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TMI Blog2012 (9) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... es NOC given by another partner for carrying on her own insurance agency business. On remand, the AO examined those documents and found correct. Decision in favour of assessee Addition of Service Tax being debit in P&L – Assessee receive insurance commission from insurance companies – Assessee passes accounting entry by gross commission & debit the Service Tax in P&L – Held that:- As per agreement insurance company will pay net amount after deduction of Service Tax. As per Rule 2 (d)(iii) of Service Tax Rules, this service comes under reverse charge mechanism. Therefore, insurance company liable to pay Service Tax. As far as assessee concern, credited the entire gross commission and debited the service tax in its books. The net result wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the assessee s account. It cannot be understood that as to how an auxiliary service provider has got the authorization in realizing Service Tax payable by itself, from an agent. In this case, the reimbursement of Service Tax by the assessee might have been the outcome of some business agreement between the parties, but no uh agreement was made available during the course of assessment proceedings. 3. That the appellant craves leaves to add, alter or amend any of the grounds during the course of hearing. 3. The first issue is relating to addition on account of remuneration to working partner. 4. The brief facts of this issue are that while doing the scrutiny assessment u/s 143(3) of the IT Act the AO has disallowed an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consent of the other partner, can either directly or indirectly engage himself/herself in any other competitive business. Thus, Smt Kabita Das should have been in possession of a no objection paper from Sri Subrata Das, the other partner, to carry out her own agencies, but no such paper with respect to NOC is made available in course of the proceedings. In this context it is also to mention that in course of Income Tax survey made during financial year 08-09, in the business premises of the firm and in course of other occasions such as inspection, verification etc, whenever the Departmental representatives visited the head office of the firm at 16, R. N Mukherjee Road, Kolkata- 1, there could be found only Sri Subrata Das, other partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. In the case of an insurance agent, it has been provided in the Service Tax Rules that the person liable to pay service tax will be the concerned insurance company who has appointed the agent . It has been understood that the Service Tax liability lies upon the auxiliary service provider ; the concerned insurance company who has appointed the agent , i.e., in this case BALIC. In this regard the reply of BALIC is that we have deducted service tax from the gross commission payable to you during the financial year 2006-2007 towards the reimbursement of sharable service tax cost incurred by us on the Service of Golden Enterprise. The statement of BALIC confirms the realisation of Service Tax from the assessee s account. But it can no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order and remand report of the AO. In the assessment order, AO basically raised two issues for disallowances of remuneration paid to Smt.Kabita that- (1) she was not in position to attend the work of the appellant firm for her pre-occupation and (2) she was engaged in a competitive business without consent of the other partner. The AR submitted that Smt. Das was the working partner since inception and she regularly attended the work of the appellant firm. In support of the same, copy of many bank cheques (total 44 numbers, dated from 17/04/2006 to 13/03/2007), having signature of Smt. Das as Managing Partner and supporting bank statements have been filed. The AR also filed a copy of letter dated 04/04/2005, in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR appearing on behalf of the revenue relied on the order of AO. 6. On the other hand, the ld. Counsel appearing on behalf of assessee has relied on the order of ld. CIT(A)by referring to the partnership deed which was placed at pages 22 to 33 of the paper book, photocopies of the ledger account for the financial year 2006-07 and photo copies of the Service Tax Ledger Account for the financial year 2006-07 which are placed at pages 131 and 132 of the paper book and filed the Service Tax Rules 1994 wherein the definition of person liable to pay service tax has been included at Rule 2(d)(iii). Based on the above documents he submitted that the action of the ld. CIT(A) is justified in the facts of the case. Therefore he requested to upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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