TaxTMI 
TaxTMI 
2016 (7) TMI 672
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..... Assessee obtains cable TV signals from Multi System Operator M/S.Wire and Wireless (India) Pvt. Ltd. (WWIL). "Multi-System Operator" (MSO) means a cable operator who receives a programming service from a broadcaster and re-transmits the same directly or through one or more local cable operators. Broadcaster are persons providing programming services. 4. WWIL apart from acting as MSO is also engaged in the business of producing and or acquiring various televisions programs and motion pictures. WWIL wanted to market and sell the television programs and motion picture produced by it to various broadcasters. The Assessee represented to WWIL that it has good contacts and exposure in the broadcasting sector and was providing services pertaining to liaison with broadcasters. WWIL and the Assessee have entered into an agreement dated 1.4.2007 whereby WWIL appointed the Assessee to render liaison services by identifying and ascertaining requirement of broadcasters for various programs, negotiate and settle fee with broadcasters, arrange for execution of requirsite agreement with broadcasters and generally liaison and co-ordinate with broadcasters. In consideration of the above services....
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....mmission expenditure as an allowable deduction u/s.37(1) of the Act, the Assessee has to prove that services were rendered by the recipient of the commission and that the payment of such commission should not for purpose which is an offence or which is prohibited by law. 8. The assessing officer noticed that the C.P.Rerollers Ltd., and BMA Stainless Ltd., were in the business of steel and doubted their expertise in rendering liaison work for marketing television programs to television broadcasters. Similarly there was no evidence whatsoever to show that M/S.Vaishnavi Trade Pvt.Ltd., another recipient of commission from the Assessee had such expertise to do liaison work for marketing programs to television broadcasters. 9. The AO issued notices u/s.133(6) of the Act to C.P.Rerollers Ltd., calling upon them to furnish certain information. One of information sought for by the AO was the name and designation of the person who liaised on behalf of C P Rerollers Ltd., and the parties with whom they concluded business for the Assessee. In reply to the said notice, C.P.Rerollers Ltd., sent a reply dated 22.8.2010 wherein they took a stand that one Mr.Mahandra Maurya, Accounts manager....
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....;ech or WWIL? xvi. How much business did you do in four years before and-after the' relevant IT 2007 -08? Furnish evidence in support of your claim xvii. Furnish evidence in support of your claim :that you have qualification experience and required skill 'for procuring a business which completely different to your traditional business which is steel." 11. CPRerollers Ltd., sent reply to the said letter in which the modus operandi by which programs are selected by broadcasters was given but the important detail regarding persons who liaised and the other queries raised by the AO as above remained unanswered. 12. A notice u/s.133(6) of the Act was issued to BMA Stainless Ltd., calling upon them to furnish certain information. One of information sought for by the AO was the name and designation of the person who liaised on behalf of BMA Stainless Ltd., and the parties with whom they concluded business for the Assessee. There was no compliance to this notice by BMA Stainless Ltd. A further notice u/s.133(6) of the Act together with a questionnaire raising the same question set out in the earlier paragraph of this order was sent to this person by the AO. ....
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....en it was time to bring truth on record, it informs that such person has left the job. Conduct of C.P. Rerollers Ltd:: i. G.P.Reroller replied to 133(6) notice vide. its letter dt, 22/8/2010 and against question No.4 regarding the employee who did liaison Job, the said letter inform as under. ' Mr. Mahendra Maurya, as looking the business with M/s. HVCPL and he is working as Manager Accounts as well as liaison works. [Annexure I] ii. After 131 notice was served on assessee; and Mr. Mahendra Maurya was called for examination under oath, a letter dt. 11/12/2010 was submitted on13/12/2010 which says in last para asunder: "In this connection we would have by inform you that the persons who has worked in this matter has already left our company. So, in this case also, similar to BMA steel, persons responsible for liaison job has left the company [Annex II] Is it coincidence that both the persons were with them only three-months back i.e. in August when they replied notice u/s 133(6)and both quit the employment at the time of stating truth. " On the aforesaid ground, I conclude that the claim of assessee that it incurred ....
