TaxTMI 
TaxTMI 
2021 (4) TMI 534
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....mpleted determining the total income at Rs..6,00,66,785/-. Vide rectification order under section 154 r.w.s. 143(3) of the Act, the total income of the assessee has been revised to Rs..8,67,58,761/- after including the addition made under section 37 of the Act of Rs..2,66,91,976/-, which was inadvertently missed out to add back to the total income. In the assessment order, the Assessing Officer disallowed the commission amount paid to M/s. Amikong Pte Ltd. for Rs..2,66,91,976/- and M/s. Poushali Sales Pvt. Ltd. for Rs..69,74,865/- on the ground that the assessee has failed to submit any documentary evidences to prove the genuineness of claim and actual services rendered by foreign agent. On appeal, after considering the submissions of the assessee, the ld. CIT(A) deleted the addition. 3. Aggrieved, the Revenue is in appeal before Tribunal. By relying on the grounds of appeal, the ld. DR has submitted that the ld. CIT(A) has erroneously deleted the addition on account of disallowance of commission payments by holding that the Assessing Officer ought not to have taken an adverse inference on it. It was further submission that the assessee has failed to submit any documentary evidenc....
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....(A) has observed as under: "(1) The Appellant is a corporate having turnover of Rs. 290 Crs, out of which the above party has given export order of Rs. 20 Crs, All that the businessman is interested is that sufficient business is obtained by the concerned party and commission is paid for the same. At the end, the Appellant has earned sufficient income from the 'transaction and there is no net loss from the transaction. The credentials are to be verified if any loans or advances are made and not required to verify the credential of the agent whom the commission is paid as per agreed terms. Further the appellant is requited to see whether there is increase in revenue after meeting the expenses, which every prudent businessman will do. (2) The Assessing Officer has got wide powers to verify the transactions, but no effort has been made to make any enquiries. There is no documentary evidence in support of the contention of the Assessing Officer. The Assessing Officer has made guess that the credentials are not established. The other Indian Agent, whose financials were submitted were also not verified nor any attempt to enquire about it were made. (3) The Appellant submits tha....
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....iness man and no that competent to examine the intricacies of a signature like an expert and all the appellant was interested was that M/s. Amikong Pte Ltd has generated substantial business and therefore 12.5% was paid as commission by the appellant company as per the agreement with M/s. Amikong Pte Ltd. The AO has also commented on the basis of Google Search that it is unbelievable that M/s. Amikong Pte Ltd could have procured orders worth Rs. 22 Crores. Further the AO also held that commission @ 12.5% is unreasonable. In this regard, the AR argued that the assessment cannot be made based on Google Search, rather ought to be made based on the evidence on record or enquiries I investigation made by the AO to disprove the document on record. It was submitted that the AO could not have such opinion based on Google Search that it is unbelievable that the M/s. Amikong Pte Ltd could not have procured such business. It is a fact on record, Mr. Nitin Goel, Director of the appellant company had earlier visited Singapore personally and discussed the deal with M/s. Amikong Pte Ltd to acquire the additional business from Myanmar. It was argued that the appellant succeeded in generating suf....
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....ign party, for non-deduction as they do not have an office in India. e. In the case of Indian Company, TDS was deducted. f. Copies of Bank Statement to establish that the payment were made through Banking Channels. g. Purchase order copy. h. Copies of sale invoices for commission paid to M/s. Poushali Sales (P) Ltd. i. Copies of Shipping Bills in case of Exports Orders. J. Service Tax Registration & Service tax payment. k. Audited financials of M/s Poushali Sales (P) Ltd., with income tax computation and acknowledgement of tax return for three assessment years, i.e.201,6-17, 2017-18 & 2018-19. The Appellant had provided all the relevant documents and evidences which were required to ordinarily maintain in the course of business to substantiate the genuineness of the payments. The terms and conditions of these arrangement as well as the obligations were agreed in writing vide a duly executed agreement, copy of which was even part of the assessment (Page 5, 6 & 7 of the assessment order). Under these circumstances, the onus shifts to the Assessing Officer to establish the genuineness, in case the Assessing Officer doubts the The Assessing Officer made huge addition ....
