Laxmi Engineering Industries vs Income Tax Officer

This appeal of the assessee was admitted on September 12, 2006, by framing the following substantial question of law, and was ordered, to be connected with IT Appeal No. 58 of 2003.

Whether the learned Income Tax Appellate Tribunal could on the basis of material before it sustain disallowance of Rs. 2,44,000 claimed to have been paid by erection and installation charges to M/s. Laxmi Stones Pvt. Ltd.?

From the look at the order of the Tribunal, it is clear that the Tribunal has allowed the appeal of the Revenue, only on the basis of commission payment to M/s. Laxmi Stone Pvt. Ltd., which was held by the Assessing Officer, to be bogus, and was disallowed, which was upheld up to the Tribunal, on the basis, that order of the Tribunal, upholding disallowance, had not been set aside. This appeal No. 58 of 2003 is one of the bunch of appeals of the present assessee, wherein the disallowance of the commission is assailed, and the three appeals being Appeals Nos. 57 of 2003, 58 of 2003 and 59 of 2003, have already been allowed, by this Court, vide judgment dated December 13, 2007 in 971385--> and, disallowance of the commission, by the authorities below, was set aside.

Since, it has been found by the learned Tribunal, that the only basis for making other addition, by the Assessing Officer, is the disallowance of the commission, to the same party, which has been upheld up to the Tribunal, in our view, when the disallowance has been set aside by this Court, by the aforesaid judgment dated December 13, 2007, for the same reasons, rather of necessity, disallowance in this case, has also to be set aside.

Accordingly, the question, as framed is answered in favour of the assessee, and against the Revenue, and the appeal is allowed. The impugned order of the learned Tribunal is set aside, and disallowance of the erection charges, amounting to Rs. 2,44,000 is set aside.