Net export invoice realisation and unsupported expense claims: commission deduction accepted, but partial disallowance sustained.

Export invoices realised only at the net amount, with no separate commission payment to the foreign agent, were treated as not giving rise to any additional taxable income; the invoice-wise deduction was therefore held not to warrant disallowance. By contrast, an ad hoc disallowance of part of the expense claim was sustained where the assessee failed to produce books or credible corroboration for the asserted loss of records, such as contemporaneous supporting material. The document reflects partial relief for the assessee on the commission issue and rejection of the unsupported expense claim.

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Issues: (i) Whether the disallowance of foreign agent's commission deducted from export invoices was sustainable; (ii) Whether the ad hoc disallowance of a portion of various expenses for want of supporting evidence was sustainable.

Issue (i): Whether the disallowance of foreign agent's commission deducted from export invoices was sustainable.

Analysis: The export proceeds were received only at the net invoice value and there was no separate outgoing payment of commission by the assessee. The adjustment was reflected through the export invoices, and the facts were held to be identical to earlier tribunal decisions on the same issue. On those facts, there was no further amount left to be treated as income accruing or arising to the assessee on account of the invoice-wise deduction described as commission.

Conclusion: The disallowance was not justified and was deleted in favour of the assessee.

Issue (ii): Whether the ad hoc disallowance of a portion of various expenses for want of supporting evidence was sustainable.

Analysis: The assessee failed to produce books of account or reliable evidence to support the claim that the records were destroyed in flood. No contemporaneous material such as an FIR, insurance claim, photographs, or other corroboration was produced. In the absence of proof supporting the expenditure claim, the authorities were justified in making and sustaining a partial disallowance.

Conclusion: The disallowance was sustained against the assessee.

Final Conclusion: The appeal succeeded only on the issue of foreign agent's commission and failed on the disallowance of other expenses, resulting in a partial relief to the assessee.

Ratio Decidendi: Where export invoices are realised only at the net amount and no separate commission payment is actually made, the invoice-wise deduction cannot be treated as additional taxable income; however, expenditure disallowance may be sustained where the assessee fails to substantiate the claim with credible evidence.

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