TaxTMI 
TaxTMI 
2019 (5) TMI 1819
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....ibunal") read as under:- 1. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,68,19,775/- without appreciating the fact that as per amended provision of section 195, the assessee has to file an application before the AO for determination of sum and rate of tax at which tax would be deducted on such foreign remittances and the said exercise has not been carried out by the assessee. 2. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting addition of Rs. 27,39,215/- u/s 68 of the I.T. Act, 1961 relying on the additional evidences filed by the assessee during the course of appellate proceedings without giving an opportunity to the AO, which is in contravention to rule 46A of I.T.Rules 1962." 3. "The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored". 4. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary". 3. The assessee is engaged in the business of dealing in Drugs & Pharmaceuticals. The ....
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....at these MNC's due to their internal policies sell their products to their agents or traders and received advance payments against sales. The assessee submitted that it did not give substantial advance payments to the suppliers for importing the produces for which it involved services of the traders and agents who took care of the same and also arrange for supplies of the raw material directly from these companies. It was submitted that these agents and traders charge their commission as the overseas MNC companies as matter of their policy do not give them commission. The assessee submitted that these commission or agency charges includes expenses incurred by the overseas agents which included registration , vendor approval, quality approval, technical documentation, local analysis etc., which is maximum in the first year as all the registration and formalities have to be undertaken. It was submitted that prices or value generated is also on higher side in the first year in order to cover up the expenses mentioned above. The assessee submitted that these commission or agency charges also included out of pocket expenses which is the responsibility of the overseas agents to be incurr....
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....for registration shall be reimbursed as decided by mutual consent. Thus, the AO observed that these registration charges did not have any link with amount of sales . The AO thus observed that overseas commission paid to these four agents were found not to be reasonable and rather excessive , the AO show caused assessee as to why these overseas commission be not restricted to 6.25%. The assessee reiterated its arguments as were advanced earlier before the AO. It was observed by the AO that the out of four agents to whom overseas commissions are payable , the assessee did not made payment to two agents. The AO observed that it has also casted doubt on the claim of genuineness of the claim of these commission expenses. The AO also observed that the confirmations are not original and rather they are Xerox and E-mails received by the assessee. The AO also observed that these confirmations do not give the relevant details such as invoice number, date of sale , description of item , sale value and basis of computation of commission charged. The AO observed that these confirmations are nothing but self serving documents obtained by the assessee during the course of assessment and all are d....
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....observed that provisions relating to payment of commission to the overseas agents are dealt with by Article 12 relating to ‗Independent personal services' or Article 7 relating to ‗Business Profits' , thus such commission shall be taxable in the country of residence of the recipients and not in the country of source i.e. India. The assessee submitted that these payments are not liable to be taxed in India but in the countries to which these parties belong to. The assessee submitted that it has requested these foreign agents to provide proof of their residences and also confirm that these overseas commission are taxable outside India. The assessee submitted that no tax was deductible at source on these payments and the bankers also did not ask for proof of deduction of income-tax at source before making payments to these overseas agents for commission , which itself shows that no income-tax was deductible at source on these payments. The assessee relied upon the decision of Hon'ble Supreme Court in the case of G.E. India Technology Centre Private Limited v. CIT reported in (2010) 193 Taxman 234(SC) to contend that only if the payee is taxable in India, then only Section ....
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....agents. It is therefore clear that the assessee has not followed the provisions of section 195 and thus provisions of section 40(i) is therefore attracted to the case of the assessee. 6.4 To summarize, the Overseas Commission payment is thus not allowable as business expenses due to following reasons:- -The assessee has failed to bring any material evidence on record to establish the nexus between Registration charges and Sales requiring higher commission expenses payable. -The assessee failed to establish that Commission has accrued to the parties/agents, in view of the specific clause in the agreement which warranted fulfilling a target of Sales of respective items over next three years. The contention that Commission on Sales has not been accrued during the year, is evidenced by the fact that Commission to the 2 agents are still outstanding till date of this order. -Without prejudice to the merit of the case as discussed above and ALTERNATIVELY, the Overseas Commission is not admissible as Business expense, as the assessee has violated the provision of section 195 and therefore invoking the provision of section 40(i) of The I. T. Act. ....
