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TMI Blog2014 (7) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue. The agents have rendered the services like procurement of orders, ascertaining the quality, timely payment etc. The recipient has declared the commission in his return of income and has confirmed to have rendered the services to the assessee. In the circumstances and facts of the case, we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition made by the A.O. and has rightly directed to enhance the allowance of deduction u/s 80IB of the Act. Deduction u/s 80IB on interest on Bank FDRs - Held that:- The FDRs were made for providing bank guarantee to the Electricity Board. Apparently, the interest on FDRs directly connected with the industrial undertaking. Even the assessee’s argument of netting of interest income is accepted. It automatically increased the profit of the assessee undertaking and the deduction U/s 80IB of the Act is also increases. We find that FDRs were made for business purposes and for getting the tender from the Electricity Board and income from interest income is directly connected with the industrial undertaking. Therefore, we confirm the order of the learned CIT(A). Accordingly, we dismiss the Revenue’s appeal on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and political relation and had been the Chairman of the Engineering Export Council of India from year 2000. Besides this, he was Member of Board of Trade constituted by the Ministry of Commerce, Govt. of India from 1998. The contract had been approved by the Board of Director of the assessee company and approved by the share holder in annual general meeting. The commission was calculated on the basis of services rendered by M/s Sadem India Ltd. on tender wise. On which, TDS has been deducted and deposited with the Central Govt. The genuineness of the payment is not doubted as the assessee was paid through account payee cheques after deducting the TDS on it. He also relied upon in case of Indocane Ltd. Vs. ITI Ltd. 1989 34 TTJ Bombay 89, which was on secret commission, paid to the employee, which was allowed by the Hon'ble ITAT Bombay. The learned Assessing Officer did not accept the assessee's reply as tenable on the ground that the Assessing Officer of M/s Sadem India Ltd. gave the different finding in its assessment for A.Y. 2004-05. The Assessing Officer further held that M/s Sadem India Ltd. does not have any capability to provide or procure the orders to assist the procuremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant as to how much expenses have been made by the person receiving commission. The appellant is concerned only with the quantum and quality of services rendered. It is contended that M/s Sadem India Ltd. is the agent of the appellant and does not work on behalf of the customer. Accordingly, the name of the agent would not figure in the tender acceptance form. Moreover, it is stated that no payment has been made in cash and that all payment have been made by cheque. In such a situation the appellant has pleaded for allowance of expenses of commission paid. In support of his claim that work was undertaken by M/s Sadem India Ltd. the appellant has furnished copies of communication with M/s Sadem India Ltd. and RRVPNL. As is stated above, the appellant is in the business of manufacturing of current and potential transformers & electrical control equipments. The equipments specified by the appellant are manufacture of very specific nature as per the requirements of the customers. It is also true that procurement of orders is an activity that has to be gone through before the actual manufacturing, testing and finally delivery of goods is made to the customers. In this age of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company in the instant case is trying to submit that the commission has been paid as per the services rendered, preparation of tenders and other services. In the agreement, it is mentioned that M/s Sadem India Ltd. is to provide assistance in preparation of tender during the valuation process and has also to provide assistance during the performance of the contract. There is no material on record that the services as mentioned in the agreement have been provided by M/s Sadem India Ltd.. The assessment company was made aware that M/s Sadem India Ltd. has mentioned that it got commission on account of goodwill of the Director Shri Satish Dhanda. No expenses for providing services were there. The company which has provided so called services admitted of making no expenses or providing technical services then onus was on the assessee company to have adduced evidence. Briefly arguing that recipient of commission has provided services were not sufficient in view of submissions of recipient made in their own assessment. The onus is on the assessee to establish that expenditure has been made for the purpose of business. The expenditure cannot be allowed only on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got orders directly from the Electricity Board. The assessee had not discharged his burden of proving by any material, thus he requested to confirm the order of the learned Assessing Officer. 6. At the outset, the learned A.R. for the assessee supported the order of the learned CIT(A) and also drawn our attention on decision of Coordinate 'B' Bench of the ITAT, Jaipur in ITA No. 901/JP/2007 for A.Y. 2004-05 order dated 30/09/2008, which has been considered by the learned CIT(A) before allowing the appeal in favour of the assessee. The facts of the case is also identical wherein commission was claimed and allowed by the learned CIT(A) as well as by the Hon'ble ITAT. It is further argued that M/s Sadem India Ltd. Performing liaison work with Electricity Board, the Director of the company have good reputation in government department and also had engaged in the various councils/commissions of the Govt. of India as well as State Govt. as they have political relation as well as liaisoning with the various departments. The learned A.R. also drawn our attention on paper book filed before us and submitted that this income has been accepted by the M/s Sadem India Ltd., the appellant had de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the rival contentions of both the parties and perused the material on record. The assessee is manufacturing of current and potential transformers & electrical control equipments. The appellant had been assisted by M/s Sadem India Ltd., Bhiwadi to execute the tender of various electricity boards. The genuineness of the payments in form of commission has not been doubted by the Revenue. The TDS has been deducted and paid to the government exchequer. The documents filed by the appellant before the lower authority supported that M/s Sadem India Ltd. has rendered service to the appellant by providing information of tender, attending the tender on behalf of the appellant, liaisoning with the various electricity boards, helping in recovering the payments, providing number of tenders, providing experience with the government department etc. The appellant had submitted all the details before the Assessing Officer to prove the services rendered by M/s Sadem India Ltd., which has not been controverted by the Revenue. The case law cited by the appellant i.e. DCIT Vs. Vhanketeshwar Wires Pvt. Ltd. has been supported the assessee's claim. The finding of the Coordinate 'B' Bench of ITAT, Jaip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before us. The learned D.R. vehemently supported the order of the learned Assessing Officer. 10. At the outset, the learned A.R. for the assessee supported the order of the learned CIT(A) and it was argued that the Assessing Officer himself had admitted interest income under the head business and profession. The FDRs on which the interest is received, his made for deriving the income from business of industrial undertaking as without providing such FDRs. No sale could have been affected. These FDRs were made not out of surplus funds but by utilizing the working capital of the business. Interest paid on working capital loan is ₹ 10,84,020/-as against the interest received of ₹ 2,75,187/- thus in fact, there is no interest income. The assessee had rightly claimed 80IB deduction on it. 11. We have heard the rival contentions of both the parties and perused the material on record. The FDRs were made for providing bank guarantee to the Electricity Board. Apparently, the interest on FDRs directly connected with the industrial undertaking. Even the assessee's argument of netting of interest income is accepted. It automatically increased the profit of the assessee unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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