9911796707
TMI Blog2017 (11) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in brief of the case are that the assessee company was engaged in providing various services which includes counseltancy services, commission services and agency services in Power sector. For the year under consideration, the assessee filed return of income on 05/10/2010 declaring total taxable income of Rs. 13,79,62,090/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short "the Act") was issued and complied with. The assessment under section 143(3) of the Act was completed on 12/03/2013 after making certain additions/disallowances and total income was assessed at Rs. 14,79,62,090/-. Aggrieved, the assessee filed appeal before the Ld. CIT-(A), who partly allowed the appeal in favour of the assessee. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 3. The ground No. 2 of the appeal is general in nature, hence, we are not required to adjudicate upon and accordingly dismissed as infructuous. 4. In ground No. 1, the Revenue has challenged deletion of the addition of Rs. 1,00,00,000/- made by the Assessing Officer for disallowing commission paid to sub-agent. 4.1 The facts in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Aggarwal, Sh. Pradeep Aggarwal and Sh. Vikas Aggarwal, who were supported by a team of dedicated qualified technical and commercial professionals. (iii) The said company rendered coordination and follow of services and for rendering such services, only communication facility was required as most of the work was done telephonically or verbally and sometimes might have to visit various offices and expenses for which were accounted in the respective head in the profit and loss account of said company. No expenses on purchase of material was required. (iv) The commission expenses incurred by the assessee neither are personal nor are of capital nature and being incurred wholly and exclusive for the purpose of business, same are allowable. 4.4 The Assessing Officer rejected the submission of the assessee observing that: (i) The agreements entered into with subagent "M/s AGR Steels Strips Private Limited" were dated 14/04/2008 and 08/09/2008, whereas the "PGCIL" awarded the contract to M/s Hyosung Corporation, Korea only on 29/12/2008 and 05/03/2009 i.e. much after the date of the agreement with subagent. (ii) In the contract agreement with subagent, there was no mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition with following observations: "4.3 I have carefully considered the submissions of the appellant and perused the order passed by the AO. I find that the appellant has engaged AGR for rendering services in terms of two agreements dated 17.6.2009 & 24.8.2009 and has paid a total commission of Rs. 1,00,00,000/- along with due service tax after deducting TDS and the payment was made through banking channels. The appellant has submitted all the relevant details called for by the AO and the AO has got the details of the transaction directly verified from AGR by issuing notice u/s 133(6) of the Act. AGR has filed detailed reply with the required documents and confirmed having rendered services to the appellant. The appellant has sufficiently discharged the onus casted on it in as much as that it has filed the copies of agreements, copies of bills, duly confirmed copies of accounts, copies of ledger accounts for entries for commission payable and paid to AGR, bank statements, copies of agreement between appellant and Hyosung, details of commission earned by it because of services rendered by AGR, copies of bank statement of AGR wherein the cheques for payment of commission were d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. DR submitted that assessee has not given evidence of any interaction of the sub-agent with the authorities of the 'PCGIL' in the process of coordination and follow-up services, despite specifically being asked for furnishing such evidence. He further submitted that preparing agreements for commission payment, raising of bills by the sub-agent and charging service tax in the bills, deducting TDS by the assessee on such payment etc. are merely paper formalities and cannot justify the factum of the services rendered by the sub-agent. According to him, it cannot be established that the expenditure was incurred wholly and exclusively for the purpose of business of the assessee and therefore, the action of the Assessing Officer in disallowing the commission payment was justified. 6. On the other hand, Ld. counsel submitted a paper book containing pages 1 to 170 and supported the order of the Ld. CIT-(A). The Ld. counsel further submitted that the assessee took services of the subagent in immediately preceding year i.e. assessment year 2009-10 and the commission expenses amounting to Rs. 1,25,00,000/- has been allowed. According to the learned counsel submitted that in view of the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness/necessity of allowability of such heavy commission. The learned CIT-(A) has not referred any documents to controvert the finding of the Assessing Officer. (ii) The learned CIT-(A) has observed that assessee has filed the documentary evidences like copies of agreements, copies of bills, duly confirmed copies of account, copy of Ledger accounts for entries for commission payable and paid to AGR, bank statements, copies of agreement between assessee and Hyosung, details of commission earned by the assessee, copies of bank statement of AGR, copies of service tax challan of AGR etc. In our opinion, the services would have been rendered subsequent to agreements entered between the parties and thus, merely agreements, cannot prove the fact of services rendered. Similarly, copies of bills or Ledger accounts are documents to record the transactions in the books of accounts for the services rendered but these, in itself, are not documents evidencing the services rendered. Similarly, payment through bank or service tax challan payment by the sub-agent in itself cannot prove that sub-agent actually rendered the services. (iii) The Ld. CIT-(A) has further observed that no cash has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices of coordination and follow-up in the process of bidding of tenders for contracts. The assessee has merely submitted that coordination and follow-up services only required use of telephone or email or personal interaction, but it has not provided any documentary evidence before us, which could establish that the sub-agent followed with M/s 'PCGIL'. The assessee has submitted that due to services of the sub-agent, the supplier got contract for supply of transformer, but the assessee has not given any detail what kind of services actually helped the supplier in getting the contract. In our opinion, the Ld. CIT-(A) is not correct in concluding that the assessee established the fact of rendering services by the subagent. 10. The reliance placed by the Ld. counsel of the assessee on the decision in the case of Radha Swami Satsang (supra) citing the rule of consistency, is of no assistance, as the fact of services rendered need to be examined in each year and merely following the rule of consistency it cannot be presumed that the subagent might have rendered the services in the year under consideration also. 11. Further, the reliance placed by the assessee on the decisions in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
