2015 (6) TMI 944 - AT - Income Tax

Disallowance of export commission - Held that - The assessee has failed to furnish the details relating to commission payments and the services rendered by the agent to the assessee. In the absence of such details, one cannot ascertain about the nature of payment, whether Shri Pinkesh Gala has rendered services from outside India, whether the commission payment is chargeable as income in his hands in India. Without ascertaining about the nature of payment, it would be difficult to apply the Circulars of CBDT and also the decisions of Hon ble Supreme Court or High Courts or Tribunal. Accordingly, we are of the view that this issue requires fresh examination at the end of the AO. Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the same to the file of the AO with a direction to examine the same afresh by considering about the applicability of the decisions referred in the case of GE India Technology Centre Private Ltd 2010 (9) TMI 7 - SUPREME COURT OF INDIA to the facts prevailing in the instant case. - Decided in favour of assessee for statistical purposes. Allowing interest expenditure claimed against the house property income - Held that - The assessment order shows that the assessee has agreed for the disallowance of the interest so claimed, since it was pointed to him by the AO that the housing loan was not taken in respect of house against which the interest expenditure was claimed. However, the ld. CIT(A) has allowed the claim without looking into the above facts. Once agreed, the assessee cannot be considered to be aggrieved by the said addition. Accordingly, we set aside the order of the ld. CIT(A) on this issue and restore the addition made by AO. - Decided in favour of revenue. Addition made u/s 69C relating to purchases - CIT(A) deleted the addition - Held that - AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. On a careful perusal of the decision rendered by Ld CIT(A) would show that the first appellate authority has analysed the issue in all angles and applied the ratio laid down by the High Courts and Tribunals in deciding this issue. Hence, we do not find any reason to interfere with his order on this issue. - Decided against revenue.

Summary

Issues:
1. Disallowance of export commission
2. Interest u/s 234B, 234C, and 234D, and penalty proceedings u/s 271(1)(c)
3. Allowing interest expenditure against house property income
4. Deletion of addition made u/s 69C related to purchases

Analysis:
1. The first issue concerns the disallowance of export commission claimed by the assessee. The Assessing Officer (AO) disallowed the commission expenditure as tax was not deducted at source, invoking section 40(a)(i) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this decision. However, the Tribunal directed the AO to reexamine the issue considering the applicability of relevant legal precedents and requiring the assessee to provide necessary details for proper assessment.

2. The second issue involves interest charges under the Income Tax Act and penalty proceedings initiation. The Tribunal deemed the penalty proceedings premature and the interest charges consequential, not requiring adjudication at that point.

3. The third issue pertains to interest claimed against house property income. The AO pointed out discrepancies in the interest claimed against the housing loan, leading to disallowance. Although the CIT(A) allowed the claim, the Tribunal reversed this decision, restoring the addition made by the AO.

4. The final issue concerns the addition made under section 69C for purchases. The AO treated a portion of the purchases as unexplained expenditure based on information from the Sales Tax Department. The CIT(A) deleted this addition, citing lack of independent investigation by the AO and reliance on statements without proper verification. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for thorough examination before making such additions.

In conclusion, the Tribunal partly allowed the revenue's appeal and treated the assessee's appeal as partly allowed for statistical purposes. The judgment emphasizes the importance of proper documentation, adherence to tax regulations, and thorough investigation before making significant financial assessments.