2014 (7) TMI 553 - AT - Income Tax

Commission expenses Proof of services rendered not furnished TDS not deducted Held that - Payment of commission made to M/s Trading Post, the assessee filed an agreement dated 1-9-2009 entered between M/s Trading Post and assessee submitted that the payment was made to M/s Trading Post in connection with the services rendered by it and it was a non-resident revenue submitted that all the additional evidences need to be examined at the end of the AO thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for further explanations and information from the assessee. Claim for damaged goods Held that - Revenue contended that CIT(A) has deleted the disallowance by considering certain new evidences and they were not confronted to the AO resulting in violation of Rule 46A of IT Rules thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication. Foreign travelling expenses Held that - Assessee was specifically asked as to whether the assessee could substantiate claim relating to Shoe fairs that were claimed to have been held in foreign countries and the participation by the assessee by bringing on record any type of correspondences, brouchers, invitation etc. - the assessee could furnish the relevant details, if an opportunity is given - the assessee is vehemently contending that the foreign trips were undertaken by the partners in connection with participating in Shoe fairs and further the claim could be proved with evidences, the assessee may be given one more opportunity to substantiate its claim - the AO has accepted the submissions of the assessee that she was assisting the partners in the foreign countries in AY 2011-12 thus, the claim of the assessee also requires proper examination thus, the matter is to be remitted back tt he AO for fresh examination Decided in favour of Revenue.

Summary

Issues:
1. Disallowance of commission expenses
2. Claim for damaged goods
3. Disallowance relating to foreign travel expenses

Disallowance of Commission Expenses:
The appeal involved the Revenue challenging the decision of the CIT(A) regarding additions made by the Assessing Officer, specifically commission expenses, claim for damaged goods, and foreign traveling expenses. The Revenue contended that the assessee did not provide proof of services rendered by commission agents and did not deduct TDS from commission payments. The CIT(A) partially confirmed the addition related to foreign traveling expenses. The dispute centered on whether commission payments were made to non-resident agents and the requirement for TDS deduction. The CIT(A) relied on circulars in force during the assessment year to support the assessee's position. The issue was further debated regarding additional evidence submitted by the assessee and the applicability of relevant circulars. The tribunal set aside the CIT(A) order and directed the Assessing Officer to re-examine the matter considering all evidence.

Claim for Damaged Goods:
The Revenue challenged the deletion of disallowance related to damaged goods by the CIT(A) due to new evidence not confronted to the Assessing Officer. The tribunal decided to remand the issue back to the AO for fresh examination, including any additional evidence presented by the assessee. The AO was directed to seek further explanations and information to make a decision in accordance with the law.

Disallowance Relating to Foreign Travel Expenses:
The dispute involved the assessee's deduction claim for foreign travel expenses, which the AO fully disallowed for lack of detailed justification. The CIT(A) found personal elements involved and restricted the disallowance to 10% of the claim. The parties contested the decision, with the Revenue arguing lack of business necessity for the travel and inclusion of expenses for family members. The assessee defended the expenses, especially for a family member assisting in business-related activities during the trips. The tribunal found the need for further examination of the claim, especially regarding participation in shoe fairs and the role of the family member in the trips. The tribunal remanded the issue to the AO for a fresh examination, considering all materials and evidence provided by the assessee, to decide in accordance with the law.

In conclusion, the tribunal allowed the appeal filed by the Revenue and the cross objection filed by the assessee for statistical purposes, with the orders pronounced on May 28, 2014.