TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 465
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...., in the year under consideration, the assessee also made domestic sales of Rs. 20,95,92,795/- to M/s. Rhine & Raavi Holdings Ltd. and paid sales commission amounting to Rs. 1,59,97,994/- to M/s JB Exports Ltd and Mr. Satish Kumar Goel. This commission was disallowed by the AO. 2.1 Further, the AO also made disallowance of Rs. 5,000/- on account of vehicle and conveyance expenses, disallowance of telephone expenses amounting to Rs. 50,000/- and disallowance on account of TDS amounting to Rs. 9,791/-. 2.2 It is also seen that during the course of assessment proceedings, the assessee had filed revised computation of income whereby the assessee reduced his accrued interest income on insurance claim as well as income on account of insurance claim. However, the AO did not allow the claim raised by the assessee. 2.3 Aggrieved, the assessee preferred an appeal before Ld. CIT(A) who deleted the addition of Rs. 1,59,97,994/- on account of sales commission and also deleted the disallowance on account of travelling and conveyance expenses, telephone expenses and business promotion and festival expenses. 2.4 The Ld. CIT (A) also directed the AO to reduce the income of the assessee by Rs. 7....
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....s, business promotion and festival expenses, it was submitted that the element of personal use in these expenses could not be ruled out as the necessary evidences were either not in possession of the assessee or they were not produced before the AO. It was submitted that these additions were wrongly deleted by the Ld. CIT (A) and they needed to be restored. 4. In response, the Ld. AR placed reliance on the order of the Ld. CIT (A) and vehemently argued that the Ld. CIT (A) had allowed these issues after detailed examination of the facts as well as after duly considering the settled judicial precedents and, therefore, the same needed to be upheld. 5. We have heard the rival submissions and have perused the material on record. As far as the first ground raised by the department regarding sales commission paid to M/s. J.B. Exports Ltd. and Shri Satish Kumar Goel is concerned, it is seen that during the year the assessee has incurred expenditure of Rs. 5,38,13,332/- on account of commission paid to various parties. The assessee has made sales of Rs. 20,95,92,795/- to M/s Rhine & Raavi Holdings Limited and has paid commission to one Mr. Satish Kumar Goel of Rs. 53,86,004/- and M/s JB ....
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....n allegedly paid by the assessee. 5.2 Further, with respect to the commission paid to M/s JB Exports Ltd, the assessing officer has noted that company was engaged in the business of yarn and textile, but did not have any business with respect to the pharmaceuticals. Similarly, on the commission income earned by the M/s JB Exports Ltd, the assessing officer also noted that the gross total income of the assessee was Nil and a refund of Rs. 34,53,150/- had been claimed by the assessee. It has been further noted by the AO that the gross total income offered by the company was nil, whereas the commission income earned by the company was Rs. 1,06,11,990/-. 5.3 Further with respect to the sales made to the Dubai party of Rs. 31.32 crores. The Assessing Officer noted that the commission was paid to the same party and that this issue of payment to the foreign commission has already been referred by the assessing officer to the Foreign Tax Division of the CBDT on 15/12/2010. 5.4 The Ld. CIT (A) has allowed the claim of the assessee vide Para No. 6 of the impugned order. The main reason for allowance of the claim is that the assessee submitted the copy of the commission agreement containin....
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....urpose of selling of the pharmaceutical products, but has been paid to persons not having any experience in selling of pharmaceutical products. Moreover, the assessee has also not demonstrated that how the commission agents have sold the pharmaceutical products by helping the assessee to increase its turnover. It is also to be noted that the Ld. CIT (A) has held that the assessee had obtained the services of the commission agent on del credere basis. However, we fail to understand as to how the payment of del credere agency commission is justified in absence of proof of rendition of services. 5.6 The Ld. CIT (A) has also noted that the AO had allowed commission on export sales in the earlier assessment years. However, the fact that payment of commission on export sales was allowed in the preceding assessment years cannot be used as a justification for allowing the commission paid by the assessee for domestic sales by drawing a parallel of payment for export commission. In fact, the assessing officer has already referred the matter to the Foreign Tax Division of the Central Board of Direct Taxes. The assessee has given no proof of rendition of services by these two agents before th....
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....al purposes. 5.8 Regarding ground Nos. 2 and 3 in which the department has challenged the deletion of addition on account of interest on insurance claim and deletion of income from insurance claim, it is seen that the assessee had filed insurance claim of Rs. 5,42,83,132/- on account of loss of stock during the course of export out of India. This amount of claim was credited by the assessee to his profit and loss account. Subsequently, the claim was rejected in its entirety by the insurance company and the rejection letter was received by the assessee in April, 2007. Besides the amount of insurance claim, the assessee had also credited notional interest income of Rs. 1,73,77,580/- on such insurance claim to his profit and loss account. As the claim had been rejected and the interest was notional, the assessee filed revised computation of income claiming non-accrual of the insurance claim and interest thereon. However, the AO rejected the claim because revised return of income was not filed within the stipulated time, as laid down in the Act, and the AO was of the opinion that such deduction was not permissible because the assessee himself had credited the amount to his profit and ....
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.... the same had neither accrued nor earned during the year under consideration. 5.10 On this issue, we agree with the interpretation of the Ld. CIT (A) that the judgement of the Hon'ble Apex Court in the case of Goetze (India) Ltd. vs. CIT (supra) does not limit the power of the appellate authority but only of the assessing authority. Further, the Hon'ble Apex Court in the case of Jute Corporation of India vs. CIT reported in 187 ITR 688 has held that with reference to section 251 (1)(a) of the Act, the declaration of law was clear that the power of the AAC was co-terminus with Act of the ITO and, if that is so, then there is no reason as to why the appellate authority did not have the power to modify the assessment order on an additional ground even if it was not raised before the ITO. The Hon'ble Apex Court in another judgment in the case of Anchor Pressings (P) Ltd. vs. CIT 161 ITR 159 held that where the assessee had omitted to claim deduction and if precise and clear material is available on record to the fact that the assessee is entitled to such relief, then the income tax authority is required to grant such relief. 5.11 Coming back to the issue before us, the facts are undi....