TaxTMI 
TaxTMI 
2020 (12) TMI 251
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....ppreciate that the payments have been made to the assessee's holding company and no evidence has been submitted to show that such payments were at arm's length or were for business expediency. 3. The Id.CIT(A) has failed to appreciate that no worthwhile evidence was submitted which could substantiate the business expenses and payment of such high commission and guarantee commission to its holding company on year to year basis. 4. The Id.CIT(A) has failed to appreciate that such payment was not wholly and exclusively for the purpose of business but was a ruse to remit huge amount of money to its parent company without payment of due taxes in India. 5. That the Id.CIT(A) has failed to appreciate that all the negotiations were held in India for Indian Gas Fields/ so there was a P.E. and/on a business connection in India and therefore the income of the foreign company was chargeable to tax in India and accordingly TDS was required to be made in terms of Sec. 195 on such payments. 6. The appellant prays for leave, to amend or alter any ground or add a new ground which may be necessary. 3. The interconnected issue raised by the revenue in gr....
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....contract, therefore being a contractual liability, the assessee was required to make the payment of commission as per the terms of the agreement. The liability of the expenditure is not disputed and the expenditure has been disallowed on the basis that details were not available before the authorities below. Under the these facts of the case and taking a note of the fact that the assessee has produced copies of various agreements relating to the payment of commission were required to be paid by the assessee, we are of the considered view that the AO should verify the evidences placed before him about the quantum of commission paid and also the nature of services received by the assessee. Thus, grounds raised in this appeal are restored to the file of AO for verification and the appeal of the assessee for AY 2004-05 is treated as allowed but for statistical purposes" 7.1 The assessee in the set-aside proceedings filed the necessary details in support of his claim for the amount of impugned commission expenses. The assessee without prejudice to the above also submitted that impugned amount of commission expenses paid to BG energy holding company was allowed by the learned CIT (A) ....
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....out the quantum of commission paid and also the nature of services received by the assessee. Thus, grounds raised in this appeal are restored to the file of AO for verification and the appeal of the assessee for AY 2004-05 is treated as allowed but for statistical purposes" 11.1 Admittedly, in the set-aside proceedings the scope before the concerned authority for resolving the dispute is limited to the extent of the direction provided by the higher authority until and unless it was directed to make the fresh/de novo assessment. As such the concerned authority in the set-aside proceedings cannot travel beyond the direction provided by the higher authority. If it does so, he will certainly exceed his jurisdiction which is unwanted. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in the case of Saheli Synthetics Pvt. Ltd Vs. CIT reported in 302 ITR126 wherein it was held as under: "Similarly even where an assessment is set aside simpliciter, without any enhancement proposal, it is always in the context of the appeal against an order of assessment and cannot be read to mean that the appellate authority granted powers to the Assessi....
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....ssessment proceedings, assessee has submitted agreement entered into with British gas (India) Pvt. Ltd., (BGIPL) and BG energy Holding Ltd. (BGEHL), Article 14 of the gas Sales Contract dated 30 May 2001, containing pricing formula and other relevant working/details for claim of commission expenses. The then A.O has disallowed the same vide order dated 19-12-06. Assessee has preferred appeal before Hon'ble CIT(A) vide order XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 3 The amount charged as commission is equal to : 3% of the annual-costs of .gas purchases by GTCL under the gas sale contracts at the floor price there under . : 1% of the annual cost bf gas purchases by GTCL under the gas sale contracts at the ceiling price there under; * 2% of the annual cost of gas purchases by GTCL under the gas 'sale contracts at price between the floor price and ceiling price there GTCL .has to pay commission to BGEH for support in purchasing natural gas. for the Long term contract from Lakshmi Field. At this juncture, it .is important to note that Gas is a natural commodity and the availability of the same is very limited. GTCL....
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....s such these assessment years, the disallowance was made on account of non-deduction of TDS under section 195 of the Act. Thus it can be inferred that the question of arm length and business expediency does not arise in the given facts and circumstances. Accordingly we do not find any merit in the grounds of appeal raised by the revenue. Hence the ground of appeal of the revenue is dismissed. 12. The 2nd issue raised by the revenue in ground No. 4 and 5 is that the learned CIT (A) erred in allowing the deduction for the payment of commission expenses of Rs. 4,65,12,087/- though there was no deduction of TDS under section 195 of the Act. 13. At the outset we note that it is the set-aside proceedings before us against the direction by the ITAT vide order dated 31st July 2015 as elaborated aforesaid. On perusal of the direction of the ITAT as discussed above, we find that there was no issue qua the non-deduction of TDS on the payment of commission expenses under the provisions of section 195 of the Act. 14. Admittedly, the assessee before the AO in the set-aside proceedings has made alternate submission that it has been allowed deduction of the impugned commission expenses....