9911796707
TMI Blog2006 (1) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... s. SLF Ltd. The quantum of commission disallowed in the A.Y. 1995-96 is ₹ 87,53,183/- and the quantum of commission disallowed in the Assessment Year 1996-97 ₹ 99,10,589/-. 3. The facts and circumstances giving rise to the present appeal are as follows. The assessee is a company. It is engaged in the manufacture of PCD board for Telecom purposes. In the Profit and Loss a/c for the A.Y. 1995-96 it had shown payment of commission of ₹ 87,53,183/- and for the A.Y. 1996-97 a sum of ₹ 99,10,589/-. The commission was claimed to have been paid to one M/s SLF Industries Ltd. The Assessing Officer wanted the details of the commission paid along with names and addresses of the persons and the Directors of the company to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was necessary to have a written agreement and also correspondence between the parties so as to establish the nature of liaisoning services rendered. The Assessing Officer has also made a reference to the fact that the details of the services rendered had not been established by the assessee despite several opportunities afforded to the assessee. The Assessing Officer had also referred to the fact that the assessee was not in a position to give the name of the contract person of SFL Industries Ltd. The Assessing Officer was of the view that the commission paid was nothing but an adjustment entry. The assessing Officer made enquiries from DOT and MTNL but there was no confirmation from them as to whether M/s SFL Industries acted as a liai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from DOT and MTNL regarding SFL acting as a liaisoning agent for the assessee. It appears that the assessee could not furnish the confirmation from DOT and MTNL on the ground that the arrangement between the assessee and SFL was a private arrangement and DOT and MTNL were not aware of such arrangement and therefore they can not confirm regarding SFL acting as liaison agent of the assessee. Similarly the assessee also did not furnish the name and address of persons of M/s SFL with whom the assessee interacted in respect of the liaisoning work. In the aforesaid circumstances the CIT(A) confirmed the order of the Assessing Officer. One more fact that the CIT(A) has referred to in his Order is the fact that M/s SFL was in the business of manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see but the guidance for the preparation of tenders and execution of orders was given by M/s SFL. Regarding the observation of the CIT(A) about the absence of confirmation of MTNL and DOT regarding services rendered by the SFL, it was submitted that it was a private arrangement between the assessee and SFL and MTNL and DOT are not aware of such an arrangement. Reliance was placed on the decision of Bombay High Court in the case of CIT vs Woodlands Nerolac 181 ITR p.1 Bombay and CIT vs Sigma Paints Ltd. 181 ITR p.6. It was also contended that the Assessing Officer did not exercise his powers conferred u/s 131 for summoning M/s SFL and examining them to verify the nature of services rendered by SFL. Reliance was placed on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be procured from DOT and MTNL for the assessee's telecom products. The responsibility of M/s SFL is also restricted to only procurement of the orders and that executing orders and subsequent collection of payment will be the responsibility of the assessee. A commission of 6.5% of the value of the order procured from DOT and MTNL by M/s SFL in favour of the assessee was to be paid by the assessee to M/s SFL. All costs and out of pocket expenses related to procurement of order are to be borne only by M/s SFL. the assessee was to pay a commission after receipt of confirmed and commercially clear order from the DOT and/or MTNL to the assessee's satisfaction. Agreement was for the period up to 31st March, 1995 with an option to rene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However the break-up of the individual orders for which commission was paid for the A.Y. 1996-97 is not available on record. 9. The above are the documents on which the assessee relies to show that the payment of commission was for the purpose of business of the assessee. We have already noticed that the assessee was not in a position to give the exact persons with whom it was dealing in connection with procurement of orders. The summons sent by the Assessing Officer to M/s SFL could not be served as they had changed that place of business. We are of the view that the above documents do not establish the services rendered by SFL to the assessee. Considering the huge quantum of the commission claimed to have been paid by the assessee it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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