AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 515
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....es by Lining/Coating Method within the Civil Engineering and Construction segment. The Company was awarded a contract by the Kolkata Municipal Corporation (KMC) for construction work of Up gradation (Refurbishment & Rehabilitation) of Man Entry Sewer along Lenin Sarani and additional contract for construction work of Up gradation (Refurbishment & Rehabilitation) of Man Entry Sewer along Nimtola Ghat under Jawaharlal Nehru National urban Renewal Mission (JNNURM) of the Government of India in the Ministry of Urban Development. The Assessee commenced the performance and execution of the work under the said contracts during the fiscal year 2008-09 and fiscal year 2009-10 by establishing a Project Office at Kolkata. 4. For A.Y.2010-11 and 2011-12 the assessee while computing its income from business had claimed as a deduction expenditure on account of agency commission as follows : Assessment Year Atirath Commercial Pvt. Ltd. (Rs.) M/s. IMACO Projektentwicklungs Gmbh,Austria(Rs.) Total (Rs.) 2010-11 3,90,80,776/- 49,54,838/- 4,40,35,614/- 2011-12 3,23,56,510/- 36,66,875/- 3,60,23,385/- 5. The Assessee to substantiate its claim that the commission in question was pa....
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.... directors of ACPL. The AO had also issued a questionnaire along with summons u/s 131 of the Income Tax Act, 1961 (Act) calling upon ACPL to produce several documents. In the examination of Shri Aditya Mard he confirmed the fact that he received commission from the assessee for services rendered and also explained the nature of services rendered by him. The AO however was of the view that ACPL did not have any specific power to represent or negotiate on behalf of the assessee. With reference to ACPL having rendered help to the assessee from time to time when tenders are published till the end of the contract, the AO was of the view that there was no evidence of the Assessee having rendered any such at the tendering stage produced. Similarly the AO was also of the view that the services rendered by ACPL of doing survey of rates prevailing for similar contract in the country, was not substantiated by any documentary evidence. The AO also held that no evidence was filed to prove coordination by Shri Aditya Mard with KMC. The AO was also of the view that ACPL did not have sufficient work force to carry out the job liaison. The AO also went through various e-mail exchanged between ACPL ....
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....the evidence on record deleted the addition made by AO observing as follows :- "4.4. I have carefully considered the facts of the case. The appellant is a foreign company without any permanent establishment in India. It bid for and secured civil engineering contract from Kolkata Municipal Corporation. The agency commission paid to Atirath Commercial Pvt Ltd is stated to be for comprehensive local support such as administrative, liaison, technical, regulatory etc. in Kolkata. It has been stated that without such local support, it would have been very difficult for a foreign company to bid, secure and execute a complicated Govt. project especially because the appellant was entering in India for the first time for carrying out such business. Copy of agreement with Atirath Commercial Pvt. Ltd was also produced in this regard. The assessing officer was, however, of the view that Atirath Commercial Pvt. Ltd had not provided any real services to the appellant. In this regard, the appellant has produced a series of correspondence, mostly through e-mail, between Atirath Commercial Pvt. Ltd and itself. In his comments on the same, the assessing officer has however stated that these were mos....
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....ness association or nexus between them. The assessing officer has, in his order, also observed that Atirath Commercial Pvt. Ltd had, after receiving agency commission from the appellant, debited huge payments, purpose for which has not been clarified. A doubt has been raised that such payments might be for such purpose which otherwise would have been an offence prohibited by law. First and foremost, such allegation is based on mere suspicion because no material has been brought on record to indicate, much less establish, that any payment for such purpose had actually been made by Atirath Commercial P'vt.. Ltd. It is just a guess work based on conjecture and surmise. As held in the decision in the case of CIT vs. Ram Narain Goel 224 ITR 180 (P&H) and various other cases, suspicion, however strong, cannot substitute for evidence for making addition. As held in the cases of Jindal Saw Pipes Ltd. (supra), Surya Foods & Agro Ltd. (supra), Dresser Valve India (P) Ltd. (supra) etc. cited by the appellant, merely because the order is from a govt./ semi- government body, it does not follow, that any payment to agent in connection to the same is against public policy. Secondly, even if t....
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....gard CIT(A) also referred to the fact that tax had been deducted at source and paid to the credit of Govt. of India. 13. As far as commission paid to ACPL is concerned, the CIT(A) was of the view that the facts in A.Y.2010-11 and 2011-12 were identical to the facts as it prevailed in A.Y.2009-10. He also found that the reasons for disallowing commission was also identical in all the assessment years. In these circumstances, he was of the view that the conclusion drawn by the CIT(A) and while deciding the appeal of the assessee for A.Y.2009-10 were proper and acceptable. The CIT(A) held that the disallowance of commission paid to ACPL cannot also be sustained. Aggrieved by the aforesaid orders of CIT(A) the revenue has preferred the present appeals before the Tribunal. 14. The ld. DR filed an application praying for an adjournment. The ld. Counsel for the assessee brought to our notice that order of CIT(A) for A.Y.2009-10 has been accepted by the revenue. In this regard our attention was drawn to page 170 for A.Y.2010-11 wherein the AO has recommended that order of CIT(A) had to be accepted. The following were the relevant recommendations of the AO :- "To The JDIT (Intl.Taxn.) r....