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TMI Blog2019 (2) TMI 1648X X X X Extracts X X X X X X X X Extracts X X X X ..... ard together and are decided by common order. For appreciation of facts appeal for Assessment Year 2012-13 is treated as lead case. In appeal for Assessment Year 2012-13, the revenue has raised the following grounds of appeal: 1.Whether in the facts and in the circumstances of the case, the learned CIT(A) erred in deleting the commission paid to agents for obtaining orders from Govt. Agencies, when such payments of Govt. Agencies is prohibited by law and hence, not an allowable deduction u/s.37(1) of the Act. 2. The appellant prays that the order of ld. CIT(A) on the above grounds be reversed and that of the Assessing Officer be restored. 2. Brief facts of the case are that the assessee-company is engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales. Therefore, the Assessing Officer disallowed the commission payment on taking view that the copy of bill produced by assessee shows that the bill issued by BHEL directly to the assessee and there is no reference of any services rendered by the agents as claimed by assessee. On appeal before the ld. CIT(A), entire disallowance was deleted. The ld. CIT(A) deleted the disallowance holding that the assessee has made the payment of commission to outside party and the commission payment is not paid in contravention of law of the land and cannot be treated as expenditure incurred against the public policy. The ld. CIT(A) also concluded that office of assessee is situated in Mumbai and factory at Daman. The assessee has no office at Haridwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us agents through which the material/goods supplied to BHEL. On appeal before the ld. CIT(A), the action of Assessing Officer was confirmed, however, on further appeal before the Tribunal, it was held that the payment made by the assessee to agents were not against the public policy and rather, it was a pure business transaction. The ld. AR of the assessee submits that facts of the case in M/s Acro Electro Technologies Pvt. Ltd. (supra) is similar, therefore, on the ratio laid down by Tribunal, the assessee is entitled for deduction of commission payment. In support of his submission, the ld. AR of the assessee also relied upon the decision of Hon'ble Madras High Court in CIT vs. Textool Co. Ltd. (315 ITR 91, decision of Hon'ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deduction or allowance could be made. 7. Before the ld. CIT(A), the assessee contended that factory of the assessee is situated in Daman and their office is situated in Mumbai. The assessee has to participate in tender floated by various companies all over the India. The setting up of office all over India is not prudent and appointing agent is more practical. Many of times, the tenders are published in local Newspaper and appointing local agents, the assessee have better access to such tenders. Appointing of local agent is wise business decision and by no stretch of imagination it could be termed as opposed to public policy. The assessee also contended that they have furnished the documentary evidences to establish that the agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ource. The assessee has also furnished the nature of services rendered by them, copy of letter generating enquiry, copy of letter from giving technical bid, making a copy to the representative, joint inspection report and other evidences to substantiate about rendering services which established that these parties have rendered services to the assessee in procuring order and rendering other services. The ld. CIT(A) also referred and relied upon the decision of M/s Acro Electro Technologies Pvt. Ltd. (supra) wherein the assessee in that case was engaged in the business of manufacturing of electrical item and supplied material to Indian Railway and BHEL. Their office was situated in Mumbai. They engaged services of certain agents in other cit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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