would be the case of incorrect or incomplete books of accounts to deduce the correct income of the year under appeal. Your honour will certainly appreciate the contention that when the accounting system adopted by the appellant is not contrary to the prescribed accounting standards then the revenue authorities has no lawful reason to disallow the claim of trade discount for which, the detailed explanations with evidences furnished. In this regard, I may rely upon the following relevant judgments:-

(i) CIT Vs. Siddarth Trade Links (P) Ltd.

(2012) 206 Taxmann 92 (Del) Para 4 and 5

(ii) ITO Vs. Sivalingam Agencies (1994) 50 ITD 509 (Mad.)

(iii) CIT Vs. Popular Vehicle Service Ltd.

(2010) 191 Taxmann 33 (Kerala).

(iv) Foster's India (P) Ltd. Vs. ITO (2008) 117 TTJ 346(Pune)

(v) Gujarat Tea Processors and Packers Ltd. Vs. Dy. CIT (2012) 28 Taxmann.com 187 (Gujarat) ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 -9- (6) Your honours, the appellant firm has not incurred the trade discount higher than that was immediate earlier year on the sale of tractors, but as a matter of fact, shown better Gross Profit margin, Net Profit margin and appreciably high returned income as demonstrated below.

Particulars Assessment Years

2006-07 2007-08

Sales/Turnover (including 3,79,80,293/- 3,72,74,099/- trade discount)

Trade Discount (Rs.) 57,13,957/- 49,90,640/-

Percentage of Trade 15.05% 13.38% Discount (%)

Gross Profit (Rs.) 33,60,116/- 26,46,262/-

Gross Profit Ratio 7.28% 7.08%

Net Profit (Rs.) 2,50,130/- 3,10,170/-

From the comparison of trading results with the immediate earlier year, your honours will certainly appreciate the very fact that the appellant has shown almost the same G.P. ratio and appreciably high the amount of Net Profit offered for taxation. Your honour will certainly agree with the contention that the income assessed by the learned AO and the disallowance confirmed by the CIT (Appeals) has resulted into unimaginable and unrealistic net profit of Rs.53,00,810/- i.e. Net Profit ratio at 14.22%, which could never be earned by any dealer of such type of vehicles in this line of business. Moreover, if the quantum of trade discount incurred for Rs.49,90,640/- disbelieved on such vague grounds raised by the AO, the Gross Profit would be Rs.76,30,901/- and the G.P. ratio would be 20.47% which is unrealistic, unfair, unreasonable and irrational looking to the income tax records of the appellant firm and much less, the normal Gross Profit margin prevailing in this line of business as dealers in tractors. It is further enlightened here that the purchases and sales as recorded in the audited books of accounts supported by the invoices/bills are duly accepted by the sales tax authorities under the Gujarat VAT Act, 2005.

Considering the facts and circumstances and legal position involved in the appeal, I have, to request your honour to allow the appeal fully and oblige.

ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08

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Thanking you in anticipation and hoping to be excused for the trouble. I remain, Sir, Yours faithfully, Sd/-

(M.S. Modi) Authorized Representative"

5.1. There is no dispute with regard to the fact that the trade discount as given by a business-man is allowable expenditure. However, for claiming such expenditure the onus is upon the assessee to prove the expenditure has in fact been incurred. We find that the AO has given a finding that in the case of one Shri Manojbhai C. Shah, the sale was effected on 20/03/2007, however, the payment of so-called trade discount is made on 25/03/2007, 26/03/2007, 27/03/2007, 28/03/2007, 29/03/2007 & 30/03/2007 and all payments below Rs.20,000/-. Similarly, in the case of Maganbhai D.Patel, the sale was effected on 27/03/2007, however, the trade discount is made even prior to the date of sale of tractor on various dates; i.e. 14/03/2007, 16/03/2007, 18/03/2007, 21/03/2007 & 25/03/2007. This fact is not rebutted by the assessee. We find that the ld.CIT(A) has given a finding on fact in para-5.1 of his order, wherein it is pointed out that in cases at Sl Nos.1 to 15, the discount was paid on various dates to the purchasers of tractors. For the sake of clarity, it would be appropriate to reproduce the finding of the ld.CIT(A) hereinbelow:-

