9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (12) TMI 1286 - AT - Income TaxTDS u/s 195 - Disallowance u/s 40(a)(ia) - payment of commission to a agent outside India - CIT(A) deleted the addition - Held that - In the present case, the asseessee produced all the evidences relating to the transactions it had with the party who procured the above said goods for food for Oil programme and all the payments were routed through valid channels by way of Banks where it is shown that the expenditure by way of commission incurred in relation to business, having relevant material on record and accepting the same as genuine transactions, but, however, basing on a report which is not part of the assessment, disallowing the claim is unjustified. With reference to the Circular No 786 dt 07-02-2000 issued by the CBDT it is very clear that no tax is deductible u/s 195 of Act on export commission and related charges payable to a non-resident for services rendered outside India is an allowable expenditure. Therefore, in the light of observations of above, we deem it proper to hold that the payment of commission to a agent outside India is a business expenditure is allowable and we confirm the order passed by the Ld. CIT(A).- Decided in favour of assessee.
Issues:
1. Deletion of addition of agency dealership commission under Section 40(a)(ia) of the Income Tax Act. Analysis: The appeal was filed by the Revenue against the order passed by the CIT(Appeals)-XX, Kolkata regarding the addition of agency dealership commission under Section 40(a)(ia) of the Income Tax Act for the assessment year 2004-05. The sole issue raised by the Revenue was whether the CIT(A) was justified in deleting the addition made by the AO under Section 40(a)(ia) of the Act. The assessee, a company engaged in manufacturing and selling various equipment, exported goods to the Ministry of Oil, Baghdad. The commission charges were paid through banking channels to a party in Jordan. The AO disallowed the expenditure of the commission paid, citing non-compliance with Section 40(a)(ia) and referencing the Volker commission report. However, the assessee provided relevant material evidencing the agreement for the services rendered. On appeal, the CIT(A) allowed the deletion of the addition, noting that in a previous assessment year, the ITAT had deleted a similar disallowance in the assessee's case. The CIT(A) emphasized that the expenditure was allowable if incurred in relation to the business and highlighted Circular No:786 clarifying non-taxability of a non-resident's income in India. The Revenue challenged the CIT(A)'s decision before the ITAT. The AR for the assessee reiterated that all transactions were conducted through valid banking channels and referred to Circular No:786. The ITAT considered the submissions, case laws, and circulars. It observed that the expenditure on commission was genuine and allowable as a business expenditure. The ITAT referenced a previous ITAT decision in the assessee's favor for a similar issue. Based on the precedents and the evidence presented, the ITAT upheld the CIT(A)'s decision to delete the addition of the agency dealership commission under Section 40(a)(ia) of the Act. The ITAT concluded that the payment of commission to an agent outside India was a legitimate business expenditure, confirming the CIT(A)'s order. In the final judgment, the ITAT dismissed the Revenue's appeal, affirming the decision of the CIT(A) regarding the deletion of the addition of agency dealership commission under Section 40(a)(ia) of the Income Tax Act for the assessment year 2004-05.
|