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....king s. 40(a)(i) of the Act , the relevant provisions of s. 40(a)(i) of the Act are reproduced below: "s. 40(a)(i) Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", - (a) In the case of any assessee - (i) Any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable (A) outside India, or (B) In India to a non-resident, not being a company or to a foreign company, on which tax has not been paid or deducted under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year; or in the subsequent year before the expiry of the time prescribed under subsection (1) of s. 200". 50. The perusal of the above provisions shows that any expenditure which is payable outside India on which tax is deductible at source but has not been deducted or after deduction has not been paid, shall not be allowed as deduct....
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....verseas agents are dealt with by Article 12 relating to "independent personnel services" or Article 7 relating to 'Business Profit" in all the DTAA. As per the provisions of the respective DTAA, the payment of such commission shall be taxable in the country of residence of the recipients and not in the country of source i.e. India. As such these payments shall be liable to tax not in India but in the countries to which these parties belong to. 54. In view of the above, we submit that these charges are not subjected to tax in India. This is also established in view of the fact that even at the time of making the payment/remittance of the commission; no deduction of tax was enforced by the bankers which itself proves that the payment is not subjected to tax. 55. Once it is established that these agents are not taxable in India, the provisions of TDS u/s. 195 of the Act shall not be applicable. It is categorically held by the Hon'ble Supreme Court in the case of GE India Technology Centre Pvt Ltd v. CIT [327 ITR 456] wherein it is held that only if, the payee is taxable in India, section 195 can be invoked. Thus, in view of the settled position, we submit tha....
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....of such sum would not be income chargeable in the case of the recipient, he may make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (I) only on that proportion of the sum which is so chargeable ". 59. The above provisions clearly shows that s. 195(2) of the Act would be applicable only in a case where the assessee, making payment to a non-resident, considers that the whole such sum would not be the income of the recipient, an application should be made to the Assessing Officer to determine the proportion of the total amount which can be subjected to TDS. The said s. 195(2) of the Act clearly proves that it is only applied to a situation where the amount payable to the non-resident is taxable in India and the quantum of income out of the total amount payable to the non-resident cannot be ascertained reasonably. In other words, s. 195(2) would be applicable only in a case where the amount payable by the appellant to the overseas agents is otherwise liable to TDS. In order to invoke s. 195(2) of the Act, it is necessary....
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.... OVERSEAS COMMISSION a) There is no requirement of deducting the TDS as on the commission paid to the non resident abroad as they are not having any permanent establishment in India they are domicile of the respective Countries i.e. Germany, U.K. and U.S.A. They are covered by double tax Avoidance Agreement entered by the respective Countries with India. They are also not domiciled in India and are domiciled in their respective countries. b) Neither they can be termed as an associated enterprises with the appellant. D.T.A.A. WITH GERMANY: a) It is issued in the notification No.GSR-836 (E) dated 29.11.1996. On perusal of article 4 (1) r/w article 7 (1) and article 14 (1) they are not required to pay any tax in India as stated in the D.T.A.A agreement entered by India with Germany. D.T.A.A WITH U.S.A. a) The said agreement is reproduced in the notification bearing No.GSR 990(E) dated 20.12.1990. On perusal of the clause article 4(1), 7(1), 15 (1) and 23 (1) it will clearly reveal that the abroad non resident commission agent is not required to pay tax in India vide the said agreement. D.T.A.A WITH ....
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....dered outside India could not be deemed to be income which has either accrued or arisen in India. The above contentions if further supported in the judgment reported in 64 DTR 257. f) Relying on the judgment reported in 263 ITR 706 that the Offshore Companies can take the exemption and benefit of double taxation avoidance agreement between the respective countries and such types of interpretation has to be done beneficial to the Assessee. g) It is also settled law that the circulars issued by the Central Board of Direct taxes are binding upon the Income Tax Authorities u/s 119. The above contentions are supporting by the following judgments reported in: 55 ITR 198, 237 ITR 889, Based on the above submission and since the payment was subsequently remitted to the respective parties through Banking channels this clearly established the genuinely of the transaction and the Ld. Assessing Officer has not discharged his burden of proof." Thus, in nut-shell the assessee prayed before learned CIT(A) that additions made on account of expenditure incurred for overseas commission on the grounds of non deductibility of income-tax....
