TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 711
X X X X Extracts X X X X
X X X X Extracts X X X X
....ound pertaining to suppressed income of Rs. 13,39,330/- on account of service tax. 4. In this case the AO observed that during the year under consideration the assessee company has shown to have received commission from Palladium Construction Pvt. Ltd. As per accounts the commission received was Rs. 1,08,36,000/-. Letter was issued u/s to Palladium Construction Pvt. Ltd for verification. As per reply received from Palladium Construction Pvt. Ltd, it was found that the commission paid by this company to the assessee company was Rs. 1,21,75,330/- (Rs.1,07,95,865/- plus 13,79,465/-, TDS) and the payment was in connection with arranging, negotiating & syndication of Bank Guarantee for 108.36Cr. Therefore, the AO asked the assessee company to explain the difference with evidence vide this office letter no. ITO/3(1)/Kol/AADCG1679H/11-12/825 dated 14/11/2011. No explanation has been submitted by the assessee company. Hence, AO held that the difference of Rs. 1,21,75,330/- and Rs. 1,08,36,000/- i.e Rs. 13,39,330/- is added to the income of the assessee .. 5. Against the above order the assessee appealed before the ld.CIT(A). Before the ld.CIT(A) assessee's counsel submitted that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted that the difference was on account of service tax. In this regard, copy of service tax return and tax payment challan was also filed by the assessee before the ld.CIT(A). We have also seen the concerned bill in proper page no.27. The bill clearly shows that the amount of bill was Rs. 1,08,36,000/- and service tax component was Rs. 13,39,330/- and the total of the bill thus comes to Rs. 1,21,75,330/-. This bill was also before the AO. Hence, AO clearly failed to appreciate the reason of the difference noted by him. That the difference was on account of service tax is also supported by the service tax return and tax payment challan accepted by the ld.CIT(A). Hence, we do no find any infirmity in the order of the ld.CIT(A) on this issue. Hence, we uphold the same. 9. Apropos the second issue i.e. deletion of addition of Rs. 92,80,472/- on account of undisclosed income of the assessee company. 10. AO observed that as per accounts the assessee company has paid commission of Rs. 1,01,65,000/-. AO asked the assessee company to submit the details of commission paid. As per details the commission paid by the assessee company was as below :- Sl.No. Name of the party Amount 1 Reli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee's submission the assessee responded that they were appointed by M/s. Palladium Construction Pvt. Ltd for all services to obtain their bank facilities and also for their sister concern, M/s. Platinium Hospitality Services Pvt. Ltd for which no separate consideration was paid. It was submitted that they had negotiated a lump sump amount of Rs. 1.08 Cr. + service tax. 13. The assessee further submitted that the reply of M/s. Quantium Agencies Pvt. Ltd with respect to arranging bank facilities for Rs. 41.00 Cr for M/s. Astek Infracom Ltd was an erroneous statement. The party concerned was not M/s. Asteek Infracom Ltd, but M/s. Platinium Hospitality Services Pvt. Ltd. The assessee also submitted further reply from M/s. Reliable Barter Pvt. Ltd that they were appointed to do all works for approval of bank facilities for M/s. Pallladium Construction Pvt. Ltd [In short M/s. PCPL] and M/s. Platinium Hospitality Services Pvt. Ltd [In short M/s. PHSPL] and mentioning of M/s. Asteek Infracon Ltd was a mistake on the part of the typist. 14. The AO was not satisfied with the above submissions of the asssessee. He concluded as under:- "6. In view of the discussion made in para and subpa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and PHSPL also confirmed that did not pay any sum to the assessee for the said services. From AO's viewpoint such an act on the assessee's part might be an imprudent one but the question is whether the AO was empowered in law to assess business income of Rs. 46.30 lacs on mere presumption that assessee should have charged its commission for services rendered on PHSPL as well." 17. The ld. CIT(A) also observed that : "If the contract between the parties does not provide for charging of any fees, commission etc then the mere fact that one of the party to the contract rendered services to other, will not give authority or power to the AO to bring to tax a hypothetical or notional income by way of fees, commission etc particularly when the parties did not bargain for payment of fees for the services rendered. " 18. The ld. CIT(A) further observed that : "If the agreed terms between the assessee and the two group companies envisaged payment of commission only by one company i.e. PCPL but requiring rendering of services by the assessee to both of them, then such an arraignment could not be faulted with by the AO." 19. The ld. CIT(A) observed as under:- "Apart from these fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The assessee has also provided similar services to another group company, M/s. Palladium Construction Pvt. Ltd (M/s. PCPL). However the assessee has charged commission for rendering such services only from M/s.PCPL. The assessee has also paid commission to the parties in connection with making available of above services. The parties had also responded that they had been paid commission for the services of arranging and negotiating bank facilities/bank guarantee to M/s. PHSPL. However, the assessee has chosen not to raise any bill from M/s. PHSPL, but it has raised only one bill on M/s. PCPL. It has been claimed that it was on mutual understanding that only one bill will be raised on M/s. PCPL. Now the above submission of the assessee has been accepted by the ld.CIT(A). It may be noted here that there is nothing on record to substantiate the assessee's submission that there was an understanding/agreement for payment of such commission, according to which the assessee will not raise any bill on M/s.PHSPL and only one bill will be raised on M/s.PCPL for rendering of such services. The ld. CIT(A) has referred to the fact that the practice adopted by the parties in the present cas....