2014 (3) TMI 1183

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....e assessee company is carrying on the business of civil construction work of M/s. Himachal Futuristic Communication Ltd. [HFCL] in the preparation of ducts for laying telecommunication cables. The assessee filed its return of income by declaring loss of Rs. 1,76,480/-. Initially, it was processed under section 143(1) of the Income Tax Act and subsequently, the assessment was completed under section 143(3) of the Act by assessing total income at Rs. 21,21,730/-. Against the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(Appeals) and the ld. CIT(Appeals), granted relief to the assessee. Thereafter, the Revenue carried the matter in appeal before the ITAT and the ITAT in I.T.A. No. 152/Mds/2007 vid....

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....f Rs. 25,00,000/- payable @ 15% p.m. has been calculated on the balance in the ledger account on account of certain expenses borne by M/s. ICMC Corporation Ltd. on behalf of the assessee company for carrying out the contractual work. The Assessing Officer has further observed from the balance sheet that the assessee company has shown an opening balance of Rs. 28,80,000/- under the head "advance" to ICMC Corporation Ltd. The interest amount of Rs. 25,00,000/- (originally claimed as commission in the profit and loss account) was credited in the said advance amount resulting in a closing balance of Rs. 3,80,000/-. Thus, on the one hand, the assessee company has allowed interest to its sister concern M/s ICMC Corporation Ltd @ 15% p.m. on the b....

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....e expenses of the assessee under the above heads is an afterthought and the assessee has been changing his explanation and also his ledger accounts to suit his explanation. The AR of the assessee company could not forward any satisfactory explanation to the above anomalies at the time of hearing on 12.11.2009 and the Assessing Officer has treated the amount of Rs. 25,00,000/- as bogus and disallowed the same. 3. On being aggrieved, the assessee carried the matter in appeal before the ld. CIT(Appeals) and it was submitted that the commission of Rs. 25,00,000/- paid to assessee's sister concern was already offered for taxation and therefore, the same cannot be taxed in the hands of the assessee. 4. On the other hand, the ld. DR has stro....

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....g Officer. However, the assessee changed its stand by stating that the actual expenses of Rs. 25,00,000/- paid to M/s ICMC Corporation Ltd. was under the following heads: (a) Supervision charges Rs. 8,00,000/- (b) Interest Rs. 5,00,000/- (c) Commission on turnover Rs. 7,00,000/- (d) Technical know-how Rs. 5,00,000/-   Rs. 5,00,000/- In the assessment order, the Assessing Officer has doubted the commission paid on the ground that the assessee has been changing its stand frequently. Apart from that the audit report does not speak about the commission payment of Rs. 25,00,000/-. Therefore, the Assessing Officer came to a conclusion that the payment of Rs. 25,00,000/- is bogus payment and disallowed. Before....