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.... Ld. DR submitted that assessee made payments to overseas agents for commission of Rs. 1.68 crores . Our attention was drawn to the orders of the authorities below. The Ld. DR submitted that Revenue has only challenged as to applicability of Section 195 read with Section 40(a)(i) of the 1961 Act to the payments made for commissions to non resident agents and non compliance of provision of Section 195 committed by the assessee . It was explained that even if assessee contemplates that there is no requirement to deduct income-tax at source on these payments made to overseas agents towards commission but still the assessee is required to approach AO u/s 195(2) to obtain certificate for non deduction of income-tax at source or for deduction of income-tax at source at lower rates than prescribed rates. It was submitted that decision of Hon'ble Supreme Court in the case of G.E India Technical Centre P. Ltd.(supra) is a decision prior to amendments being made in Section 195 of the 1961 Act , and the assessee in the instant case has failed to comply with the requirements of amended Section 195 of the 1961 Act. It was submitted by Ld. DR that the assessee was required to make application be....
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.... overseas agents are stated to be working from abroad. These overseas agents have rendered services towards procuring export orders as well for arranging imports from outside India. The assessee has made payments towards commission to overseas agents by remitting payments from India through banking channel abroad to two agents while for two agents payments were not yet remitted till the year end. The assessee had submitted details of said payments for last three years as under:- Financial Year Overseas Transaction Value (in Rs . ) Overseas Commission Value (in Rs . ) %age of Overseas Commission 2008-09 12,23,22,188.00 1,68,19,755.00 13. 75% 2009-10 16,93,05,845.00 1,05,30,824.00 6.22% 2010-11 6,00,73,432.00 12,01,469.00 2% The assessee had duly submitted copies of agency agreement/contract and exclusivity agreement pertaining to 4 major overseas agents based in USA & Europe as well copies of ledger account of these agents. The four foreign agents to whom aforesaid payment of commission of Rs. 1.68 crore were made are as under: Sr. No. Name of the company Name of the country 1 Regal Rank Ltd UK 2. ....
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....on , vendor approval, quality approval, technical documentation, local analysis etc., which is maximum in the first year as all the registration and formalities have to be undertaken. It was submitted that prices or value generated is also on higher side in the first year in order to cover up the expenses mentioned above. The assessee submitted that these commission or agency charges also included out of pocket expenses which is the responsibility of the overseas agents to be incurred by them. It was also submitted that these overseas commission were paid to overseas agents only after completion of registration and other formalities and achievement of sales target in terms of value and volume . The authorities below have perused the agency agreements. It is provided in the agreements that targets as to value and volumes are fixed for overseas agents to get commission and in case the performances are not forthcoming, the assessee will not be liable to pay these commissions. Thus, these commissions paid to overseas agents are linked to performance by way of export orders generated or import of raw material etc facilitated for the assessee. The assessee was new to export business and ....
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....the assessee. Admittedly , the assessee while making payments to these overseas agents towards commissions did not deducted income-tax at source under the provisions of Section 195 of the 1961 Act but it is a matter of record that the assessee did produce certified Form No. 15CA/15CB before AO during assessment proceedings wherein it is certified by CA that no sum so paid by assessee towards commission to these overseas agents is liable to be taxed under provisions of the 1961 Act. the Revenue could not controvert this position. It is important at this stage to refer to decision of Hon'ble Madras High Court in the case of Evolv Clothing Company Private Limited v. ACIT reported in (2018) 407 ITR 72(Mad.), wherein it was held as under: "19. From the judgment and order of the learned Tribunal under appeal, it appears that the Revenue only contended that the payee in question had rendered technical services in the nature of systematic research to the appellant and received fee in lieu thereof, which was liable to be taxed as per Article 13 (Clause 4) of the Indo-Italian Double Taxation Avoidance Agreement (DTAA). 20. The learned Tribunal took note of the agreement bet....
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....her rendering of the service of market survey abroad would tantamount to rendering of technical service so as to attract taxes in India? (iii) Whether an assessee is liable to deduct TDS on commission paid to overseas agents operating abroad? (iv) Whether the amendment of the Income Tax Act with retrospective effect from 1.6.1976 by the Finance Act, 2010 clarifying that income of non resident would be deemed to accrue or arise in India under Clause (v) or clause (vi) or clause (vii) of sub-section(1) and be included in the total income of the non-resident whether or not the non-resident has a residence or place of business or business connection in India, and whether or not the nonresident has rendered services in India is attracted in the facts and circumstances of this case? 23. The first question necessarily and obviously has to be answered in favour of the appellant/assessee and against the Revenue, the question being covered by the judgment of Supreme Court in Toshoku Ltd., supra. The issue before the learned Tribunal was whether the appellant/assessee had paid for systematic research or for procuring export orders. It was all along the contention of....
