2024 (3) TMI 467

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.... 2013-14. 2. In this appeal, the assessee has raised the following grounds:- "1. The Learned Commissioner of Income Tax Appeals, National Faceless Appeal Centre, Delhi (The Ld CIT-A) has erred in law and in facts in upholding the validity of order passed u/s. 143 (3) of the Act mechanically and purely on the basis of mathematical calculations instead of considering the facts and circumstances which compelled the appellant to pay higher amount of commission to the foreign agent who is a unrelated person and without giving an opportunity of personal hearing to the appellant which is in gross violation of principle of natural justice. 2. The Ld. AO erred in law and on facts in disallowing commission paid to foreign agent u/s. 37 of the Ac....

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....s buyers. 6. The Ld CIT-A has erred in law and on facts in confirming the action of the Ld AO in not taking into consideration the fact that export commission is within the limit of 12.5% as prescribed by the Reserve Bank of India (RBI) and within the limit prescribed by the Director General of Foreign Trade, Government of India vide Custom Circular no. 64/2003 dated 21.07.2023. 7. Due to the ever prevalent war like situations in Yemen, the outward remittances was stopped in the disputed assessment year. Therefore, the RBI prudently allowed remittances to flow from other countries for exports made to Yemen. Moreover, even the Export Credit Guarantee Commission had stopped giving guaranteeon export sale recoveries. Thus, our foreign agen....

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....ring the assessment proceedings, it was observed that in the assessment year 2012-13, the assessee had a total sale of Rs. 16.40 Cr, whereas in the assessment year under consideration, the total sale increased to Rs. 23.37 Cr. Thus, it was noticed that the sales have increased by around 44% as compared to the assessment year 2012-13. On perusal of the profit and loss account, it was observed that the assessee has debited commission expenses of Rs. 94,37,792/- in the assessment year 2012-13, whereas, in the assessment year 2013-14, it has paid commission expenses of Rs. 2,28,81,286/-. Accordingly, it was noticed that the turnover has increased only by 45% however; the commission expense paid by the assessee has increased by 142%. The assesse....

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....r under consideration as compare to the AY 2012-13 i.e. (20% of 5.75)- 1.15% Justified claim of commission-5.75%+1.15% = 6.90% Actual Commission paid-9.79% Commission Disallowed- (9.79% -6.90%) - 2.89% Therefore commission paid by the assessee to only one party i.e. Al Saqi Trading LLC, of. UAE of Rs. 2,28,81,286/- is not justified. I disallowed the commission of 2.89% of the total turnover of the current year as against the 9.79% as claimed by the assessee, which works out to Rs. 67,53,982/-. In this connection penalty proceedings u/s. 271(1)(c) are separately initiated." 5. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and upheld the part disallowance of the export commission p....