TaxTMI 
TaxTMI 
2011 (7) TMI 69
X X X X Extracts X X X X
X X X X Extracts X X X X
....04-05 and 2005-06. The assessee was carrying on business of distribution of Acer products, such as computers, laptops, desktops, etc. of M/s. Acer India Pvt. Ltd. for about two years. Due to some financial constraints, it could not make its business venture a profitable one and in the process incurred heavy losses. In the meeting of the Board of Directors held on 29th December, 2001, the assessee company decided to transfer the distribution of the Acer producers to M/s. Salora International Ltd. (for short "SIL"), for which M/s. Acer India Pvt. Ltd. had also consented, by virtue of a written agreement between the assessee and SIL. The distribution of the products was to be taken over by SIL on certain terms and conditions including payment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no denying the fact that the appellant company has entered into an agreement with M/s. ACER India Pvt. Ltd. for distributionship of ACER products in India. The appellant company has shown income on this account in the earlier income tax returns which had been assessed by the Department u/s 143(1)/143(3). The distributionship business ran into losses when the appellant company decided to shift the same in the hands of its sister concern i.e. M/s. Salora International Ltd. to which M/s. ACER India Pvt. Ltd. also agreed. The AO agreed to all the above mentioned facts of the case. However, thereafter the AO disagreed and stated that agreement dated 1/1/2002 between ACER India Pvt. Ltd. and M/s. Salora International Ltd. does not contain any ref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ernational Ltd. i.e. whether the commission is required to be paid to the appellant or not. In these circumstances, I do not consider it appropriate to accept the view point of the AO and accordingly, the AO is directed to delete the addition and treat the amount of Rs.52,91,670/- as business income and allow set off of brought forward losses if otherwise allowable as per law." 2. In the appeal pertaining to the assessment year 2005-06, the CIT followed the reasons as recorded in the order for the assessment year 2004-05 as noted above. Consequently, in this case also the CIT(A) held the commission amount to be a business income and the assessee was entitled to assessment of the carried forward business losses. 3. The Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nses incurred by SIL in the shape of commission paid for the services rendered by FX Info Technologies Ltd., is directly associated with its business. There is nothing on record to suggest that the said order of the Tribunal was challenged. That being so, it comes out to be an accepted position that in the case of SIL, it was accepted by the Revenue that the commission paid by SIL to the assessee was business expenditure. If that was so, the business expenditure in the hands of SIL by natural corollary is the business income in the hands of FX Info Technologies Ltd., which is the assessee in the present case. 5. It was, however, submitted by the learned counsel for the Revenue that there was no clause in the memorandum of associat....