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Issues involved: Appeal against order passed by CIT(A) for assessment year 2005-06.
Issue 1: General ground not requiring adjudication - The first ground raised by the Revenue was deemed general and did not require further adjudication. Issue 2: Deletion of addition of excess agency commission - The AO made an addition of Rs.32,11,200/- on account of excess agency commission paid to a foreign agent. - Assessee claimed the commission was payable at 10% of F.O.B. value for services rendered. - CIT(A) deleted the addition, noting substantial increase in profits despite commission payment. - ITAT upheld CIT(A)'s decision, stating the assessee has the discretion to determine commission percentage based on business exigencies. Issue 3: Deletion of addition of rent, rates, and taxes - AO made an addition of Rs.2,55,827/- for property taxes claimed by partners of the assessee firm. - CIT(A) deleted the addition based on the argument that the properties were used for business purposes. - ITAT overturned CIT(A)'s decision, stating lack of evidence to prove business use of the properties. Issue 4: Deletion of addition of labor charges - AO made an addition of Rs.4,62,376/- due to incomplete signing of labor register. - CIT(A) deleted the addition, noting subsequent signing of the register and proper payment of EPF & ESIC. - ITAT upheld CIT(A)'s decision, finding no basis for ad hoc disallowance and accepting the rectification proposal. Issue 5: Payments to non-resident shipping companies - AO made an addition of Rs.17,29,389/- for payments made without deducting tax at source. - CIT(A) deleted the addition based on additional evidence submitted, contravening Rule 46A of IT Rules. - ITAT set aside CIT(A)'s decision, directing AO to decide the issue afresh after allowing the assessee to present evidence. In conclusion, the ITAT partially allowed the appeal, directing a fresh assessment on the issue of payments to non-resident shipping companies in compliance with Rule 46A.
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