"5.1. Decision; I have carefully considered the findings of the AO in the assessment order and the submissions made by the Id. AR. As mentioned in the earlier paragraphs, the AO made the addition after being convinced that ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08

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the cash discount shown by the appellant was apparently not genuine and afterthought. To justify the conclusion, the AO stated that i) the bills and vouchers for cash discount was made by the appellant, ii) the signatures of the customers in the delivery challan for purchase of tractors do not tally with the bills/vouchers made for cash discount, iii) The cash book entry and the ledger account of the appellant towards the cash discount paid date wise do not tally,

iv) All cash discount payments were much after the date of sales, v) The tractor sale bills do not show the discount offered by the appellant and therefore the AO further observed that the customers derived undue advantage of claiming full depreciation without excluding the cash discount received by them. Clearly, the AO had made out a case and come to the conclusion after verifying the books of accounts, particularly cash book, ledger book and confirmations letters from the customers that the cash discount shown by the appellant in the books of accounts was not genuine and afterthought. In rebutting the finding of the AO, the Id. AR argued mainly on three counts i) the customers are from far off villages and prior to purchase of tractors, they have no bank facilities, and therefore, cash was paid, ii) the discounts are paid to the customers to help them get full amount of loan, iii) the cash discount recipients have confirmed which were given at the time of assessment proceeding. I have considered carefully the arguments raised by the Id. AR. 1 have also perused the ledger account of trade discount given and the confirmation letters filed by the customers for having received the cash discount. The details of cash discount given by the appellant along with the date of sale of the tractors to the customers are given below:

Sr.No. Name of the Cost of Discount Dates between Purchaser tractor & paid in discount paid date of cash purchase 1. Rameshbhai 504000/- 60000/- 29.4.2006 to Babarbhai Patel 15.05.2006 2. Gamanbhai 593000/- 75000/- 30/04/06 to Maganbhai 26.04.2006 10.05.06 Choudhary 3. Janyantibhai 593000/- 70500/- 12.05.06 to Sakkarbhai 10.05.2006 21.05.06 Deshmuck 4. Naginbhai Limjibhai 593000/- 68560/- 15.05.06 to Garasia 13.05.2006 25.05.06 5. Dansubhai 593000/- 62150/- 22.05.06 to ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 - 12 -

Ramubhai Gamit 20.5.06 03.06.06 6. Ramanbhai 593000/- 68700/- 27.05.06 to Chatrabhai Patel 24.05.05 05.06.06 7. Manilal Ramabhai 602698/- 70000/- 31.05.06 to Patel 29.05.06 12.06.06 8. Bijubhai Ramjibhai 602698/- 68000/- 30.06.06 to Bosad 07.06.06 20.06.06 9. Chhanabhai 599583/- 65000/- 12.06.06 to Samlubhai Padher 26.06.06 28.07.06 10. Narsibhai Janiabhai583489/- 78300/- 18.06.06 to Naika 26.06.06 02.08.06 11. Ethubhai Juliabhai 583489/- 65000/- 20.07.06 to Mahala 26.06.06 28.07.06 12. Gajanand Tractor 322941/- 70,000/- 26.06.06 to 07.07.06 03.07.06 13. Muljibhai 501320/- 50,000/- 10.07.06 to Bhimabhai Patel 08.07.06 20.07.06 14. Chimanbhai 542920/- 70400/- 12.07.06 to Zinabhai Patel 29.06.06 28.07.06 15. Pravinbhai 583520/- 53100/- 18.07.06 to Ramanbhai Mahala 29.06.06 29.07.06 16. Vijaybhai 510860/- 70000/- 20.07.06 to Dahyabhai Ahir 04.07.06 08.08.06 17. Vinodbhai 432000/- 46350/- 26.07.06 to Ranchodbhai Patel 04.07.06 01.08.06 18. Sudhirbhai 599640/- 70800/- 31.07.06 to Bababhai Patel 24.07.06 13.08.06 19. Kakadoben 599640/- 65900/- 25.08.06 to Lakhubhai Vadvi 25.07.06 05.09.06 20. Lahabhai Kalubhai 495520/- 70300/- 26.08.06 to Deshmukh 28.07.06 08.09.06 21. Zinabhai Naranbhai 599640/- 60000/- 28.08.06 to Patel 05.09.06 22. Ashokbhai 602760/- 75000/- 29.08.06 to Chhaganbhai Patel 23.08.06 10.09.06 23. Dhanibhai 602760/- 70300/- 10.09.06 to Devjibhai 18.08.06 21.09.06 Choudhary 24. Kantobhai 543400/- 75400/- 12.09.06 to Jimlabhai Patel 18.08.06 28.09.06 ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08 - 13 -

