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TMI Blog2015 (3) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... l - are introduced by a commission agent, the services of the commission agent stands rendered. The parties may not like that the terms and conditions should be negotiated by the commission agent. It depends on both the parties. It is not a case where M/s. Mayur Minerals has denied that it was not got introduced through Mrs. Sita Ram Parodkar to the Assessee. One Mrs. Sita Ram Parodkar, who may be illiterate, got introduced M/s. Mayur Minerals with the Assessee, in our opinion, if the Assessee is satisfied her job is over. CIT(A), in our opinion, has rightly dealt with this issue and deleted the disallowance. We, therefore, confirm the order of CIT(A) on this issue. - Decided in favour of assessee. Disallowance in respect of commission paid to M/s. De Long Mineral 10,000/- to 19,500/-. We do agree that it may be due to the quantity of iron ore transported but, in our opinion, the difference cannot be too much. The Assessee even though has given the details and self-made vouchers but could not give the calculation of how much iron ore has been transported by each truck. Under these facts and circumstances, in our opinion, CIT(A) was fair enough to reduce the disallowance to 20% of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the AO accepted the quantitative statement showing the opening stock, purchases, consumption as well as the closing stock, therefore, in our opinion, without making the purchases the Assessee cannot consume the iron ore. We, therefore, delete the disallowance. - Decided in favour of assessee. Payment of demurrage without deducting TDS - CIT(A) deleted the disallowance - Held that:- The issue is duly covered by the decision of the jurisdiction High Court in the case of CIT vs. Orient Goa Co. P. Ltd.[2009 (10) TMI 575 - Bombay High Court] to hold that the facts of the present case, are governed by section 40(a)(i ) of the Act 1961 as Amount paid to non-resident without deducting tax at source - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The learned CIT(A) erred in disallowing ₹ 2,10,800/- being labour charges incurred and paid for crushing the mineral ore on surmises and suspicion although it is accepted that the Appellant has incurred these expenses and same are not found to be excessive. 3. The learned CIT(A) erred in confirming ₹ 5,16,900/- being payment made for purchase of iron ore on surmises and suspicion although the sales and closing stock had been accepted." 2. Ground nos. 2 & 3 of the Revenue's appeal relate to the deletion of the disallowance made by the AO on account of Commission and Brokerage paid to Mrs. Sita Ram Parodkar and M/s. De Long Mineral & Logistics Pvt. Ltd., Singapore. The brief facts of the case are that the AO noted that during the year the Assessee had paid Commission of ₹ 89,95,806/-. The AO was satisfied so far as commission paid to Radhakrishnan amounting to ₹ 22,36,120/- was concerned and therefore allowed the same but was not satisfied in respect of commission paid to Mrs. Sita Ram Parodkar amounting to ₹ 45 lacs and to M/s. De Long Mineral & Logistics Pvt. Ltd., which is a Singapore based party amounting to ₹ 22,19,528/-. The Assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r resides in the mining area of Sanquelim and since the appellant needed the ore of a particular quality, she was the ore, who through her resources, identified the supplier, i.e. M/s Mayur Minerals. M/s Mayur Minerals also operates in Sanquelim. The appellant also stated that, though, Mrs. Sita Parodkar was working for the appellant for quite some time, its only after the sale-purchase deal was finalised, that the agreement was executed. Regarding services, the appellant stated that she not only identified M/s Mayur Minerals, but also organsied meeting of the two parties and ultimately the deal was finalised amicably. The learned AR pointed out that the observation of the A.O. that Mrs. Sita R. Parodkar provided services to the appellant in only one year, is factually incorrect, as she has provided services in subsequent years as well. The learned ARs stressed on the point that paying commission on purchases is a normal occurence in mining business and there is nothing unusual about this. The observation of the A.O. that the stamp paper was not purchased by Mrs. Sita R. Parodkar cannot be viewed adversely, as the same was purchased by her son who actively helped his mother in disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdictional ITAT, Panaji is also in favour of the appellant on this issue. The A.O. is directed to delete the addition amounting to ₹ 22,19,528/- made on this account. This Ground of Appeal of the appellant is allowed accordingly." 