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TMI Blog2021 (7) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... uently the learned CIT (A) has passed the order dated 17th February 2016. The assessee before the authorities below failed to furnish the details of the parties despite having several opportunities. Even now before us the matter has been listed 16 times prior to the present date of hearing but the assessee has not brought anything on record about the details of such parties after filing the appeal on 4th April 2018. Thus it is transpired that it is very unlikely that the assessee shall be in a position to furnish the necessary details. Accordingly, we are not inclined to give fresh opportunity to the assessee by restoring the matter to the file of the AO as prayed by the learned AR for the assessee. Accordingly, without going into the merit of the case, the ground of appeal of the assessee, in the absence of documentary evidence as discussed above, is hereby dismissed. Capitalizing the amount of interest attributable to the advances given to the parties for acquiring the capital asset - HELD THAT:- As the assessee has not utilized the borrowed fund for making the advance to the party as discussed above. Thus the question of capitalizing the element of interest attributable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head export commission as outstanding adjusted against commission by treating same as prior period expenses. Ld. CIT (A) ought to have delete disallowance as liabilities for payment crystalize in the current year and appellant company is in same rate of tax for all the years. It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming addition of ₹ 5,75,929/- by invoking provision of section 40(a) (i) of the Act on without prejudice basis ignoring submission of the appellant that agents rendered services outside India and does not have any,-permanent establishment In India and hence provision of section 40(a)(i) is not applicable to the appellant. It be so held now. 3. Ld. CIT (A) erred in law and on facts in confirming disallowance of ₹ 6,85,804/- us 36(1)(iii) of the Act ignoring fact that appellant has huge interest free funds in form of Share Capital and Reserves Surplus. Ld. CIT (A) ought to have considered the submission of the appellant and delete the disallowance. It be so held now. 4. Ld. CIT (A) ought to have considered the submission of the appellant that amount paid to H L Pharma Co., Korea as capital advances to acquired inta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t executed between the foreign agents and the assessee has been furnished and no proof of rendering the services on the basis of commission has been paid has been provided. The AO without prejudice has also disallowed the above expenditure as the IDS has not been deducted on the above foreign commission. 2.4 The appellant has submitted that it has submitted before the AO oil copies of invoices of export commission, tax residency certificate of non resident received along with copy of Form 15CA 15CB to establish the genuineness of expenditure and that appellant is not required to deduct IDS on the foreign commission. Appellant has further submitted that CIT(A) in the earlier assessment year has allowed such disallowances made by the AO. 2.5 It is evident from the detail of export commission submitted that appellant has claimed provision made for export sales commission of ₹ 1,36,544/- and outstanding adjusted against commission of ₹ 4,39,3857-out of total claim of export commission of ₹ 29,61,3377-. As no detail of party mentioned for the provision made for export sale commission of ₹ 1,36,5447-, the identity and genuineness of the expenditure is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d perused the materials available on record. In the present case the assessee has claimed deduction on account of commission paid to the overseas parties on the export sales amounting to ₹ 29,61,337/- only. But the same was disallowed by the AO on account of two reasons. Firstly, the assessee failed to furnish the documentary evidences such as the identity of the party, the services rendered by such parties, details of the exports made by it through the commission agents. Thus the genuineness of the transaction was doubted. Secondly, the assessee failed to deduct the TDS under section 195 read with section 40(a)(i) of the Act. 8.1 However, the learned CIT (A) was pleased to hold that the provisions of TDS are not applicable with respect to the commission paid to the overseas parties. Besides this the assessee furnishes the necessary details to justify that the export commission was genuine in support of its claim. Accordingly the learned CIT (A) deleted the addition made by the AO for a sum of ₹ 23,85,408.00 out of the total addition of ₹ 29,61,337.00 made by the AO. In other words the balance amount of ₹ 5,75,929.00 was confirmed by the learned CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully considered the facts of the case, assessment order and submission of the appellant. The AO has made disallowance of ₹ 6,85,804/- u/s. 36(l)(iii) on the interest free advance of Rs.l .92,76,148/-to M/s. H. L Pharma Co., Korea. The appellant has submitted that the capital advance of Rs.l,92,76,148/- was made to M7s. H. L. Pharma Co. against the purchase of technical know how for business purpose and out of own fund, therefore, provision of section 36(1) (iii) is not applicable, 3.4. Appellant