TaxTMI 
TaxTMI 
2011 (3) TMI 674
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....ncome of Rs. 22,70,762 for the impugned assessment year. During the course of assessment proceedings, Assessing Officer required the assessee to justify the commission claim of Rs. 1,46,16,995. As per the assessee, it was exporting goods directly to its customers in various countries, but, nevertheless, invoicing was done as per the prices negotiated by the group concerns located in the respective countries. Submission of the assessee was that the difference between the price at which the supplies were made and at which the group had agreed with the respective customers were paid as commission to the group companies, in the respective countries by way of credit note. Assessing Officer was of the opinion that assessee was doing business with....
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....side, were canvassed by the group concerns in such countries, which, could not cater to the requirement of customers due to non-availability. Hence as per the assessee, it was obliged to supply goods at price negotiated by the group concern to such customers and excess over the normal pricing was given as commission to such group concerns. The argument of the assessee was that it was simple commission payment for procurement of orders and there was no technical service associated as such. Assessee also submitted that the payments would also not be "royalty" since there was no transfer of any rights or any use of patent or use of information imported from the associated concerns outside India. There was no managerial or consultancy services ....
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.... tax as mandated under law. Further according to ld. DR assessee could not prove that the payments were commission for canvassing orders but on the other hand, such payments were not proved as incurred for any business purpose. 5. Per contra, ld. AR submitting a statement of such commission payments argued that assessee was part of Mainetti group which had its principal at Italy. According to the ld.AR, supplies made to various customers outside India were as per prices negotiated by the Mainetti group concerns situated in such outside countries and assessee was obliged to give commission to such concerns on price it received over and above the normal sale price. Further as per ld.AR, in view of the decision of Hon'ble Apex Court in the ....
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....ould have pointed it out in his order. On the other hand, TPO at para-4 of his order dated 16-10-2008 with Ref. No. M503/TPO-V/assessment year 2005- 06 has given her comments as under: "4. The case was discussed with the assessee's representative. After examining international transactions, no adjustment is considered necessary to the value of international transactions entered into by the assessee. Accordingly, the international transactions referred, are accepted to be at Arm's Length Price. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for assessment year 2005-06 and not for any other assessment year." So we do not find any justification for the conc....
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....on. When an assessee is not obliged to deduct tax on a payment made to non-resident, then in view of the decision of Hon'ble Apex Court in the case of GE India Technology Cent. (P.) Ltd. (supra) there was no question of any failure to deduct such tax being fastened on it. Or in other words, an assessee cannot be visited in such a situation, with consequences of a nature mentioned in section 40(a)(i) of the Act. In our opinion, there was no question of deduction of tax being made by the assessee on the commission payment abroad. However from the list submitted by the assessee we find that a sum of Rs. 2,37,648 was domestic commission and only Rs. 1,43,79,347 was commission paid overseas. For domestic commission of Rs. 2,37,648 assessee was l....