3. The ld. DR before us relied on the order of the AO and reiterated the points on the basis of which the commission paid to Mrs. Sita Ram Parodkar was disallowed. It was submitted that the AO had asked the Assessee to produce Mrs. Sita Ram Parodkar but he could not produce her as she cannot walk, is an illiterate and having sight problem. Her date of birth according to PAN is 1.1.1946. She was almost 63 years old when the transaction happened. She is a housewife. She has not carried out any other transaction. Even the commission is normally paid when the party sells the product but it is a case where commission has been paid when the Assessee purchased iron ore from Mayur Minerals. Except for the agreement between the Assessee and Mrs. Sita Ram Parodkar, no evidence was furnished by the Assessee. The Assessee is not new in the business. He knows each and every place where iron ore is available. The Assessee has purchased from Mayur Mine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The parties so brought together may negotiate the terms and conditions for the deal being carried out themselves or can negotiate the terms and conditions through the commission agent. It is not necessary that the terms and conditions of the deal have to be negotiated through the commission agent. Once two genuine parties - one in need of buying the material and other in need of selling the material - are introduced by a commission agent, the services of the commission agent stands rendered. The parties may not like that the terms and conditions should be negotiated by the commission agent. It depends on both the parties. It is not a case where M/s. Mayur Minerals has denied that it was not got introduced through Mrs. Sita Ram Parodkar to the Assessee. One Mrs. Sita Ram Parodkar, who may be illiterate, got introduced M/s. Mayur Minerals with the Assessee, in our opinion, if the Assessee is satisfied her job is over. CIT(A), in our opinion, has rightly dealt with this issue and deleted the disallowance. We, therefore, confirm the order of CIT(A) on this issue. 6. Ground no. 3 relates to deletion of the disallowance in respect of commission paid to M/s. De Long Mineral & Logistics ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment in India. Even no material has been brought on record by the Revenue which may prove that M/s. De Long Mineral & Logistics Pvt. Ltd. has permanent establishment in India. The commission earned by M/s. De Long Mineral & Logistics Pvt. Ltd. has to be regarded as business profit of M/s. De Long Mineral & Logistics Pvt. Ltd. and therefore, in our opinion, Article 7 of the DTAA entered into between India and Singapore will not be applicable. Once M/s. De Long Mineral & Logistics Pvt. Ltd. does not have permanent establishment, the business profit earned by M/s. De Long Mineral & Logistics Pvt. Ltd. by way of commission are not chargeable to tax in India and therefore, the Assessee, in our opinion, was not under obligation to deduct tax at source as per provisions of Sec. 195. We, therefore, do not find any illegality or infirmity in the order of CIT(A) deleting the disallowance made by the AO in respect of commission paid to M/s. De Long Mineral & Logistics Pvt. Ltd. Thus, ground no. 3 stands dismissed. 8. Ground no. 4 of the appeal as well as ground no. 1 of the C.O relate to the deletion of disallowance made on account of hire charges. The brief facts relating to these grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 50% of the expenses to be genuine and 50% of the expenses to be non-genuine is not proper basis. CIT(A) reduced the disallowance to 20% of such transportation expenses. We do agree that the onus is on the Assessee once the Assessee claims that he has incurred the expense to prove the genuineness of the expense so incurred. The Assessee in this case has shown the payment of the transportation charges for transporting iron ore from Jalna to Redi. The payment made by the Assessee to each of the truck in respect of transportation ranges from ₹ 10,000/- to ₹ 19,500/-. We do agree that it may be due to the quantity of iron ore transported but, in our opinion, the difference cannot be too much. The Assessee even though has given the details and self-made vouchers but could not give the calculation of how much iron ore has been transported by each truck. Under these facts and circumstances, in our opinion, CIT(A) was fair enough to reduce the disallowance to 20% of the expenses and confirm the disallowance to the extent of ₹ 8,43,986/-. In our opinion, this is not a fit case which warrants our interference. We accordingly confirm the order of CIT(A) and dismiss ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices of M/s. Karishma Impex to meet the export commitment. M/s. Mayur Minerals has delivered only 55% fines and ROM. This proves that what was received from M/s. Mayur Minerals was ROM also and therefore it was crushed. It was stated that M/s. Karishma Impex has charged at the same rate to M/s. Karishma Exports towards crushing and screening charges and the sum paid by the Appellant is reasonable. If the payment would not have been genuine, the AO would not have allowed 50% of the expenditure. CIT(A), therefore, deleted the disallowance. 