2019 (7) TMI 645 - HC - Income Tax

Addition of expenditure as commission on export of goods - payment on behalf of the Assessee to its overseas agents for facilitating its export business - claiming deduction by filing of a revised return - Department's appeal is on the footing that no deduction/expenditure, which was not claimed in the return of income, could be claimed before the Assessing Officer without filing any revised return - HELD THAT - A similar plea, in a similar case involving the same issue, was before this Court in The Principal Commissioner of Income Tax, Panaji v/s. M/s. Rajaram Bandekar (Sirigao) Mines Pvt. Ltd. 2019 (7) TMI 416 - BOMBAY HIGH COURT after considering the case law cited by the Revenue and, in particular, the case of Goetze (India) Ltd. Vs. Commissioner of Income Tax, 2006 (3) TMI 75 - SUPREME COURT held that there was no question of the Assessee claiming any deduction by filing of a revised return. This Court held that what the Assessee received from its foreign buyers was the net FOB value; the Assessee was not claiming any expenditure on account of commission paid and, there was, thus, no question of any revised return. In that case, the Court observed that there was no tax effect whatsoever by reason of the expenditure made by foreign buyers by way of commission paid outside India and that, in the premises, no substantial question of law arose for consideration of the Court. The decision in M/s. Rajaram Bandekar (Sirigao) Mines Pvt. Ltd. (supra) covers the facts of the present case. For the reasons stated in that case, no substantial question of law arises in the present Tax Appeal for consideration of this Court. The Appeal, in the premises, is dismissed.

Summary

Issues:
1. Addition of expenditure as commission on export of goods.
2. Applicability of Section 9(1)(i) of the Income Tax Act.
3. Claiming deduction/expenditure without filing a revised return.

Analysis:
1. The judgment concerns the addition of expenditure as commission on the export of goods, paid on behalf of the Assessee to its overseas agents for facilitating its export business. The Assessee, engaged in the mining and extraction of iron ore, filed a return of income for assessment year 2012-13. The Assessing Officer added the amount of commission paid by foreign counterparts to overseas agents appointed by the Assessee for facilitating export business. The Commissioner of Income Tax (Appeals) deleted this addition, stating that the non-resident foreign commission agents provided services outside India, making their income not assessable in India under Section 9(1)(i).

2. The ITAT upheld the CIT (Appeals) order, noting that the commission payment had no tax liability in India as it involved transactions between foreign agents and importers abroad. The Department's appeal argued that any deduction/expenditure not claimed in the return could not be claimed before the Assessing Officer without a revised return. Citing a similar case, the High Court held that the Assessee receiving the net FOB value from foreign buyers did not claim any expenditure on commission paid, thus no revised return was necessary. The Court emphasized that there was no tax effect due to the expenditure made by foreign buyers as commission paid outside India.

3. The Court referred to a previous case to support its decision, stating that no substantial question of law arose in the present Tax Appeal. The judgment in the earlier case covered the facts of the current case, leading to the dismissal of the appeal. The Court concluded that as per the reasons stated in the previous case, there was no substantial question of law requiring consideration in the present appeal, resulting in the dismissal of the appeal.