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TMI Blog2013 (11) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... see is directed against the order dated 28.11.2006 of Commissioner of Income Tax(Appeals) for the assessment year 2003-04. 2. The assessee has raised the following effective grounds in this appeal: 1. That on the facts and in the circumstances of the case the learned CIT(A) has erred in law in holding that disallowance of claim of referral fee made by A.O at Rs. 258,00,000/- is in accordance with law. 2. a) That on the facts and in the circumstances of the case the learned CIT(A) erred in law in sustaining the disallowance of Rs. 131874/- being employee s contribution of P.F thereby holding that extension of due date for deposit of P.F under section 43B of the IT Act by F. Act 2003 is applicable to Employee s contribution only. b) That the learned CIT(A) failed to appreciate that cases relied upon by assessee as sited in the appellate order for employer s contribution order, deals with and are applicable to both deposit of employer s as well as employee s contribution to P.F. c) That the learned CIT(A) failed to appreciate that due date as defined under IT Act for the purpose of section 43B as well as 2(24)(X)/36(1)(va) of the Act is one as shown under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On appeal, the CIT(A) confirm the action of the AO for disallowing the claim of referral fee in total. Since the claim was disallowed for want of evidence to show that any service was rendered, therefore, the CIT(A) did not think it fit to decide the issue of Arm s Length Price under Transfer Pricing provision. 5. Before us the Ld. Counsel for the assessee has submitted that the authorities below have disallowed the claim of the assessee by holding that the agreement has no legal and binding force for want of stamp duty, witness, date of agreement and production of original agreement. The Ld. Counsel has forcefully contended that there is no requirement of stamp duty for the agreement under consideration and it is also not required to be witnessed as per the provisions of the Contract Act. Further the Ld. Counsel has submitted that even a oral agreement is legally enforceable if the conditions as prescribed under Contract Act i.e. competency of the parties, free consent, consideration, for lawful object and the agreement is for lawful object and not declared as void by the law inforce. Thus, the Ld. Counsel has contended that the reasons for rejecting the agreement are not susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in holding that the agreement has no legal and binding force. The assessee has also failed to prove with evidence that any service was rendered by the Citi Bank, NA to justify such a payment which is 75% of the total revenue earned by the assessee on the brokerage income. She has strongly relied upon the orders of the authorities below. She has also relied upon the decision of Hon ble Supreme Court in case of Lachminarayan Madan Lal Vs CIT 86 ITR 439 and submitted that the Hon ble Supreme Court has observed that mere existence of an agreement between the parties or any payments made there under does not bind the Income Tax Officer to hold that the payment was made exclusively and wholly for the purpose of the assessee s business. 7. We have considered the rival submissions as well as relevant material on record. A regards the validity of agreement we note that the alleged agreement is undated and no description regarding the authority of the persons who have signed the said agreement. Though no stamp duty was paid and also it has not been attested by any witness however, there is no such requirement for enforceability of the agreement between the parties. It is pertin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank, NA and the nature of services. We note that the assessee filed certain details regarding top 25 cases which were referred by the Citi Bank, NA but the authorities below did not examine the relevant record. Accordingly, in the interest of justice we set aside this issue to the record of the CIT(A) to adjudicate the matter afresh by considering whether any services has been rendered by the Citi Bank, NA, irrespective of agreement in question for allowing the claim u/s 37 and further the issue of Transfer Pricing to be adjudicated by taking into consideration the suitable comparables and most appropriate method. 10. Ground No. 2 regarding disallowance of employees contribution to P.F u/s 43B. The AO noted that the assessee has not made payment of contribution received from employees and also employer contribution before the due date as defined in the explanation to section 36(1)(va). Accordingly, the AO disallowed both the payments being employees as well as employers contribution by invoking the provisions u/s 43B of the Income Tax Act. On appeal, the CIT(A) has allowed the claim with respect to the employers contribution P.F however confirm the disallowance regarding employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution of the employees paid within the due date for filing the return of income is allowable under section 43B. This order of the Tribunal has not been referred to in the subsequent order of the Tribunal dated 28th January 2010 in the case of the same assessee, namely, Simplex Engineering Foundry Works, for the assessment year 20P04-05 in ITA No.378/Mum./2009, and with reference to the earlier order, the disallowance of the employees contribution was upheld by the Tribunal. In another order passed on 28th January 2010 in ITA No.6847/Mum./2008 (assessment year 2005-06) in the case of Pink Pen Private Ltd. v ITO, the Tribunal was dealing with the employees contribution to Provident Fund and ESIC which was paid even beyond the grace period. The Assessing Officer had disallowed the payment under section 36(1)(va), holding that the contribution was not covered by section 43B. The Tribunal was of the opinion that the case was covered by the judgment of the Supreme Court in the case of CIT v. Alom Extrusions Ltd.(2009) 319 ITR 306 and accordingly held that the contribution of the employees ; if paid before the due date for filing the return of income as contemplated by the proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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