AI Drafter 
TaxTMI 
TaxTMI 
2017 (12) TMI 1390
X X X X Extracts X X X X
X X X X Extracts X X X X
....h was taken u/s. 132 of the Act. During the course of search proceedings, Mr. Sandeep Sitani had admitted that he is not doing any real business in his concerns and was providing only accommodation entries. Accordingly, the Assessing Officer took the view that commission expenditure claimed to have been paid to Inorbit Advertising is bogus and accordingly disallowed the same. 3. Before the learned CIT(A), the assessee contended that it has discharged its onus to prove the genuineness of the payment of commission by furnishing all the required details. The assessee further submitted that Inorbit Advertising has procured business to the tune of Rs. 290.70 lakhs and the assessee has paid commission @ 15% as per trade practice. It was submitted that the assessee has collected service tax on such commission and has also deducted tax at source. It was further argued that Inorbit Advertising was not operating from the address belonging to Mr. Sandeep Sitani, from where he was operating several concerns. In the statement given by Mr. Sandeep Sitani, there was no specific allegation against the assessee. The assessee has also submitted before the learned CIT(A) that it had asked for cros....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submitted that the assessee has given all the details to the AO in order to prove the genuineness of the commission expenditure. The assessee had generated income of Rs. 290.70 lakhs from out of the sign boards and the assessee paid commission to M/s Inorbit @ 15%. He submitted that the assessee has collected service tax from Inorbit Advertising and has also deducted tax at source from the commission payment. Learned AR further submitted that the assessee has furnished copies of bills raised upon the assessee by Inorbit Advertising and also furnished details of payment made to them, copy of TDS certificates. Learned AR further submitted that Inorbit Advertising has filed return of income for the year under consideration duly disclosing payments received from the assessee and has also claimed TDS deducted by the assessee. The learned AR further submitted that the Assessing Officer has placed reliance on the general statement given by Mr. Sandeep Sitani. He submitted that Mr. Sandeep Sitani did not specifically implicate the assessee. He submitted that the Assessing Officer has not brought any material on the record to disprove the claim of commission payment. Further submitted that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. Nowhere in the statements given by Mr.Sitani the name of appellant company has been mentioned. No incriminating materials relating to in the commission paid or bills raised have been found during the course of search. 6. The only thing to be seen is whether the payments were reasonable and against services rendered. The appellant has paid an amount of Rs. 48,94,225/- against the bill amount of Rs. 2.97 crores. The commission has been charged at 15@ of the bill amount. The specific details of advertisement orders obtained from various parties have been filed. It is argued that procuring orders for advertisement in a competitive market is not possible without payment of commission to agencies. It is argued that the company Inorbit Advertising is in the business of advertising and has procured them the specific orders. They have been paid for introducing the client. They have confirmed the receipts by filing specific confirmation. The payment is a business necessity and is also reasonable in amount. The explanation of the appellant appears to be in harmony with market realities. 7. There is no evidence that lnorbit Advertising has issued fictitious bills and h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ters Pvt. Ltd. (supra)have been rendered on the basis of facts available in that case and hence it is distinguishable. Accordingly, we are of the view that the order passed by the learned CIT(A) on this issue does not call for any interference. 9. Next issue relates to disallowance of payment of legal fees of Rs. 45.97 lakhs. The assessee has paid legal fees to the firm M/s. Cordato Partners, which is an Australian legal firm. The assessee had engaged the above said firm in connection with legal dispute that arose between the assessee and M/s. LBM, an Australian concern. Thus, the services of M/s. Cordato Partners were offered in Australia. The Assessing Officer took the view that the assessee should have deducted tax at source from the payment made to M/s. Cordato Partners u/s. 195 of the Act. Since the assessee had failed to deduct TDS, Assessing Officer disallowed the expenditure, by invoking provisions of section 40(a)(ia) of the Act. 10. Before the learned CIT(A), the assessee submitted that the legal charges received by M/s. Cordato Partners is not taxable in India in terms of Article 14 of Double Taxation Avoidance Agreement between India and Australia. Accordingly, he....