Foreign agency commission disallowance upheld for lack of proof, but double taxation avoided where the amount was already taxed later.

Foreign agency commission was disallowed as business expenditure because the assessee failed to prove the genuineness of the services, the identity and role of the recipient, and the business nexus of the payments; the record also showed adverse third-party material, missing primary evidence, and inconsistencies on payment and foreign remittance compliance. However, where the corresponding liability had already been written back and offered to tax in a later year, the same amount could not be taxed again in the impugned years absent a statutory basis for duplication. The substantive disallowance therefore remained, but relief was limited to preventing double taxation of the written-back amount.

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Issues: Whether the foreign agency commission claimed as business expenditure was allowable, and whether the amount written back and offered to tax in a later year could again be disallowed in the impugned years.

Analysis: The claim for commission expenditure failed on merits because the assessee did not establish the genuineness of the services, the identity and role of the recipient, or the nexus of the alleged payments with business, and the record also reflected adverse third-party information and missing primary evidence. The Tribunal also noticed inconsistencies regarding actual payments and compliance with foreign remittance requirements. At the same time, the assessee demonstrated that the corresponding aggregate liability had been written back and taxed in a subsequent assessment year, and taxing the same amount again in the impugned years would result in double taxation in the hands of the same assessee.

Conclusion: The disallowance of the commission expenditure was upheld on merits, but relief was granted to the extent the same amounts had already been offered to tax in the later year, so as to prevent double taxation.

Final Conclusion: The appeals were allowed only to the limited extent necessary to neutralize duplication of tax on the written-back amount, while the substantive finding that the commission claim was not proved remained intact.

Ratio Decidendi: An expenditure claim must be supported by credible evidence of genuineness and business nexus, but the same amount cannot be taxed twice in the hands of the same assessee absent a specific statutory mandate.

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