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....s whether expenditure incurred wholly and exclusively for the purpose of business, which has been discharged by the appellant, expenditure is to be allowed. x. The AR argued that but for the commission payment to these parties, the appellant could not have got the business of Rs. 22 crores from Myanmar and Rs. 60 crores from M/s. Reliance Jio Info comm Ltd and therefore, the income of the appellant could have been lower to that extent. Further, it has argued that as the earning of such income and expenses are interlinked and as the commission was wholly and exclusively for earning income, the same is allowable. xi. The appellant submitted that the Assessing Officer has stated that the credentials of M/s Amikong Pte Ltd., are not proved by the appellant and it is unbelievable that the agent has procured orders and was not realistic in the absence of evidence substantiating the involvement of M/s Amikong Pte. Ltd. This contention of the Assessing Officer and inference of the Assessing Officer is not legally tenable in view of the following grounds: a. The Appellant is a corporate having turnover of Rs. 290 Crs, out of which the above party has given export order of Rs. 20 Crs. ....
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....vidence" means evidence that a reasonable mind could accept as adequate to support a conclusion. Evidence offered to help establish a fact in issue. As opposed to evidence directed to impeach or to support a witness's credibility is also called as Substantial Evidence. From the above it can be seen that substantial evidence has more persuasive value than the other two. However, all the three, Corroboration, Circumstantial and Substantial evidence have its own value based on the particular situation in which that evidence is used and also based on the law in which the court is deciding. There is no any hard and fast rule that the particular evidence is more valuable in the matters of Taxation Laws. All these evidences have its own persuasive value in the proceedings, which is before an assessing authority. The appellant further submitted that it could not understand as to what is substantial evidence of commission agent as required by the AO. In commission agency business, contract can be entered into or it can be verbal contract but bill must be required from the agent for the supply made to the parties referred by them in order to pay commission. The agent is responsible for....
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....ent year 2016-17, which was also furnished to the Assessing Officer is attached herewith to prove that the party has disclosed the said commission in their return of income and claimed TDS thereon. Hence the commission is to be allowed in such cases as held in CIT V s Premier Poly Sacks Pvt Ltd., (2010) 321 ITR 450 (Madras). xv. The AR argued that the AO had taken adverse inference for payments made to M/s. Poushali Sales Pvt Ltd in spite of the fact that the payments have been made through banking channels after duly deducting TDS and the said company has declared the commission revenue both to the service tax department and the Income Tax Department as per the respective returns filed. It was further argued that when the Service Tax Department and Income Tax Department has accepted the transactions in the hands of M/s. Poushali Sales Pvt Ltd, there is no justification for the AO to have taken an adverse inference especially when the payment of commission was just around 1%. xvi. The Appellant submits that the commission paid is not very high as compared to profits earned. It was a legitimate business expenditure which has not been doubted and it has resulted in high profit be....
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....gh Second Party. Upon execution of the above agreement, the assessee company procured export orders of Rs..22 crores from four customers namely Camus at Myanmar, East Boy Trading Co Ltd., Irrawaddy Green Towers Ltd., and Ock Yangon Pvt. Ltd., Myanmar through the commission agent M/s. Amikong Pte Ltd. The business of the assessee with the above companies in Myanmar was neither fake nor disputed by the Assessing Officer since the assessee has produced the export shipping bills of the Myanmar customers where the goods have been dispatched and on the supply commission was paid through banking channel after obtaining 15CB from the auditor. It is clear from the above that M/s. Amikong Pte Ltd., the commission agent has introduced new customers to the assessee, procured export order and accordingly the assessee carried out the business. 4.4 Generally no direct evidence for the "service rendered" can be produced and the relationship of the "service rendered" and "business purposes" has to be established by circumstantial evidence and growth in the business of the assessee in such cases. In this case, as per the matching concept of taxation, both the commission Agents have given sufficien....