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.... income by way of interest, by way of royalty and by way of fees for technical services and not to brokerage or job wise commission on activities incidental to procurement of orders. 27. The Assessing Officer, in effect, held that income could be deemed to accrue or arise in India under Section 9(1)(vii) of the IT Act even if the non-resident did not have place of business or business connection in India or had not rendered services in India. The exceptions provided under Section 9(1)(vi)(b)/9(1)(vii)(b) of the IT Act, which apply to utilization of services of business outside India, did not cover the assessee's case. 28. The Assessing Officer had also taken note of withdrawal of two circulars: (i) Circular No.786, dated 7.2.2000, dealing with payment of export commission, opining that withdrawal, being procedural in nature, would apply to proceedings pending; and (ii) Circular No.23 of 1969, which exhaustively dealt with subject of "Non residents Income accruing or arising through or from business connection in India - Liability to tax - Section 9 of the Income Tax Act, 1961". 29. From the Service Agreement with the agents abroad, it is clear that th....
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.... contention of the Department was accepted it would mean obliteration of the expression "sum chargeable under the provisions of the Act" from Section 195(1)." 32. Where there is no liability in India, there can be no question of disallowance under Section 40(a)(i) or Section 40(a)(ia) of the IT Act on the ground of non-deduction of tax at source. Moreover, where a non-resident has no permanent establishment in India, there can be no liability either under the domestic law or under Double Taxation Avoidance Agreement. In any case, even if a non-resident Indian did have a permanent establishment, but income was earned without availing of such permanent establishment, the income for services rendered abroad could not have been liable for tax deduction at source. 33. Under Section 9(1)(vii)(b), income by way of fees for technical services payable by a person, who is a resident, is taxable income except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India. In view of Explanation (2) to Section 9(1)(vii), technical s....
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....s for technical services means consideration, including lumpsum consideration for rendering any managerial, technical or consultancy services. 38. In the instant case, the Assessing Officer has, in the assessment order, accepted that the appellant assessee has paid commission charges to overseas agents. It is not the case of the Assessing Officer that any lumpsum consideration has been made for any specific managerial, technical or consultancy services. 39. On a overall reading of the Explanation, it is apparent that fees for technical services does not contemplate commission which is order specific and computable at a small percentage of the order value. Section 40(a)(i) does not contemplate order wise commission based on the order value. 40. For the reasons discussed above, the appeal is allowed and the questions framed are answered in favour of the assessee against the Revenue. No costs. Consequently, connected miscellaneous petition is closed." The aforesaid is the decision of Hon'ble Madras High Court in the case of Evolv Clothing Company Private Limited(supra) for AY 2009-10 wherein the Hon'ble Madras High Court has referred to decision of Hon'bl....
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....n terms of value and volume of export orders generated or imports facilitated by these overseas agents for the assessee.These overseas agents were not paid commission in India and payments were remitted abroad by assessee from India through banking channel and in case of two overseas agents it is stated that payments were not made by year end. Attention is also drawn to recent decision of Hon'ble Gujarat High Court in the case of PCIT v. Ferromatic Milacron India Private Limited (2018) 99 taxmann.com 154(Guj.) , wherein Hon'ble Gujarat High Court held that on payments made to overseas agents towards commission for export orders will not entail deduction of income-tax at source u/s 195 and no disallowance u/s 40(a)(i) is warranted by holding, as under: "Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 19.04.2018 raising following questions for our consideration: "A. Whether the Appellate Tribunal had erred in law and on facts in upholding the order of the CIT(A) deleting the addition made on account of disallowance u/s. 40(a)(ia) of the Act for non deduction of tax on commission payable to foreign agents of Rs. 1,20,72,972/-? ....
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....95 of the Act imposes requirement of deduction of tax at source on any person responsible for paying to a non-resident any sum chargeable under the provisions of the Act. The prime requirement therefore for applicability of the section is that the payment to the nonresident should be a sum chargeable under the provisions of the Act. In other words, the payment is not an income which is chargeable to tax in India. Requirement of deducting tax at source under section 195 of the Act would not arise. This aspect was elaborated by the Supreme Court in case of GE India Technology Center P. Ltd (supra) holding that on mere remittances of an amount to non-resident, duty to deduct tax at source would not arise unless such remittances contains wholly or partly taxable income. 5. Section 9 of the Act carries the heading "income deemed to accrue or arise in India. Sub-section (1) of section 9 provides that in following incomes, contained in various clauses therein, shall be deemed to accrue or arise in India. Clause (i) of sub section (1) provides that all income accruing or arising, whether directly or indirectly, through or from any business connection in India or through or from an....
