2018 (6) TMI 1545

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....rd together and hence they are being disposed of by this common order, for the sake of convenience. 2. The assessee is engaged in the business of manufacturing of textiles through handloom and power looms. 3. We shall first take up the appeal filed for AY 2009-10, wherein the assessee is assailing the decision of Ld CIT(A) in confirming disallowance of commission expenses paid to a foreign party. 4. The facts relating thereto are set out in brief. The AO noticed that the assessee has claimed commission expenses of Rs. 38.74 lakhs. It was noticed that the assessee has deducted TDS on commission payments of Rs. 24.18 lakhs only. Hence the AO disallowed a sum of Rs. 14.48 lakhs out of commission expenses u/s 40(a)(ia) of the Act for non-ded....

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....l. 6. On the contrary, the Ld D.R supported the order passed by Ld CIT(A). 7. Having heard rival contentions, we find merit in the contentions of the assessee. The invoice raised by the assessee as well as the Letter of Credit obtained by the customer of the assessee from bank clearly show that 2% commission was payable to local agents. It was submitted that the same was paid as per terms and conditions entered between the parties. In effect, what the assessee realised was only 98% of the invoice value. Even if the assessee was not able to substantiate the nature of services provided by the local agents, the shortage in realisation is allowable as normal business deduction. Since the impugned payment is not chargeable to tax in India in t....