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TMI Blog2015 (6) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the commission agent is on the basis that contract was already awarded by M/s Modern Food Industries (India) Ltd. in the year 1999 and delivery was to be made by the assessee company at its own premises but these two aspects regarding negotiation for rate difference and follow up of payment realization has not been considered by authorities below before holding that no services were rendered. Hence, on this aspect, we are of the considered opinion that the orders of the authorities below are not sustainable. In a case of supply to Government undertaking also, in spite of direct order/contract awarded by PSU, various formalities are to be completed by the supplier and the same can be done in two ways. One way is to have competent person on the roll of the supplier company to do such formality and second way is to obtain the services of commission agent who have such experience and expertise. The expenditure incurred by the supplier on such work in any one of the two manners, as discussed above are allowable and the same cannot be disallowed unless it is established that such expenditure is for effecting the decision making process of a PSU of Government of India. In the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) (ii)] and accordingly the claim should have been allowed in full, instead of being restricted to a sum of ₹ 1 lakh only. 3. BECAUSE the Id. CIT(A), on a due consideration of the facts and circumstances of the case, particularly that; (i) Shri N.K. Bali had acted on behalf of the payee; (ii) he had been representing the appellant at various stages of the job work handled by the appellant for Modern Food Industries India Ltd. (MIFL), as was fully borne out from the entries appearing in the visitors' book; (iii) information (so called) given by the executives of MIFL through letters and their statements (as recorded by the Assessing Officer) were wholly irrelevant in view of the uncontroverted fact that Shri N.K. Bali had been handling the activities as had been assigned to M/s. Premier Ispat (P) Ltd., in relation to the job work as had been carried out by the appellant on behalf of MIFL; and (iv) other relevant facts and circumstances of the case; should, have allowed the entire commission amounting to ₹ 12,47,268 as had been paid to M/s. Premier Ispat Pvt. Ltd. 4. BECAUSE even the statement given by the director of the payee M/s. Premier Isp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said agent, the said agent was supposed to do liaisoning work, follow up work and to look after dispatch, payment realization and rate difference negotiation etc. for supply to M/s Modern Food Industries (India) Ltd. He also furnished copy of agreement dated 19th April 1999 between M/s Modern Food Industries (India) Ltd. with the assessee company in respect of supply of nutro biscuits of the assessee company to that company. He also submitted that the copy of the agreement between the assessee company and M/s Kundan Castings (P) Ltd. is available on pages 29 to 30 of the paper book. Regarding the remaining two parties i.e. Rainbow Merchantile Ltd. and Mahavir Electronics, to whom small amount of commission was paid, it was submitted that formal agreement with them is not available but copy of bill raised by Rainbow Merchantile Ltd. is available on page No. 42 and copy of bill raised by Mahavir Electronics is available on page No. 43 of the paper book. Reliance was placed on the following judicial pronouncements: (i) Aluminium Corporation of India Ltd. vs. CIT [1972] 86 ITR 11 (SC) (ii) Jaswant Sugar Mills Ltd. vs. CIT [1970] 78 ITR 154 (Del) (iii) CIT vs. Suzlon Ener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to a commission agent is justified unless it is proved that no such work was actually done by the commission agent. The allegation of the authorities below that no services were rendered by the commission agent is on the basis that contract was already awarded by M/s Modern Food Industries (India) Ltd. in the year 1999 and delivery was to be made by the assessee company at its own premises but these two aspects regarding negotiation for rate difference and follow up of payment realization has not been considered by authorities below before holding that no services were rendered. Hence, on this aspect, we are of the considered opinion that the orders of the authorities below are not sustainable. 6. Regarding the second basis on which it is held by CIT(A) that the payment is not allowable is that the payment of commission is to effect the decision making process in a contract awarded by PSU of Government of India. He has held that the expenditure of this nature cannot be allowed as it is opposed to the public interest. In this regard, we find that when the agreement was already awarded by M/s Modern Food Industries (India) Ltd. to the assessee company in the year 1999 and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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