has submitted that it has own fund of ₹ 3.92 crore including share capital of ₹ 3 crore and reserve and surplus of ₹ 0.92 crore against the capital advance of Rs.l.92 crore. Therefore, in view of various judicial pronouncements, no disallowance u/s.36(1)(iii) is called for. 3.5 On perusal of balance sheet, it is seen that appellant had share capital and reserve and surplus of ₹ 3.25 crore as on 31/03/2012. The capital advances of ₹ 1.92 crore has been made during the year and the share capital and reserve and surplus as on 31/03/2013 is ₹ 3.91 crore. As there is increase in reserve fund of ₹ 70 lacs only, the appellant s argument tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is available on pages 10 of the paper book. Besides the above, it is also significant to note that the assessee has shown receipt of interest free loans and advances amounting to ₹ 3,10,00,000.00 which can be verified from the financial statements placed on 15 of the paper book. Thus the own fund of the assessee along with the interest free loans received by it aggregates to a sum of ₹ 7,01,81,000.00 which is in excess of the advance given to the party for an amount of ₹ 1,92,76,148.00 only. Accordingly a presumption can be drawn that the own fund of the assessee has been used for advancing money to the party as discussed above for acquiring the technical know-how. In other words, the borrowed fund has not been used for advancing the sum of ₹ 1,92,76,148.00 to the party. 15.2 In holding so we draw support and guidance from the judgment of Hon ble jurisdictional High court in the case of CIT vs. Torrent Power Ltd reported in 363 ITR 474 where the head note reads as under: It was noted from records that the assessee was having share holding funds to the extent of 2607.18 crores and the investment made by it was to the extent of`₹ 195.10 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 17. The first interconnected issue raised by the assessee in ground no. 1 and 2 is that the Ld. CIT(A) erred in confirming the addition of ₹ 2,94,852/- on account of export commission treating the same as non-genuine as well as non-deduction of TDS u/s.195 r.w.s 40(a)(i) of the Act. 17.1 The AO during the assessment proceedings in the absence of necessary documents held that the impugned amount of export commission of ₹ 24,78,592/- has not been incurred for the purpose of the business and therefore same cannot be allowed as deduction u/s. 37(1) of the Act. 17.2 Besides the above, the AO also found that the assessee failed to deduct the TDS on the impugned amount of export commission under the provision of section 195 of the Act. Accordingly the AO also disallowed the same under the provision of section 40(a)(i) of the Act and added to the total income of the assessee. 18. On appeal, the Ld. CIT(A) partly confirmed the order of the AO by observing as under: 3.3 I have carefully considered the facts of the case, assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary the Ld. DR, opposed for the admission of such additional evidences on the reasoning that there was no sufficient cause furnish by the Ld. AR which prevented the assessee to furnish such additional evidences before the authorities below. The Ld. DR vehemently supported the order of the authorities below. 22. We heard the rival contentions of both the parties and perused the materials available on record. In the present case the AO made the disallowance of the export commission expenses claimed by the assessee for ₹ 24,78,592/- by treating them as non-genuine as well as the assessee failed to deduct the TDS with respect to such commission expenses paid to the overseas parties under the provisions of section 195 of the Act. However, the learned CIT (A) was pleased to delete the addition for an amount of ₹ 21,83,740/- except for the sum of ₹ 2,94,852/- only. The learned AR before us has filed additional evidences in support of the commission expenses in dispute to justify that the commission expenses were incurred for the purpose of the business and the assessee was not liable to deduct the TDS under the provisions of section 195 of the Act. The 1st controv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are of the opinion that rule 29 does not confer any right on the parties, as such, to produce any additional evidence either oral or documentary before the Tribunal. On the other hand, such a right has specifically been taken away by prohibiting the production of the additional evidence by the parties. The power has been vested only in the Tribunal to require production of any document or evidence if it is of the opinion that it is necessary to do so to enable it to pass order or for any other substantial cause. 22.3 In view of the aforesaid discussion, the additional evidence cannot be placed by the assessee for the admission before the Tribunal as a matter of right. The Tribunal has the sole discretion whether to admit or not to admit additional evidence. However such discretion cannot be used in arbitrary manner. 22.4 Now coming to the facts of the case on hand, the learned AR in the application for the admission of the additional evidences has just casually mentioned that these additional evidences pertain to the 3rd parties and therefore the assessee has taken time to collect the same. The reason given by the assessee is not based on any supporting documents. On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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