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TMI Blog2011 (1) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of manufacturing and export of garments in the year in question. A sum of Rs.97,01,702/- was claimed as deduction under the head Agency Commission . The AO noted that figure under this head in the preceding year was Rs.46,97,553/-. It was noticed that the commission was paid only to one party, namely, Mr. Lenny King. The assessee was called upon to furnish details of commission paid and services provided. The assessee submitted that the agency commission was payable at 10% of F.O.B. value as mentioned in GRs, which were approved by the Reserve Bank of India. Sample of Bank Certificate mentioning 10% agency commission was also enclosed. The reason for the increase in agency commission in this year, was stated to be the rendering of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to 2.88% of the turnover. Once the commission is accepted to have been paid, there is no logic in disallowing such expenditure by holding that it was excessive. It is for the assessee to determine the way in which it has to carry on its business. The assessee has to decide the percentage of commission which is to be allowed by him considering all the attending circumstances and the business exigencies. In our considered opinion, the ld. CIT(A) was justified in deleting this addition. 5. Ground no. 3 is against the deletion of addition of Rs.2,55,827/- made by the AO on account of rent, rates and taxes. On verification of the details, it was noticed by the AO that the assessee claimed deduction in respect of two payments amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified if some evidence showing the use of these two galas for the business purposes of the assessee firm had been produced. Here is a case in which no such evidence was filed before the authorities below and the situation remains same before us as well. In these circumstances, we are of the considered opinion that in the absence of any evidence to show that the assessee used these two premises for its business, the deduction cannot be allowed. We, therefore, overturn the impugned order on this issue and restore the addition made by the AO. This ground is allowed. 7. Ground no. 4 is against the deletion of addition of Rs.4,62,376/- made out of labour chages. The assessee debited salary of Rs.16,63,775/-, labour charges of Rs.46.23 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowed. 9. The last effective ground is against the deletion of addition of Rs.17,29,389/- from the total addition of Rs.36,47,447/- made by the AO on account of payments made to non-resident shipping companies without deducting tax at source. This ground also challenges the action of the ld. first appellate authority in deleting the addition by relying on additional evidence filed before him in contravention of Rule 46A of the IT Rules. 10. After considering both the sides and perusing the relevant material on record, it is seen from the second para of penultimate page of the impugned order states that the assessee furnished certain details before the ld. CIT(A) for the first time. The ld. A.R. candidly accepted that such details ..... X X X X Extracts X X X X X X X X Extracts X X X X
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