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....sought the cooperation of such payee to file their reply and supporting documents. (IV)The AO drew the conclusion wrong or misconceived reasoning with properly appreciating the facts and only by analyzing the replies filed by the assigns which can be observed from the comments in the assessment order by comparing the replies submitted by the assigns. (V) The AO failed to appreciate the fact that with effect from 1st April 2008 from the subsequent periods, WWIL had directly appointed BMA Stainless Ltd as its liaison agent in place of the appellant. Thus the question on the capability of the said party to work as assign of the appellant does not arise. More so when the authenticity of the job is not in doubt. (VI) . The AO did not enquire about the payment with other two parties, namely M/s. Maxpro Tracon (P) Ltd. and . Statt Investment & Services (P) Ltd. However he added to the total income, the amount of liaison fees paid to these two parties too. (VII) The appellant declared and confirmed all the supporting and documents relied upon have been duly filed and discussed before the AO. (VIII) Alternatively, it is argued that the appellant ....
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.... CIT(A), the revenue is in appeal before the Tribunal. We have heard the submissions of the learned DR and the learned counsel for the Assessee. The learned DR pointed out the enquiries made by the AO and submitted that there was complete failure on the part of the Assessee to let in any evidence to prove that services were rendered by the persons to whom the Assessee made payment of commission. It was his submission that in the absence of any evidence to show that services were in fact rendered by the person to whom commission was paid, the deduction claimed cannot be allowed. It was his submission that the CIT(A) had ignored this vital requirement of law and has proceeded to give relief to the Assessee based on irrelevant considerations. He prayed that the order of the AO be resorted. 18. The learned counsel for the Assessee reiterated submissions as was made before the CIT(A) and relied on the order of the CIT(A). In particular it was submitted by him that out of the five persons to whom commission was paid by the Assessee, enquires were conducted by the AO only from 3 persons and there was no justification for disallowance of commission paid to the other two persons. 19. ....
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....d has concluded that the those parties claim of doing any liaison. job is not correct, not commenting on the fake agreements, does not become a proof of job done by parties. Where is not questioning the agreement arises? III) The assessing officer did not provide the proper opportunity to represent the case under various pleas, as appear from the letters filed by the parties. Despite of the fad, the appellant sought the cooperation of such payee to file their reply and supporting documents. This is factually incorrect. BMA Stainless Received the notice on 23/1112010. They prayed for time vide its letter dt 24111/2010 on the ground that concerned person ,is out of station. The time was allotted on 06/12/2010 . No body appeared on the said date. On 10/12/2010, BMA writes "we. would like to inform you that the persons who has dealt this matter has already left our organization" So where is the question of not giving proper opportunity? Ld CIT(A) did not give attention to A.O remark in his assessment order that the same party was not even able to identify the staff who actually did the job in its letter dt 04/08/2010'. Regarding CP Re-roller Pvt.ltd C.P Reroller vide its l....
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.... not be extended to parties who were enquired into and abjectly failed to bring on record even most fundamental evidence on record. VII The appellant ,declared and confirmed all the supporting and documents relied upon have been duly filed and discussed before the AO. The statement of Ld CIT(A) IS factually incorrect . Neither the assessment folder was called for ,nor the statement of A.O was asked for, nor was he. called for hearing. How can Ld CIT(A) give certificate of authenticity that assessee had given all the documents". The fact is on record that none of the parties appeared u/s 131 of the I T Act. Did not submit any evidence which was later asked u/s 133(6). On 27/12/2010 ,just three days before it merely filed letter in office without any corroborative evidence asked for . Even that letter itself says at any places "enclosure " .however no enclosure was attached . The date of letter was chosen on 27112/2010 , knowing fully well that letter cannot be countered for paucity of fund. VIII Alternatively, it is argued that appellant has not made any expenditure to earn that income save and except the expenses admissibility thereof are in dispute. The expens....
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.... accounts of the recipients are duly checked and audited by the statutory auditors under the Companies Act and Income-tax Act. It is totally irrelevant because the issue involved is not regarding-source of the payment. How come this fact proves any work done by parties ?? XI) Such payments of liaising fees were subject to proper deduction of tax at source and such compliances have been duly made. The copies of .the respective income tax records and audited annual accounts of the assigns are furnished. Same as above . These action does not make a fake expense as authentic expense. XII) In view of the above observation / findings and discussions-the claim of the appellant that it had appointed the assigns to do the job in its behalf and has not done the job by itself cannot be denied. In all the aforesaid 11 points , not a single evidence in support of the parties who abjectly- failed , parties who did not abide by law were discussed in the assessment order. For example Ld CIT (A) did not even wrote a word regarding the denial by the Broadcaster about .the involvement of parties. ' Ld CIT (A) did not even state at any place why the questions which were ....