TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 930
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....or the A.Y.2004-05 without appreciating the fact that the assessee was unable to prove the need for commission @25% paid to M/s.Khadlaj Perfumes LLC, whereas commission incurred with other parties was @0.5% to 5.85%" 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in deleting the addition made in respect of loan advanced to associated enterprises, M/s.Mellow Commodities SDN.BHD at arm's length price, without appreciating the fact that section 92 of the I.T. Act is clearly applicable to the transaction made with the associated entity." 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in allowing the appeal of the assessee placing reliance on the decision of the jurisdiction Hon'ble ITAT, Mumbai Bench(Special Bench) in the case of M/s. All Cargo Global Logistics Ltd (137 ITD 287), whereas the decision in All Cargo global logistics Ltd has been further contested in appeal and the decision of the Hon'ble Mumbai High Court is still pending." 4. The Appellant prays that the order of the CIT(A), on the above grounds be set aside and that of the Assessing Officer be restored. 2. Facts, in brief are th....
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....y assessments were made for AY 2004-05 and AY 2005-06, prior to search, and no disallowance of commission expenses were made. There is a generally accepted practice and requirement of appointing a local agent for business in Middle East. From the details of country wise exports called, it is observed that sales to UAE and Yemen fell at end of 2002-03 and beginning of FY 2003-04. The exports of Afzal Pandharpuri to UAE fell from Rs. 7.45 crores in FY 2002-03 to Rs. 6.36 crores in FY 2003-04. Similarly exports to Yemen fell from Rs. 2.53 crores in FY 02-03 to Rs. 1.61 crores in FY 2003-04. This corroborates the claim of the appellant that its sales were getting affected by availability of spurious and duplicate products necessitating appointment of a strong sales agent. The sales of branded product Afzal Pandharpuri went up manifold, both in terms of value and quantity, even after increasing the sales price, after the appointment of Khadlaj Perfumes LLC, Dubai. The details of the commission agent giving name and address was furnished. The AO did not seek verification of details regarding the foreign agent by using the DTAA provisions for exchange of information and unreasonably insis....
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.... not tenable on merits. As regards the alternative contention of the assessing officer, I have already discussed earlier that the assessing officer has selectively considered the rates of commission without spelling out any reason. This action of the assessing officer is biased. Further, I am unable to agree with the view of the AO that even if the commission services is held as genuine, part of the payment should still be disallowed as unreasonable. Once the services is held to be genuine, it is not for the AO to sit in judgment on the reasonableness of the payment. In any case there is no evidence that the payment has been siphoned off. The commission agent is an independent third party. I therefore do not uphold the alternative argument of the AO. Ground of appeal no.8 is allowed for all the AY. 2004-05 to AY.2008-09 Similarly, the disallowance of proportionate interest on interest free advances given by the assessee was deleted by Ld. CIT(A) by noting that the advances were subsequently converted into Share Capital and the said transactions were duly approved by the RBI. Finally, the matter was concluded in the following manner:- 5.10.6 It is noticed that in the assessment ....
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....000 MYR at beginning of calendar year 2003 which increased to 500000 MYR by the end of 2003. This again was increased to 1000000 MYR by end of calendar year 2004. In calendar year 2006, MYR 430300 was shown as share application money. In calendar year 2007, the total share capital went up to MYR 190,42,700 and the share application money was converted into equity. Further, the AO has made halfhearted attempt at determining the comparable. He has taken the LIBOR rate to be uniform 6% for the entire period of FY 2003-04 to FY 2007-08 on the dates when the amount was advanced without identifying the LIBOR rate for the specific dates on which the amount was advanced and for specific tenure. Further, there is no basis given for determining the markup @ of 4% over LIBOR. Lastly and most significantly, the AO has not examined the true nature of transaction that the amount was advanced only as subscription to equity capital. The fact that the entire amount advanced was converted into equity was before the AO even as he framed the assessment order. It is a fundamental proposition of Transfer Pricing that the true character of the transaction has to be considered before applying the ALP. The....
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...., we find that, at the moment, the issue stood squarely covered in assessee's favor by the cited decision of jurisdictional Bombay High Court as rightly noted by Ld. CIT(A). Similar view has been taken by Hon'ble Delhi High Court in CIT Vs. Kabul Chawla [380 ITR 573]. Further, upon perusal of SLP No. 18560 of 2015 dated 12/10/2015 admitted by Hon'ble Supreme Court against the decision of Hon'ble Bombay High Court rendered in CIT Vs. Continental Warehousing Corporation [supra], we find that Hon'ble apex court has only admitted SLP against the ruling of the Hon'ble Bombay High Court's finding that no addition can be made in respect of assessments which have become final if no incriminating material is found during search or during 153A proceedings. It is seen that the Hon'ble Apex Court has not stayed or suspended the operation of the decision of the Hon'ble Bombay High Court and therefore, at the moment, the decision of jurisdictional High Court is binding on us and we are bound to follow it. 6. For the sake of completeness, we find that Hon'ble Delhi High Court in the case of Kabul Chawla (supra) and others dated 28/08/2015 has summarized the legal position on ....
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.... making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the Course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. 39. The question framed by the Court is answered in favour of the Assessee and against the Revenue." Respectfully following the binding judicial precedent, we upheld the conclusions drawn by Ld. CIT(A) and dismiss revenue's appeal. Revenue's Appeal ITA No. 3037/Mum/2014, AY 2005-06 7. The assessee, in the similar fashion suffered quantum additions against commission and interest aggregating to Rs. 637.60 Lacs. The Ld. CIT(A) applying the same logic and reasoning, deleted the same. The order of first appellate authority is common order from AY 2004-05 to 2008-09. Aggrieved, t....
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.... the present case, the assessment had been completed under summary scheme under section 143(1) and time limit for issue of notice under section 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and in such a case there was no question of abatement. Therefore, addition could be made only on the basis of incriminating material found during search. Further, the revenue's appeal against the said order of the Tribunal has been dismissed by Hon'ble Bombay High Court in CIT Vs. Gurinder Singh Bawa [2015 79 Taxmann.com 398] finding no substantial question of law in the same. Hence, facts being identical, following binding judicial precedent, we dismiss revenue's appeal. Assessee's Appeal ITA No. 3077/Mum/2014, AY 2006-07 9. In this year, the assessee has suffered another quantum addition of Rs. 72.18 Lacs, being expenses incurred for charitable purposes which has been confirmed by Ld. CIT(A). The Ld. AR, at the outset, drew our attention to the additional Grounds of Appeal being filed by the assessee vide letter dated 24/10/2017 which reads as under:- The Learned CIT(A) failed to appreciate that as assessment was completed and as no in....