11. We heard the rival submissions and carefully considered the same alongwith the order of the tax authorities below. We noted that in this case the AO has not invoked the provisions of Sec. 40A(2). It is a case where the AO himself has accepted the genuineness of the expenditure incurred by the Assessee and that is why the AO has allowed 50% of the expenditure incurred by the Assessee on crushing. In our opinion, the AO cannot enter into the shoes of the businessman and decide at what rate the Assessee should pay the charges to the party from which the Assessee has got the job work done until and unless the case of the Assessee falls within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noted that the CIT(A) has given a finding of fact that the labour expenses have been incurred through self-made vouchers and there are not supporting bills. Even the expenses have been paid at ₹ 18,500/- or ₹ 19,500/- per day in cash. The onus is on the Assessee to prove the genuineness of the expenses incurred. The ld. AR did not controvert the finding that the expenses are through self-made vouchers and accepted that there is no supporting evidence available. Under these facts and circumstances, in our opinion, there is no infirmity in the order of the CIT(A). CIT(A) has given a finding of fact. We accordingly confirm the order of CIT(A). Thus, ground no. 6 in Revenue's appeal as well as ground no. 2 in the C.O both stand dismissed. 14. Ground no. 7 in Revenue's appeal and ground no. 3 in the C.O relate to cash payment made for the purchase of iron ore. The AO noted that the Assessee has shown cash purchased of iron ore amounting to ₹ 25,84,501/- on the basis of the details furnished by the AO. The name of the parties from whom the cash purchases were made was not supplied by the Assessee. All the purchasers were through self-made vouchers. In the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ITR 40 (Kar.). There the learned Division Bench observed that "The question for consideration is whether demurrage payable to a non-resident owner or charterer of a ship for the delay in loading the ore sold to the foreigner is liable to be taxed under the provisions of the Income-tax Act". We have seen the facts obtaining in that case. In our view, the facts are distinguishable. The ratio of this Judgment also does not help the present assessee, i.e., the respondent in this appeal. We have noticed the various dates in the cited judgment. We have also considered the definition of word "demurrage" to which our attention was invited by learned Senior Advocate Shri Usgaonkar. Learned Senior Advocate also invited our attention to dictionary meaning of the word "demurrage" (Black's Law Dictionary). 8. Section 172 of the Act 1961 is carefully considered by us. Chapter XV titles as "Liability in special cases". We have no concern with sections, starting from section 159, till section 171 from this Chapter XV. Section 172 comes under sub-title "H.-Profits of non-residents from occasional shipping business". Title of section 172 is &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the provisions of sections 194C and 195 relating to tax deduction at source, are not applicable. The recovery of tax is to be regulated for voyage undertaken from any port in India by a ship, under the provisions of section 172. In this view, these observations of the learned Vice President of Income-tax Appellate Tribunal have no concern with the factual aspect that it is a case of occasional shipping, pleaded or raised by assessee. There is no dispute about interpretation of section 172 or section 195. Crucial point is as to how section 172 applies to the facts of the present case wherein the respondent-assessee is an Indian company, incorporated under the provisions of Indian Companies Act, 1956. In our view, the learned Vice President of the ITAT has recorded a perverse observation/finding in para 3 regarding application of sections 44B and 172 of the 1961 Act. 9. We may notice that the Judgment of the learned Appellate Tribunal is unreasoned and cryptic one. This judgment runs in around 20 to 25 lines. We are not oblivious of the fact, that not the form, but substance is material. The learned appellate Tribunal seems to have referred to the Circular of CBDT No. 723, dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany. That non-resident company had chartered a ship "M.V. Sparto" belonging to a non-resident company called Sparto Compania Naviera of Panama. The said ship called at the port of Betul, Goa on 1-3-1970. On 20-3-1970, the ship had left for Canada. The ship was allowed to leave port of Betul on the basis of guarantee bond, executed by the respondent in favour of the President of India. On 15-4-1970, the First Income-tax Officer, Margao, Goa issued a Demand Notice to the respondent Gosalia Shipping (P.) Ltd. for payment of ₹ 51,000 and odd amount, by way of Income-tax. We have noticed all these facts only to say that in the case on hand, there are no pleadings or material brought on record to show that the case is governed by occasional shipping within the meaning of section 172 of the Act, 1961 and said section applies. 12. Having considered the submissions of the learned Counsel appearing for the parties, in our view, the facts of the present case, are governed by section 40(a)(i ) of the Act 1961. Order passed by the Assessing Officer, in our view, is legal, proper and in accordance with the Scheme of Act 1961. In view of which we have taken in the matter, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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