TaxTMI 
TaxTMI 
2015 (12) TMI 892
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....case are that for the year ended 31 st March, 2009 relevant to assessment year 2009-10, the assessee had accrued an amount of Rs. 77,32,218/- in the books of account towards sole selling agency commission, based on contact between the appellant and KSB Singapore (Asia Pacific) Pte Limited, Singapore. This contact was duly approved by the Ministry of Corporate Affairs, Government of India vide their letter dated 10th July, 2007. While completing the assessment, the Assessing Officer has disallowed part of the commission on sales debited to the Profit and Loss Account amounting to Rs. 31,06,189/-. 2.2 The assessee company is engaged in the production of Pumps. The holding company is KSB AKTIENGESELLSCHAFT, Germany. During the assessment pr....
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....nt Year 2009-10. After considering the submission made by the assessee and the legal position, the CIT(A) confirmed the order of the AO by observing that since accordingly to the agreement, the commission charges would fall due for payment only on receipt of the payment from the clients; therefore, the AO was right in allowing only that part of the commission payment that have been received by the assessee during this year. Further, he observed that since these payments are ascertained on the basis of sale/export of goods or materials therefore even though the assessee is following mercantile system of accounting, the commission would be due to be paid only when the transaction for export of, goods is finalized and payment is received from ....
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....ited our attention to the relevant clause in the contract between MIL CONTROLS LIMITED and KSB SINGAPORE (ASIA PACIFIC) PTE LIMITED. 3.1 The ld AR further submitted that the sales income corresponding to the commission of Rs. 77,32,2181- has been recognized in the previous year 2008-09. It was submitted that income may accrue to an assessee without actual receipt of the same and if the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later. In support of his contention, the ld AR relied on the decision of the Hon'ble Supreme Court in the case CIT v. Shri Goverdhan Ltd. [1968] 69 ITR 675 (SC). The ld AR submitted that the corresponding commission payable as per the SS....
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....a Co.Ltd. v. CIT [1959] 37 ITR 1 (SC). Accordingly, the ld AR submitted that the commission amounting to Rs. 77,32,218/- is accrued and is an allowable expenditure as against Rs. 45,26,029/- allowed in the assessment. Accordingly, it was submitted that the disallowance made by the AO and confirmed by the CIT(A) was unwarranted and and not according to facts and law and the same may be dismissed. 3.2 On the other hand, the ld DR relied on the orders of the authorities below and submitted that the commission is payable only on realization of sale value as per the agreement, which has not accrued and the AO was rightly disallowed by the AO. 3 We have heard the parties and perused the relevant material on record. We have also gone careful....