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TMI Blog2013 (2) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... business expediency and there was no element of illegality in making the payment – Against the revenue. Further, Section 40(a)(i) shall not be applicable in the given case since there is no liability on the appellant to deduct taxes at the time of payment of the commission to an agent outside India and deposit the same with the tax authorities – No violation of Section 195 - Against the revenue. - ITA 1932, 1945, 2044 & 2008/K/2010 - - - Dated:- 13-1-2012 - Sri Mahavir Singh Shri C. D. Rao, JJ. For the Appellant: Shri A. K. Pramanik For the Respondent: Shri S. M. Surana ORDER Per Mahavir Singh, JM. All these four appeals by revenue are arising out of separate orders of CIT(A), Kolkata in Appeal Nos.35 34/CIT(A)-IV/2008-09 and 16 14/CIT(A)-IV/09-10 all dated 24.12.2009. Assessments were framed by ACIT, Circle-4, Kolkata u/s.147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Years 2002-03 and 2003-04 vide his separate orders dated 03.12.2007. Penalties in dispute were imposed by DCIT, Circle-4, Kolkata u/s. 271(1)(c) of the Act vide his order separate orders dated 30.06.2008. 2. First we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it is mentioned that commission paid to parties outside India in respect of sale of goods to Iraq is unethical. The sale of such goods was as per UN sponsored oil for food programme on humanitarian ground and according to Assessing Officer any commission or kick back on such supply was unlawful and he disallowed in both the assessment years. Aggrieved, assessee preferred appeals before CIT(A), who allowed the claim of assessee by giving following finding in para 9, 10, 10.1 and 10.2 of his appellate order: 9. The appellant also drew my attention to the fact that the name of the company appears in page 168 of Table VII of the Volcker Committee report. In the footnote it was mentioned that no specific information was available with the committee regarding payment of freight charges. The appellant also mentioned that regarding ASSF (After Sales Service Fee), the agent was paid commission for providing service to the seller and not to the buyer. Commission was paid by the assessee for procuring orders and ensuring payment. 9.1. Further, the appellant also contended that the provision of Section 40(a)(i) is not applicable in their case as the TDS is not to be deducted on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal no. 47/CIT(A)-IV/06-07 dated 23.05.2008 as under: I had occasion to deal with a similar issue of disallowance of the commission paid to Overseas Agents in respect of Export of Tea to Iraq in the case of another Exporter to Tea also wherein I had occasion to examine the issue in greater detail. After comprehensive examination of the facts and the law on the subject, I held in that case that the payment of commission in respect of Export of Tea to Iraq was an allowable business deduction (order dtd.31.03.2008 in Appeal No.54/CIT(A)-IV/06-07 for Asst. Yr. 2003-2004 in the case of M/s. Limtex (India) Ltd. After considering the facts and submissions of the appellant and on appreciation of the facts and also the legal principles involved in this case I am inclined to agree with the arguments of the Id. A/Rs in this case. No material has been brought on record by the A.O. to show that there was payment by the appellant in the nature of kickbacks or there was any illegal payment involving infraction of any law. Mere appearance of the name of the appellant-company in the Volcker Committee s Report could not lead to an adverse inference against the appellant because the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (supra), the Tribunal has held vide para 20 to 25 as follows : 20. We have carefully considered the submissions of the Id. Representatives of both the parties and the orders of the authorities below. We have also gone through the relevant pages of the paper book. During the course of hearing, the ld. A .R. referred the paper book extensively to substantiate his submission that there were agreements entered into by the assessee and the concerned payees in respect of exports made by the assessee in the assessment year under consideration, The reference to the relevant pages to draw our attention during the course of hearing has already been referred hereinabove. 21. In respect of the commission paid to Mr. Kubaisi, we observe that the assessee entered into agreement with the Agency and Representation dated 01.07.2001. There was another Memorandum of Understanding dated 26.07.2001. We also observe that the assessee contacted Mr. Khalid J. Al Kubaisi on the suggestion of the then Indian Ambassador in Iraq to avail his services to supply transformers to Iraq. We observe that in the agency and the representation agreement followed with the Memorandum of Understanding, it was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional due to business necessitated and for business consideration for the export made to Iraq. 23. Similarly we also observe that the assessee company availed the services of M/s. Cosmos International to enable supply 51 containers containing 722 pieces of transformers of the aggregate value of Euro 2130368.80, which was already in transit when the war broke out on 17.03.2003. M/s. Cosmos International was to revive and to regularize the purchase orders under UN Resolution No. 1483 dated 22.05.2003 to enable the assesee to make the shipment upto 21.11.2003. Not only this, M/s. Cosmos International was also to get full payments not only in respect of the earlier 51 containers which had already been shipped by the assesee prior to 26.08.2003, but also for further consignment of 143 containers covering 2055 transformers of the value of Euro 5517301.71. In this respect, the agreement was duly entered into between the assessee and M/s. Cosmos International, the copy of which is placed at pages 126 127 of the paper book and the other correspondences entered into which are placed at pages 128 to 133 of the paper book. The Department has not disputed the above facts. Therefore, we are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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