9911796707
TMI Blog2020 (4) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the receivables is accordingly deleted. - Decided in favour of assessee. Disallowance of commission expenses - HELD THAT:- Assessee has failed to produce documentary evidence to support that Mr. Pandey provided any kind of services to the assessee. Merely providing some email exchange between him and the assessee is not sufficient to support that Mr. Pandey provided any kind of services in relation to the contracts for which he has been paid commission expenses - During the course of the hearing, the learned counsel of the assessee was asked whether similar commissions have been given in case of the contracts received from private parties, he clearly admitted that no such commission expenses have been paid for executing the contract of the private parties. This fact also support the finding of AO that the commission was given only for procuring contracts from the railway and such kind of commission for procuring contracts from government is not permissible as per the government rules. No documentary evidences to support the service rendered by Mr. Pandey, the reliance placed on the decision in the case of CIT Vs. Conimeters Electricals (P) Ltd. [ 2009 (8) TMI 1236 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the said expense was allowed in the preceding years after duly recording 'statement on oath from the third party vendor to whom such commission has been paid. 6. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal 2. Briefly stated facts of the case are that the assessee was engaged in manufacturing of cast manganese steel crossing for rail tracks and other engineering products to cater the requirements of the steel industries, power-plant, mining cement and other plants engineering industries. The assessee filed return of income for the year under consideration on 30/11/2013, declaring total income of ₹ 11,94,37,330/-. The case was selected for scrutiny assessment and notice under section 143(2) of the Income-tax Act, 1961 (in short the Act ) was issued and complied with. During assessment proceeding, the Assessing Officer observed international transactions carried out by the assessee with its Associated Enterprises(AEs) and referred the matter for benchmarking of those international transactions to the learned Transfer Pricing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (IT Appeal No. 379 of 2016 dated 21/07/2016), there was no requirement of making any adjustment on account of the receivables. The learned counsel referred to balance-sheet of the company available on page 6 of the paper-book to support that the assessee company was debt free company. The learned counsel also referred to page no. 19 of the paper-book and submitted that no interest expenses have been paid during the year under consideration. 3.1 He further submitted that no interest has been charged by the Associated Enterprises with regard to the receivables from the assessee. He submitted that in case they would have charged interest on the receivable, assessee would have paid more interest and therefore charging of the interest would have been detrimental to the interest of the assessee. The learned counsel referred to page 104 of the paper-book which contained that notional interest of ₹ 8,93,453/- would have been payable by the assessee to the Associated Enterprises, had the Associated Enterprises charged the interest on receivable. He further submitted that outstanding payment in the form of the receivables were also due from the non-associated enterprises and no i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d did not provide any specific scope of services to be rendered by Mr. Pandy. The Assessing Officer asked supporting documents like project reports, email, correspondence etc., however, the assessee submitted few email interaction between the assessee and Sh. Pandey, which according to the Assessing Officer was not sufficient to explain the nature of the services rendered by him. The learned Assessing Officer pointed out that as per the authorities issuing the tender, there was no requirement of any commission agent and if so required the government prescribed persons were only eligible to act as agent for rendering the services, which was not the situation in the instant case. 4.2 The learned AO relied on the decision of the Hon ble Calcutta High Court in the case of Standipack (P) Ltd Vs CIT (2012) 211 Taxmann 144 (Calcutta), wherein it is held that expenditure towards commission paid for providing expertise to apply for tender and follow up action for acceptance of tender, being from officer impermissibly law, is not allowable as business expenditure. 4.3 Before the learned DRP, the assessee claimed that actually service charges were paid for services rendered by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission of the parties and perused the relevant material on record. We find that the assessee has failed to produce documentary evidence to support that Mr. Pandey provided any kind of services to the assessee. Merely providing some email exchange between him and the assessee is not sufficient to support that Mr. Pandey provided any kind of services in relation to the contracts for which he has been paid commission expenses. Further during the course of the hearing, the learned counsel of the assessee was asked whether similar commissions have been given in case of the contracts received from private parties, he clearly admitted that no such commission expenses have been paid for executing the contract of the private parties. This fact also support the finding of the Assessing Officer that the commission was given only for procuring contracts from the railway and such kind of commission for procuring contracts from government is not permissible as per the government rules. In view of no documentary evidences to support the service rendered by Mr. Pandey, the reliance placed on the decision in the case of CIT Vs. Conimeters Electricals (P) Ltd. is of no help to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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