2013 (7) TMI 1009 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this case are the admission of additional evidences in contravention of Rule-46A of the IT Rules, 1962, the disallowance of commission under section 37 of the IT Act, and the applicability of TDS provisions under section 40(a)(ia) of the Act.

Admission of Additional Evidences:
The Revenue challenged the admission of additional evidences by the CIT (A) despite objections from the AO. The CIT (A) considered the additional evidences necessary for deciding the appeal and granted relief to the assessee based on the genuineness of the expenditure and services rendered. The Tribunal dismissed the ground related to the violation of Rule-46A of IT Rules, 1962.

Disallowance of Commission u/s 37:
The Assessing Officer disallowed the commission paid by the assessee to a foreign party, Mr. John Victor Smith, amounting to &8377;1,13,24,831, due to lack of evidence and discrepancies in the agreement. The CIT (A) allowed the claim under section 37, stating that the genuineness of the payment was established through banking channels and the correlation between sales and commission. The Tribunal upheld the CIT (A)'s decision, noting that the assessee fulfilled its onus.

Applicability of TDS Provisions:
The Revenue contended that the commission payment attracted TDS provisions under section 40(a)(ia) of the Act. However, the CIT (A) held that since Mr. John Victor Smith was not assessable to tax in India, the TDS provisions did not apply. The Tribunal agreed with the CIT (A) that for invoking section 195 of the Act, the income must be chargeable to tax in India, and as such, upheld the CIT (A)'s decision.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s decisions on the admission of additional evidences, disallowance of commission under section 37, and the applicability of TDS provisions.