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....ia) of the Income-tax Act, 1961. 3. Revenue carried the matter in appeal before the Tribunal. The Tribunal, by the impugned judgment, dismissed such appeal making the following observations : "We have heard the rival contentions and perused the material on record carefully. Section 195 required that any person responsible for paying to a non resident any some chargeable to tax shall deduct tax there on at the rate in force. We noticed that assessee has paid commission to non-residents for services rendered in sales and marketing of assessee's product as commission agent outside India. We observe that the agents were notarized and not having fixed base in India and have rendered all the sales and marketing services outside India. We have also perused the judicial pronouncements of the Hon'ble Supreme Court in the case of GE India Technology CEN Private Limited v. CIT [2010]193 Taxman 234(SC), wherein, it was held that section 195 gets attracted in cases where payment made is a composite payment in which a certain proportion of payment has an element of income chargeable to tax in India and prayer seeks a determination of appropriate proportion of sum charge....
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....s in India or any other persons in any manner whatsoever in India. This expression which is added for removal of doubt is clear from the plain language thereof, may have a bearing while ascertaining whether certain payment made to a non-resident was taxable under the Act or not. However, once the conclusion is arrived that such payment did not entail tax liability of the payee under the Act, as held by the Supreme Court in the case of GE India Technology Centre (P.) Ltd. (Supra), sub-section [1] of Section 195 of the Act would not apply. The fundamental principle of deducting tax at source in connection with payment only, where the sum is chargeable to tax under the Act, still continues to hold the field. In the present case, the Revenue has not seven seriously contended that the payment to foreign commission agent was not taxable in India. 6. Tax Appeal is therefore dismissed." We have observed that the assessee has rightly relied on the decision of Hon'ble Madars High Court in CIT v. Farida Leather Company in Tax Case Appeal No. 484 of 2015 , wherein Hon'ble Madras High Court decided the appeal in favour of the taxpayer on the ground that even if the taxpayer has not ....
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....agency commission / sales commission paid by the assessee to non-resident agents, for the services rendered by them, outside India, in procuring export orders for the assessee, would not attract or partake the character of "fees for technical services" as explained in the context of 9 (1) (vii) of the Act and therefore, there is no scope for the application of the provisions of Section 195 of the Act (Tax Deducted at Source). It is also contended that as the non-resident agents have neither business connection in India nor they have permanent establishment in India, they are liable to be taxed in India. 5.1 Yet another contention of the learned counsel for the assessee is that: (a) the assessee paid the amount by way of commission to foreign agents for the services rendered outside India; (b) the Tax Deduction at Source (TDS) is required to be made on all payments to non-residents, only if such payments are liable to be taxed in India. (c) following the decision of this Court, CIT v. Faizan Shoes (P.) Ltd. [2014] 367 ITR 155/226 Taxman 115/48 taxmann.com 48 (Mad.), the assessee is not liable to deduct tax at source, when the non-resident agent provides services outside Ind....
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....on (1) of section 139 thirty per cent of, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVIIB on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.' (ii) Explanation 2 to Section 195(1) of the Act :- 'Section 195 - Other sums: (1) Any person responsible for paying to a non-resident not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) or section 194LD or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries") shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the i....
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....able under the Act and are payable outside India, shall not be allowed as an expenditure to the assessee, unless tax is paid thereon or is deducted therefrom under Chapter XVII-B of the Act. 7.3 Section 195(1) of the Act deals with deduction of tax from payment to non-residents and foreign companies. Section 195(1) of the Act comes into play at a stage where the payer, who is enjoined to deduct the tax, either credit such income to the account of the payee or make payment thereof, whether in cash / cheque / draft or any other mode. The taxability of such amount in the hands of the payee or occasioning of the taxable event is alien for the purpose of Section 195(1) of the Act. 7.4 Section 195(2) is an enabling provision, enabling an assessee to file an application before the Assessing Officer to determine the appropriate proportion of the sum chargeable and upon such determination, the tax has to be deducted under Section 195(1) of the Act. The payment is made credited to the account of the payee. 8. The question now is, whether the assessee ought to have deducted tax at source as contemplated under Section 195 of the Act, when the assessee paid commission....
