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TMI Blog2012 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... export sales have been made during the year. In view of additional evidences produced by assessee, it is found that sufficient material has been brought on record in support of this contention that services were rendered by the agent. Once it is found that the services were rendered and commissions is paid, the same should be allowed as business expenses - Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ot excessive and unreasonable. 2.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this issue is now covered in favour of the assessee by the judgment of Hon'ble Apex Court rendered in the case of Rotork Controls (India) Ltd. (supra). There is no dispute on this aspect also that the method of accounting adopted by the assessee for this year regarding making provision in respect of warranty expenses is consistently followed by the assessee in the subsequent years. Regarding the estimation of warranty provisions also, it is seen that the same is not excessive as compared to the actual expenditure on this account. Considering all these facts, we do not find any reason to interfere in the order of Ld. CIT(A). 2.4 In the result, appeal of the revenue is dismissed. 3. Now, we take up the appeal of the revenue for the assessment year 2006-07. In this year also, only one effective ground has been raised by the revenue which is as under: "1 . On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs. 48,61, 158/- being disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of interest expenditure in connection with making investment in shares. He submitted that the A.O. has made disallowance of Rs.3,51,407/- on account of interests disallowance, which should be deleted in full. Regarding the disallowance made by the A.O. in respect of administrative expenses, it was submitted that as per this judgment of Hon'ble Bombay High Court, only reasonable disallowance can be made. 4.2.2 Ld. D.R. supported the orders of authorities below. 4.2.3 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgement cited by the Ld. A.R. Considering the facts of the present case, it has to be accepted that no interest bearing borrowed funds were used for investment in shares and, therefore, no disallowance is called for out of the interest expenditure. As per this judgment of Hon'ble Bombay High Court rendered in the case of Godrej & Boyce Manufacturing Pvt. Ltd. (supra), Rule 8D is not applicable in the present case because assessment year involved is assessment year 2006-07. Still some disallowance u/s 14A out of the administrative expenses is called for. Normally we rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant had failed to furnish any documentary evidence, appellant contended that export orders were secured through commission agents, who assisted it in bidding, technical evaluation, price negotiation and liaison with customers, since it did not have any office in Bangladesh. Appellant contended that the agents had relationship with Bangladesh customers and hence their services were helpful in securing the order. As per appellant, the agents also visited Bangladesh on its behalf and IDS was deducted by the appellant from the payments made. Details such as PAN No., address and confirmation from the agents were filed. Appellant contended that due to engaging the commission agents, it could fetch better price with much higher profitability than that realized in domestic sales. The Assessing Officer observed that the contention of appellant about agents assisting it in bidding, technical evaluation, price negotiations and liaison with customers was unsubstantiated and in spite of adequate opportunities to put forth documentary evidences in support of this contention, no evidences other than copy of handwritten debit note of M/s. Marfatia & Co. could be submitted. Assessing Officer furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 It was further submitted by the Ld. A.R. that as per these correspondence of the assessee with the Agent M/s. Marfatia & Col, it can be seen that they were acting as the agents of the assessee company for export to Bangladesh and the orders were procured by them and they were also monitoring, commissioning the equipment at the buyer's end and were taking up the matter with the assessee for solving out the problems of the buyer. Regarding the second objection of the revenue that the payments were made to four different persons, it was submitted that the payments were made to different persons as per the instructions of the agent M/s. Marfatia & Co. as per letter dated 30.06.2005 as per which, they have requested for payment of Rs.46,78,986/- to them and Rs.5 lacs to Soma Mukherjee and Rs.30 lacs each to Fatima S Broachwala and Saifuddin F Broachwala. He submitted that assessee is concerned with the services and payment for that. The services were rendered by M/s. Marfatia & Co and if he in turn has taken help form others and instead of making payment directly to them, he asked the assessee to make direct payments to those persons in part, then no adverse inference should be drawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted. As per these additional evidences, it is seen that these are correspondence between the assessee and the agent M/s. Marfatia & Co. during July 2004 to June 2005. The agent has intimated the assessee that they are having very good contacts in Bangladesh and they are aware of the work contract awarded for underground mining project of Bangladesh to a Korean company and this company requires some mining machinery and for the same, the agent has intimated the assessee company that if the assessee is interested, they can procure orders for the assessee from Korean company. In reply, the assessee company sent the required product literature and other details and thereafter, this agent intimated the assessee that product literature was forwarded by them to the Korean company. They also asked the assessee company to quote the payment terms and Despatch schedule etc. There are other letters in this connection between the assessee and the agent and as per letter dated 30.06.2005, the agent M/s. Marfatia & Co. made a request to the assessee that since they cannot alone handle the whole project, there were some other persons also involved in the execution of this contract and, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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