TaxTMI 
TaxTMI 
2024 (2) TMI 887
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....d. 2. On the facts and circumstances of the case and in law, the Id. assessing officer erred in making addition/variation of Rs. 10,98,98,889/- on account of commission, brokerage and discount expenses. 3. On the facts and circumstances of the case and in law, the Id. assessing officer/ Hon'ble DRP erred in making disallowance of Rs. 64,28,401/- u/s. 14A of the Act. r.w.r 8D of the Income Tax Rules. 4. On the facts and circumstances of the case and in law, the ld. assessing officer/Hon'ble DR erred in making addition of Rs. 74,92,596/- on account of disallowance of ESOP expense. 5. On the facts and circumstances of the case and in law, the ld. assessing officer/ ld. TPO/ Hon'ble DRP have erred in making adjustment of Rs. 45,23,261/- on account of commission on standby letter of credit." 3. When the matter was called for hearing, the ld. counsel for the assessee submitted that while Ground No.1 is not pressed, all other grounds are squarely covered in assessee's own case for Assessment Year 2017-18 as decided by the Co-ordinate Bench of Tribunal in ITA No.2109/Del/2022 order dated 02.01.2024. 4. Ground No.2 concerns addition / variations of Rs. 10,98,98,889/- o....
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....uttal, the assessee had denied making any such assertions before the DRP as well as in the final assessment stage. The AO has not referred to any documentary evidences including clause in the agreements entered into with overseas agents which places such obligations of quality check on the commission agents. It is well settled that onus lies on the person who alleges as observed in K.P. Verghese vs. ITO (1981) 131 ITR 597 (SC). The Revenue cannot put an impossible burden on the assessee to prove a negative point. The AO has merely relied upon certain assertions purportedly made by the representative of the assessee towards quality check. No evidence has been placed to establish the factum of any such assertions. Be that as it may, such allegations cannot be imputed in the absence of any documentary evidence. The whole basis for making such whopping disallowance is shallow and a damp squib. The assessee has repeatedly asserted that services have been rendered outside India by the overseas agents for procurement of orders without any technical or managerial assistance. 10. Under the circumstances, in the absence of any adverse material, the factual matrix did not provide any scope ....
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....isions of Section 195 of the Act for the reasons that commission to such overseas agents are not taxable under the Act. The AO has not alleged or established any thing to the contrary. The AO was thus not justified to disallow such commission expenses under the Act. We thus direct the AO to reverse and cancel the additions on this score. 10. Hence, Ground No.2 of the appeal of the assessee is allowed." 6. In consonance with the view taken in Assessment Year 2017-18 in ITA No.2109/Del/2022, the impugned additions made on account of commission, brokerage, discount expenses is not sustainable in law and facts. 7. In the result, the Ground No.2 of the appeal of the assessee is allowed. 8. Ground No.3 concerns disallowance of Rs. 64,28,401/- under Section 14A of the Act. 9. The ld. counsel pointed out that the assessee has declared exempt income by way of dividend to the extent of Rs. 6,97,835/- while suo motu disallowance itself stands at Rs. 7,30,000/- which is in excess of exempt income. 10. In identical facts and circumstances, the Co-ordinate Bench in assessee's own case in Assessment Year 2017-18 has dealt with the issue as under: "11. Ground No.3 concerns a disallowance ....
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.... The options are granted with specific exercise period from the date of vesting of shares and the options are exercisable at a pre-determined price of Rs. 50 each resulting in issue of share on discount to the market price of the company shares on the date of grant. 12.2 As pointed out, it was asserted before the lower authorities that the expenses are incurred with a view to retain the talent / staff for the benefit of the company and consequently such expenses are allowable as business expenditure in the light of the judgments rendered in Biocon Ltd. vs. DCIT (2013) 35 taxmann.com 335 (SB); CIT vs. Lemon Tree Hotels Ltd. (supra) 12.3 Before the DRP, the assessee reiterated that the expenses are neither notional nor capital in nature. The expenses incurred are revenue in character and is incurred wholly and exclusively for the purpose of business. The AO has wrongly placed reliance on decision of Co-ordinate Bench of Delhi Tribunal in Ranbaxy Laboratories which has been overturned by the Special Bench thereafter in Bicon Ltd.. 12.4 The issue is no longer res integra and covered in favour of the assessee by the Hon'ble Jurisdictional High Court in Lemon Tree (supra). The DRP ....
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....Therefore, there is no outgo. In any case, the guarantee charges charged by the bank are on market rate and the assessee has also recovered the same at the rate at which the bank has charged. The DRP however did not find any infirmity in the action of the AO/TPO. As per the rectification order passed under Rule 13 of DRP, 2009, the DRP has simply affirmed the action of the AO/TPO regarding the proposed adjustment of Rs. 23,06,351/- without any discernible reason. 14.3 Before the Tribunal, the ld. counsel contended that the TPO/DRP/AO have committed error in making adjustment of Rs. 23,06,351/- on account of commission on standby letter of credit. The ld. counsel submitted that no cost has been borne by the assessee-company as submitted repeatedly before the lower authorities. The actual bank commission charged by the bank at the market rate has been duly recovered from the AEs and therefore the AO/TPO/DRP was not justified in making further additions/adjustments. The ld. counsel reiterated that SBLC has been issued by the company's bankers without any margin or any specific security. In the alternative and without prejudice, the ld. counsel referred the judgment of the Co-ordinat....