TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 1286
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.... survey under section 133A of the Act. For this Revenue has raised following grounds: - "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the disallowance of Rs. 1.50 crores of Commission without appreciating the face that the assessee itself had voluntarily offered the disallowance of commission as excessive and unreasonable in the computation of income filed on 13.02.2006 and 31.03.2007. On the facts and in the circumstances of the case and in law, the Id. CIT'(A) erred in directing the Assessing Officer to delete the disallowance of Rs. 1.90 crs of commission without appreciating the vide Circular No 549 dated 31.10.1989, CBDT has clarified that..... Under the new provisions, in an assessment order passed u/s 143(3) in a scrutiny case, neither the income can be assessed at a figure lower than the returned income, nor loss can be assessed at a figure higher than the return loss, nor a further refund can be given except what was due on the basis of the returned income and which would have already been allowed under the provisions of section 143(1)(a)(ii). On the facts and in the circumstance....
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.... claim of deduction u/s10A at Rs. 4.82 crores for AY 2005-06 as on factual verification it is found that the claim is made for 11th year. Secondly the payment commission during the A.Y. 05-06 is at Rs. 8.62 crores is excessive in comparison to last year's payment AY 05-06 is at Rs. 8.62 crores is excessive in comparison to last year's payment (A.Y. 04-05). I would like to offer Rs. 1.90 crores (Rs. one crore ninety lakhs) being excessive payment made to M/s. Hitesh Trading Company, Singapore and pay the taxes accordingly." 4. Accordingly, the AO was of the view that the assessee has voluntarily admitted that the commission claimed to the extent of Rs. 1.90 crores was excessive and the same was offered for taxation in the revised returns filed from time to time. The AO added the same as income declared under section 133A of the Act amounting to Rs. 1.90 crores. Aggrieved, assessee preferred the appeal before CIT(A), who allowed the claim of the assessee after considering the submissions of the assessee and remand report of the AO by observing in Para 1.5 as under: - "1.5 I have considered the submissions of the learned Counsel, the remand report of the AO and reply of the Ld. Co....
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....mission and also treated the same as excessive. According to her, in earlier years the assessee's commission to the extent of 5% was allowed, whereas in this year the assessee has claimed 8%, which is higher and due to that reason the assessee himself admitted before the survey party and while filing before AO the returns of income. She stated that the CIT(A) has totally misdirected by placing his judgment on the provisions of section 40A (2b) of the Act. On the other hand, the learned Counsel for the assessee relied on the order of CIT(A). 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the assessee in its regular business entered into an agreement with Hitesh Trading Co. which is based at Singapore, to act as sales agent for sale the assessee's products in USA and Canada on 01.01.2000. Vide this agreement the mandate was to promote and market sale of the assessee's products in the said territory. The amount of commission was 5% of FOB value of the sale proceeds. With a view to expand business further, the assessee desired to do penetration in other emerging markets and accordingly, a....
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.... mistake, the director agreed to rectify. (ii) The next question was regarding decrease in the net profit and in response to which it was clarified that such fall was due to the increase in the amount of commission payment. Upon this, the director was asked to give name and address of the persons to whom commission was paid, which was answered. Upon this, a question was asked about the increase in the amount of commission to the said company. In response to this, the director gave detailed explanation, justifying the increase in rate of commission vide Question and Answer 14 of the Statement. (iii) As such, as is self- evident, the director gave proper explanation regarding the increase in rate of commission and there was absolutely no question about such commission being bogus or inadmissible. (iv) Further, the director offered Rs. 1.90 crores "being excessive payment made to M/s. Hitesh Trading Company. Before us now, Ld. Counsel argued that the admission - if at all is binding and admissible was regarding the excessive payment and not regarding bogus and inadmissible nature of the expenditure. Most importantly. the word "excess' was in the context of the increase in....