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TMI Blog2010 (3) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... to whom distribution business was assigned, earned good profits. We also found that M/s. Salora International Ltd. had also achieved good profit margin by increasing the sales of Acer products manifold, which could not be achieved by the assessee-company during the period the agency was held by the assessee. The detailed finding recorded by the Commissioner of Income-tax (Appeals) is as per material on record and does not warrant any interference, appeals of the Revenue are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 2004 17.64 crores (d) Year ended March 2005 26.00 crores (e) Year ended March 2006 68.12 crores 6. Before the Commissioner of Income-tax (Appeals), the assessee has filed following three documents "in support of its claim of income receipt from Salora International as business receipt liable to tax as income from business and profession" ; (1) Copy of letter dated December 27, 2001 by Acer India P. Ltd. to M/s. Salora International India Ltd. (2) Copy of letter dated December 27, 2001 addressed to the assessee-company by M/s. Acer India P. Ltd. (3) Copy of resolution of board of directors of the assessee-company passed on December 29, 2001 for his comments under rule 46A of the Income-tax Rules, 1962. 7. By the impugned order, the Commissioner of Income-tax (Appeals) observed that the assessee-company was engaged in the business of distributor of Acer India Ltd. The distributionship of the Acer products was being held by the assessee-company up to December 31, 2001. The assessee could carry out the said business of distributorship with Acer India Ltd. for about two years. Due to financial constraints and lack of finance, it could not make the venture a profitable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from other sources, therefore the carried forward business loss could not be set off against such income. 9. On the other hand, the learned authorised representative submitted that assessee was already in the business of distribution of Acer products like computers, laptops and desktops, etc., and in continuation of the same services later on it was in receipt of income in the form of commission on assignment of such agency by Acer India P. Ltd. to M/s. Salora International Ltd. As per the learned authorised representative, due justification has been given for assignment of dealership to M/s. Salora International Ltd. The nature of services rendered even after assignment of agency remained the same, therefore as per the learned authorised representative, the income earned in the course of business even though in the name of commission was correctly assessed by the Commissioner of Income-tax (Appeals) as business income against which carry forward business loss can be set off. He also placed on record the order of the Income-tax Appellate Tribunal in the case of Salora International Ltd., order dated July 31, 2009 wherein payment of commission by M/s. Salora International Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness places and to provide information about areas in which good turnover is expected. All these services were rendered by the assessee while carrying on business in an organised way and in the course of regular business. The same infrastructure and establishment was utilised by the assessee which were hitherto utilised while it was carrying on the business of distribution of Acer Products itself. With regard to findings recorded by the Commissioner of Income-tax (Appeals) for the nature of services rendered and the treatment of income received thereon, which have not been controverted by the learned Departmental representative, we do not find any reason to interfere with such findings recorded by the Commissioner of Income-tax (Appeals) and thereby treating the income received for rendering such services as business income even though it was given in the name of commission. 11. We also found that after transfer of agency to M/s. Salora International Ltd., there was substantial increase in the sales turnover year after year which is clearly depicted in the paper book filed before the lower authorities. Thus, the venture of distribution of Acer products in which the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational Ltd. has utilised the establishment and infrastructure of M/s. FX Info Technologies Ltd. (who is an assessee before us) for carrying out sale of Acer computers. The expenses incurred by Salora International in the shape of commission paid for the services rendered by FX Info Technologies Ltd., is directly associated with its business, vide its order dated July 31, 2009 in I. T. A. No. 2279/Delhi/2008. Thus, the issue in the instant case is also covered by the ratio laid down by the co-ordinate Bench in case of Salora International Ltd. The business expenditure in the hands of Salora International Ltd. by a natural corollary is business income in the hands of FX Info Technologies, who is assessee in the instant case. The Assessing Officer in its order has also stated that as per the memorandum of association of the company, the main object did not include any object which permits the assessee to carry on the business of earning the commission and therefore such commission income cannot be treated as income from business. In contrast to this observation of the Assessing Officer, we found that as per clause (8) of the objects as contained in the memorandum of association ..... X X X X Extracts X X X X X X X X Extracts X X X X
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