TaxTMI 
TaxTMI 
2014 (2) TMI 1384
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.... 2. In the course of hearing, the assessee strongly argues that the CIT has erred in directing the Assessing Officer to pass a fresh order after a detailed investigation qua its foreign agent export commission of Rs. 1,46,84,028/-. It is contended that since the Assessing Officer had rightly held it entitled for the same as expenditure, the CIT ought not to have invoked jurisdiction u/s 263 of the Act. Per assessee, the Assessing Officer had allowed the aforesaid commission in accordance with the circulars issued by the 'board' in the year 1969 i.e 23.7.1969 bearing No.23 and also No.786 dated 7.2.2000. Hence, it argues that section 263 proceedings have been wrongly assumed by the CIT. To buttress the same, following case law has been quo....
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....see. 5. It is to be seen from the case file that on 26.4.2012, the CIT issued section 263 notice to the assessee by observing that primafacie the assessment in question framed hereinabove was erroneous causing prejudice to the interest of the Revenue as under: "Sub: Show cause notice u/s 263 of the Income-Tax Act, 1961 for the Assessment Year 2008-09 -your own - PAN AAAFH0373B - reg ...... For the Assessment Year 2008-09, you had filed return of income on 31.10.2008 admitting income of Rs. 2,73, 13,910/- and the same was processed u/s 143(1). 2. Later, assessment in your case was taken up for scrutiny and an order u/s 143(3) of the Income-tax Act, 1961 was passed on 16.12.2010 accepting the income returned b....
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.... by its latest Circular No.7/2009 dt. 22.10.2009. 5. Under the circumstances, it is logical that the order dt. 16.12.2010 passed by the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 for the Assessment Year 2008-09 in your case, is found not only to be erroneous but also prejudicial to the interests of revenue. I, therefore, propose to pass an order u/s 263 of the Income-tax Act, 1961 as the facts and circumstances of the case deem it fit. Hence, you are hereby given an opportunity to file your written submissions/objections or personally appear before the undersigned through your authorised representative, if any, on the issue mentioned above on 3.5.2012 and that your case stands posted for hearing on the same date at 03....
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....ome Tax Act. Without verifying these issues and the nature of payments it has been presumed that TDS is not applicable u/s 195 of the Income Tax Act, 1961 against the payments made as commission to foreign agents. First we have to see the nature of payment and then we can apply the circulars. In the instant case, the assessing officer has not investigated the nature of commission payments and also the applicability of section 9, section 195 and section 40(a)(i) of the Income Tax Act. Due to these reasons, I find that the order passed by the learned Assessing officer is erroneous and prejudicial to the interest of the Revenue. The order passed u/s 143(3) of I.T Act is set aside and the Assessing Officer is directed to make enquiries on this ....
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....t the hon'ble Delhi high court in the case of CIT vs Angelique International Ltd (supra) has held that the action of the 'board' in issuing withdrawal of earlier circulars with effect from 22.10.2009 is only prospective and not retrospective. As a result, we also observe that since the impugned assessment year is 2008-09 i.e well before 22.10.2009, the circular issued in the year 2009 did not have any effect in the assessee's case. That being so, the Assessing Officer had rightly followed the circular in allowing the assessee's foreign agent commission payments as expenditure without deduction of any TDS. A perusal of the other case law (supra) also buttresses the same argument of the assessee. Rather, in the case of Faizan Shoes Pvt. L....