TaxTMI 
TaxTMI 
2022 (2) TMI 1455
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....and has no permanent establishment in India and payment was not made on behalf of assesse, without any verification of the claim by any enquiry or remand report. 2. Whether in the facts and circumstances of the case, Ld. CIT(A) has erred in deleting the addition of Rs. 75,00,000/- on account of increase in share capital relying on the submission filed by the assessee. 3. Whether in the facts and circumstances of the case, Ld. CIT(A) was justified in admitting the additional evidences in violation of Rule 46A of the I.T. Rules, while deleting the addition made". 3. Brief facts are such that the assessee is a company engaged in the business of manufacturing and trading of aluminum extrusion. The assessee submitted return declaring a total income of Rs. 63,48,206/- on 30/03/2011. The Ld. AO completed assessment at a total income of Rs. 3,29,74,780/- after making certain additions. Aggrieved by the order of assessment, the assessee filed appeal to Ld. CIT(A). The Ld. CIT(A) deleted additions and allowed the appeal. Being aggrieved by the order of Ld. CIT(A), the Revenue has preferred this appeal and now before us. 4. Ground No. 3: 4.1 In this Ground, the Revenue has urged to dec....
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....eds to be upheld. The Ld. A/R also placed reliance on following decisions: (i) CIT Vs. Jagjot Singh and Sons (2014) 41 taxmann.com 423 (Allahabad) (ii) CIT Vs. Eicher Tractors Ltd. (2007) 165 Taxmann 226 (Delhi) 4.6 We have given a careful consideration to the material available on record and the contentions put forward by both sides. On a careful consideration of the same, we observe that the Ld. CIT(A) has sent application of assessee alongwith additional evidences produced by the assessee to the Ld. AO and invited comments from Ld. AO. In response, the Ld. AO filed a detailed Remand-Report dated 08.05.2018. This way the Ld. CIT(A) has given the fullest opportunity to the Ld. AO and the Ld. AO has also utilized the same. We have also perused the Remand-Report placed by Ld. A/R at Page No. 7 of the Paper-Book. On perusal we find that the Ld. AO has made following reporting in Para No. 5 of the Remand-Report: "5. As regards my comments on admissibility of additional evidences, I may submit that the AO making assessment has given full opportunity of being heard, but assessee failed to make any compliance. However, in the assessment, the additions have been made on assessee's ....
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....ssessee has claimed deduction of this commission- payment as business expenditure. During assessment proceedings, the Ld. AO called for the details of commission expenditure but the assessee did not submit. Therefore, while completing assessment, the Ld. AO disallowed this commission expenditure by observing as under: "Selling Expenses include Commission on Export Sales amounting to Rs. 1,71,32,125/-, as against last year's such expenses relating to export sales at Rs. 14,26,636/-. The assessee was, vide detailed questionnaire issued on 19-11-2012 required to furnish details of such expenses and details of TDS made therefrom and items covered u/s 43B and also to furnish copy of TDS returns. No such details have been furnished. It could not be verified as to whether such commission payment has been subjected to TDS u/s 194H or not, and if TDS is deducted whether the same has been deposited to the Central Govt. A/c within the time allowed u/s 43B of the IT Act. In the absence of the assessee's substantiating the genuiness of the claim of commission payment of Rs. 1,71,32,125/-, the claim is not allowed and hence it is added back to the total income of the assessee." 5.3 The Ld. CI....
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....mation Solutions Ltd. where the ITAT HYDERABAD Bench has further clarified that "Even though Explanation 2 to section 195 clarifies the position that whether or not a non-resident person has a residence or place of business or business or business connection in India or any, the Explanation cannot override the main provision of section 195 about 'sum chargeable' under the provisions of the Act. As defined in section 5, no income accrues or arises or deemed to accrue or arise in India on the payments made in USA by branch there. Therefore, the payments made abroad cannot be considered as income chargeable under the provisions of the Act." Hence, in light of the above, the appellant is not liable to deduct TDS on foreign payments not chargeable to tax in India. 5.2.4 The above person to whom payments of commission made have presence in UAE. In this case the aforesaid person has no permanent establishment or business connection in India and since it is not liable to tax in India. Therefore the payment is not liable to TDS u/s 195 of The Act. Further as per the Judicial Pronouncement, the treaty with any country will always prevail over the Income Tax Act. 1. Union of India vs.Azad....
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....CIT-5, Bangalore Vs. Puma Sports India Pvt. Ltd. ITA No. 223 / 2018 dated 12.03.2021, Karnataka High Court With these submissions, the Ld. A/R argued that the Ld. CIT(A) has rightly deleted the disallowance made by Ld. AO. 5.6 We have considered the material held on record as also the rival contentions of both sides. A perusal of the assessment-order reveals that the assessee was not able to submit the evidences in support of claim of commission-expenditure as required by Ld. AO and this prompted the Ld. AO to make disallowance. However, as noted earlier, the assessee has submitted additional evidences in the form of (i) copy of the agreement with the agent, (ii) sample copies of sales-bills, (iii) calculation sheet of commission, and (iv) sample copy of the purchase-order received from the foreign-buyer, to the Ld. CIT(A) and those evidences stand admitted in terms of Rule 46A(1)(b). We observe that the Revenue has not pointed out any deficiency in these admitted evidences. Hence from these evidences, it is amply clear that the assessee has paid commission for business expediency. Regarding non-deduction of tax at source u/s 195 by the assessee, we observe that it is a well-sett....
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....eeding, the Ld. AO required the assessee to submit evidences in support of the receipt of Rs. 75,00,000/- but the assessee did not submit. Therefore, while completing assessment, the Ld. AO invoked section 68 and made an addition of Rs. 75,00,000/- by observing as under: "As per the audited accounts, the paid up capital at the close of last year was Rs. 75,00,000/- whereas the same has been increased to Rs. 1,50,00,000/- during this year, thus, the assessee company has raised share capital by issuing fresh shares amounting to Rs. 75,00,000/-. Vide Q. No. 14 of notice u/s 142(1), the assessee was required to establish the identity, genuineness and creditworthinedss of the share applicants and also to furnish register of shares and a copy of application thereof. No such details have been produced / furnished and in such circumstances, the identity and creditworthness of the subscribers to the new shares to the extent of Rs. 75,00,000/- could not be established. Even the assessee has not stated the individual shares subscribed by the sharesholders afresh during the year in spite of various opportunities allowed as detailed above. As such the investment in shares to the extent of Rs.....
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.... 635 (Trib.- Agra): (2011) 131 ITD 127 : (2011) 141 TTJ Establishment of identity and credit-worthniness proved - Assessee produced the bank account of creditor in his bank account on the same day on which loan was given - Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries - HELD - In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entiries. Further, mere depost of money by the creditor on the same day, does not establish that the loan in not genuine - Assessee has proved the source of credit and also the source of source - Addition cannot be made. ii. Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs. 1,00,000/- confirmation of creditor was filed - Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan - HELD - Assessee has established the identity - The party has confirmed the transaction - If AO doubted the transaction, AO should have called creditor u....