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TMI Blog2021 (8) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... PUN/2020 arising out of ITA No.104/PUN/2015 for the assessment year 2009-10 and by that Miscellaneous Application order, it was observed by the Tribunal that Ground Nos.3 and 4 of the original grounds of appeal memo were not adjudicated and therefore, for adjudication of those said grounds only, the matter was recalled and it had been posted for hearing before us today i.e. 18.08.2021. Thus, the Ground Nos. 3 and 4 reads as under: "3. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the disallowance of commission paid to liaison representatives relying on the decision of ITAT, Pune and Gujarat High Court which was applicable in the case of Ltd. Companies wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as "the Act‟) in the case of assessee-company on 11.03.2011. That during the course of survey action, certain documents were impounded u/s.133A(3)(ia) of the Act and statement of the Director of the company was also recorded. Thereafter, assessments of four years i.e. AY 2004-05 to AY 2007-08 were reopened by issuing notice u/s.148 of the Act and during the course of these assessments, this issue has been investigated in the light of the statement recorded during survey proceedings. Accordingly, similar details have been called for from the assessee in respect of the commission payments made to liaison representatives who were dealing with various units of Indian Railways on behalf of the assessee-company. The requisite details wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,89,26,076/- being Rs. 14,19,455/- was disallowed and added to the total income of the assessee for the assessment year 2009-10. 7. That on this issue of commission payment, the Ld. CIT(Appeals) observed that the assessee is one of the major suppliers of cylinder liners and cylinder heads that is required for running of diesel locomotives by the Indian Railways. The above stated components are critical components wherein continuous technical evaluation and testing of the quality, chemical composition, drawing and designing for product development is required. The liaison representatives are stated to be highly technical personnel who have been associated with the company from the year 1987 onwards. Since the factories for the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentatives runs 200 pages and convincingly demonstrated that the liaison representatives were not only engaged in procurement of order with Indian Railways but were also providing crucial technical support and after sales service. The Ld. CIT(Appeals) further observed that the Assessing Officer has not doubted that the payments were genuine or that services were rendered by the liaison representatives. There is also no whisper in Assessing Officer‟s order that the parties were fictitious or that no work was carried out by these parties on behalf of the assessee. The Assessing Officer has not brought on record any materials that would establish that the payment of commission was made to the liaison representatives to procure orders fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Government does not deal with middleman, it does not mean that there is no role for an agent to play when an assessee is dealing with the Government. The transactions and the dealings with the Government obviously cannot be done through an agent but the agent can assist an assessee in obtaining supply and facilitating of information which are required for the assessee. The explanation of the assessee that the agents assisted the assessee in the pre-tender and the post-tender activities is clearly borne out of the evidences which are part of the seized material. This being so, it cannot be said that no services have been rendered by the agents to the assessee. In the circumstances, we are of the view that the learned CIT(A) was right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined and mentioned by the Ld. CIT(Appeals) in his order. That further, practical scenario in functioning of the business set up of that of the assessee in dealing with Indian Railways whose offices are located on various places in India and due to difficulties of conversation for not having knowledge of local language etc., these factors were also taken into consideration by the Ld. CIT(Appeals). We therefore, cannot doubt the involvement of the liaison representatives in the business of the assessee and neither the Assessing Officer has brought on record any evidences/materials to suggest otherwise. The Assessing Officer has neither doubted the payments nor has doubted the parties to whom the payments were made. The Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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