25. Gamanbhai 603520/- 60200/- 15.09.06 to Maganbhai 25.08.06 25.09.06 Choudhary

From the above table, it is crystal clear that the so called cash discount given to the customers were much after the sales were affected apart from in a couple of cases, a normal practice, discounts are offered to the customers by way of accessories and services. It is also fact that in few cases discounts are given in cash for some genuine cause. In the instant case, the appellant has not able to demonstrate, why it has offered cash discount to the customers sometimes after one month from the sale effected. It is also seen from the discount offered that the rate varies from 8 to 8.5%. This kind of cash discount is naturally unusual in this trade. More so, the appellant is a dealer and the margin for sale of tractors would normally will not be more than 10 to 15%. The appellant also heavily invested which incur interest component of such capital. Ina the tight scenario offering it 8 to 8.5% cash discount definitely not a viable business proposition. As the AO rightly observed that entry in ledger account do not tally with the cash book clearly indicates that the cash discount expenses was invented by the appellant much after the sales were affected. When the tractors were sold to the customers, they had already had bank accounts then why the appellant did not pay them in cheques the discount instead of paying in cash. The contention of the Id. AR that cash discounts are offered to the customers to avail full bank loan and to facilitate margin money also do not hold much water because the question of margin money arises before the loan sanctioned and it should have been in the account of the loanee. Further, the appellant should have given in cheques before the loan was obtained by the customers as it happens in normal cases.

This obviously raised serious doubt about the genuineness of the discounts given in cash by the appellant. The appellant also had not brought any plausible explanation before me as to why other than cash discounts are not offered to the customers which are normal practice in this type of trade. Considering the facts and circumstances of the case, 1 am convinced that there is no need to interfere in the finding of the AO when the facts are crystal clear against the appellant. Therefore, this ground of appeal is dismissed."

5.2. The aforesaid finding of ld.CIT(A) is not controverted by the assessee. The contention of the assessee is that such trade discounts are allowable and is prevalent in the similar line of business. During the ITA No.3073/Ahd/2010 M/s.Speed Eicher vs. ITO Asst.Year - 2007-08

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course of hearing, a query was raised as to how come the payment of discount to the purchasers of the tractors was made in installments and even before or after the tractor has been sold. The ld.counsel for the assessee could not give any satisfactory reply to the query. In our considered view, the assessee failed to prove the expenditure with satisfactory explanation, therefore we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, the ground raised in the assessee's appeal is rejected.

6. In the result, Assessee's appeal stands dismissed.

Order pronounced in the Court on Thursday, the 19th day of March, 2015 at Ahmedabad.

Sd/- Sd/- (जी.डी.अ वाल) (कुल भारत) उपा य या यक सद य ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER Ahmedabad; Dated 19/ 03 /2015 ट,.सी.नायर, व. न.स./T.C. NAIR, Sr. PS

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ% / The Appellant

2. &'यथ% / The Respondent.

3. संब6ं धत आयकर आय8 ु त / Concerned CIT

4. आयकर आय8 ु त(अपील) / The CIT(A)-Valsad

5. 9वभागीय & त न6ध, आयकर अपील,य अ6धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड< फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स'या9पत & त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad