TaxTMI 
TaxTMI 
2014 (5) TMI 738
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....; "1. The order of ld. CIT(A) is erroneous both on facts and in law. 2. The ld. CIT(A) erred in sustaining the disallowance of made by the Assessing Officer under section 40(a)(ia) in respect of sales commission paid to foreign agent. 3. The finding of the ld. CIT(A) are entirely based on suppositions and assumptions far from the facts available on record. 4. ............... 3. Facts of the case in brief are that the assessee company is engaged in manufacture of paper sizing chemicals. For the assessment year 2007-08, it has filed return....
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.....), The Assessing Officer, however, found no merit in the contentions of the assessee. Referring to the provisions of section 40(a)(ia), he noted that the said amount cannot be allowed as deduction, on account of default on the part of the assessee in effecting TDS before making payment. He also referred to the decision of the Apex Court in the case of Transmission Corpn. of A.P. Ltd. v. CIT [1999] 239 ITR 587, and the decision of the Tribunal in ITA Nos.10 and 11/Hyd/1996, with regard to the scope of the provisions of Section 195(2) and 195(3), in the case of payments to non-residents, it was held that since the non-resident recipients have not obtained certificate of exemption from the Assessing Officer under section 195(3), the assessee ....
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.... as to the services rendered by the said foreign party to the assessee, and ultimately concluded that there was no evidence of any service rendered by the foreign party to the assessee, and consequently, the expenditure on account of commission claimed by the assessee cannot be said to have been incurred wholly and exclusively for the purpose of business of the assessee. Even on that count, the CIT(A) held that the expenditure in question cannot be allowed as deduction under S.37(1) of the Act. 5. Aggrieved, assessee is in second appeal before us. 6. The learned counsel for the assessee, reiterating the contentions urged before the Revenue authorities submitted that the services rendered by the said party to whom commission was paid, ....
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....he shipment of the same. In the present case, the assessee has not been able to produce copy of the order in writing, which has been received in terms of the agreement from the foreign party during the previous year. Hence, there is no documentary evidence produced by the assessee to support its claim of any service rendered by the foreign party during the previous year. He accordingly, supported the order of the CIT(A) that the expenditure of Rs.1,77,948 cannot be allowed as a deduction even under S.37(1), in the absence of any evidence of services rendered by the party to which commission payment has been made. 8. We heard both sides and perused the material available on record. We have also gone through the decisions cited by the part....
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....n from 1.4.2006 to 31.3.2007 furnished by the assessee in the papers furnished before us, clearly substantiate the claim of the assessee as to the services rendered by the foreign party. In the absence of any material to the contrary brought on record by the Revenue, one cannot dispute the claim of the assessee in this behalf. Consequently, we find no justification for the CIT(A) to dispute the very rendering of services by the foreign party to the assessee, so as to justify the disallowance under the provisions of S.37(1) itself. 9. From the letter of the assessee dated 5.3.2007 enclosing thereto the Demand Draft dated 1.3.2007 for USD 3954.38, copy of which alongwith enclosure furnished before us, also clearly indicates that the paymen....