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TMI Blog2015 (8) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... /2008, I.T.A.No.2176/Ahd/2008 - - - Dated:- 31-7-2015 - SHRI G.D. AGARWAL AND SHRI KUL BHARAT, JJ. For The Appellant : Shri S.N.Soparkar, AR For The Respondent : Shri Narendra Singh,Sr.DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : These two appeals by the assessee are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-VIII, Ahmedabad [ CIT(A) in short] dated 31/03/2008 09/12/2009 pertaining to Assessment Years (AYs) 2004-05 2005-06 respectively. Since common issues are involved, both these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. 2. First, we take up the Assessee s appeal in ITA No.2176/Ahd/2008 for AY 2004-05 as a lead case. The Assessee has raised the following concised grounds of appeal:- Pursuant to the directions from the Hon ble Bench, appellant craves leave to submit the following concise grounds of appeal before the Hon ble ITAT. 1. General 2. (a) Ld. CIT (A) erred in law and on facts in confirming action of AO in not granting deduction of ₹ 1, 45, 04,757/- commission on performance guarantee claimed during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record and gone through the orders of the authorities below. We find that the AO decided the issue by observing as under. 4. In the statement of total income filed along with the return the assessee has added back following amount to the net profit as per P L A/c. Commission on performance guarantee Rs.1,45,04,757/- Purchase Commission Rs.3,18,96,000/- In this connection the assessee has appended a note to the statement as under:- During the year under review the assessee company has made provision for commission for performance guarantee given to supplier on behalf of the company of ₹ 1,45,04,757/- and has also provided for commission on purchase aggregating to ₹ 3,18,96,000/-. The same has been disallowed and will be claimed at the time of actual payment with necessary documents, as per law. However, against this stand taken by the assessee, vide Point No.16 to reply dated 11/08/06 the assessee has submitted that the same is as per agreement and hence it is allowable as business expenses and therefore the same be allowed accordingly. To substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpense was allowable. We find that the ld.CIT(A) has rejected the ground on the basis that the assessee has not filed the revised return claiming the above expenditure and has filed a simple letter before the AO and further the full facts have not been placed before the AO and also details and evidences have not been filed before the A.O. The ld.CIT(A) also observed that the details filed before him the necessity of incurring the expenses is not established and also it is not established that services have been rendered by the payees. We find that the contention of the assessee is that the expenditure was required to be incurred under a contract, therefore being a contractual liability, the assessee was required to make the payment of commission as per the terms of the agreement. The liability of the expenditure is not disputed and the expenditure has been disallowed on the basis that the details were not available before the authorities below. Under these facts of the case and taking a note of the fact that the assessee has produced copies of various agreements relating to the payment of commission were required to be paid by the assessee, we are of the considered view that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Gas India Pvt. Ltd., BG Energy Holding Ltd and Gujarat Gas Co. Ltd. 5. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer by arbitrarily holding that there are no evidences produced by the appellant for the services rendered by BG Energy Holdings Limited during the year under appeal. The appellant submits hereby that it had produced all the evidences and records for the services rendered by the BG Energy Holdings Limited during the assessment proceedings as well as appellate proceedings however the submissions have been ignored while confirming the disallowance. 6. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer by arbitrarily holding that if there are no changes in the terms and conditions of the agreement affecting the payment then the said expenditure need not be accounted or claimed as tax deductible subsequently. The appellant would like to bring to your notice that any business expenditure should be allowed as a deductible expenditure if it has been incurred directly or indirectly for the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT (Appeals) has grossly erred in law and on facts in confirming the addition of ₹ 26,00,000/- made by the learned Assessing Officer on account of interest received from M/s. United Phosperous without appreciating the fact that the appellant had disclosed the receipt of such interest as income in F.Y. 2003-04 and 2004-05 on accrual basis and documentary evidence in the form of ledger accounts were furnished which corroborated disclosure of such income. 11. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the addition of ₹ 26,00,000/- made by the learned Assessing Officer without appreciating the fact that even as per sub-rule (3) (4) of Rule 37BA of Income Tax Rules to be read with Section 199 of the Income Tax Act the credit for tax amounting to ₹ 5,43,660 is allowable to the appellant. 12. It is therefore prayed that the impugned addition of ₹ 26,00,000/- made by the AO and confirmed by the CIT (A) may please be deleted. Your appellant prays for leave to add, alter and/or amend all or any of grounds before the final hearing of appeal filed. 7.1. In this appeal, the facts are identical to the facts of asse ..... 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