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TMI Blog2017 (2) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... me court in the case of Sassoon J.David & Co.P.Ltd. vs CIT. (1979 (5) TMI 3 - SUPREME Court) to come to the conclusion that the revenue cannot assume the role of ascertaining how much the is reasonable expenditure having regard the circumstances of the case. The CIT(A) has also duly taken note of the fact that ACPL and the assessee were not related parties and that all the payment have been made through banking channels after due deduction of tax at source. - Decided against assessee - I.T.A Nos.395 & 396/Kol/2016 - - - Dated:- 8-2-2017 - Sri N.V.Vasudevan, JM Dr.Arjun Lal Saini, AM For The Appellant : Shri S.K.Tulsiyan, Advocate For The Respondent : None (Adjournment request rejected. ) ORDER Per V.V.Vasudevan, JM Both these appeals filed by the Assessee are against common orders dated 23.12.2015 of CIT(A)-22, Kolkata relating to A.Y 2010-11 and 2011-12. 2. The common issue that arises for consideration in these two appeals is as to whether CIT(A) was justified in deleting the addition made by the AO by disallowing the claim of the assessee for deduction of commission paid to M/s. Atirath Commercial (P)Ltd. (ACPL) and M/s. IMACO Projektentwicklungs G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work upto the final completion of the project. b) Assistance and personal advice in securing and arranging of the necessary import licences, visas, working and residence permits or any other local permit required for the personnel of Michel Bau c) Providing all necessary assistance required to fulfill all governmental formalities during negotiations, at signature of contract, during the execution and up to the final completion of the project. d) To assist to follow up and to arrange with the KMC all contractual documents like Inspection reports, Acceptance Certificates, progress reports etc which are to be lawfully and contractually provided by KMC. e) To assist MB for setting up of a local office as may be required by Indian law and to arrange for all the formalities as may be required. All expenses for the same would be borne by MB. f) Assistance in securing the payment from KMC/finance bank, until receipt to the final payment and release of the corresponding bank guarantees. g) Assisting MB in having a smooth relationship with KMC. 6. As far as the payment made to IMACO is concerned the assessee provided the following documents to substantiate its claim for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of collecting mails. 8. After making all the above observations, the AO finally concluded as follows :- Considering the above facts and discussion, it is abundantly clear that Atirath possessed no special expertise and Michel Bau was, and is still, its first such client. The number of employees and the nature of minimal services rendered, all point to the inference that there was nothing that entitled Atirath to an agency commission of 8% of contract value. Thus the whole transaction is either sham or bogus or is undertaken to camouflage some such expenses which are not legally admissible being in contravention of the laws of the land. Hence the entire amount of agency commission paid to Atirath is being disallowed as not being genuine in nature and added back to the total income of the assessee. Total income as shown in return: 4,46,40,970/- Add:- Agency Commission as discussed above 4,40,35,614/- Total Taxable Income 8,86,76,584/- 9. It can be seen from the above observations of the AO and from a reading of the entire order of AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisputed that the appellant is a foreign company without any establishment in India. Therefore, it is quite understandable that it required assistance from a local party in order to carry out its work and the appellant had to pay some charges for the same. The correspondence produced by the appellant shows that at least some services were being rendered by the Atirath Commercial Pvt. Ltd to the appellant. The assessing officer has also, albeit in an indirect way, accepted this, though he is of opinion that the services were minor ones which did not call for payment of such substantial amount. However, it is well settled that IT authorities are not supposed to sit over judgment regarding the quantum of payment made by an assessee in course of his business. A business man is generally presumed to be the best judge of his business affairs. As long as it is established, that some services were being rendered and the payment was being made fully and responsively for purpose of business, the same is to be allowed as deduction. The ratio of the Supreme Court's decision in the case of Sassoon J. David Co. P. Ltd. v CIT 118 ITR 261 cited by the appellant also supports this propositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work carried out by it. The payment had been made through banking channel after deducting tax at source. Material has also been brought on record by the appellant to indicate that Atirath Commercial Pvt. Ltd had indeed rendered some services to it. On the other hand, no material, whatsoever, has been brought on record by the assessing officer to, suggest that to establish that payment was not for the purpose as stated by the' appellant. In my opinion, the appellant had discharged its onus to claim agency commission as business expenditure. Considering all these facts, I delete the disallowance of ₹ 47,26,352/-. 12. In A.Y.2009-10 there was no payment of commission to IMACO and the commission was paid only to ACPL. In A.Y.201-11 and 2011-12 the Assessee drew attention to the conclusions of CIT(A) in his for A.Y.2009-10. The CIT(A) was of the view that the AO had not given any reasons for disallowing commission payment to IMACO and therefore the disallowance of commission paid to IMACO cannot be sustained. However in the remand report filed before CIT(A) the AO had sought to raise dispute regarding the genuineness of the agreement between the assessee and IMACO. The CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. 3.The file sent is returned herewith. It was submitted by him that though the principle of res judicata is not applicable in income tax proceedings, but the rule of consistency has to be followed. It was his submission that when the facts and circumstances that prevailed in 2009-10 as well as A.Y.2010-11 and 2011-12 are identical and when the reasons adduced for making the disallowance of commission were also identical, it would not be proper to allow the revenue to challenge the order of CIT(A) for A.Y.2010-11 and 2011-12. According to him since the issue is squarely covered by CIT(A) for A.Y.2009-10 the appeal should be taken up for hearing as a settled issue. 15. We have given a very careful consideration to the submissions of the ld.counsel for the assessee and are of the view that the issue now in so far as it relates to the payment of commission is settled in the case of the assessee by the revenue s action in not filing the appeal on an identical issue arising on identical facts and circumstances in A.Y.2009-10. It is also pertinent to mention that the non filing of appeal for A.Y.2009- 10 was not due to any orders or instructions or directions issued u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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