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....equire any contribution of technical knowledge, experience, expertise, skill or technical know-how of the processes involved or consist in the development and transfer of a technical plan or design. The parties merely source the prospective buyers for effecting sales by the assessee, and is analogous to a land or a house / real estate agent / broker, who will be involved in merely identifying the right property for the prospective buyer / seller and once he completes the deal, he gets the commission. Thus, by no stretch of imagination, it cannot be said that the transaction partakes the character of "fees for technical services" as explained in the context of Section 9(1)(vii) of the Act. 12. As the non-residents were not providing any technical services to the assessee, as held above and as held by the Commissioner of Income Tax (Appeals), the commission payment made to them does not fall into the category of "fees of technical services" and therefore, explanation (2) to Section 9(1)(vii) of the Act, as invoked by the Assessing Officer, has no application to the facts of the assessee's case. 13. In this case, the commission payments to the non resident agents....
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....econd issue raised by Revenue in its appeal concerns itself with the deletion by learned CIT(A) of addition to the tune of Rs. 27,39,215/- which was made by AO u/s. 68 of the 1961 Act, relying on the additional evidences filed by the assessee before learned CIT(A) during the course of appellate proceeding , wherein Ld. CIT(A) deleted the additions without calling for remand report from the AO as is mandated under Rule 46A of the Income-tax Rule, 1962. We have observed that there were differences in the reconciliation of the balance outstanding in the books of accounts of the assessee to credit of one M/s Chikhloli Chemicals Pvt. Ltd vis-a-vis ledger account filed by the said party which the assessee was not able to explain before the AO. The AO observed that the assessee is contending that it purchased goods to the tune of Rs. 27,39,215/- from the said party namely M/s Chikhloli Chemicals Pvt. Ltd. while sales made to the said party namely M/s Chikhloli Chemicals Pvt. Ltd. were to the tune of Rs. 47,37,752/- , but as per ledger account filed by the said party, the said party namely the said party namely M/s Chikhloli Chemicals Pvt. Ltd only confirmed to have made purchases from the....
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....lusion of assessment order when the assessment was getting time barred, there was no time left to file fresh confirmation and the assessee was not given adequate time to file fresh confirmation from said party namely M/s Chikhloli Chemicals Private Limited. It was explained that now assessee has filed proper confirmation before the learned CIT(A). The difference in confirmation account of 27,39,215/- being shown in the books of accounts of the assessee for purchases made from said M/s Chikhloli Chemicals Private Limited vis-a-vis sale of Rs. 23,94,000/- shown by said M/s Chikhloli Chemicals Private Limited in its books of accounts, was explained by assessee to be due to different treatment in accounting for taxes and duties by assessee and the said party. The Ld. CIT(A) accepted the contention of the assessee and allowed relief to the assessee vide appellate order dated 29.10.2012 passed by learned CIT(A) deleting the aforesaid additions to income as were made by the AO. 7.3 Now being aggrieved by appellate order dated 29.10.2012 passed by learned CIT(A), the Revenue has filed an appeal before the tribunal. The learned DR claimed that there is an infringement of Rule 46A of the ....
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....d by the said M/s Chikhloli Chemicals Private Limited but by one M/s Purva Inorganics Pvt. Ltd.. This led AO to discard this piece of evidences as inadmissible and additions to the tune of Rs. 27,39,215/- were made by the AO u/s 68 of the 1961 Act to the income of the assessee vide assessment framed u/s 143(3) of the 1961 Act. Later on before Ld. CIT(A), the assessee filed fresh confirmation from said M/s Chikhloli Chemicals Private Limited duly signed by said M/s Chikhloli Chemicals Private Limited as an additional evidence which was accepted by Ld. CIT(A) and additions to the income as were made by the AO were deleted by learned CIT(A). However the Ld. CIT(A) did not forward these additional evidences to AO for his comments/ verification as no remand report was called for by learned CIT(A) before accepting the contentions of the assessee and deleting the additions to the income as were earlier made by the AO vide assessment framed u/s 143(3), which led to infringement of Rule 46A(3) of 1962 Rules. The Rule 46A of the 1962 Rules is reproduced hereunder: Production of additional evidence before the [Deputy Commissioner (Appeals)] [and Commissioner (Appeals)]. 46A ....