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TMI Blog2022 (8) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... y details in support of its case. The A.O. shall afford a reasonable opportunity of hearing to the assessee before a decision is taken in the matter. It is ordered accordingly. Appeal allowed for statistical purposes. - ITA No.846/Bang/2014 And ITA No.847/Bang/2014 And ITA No.848/Bang/2014 And ITA No.646/Bang/2020 - - - Dated:- 3-8-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Revenue : Sri.Muzaffar Hussain, CIT-DR For the Assessee : Sri.S.Parthasarthi, Advocate ORDER PER BENCH : The Hon ble High Court of Karnataka in ITA No.203/2016 (judgment dated 12.01.2021) had set aside the earlier Tribunal order in ITA No.846/Bang/2014 to 848/Bang/2014 (ITAT s order dated 30.12.2015). The Hon ble High Court directed the Tribunal to examine the issue afresh. The relevant finding of the Hon ble High Court reads as follows:- 5. We have considered the submissions made by learned counsel for the parties and have perused the record. From perusal of para 4.6 of the order passed by the Commissioner of Income Tax (Appeals), it is evident that the material was produced by the assessee which has not been considered by the tribunal. It is also notewort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement entered between the assessee and the commission agents, had held that the assessee had derived benefit in executing project and the commission payment was considered to be genuine and reasonable. On further appeal by the Revenue, the ITAT allowed the appeal of the Revenue (order dated 30.12.2015). The ITAT held that merely by making cheque payments, the A.O. is not prevented to probe the issue. Further, it was held by the ITAT that the assessee has not been able to substantiate the nature of work done by the agents, and therefore, the expenditure claimed cannot be allowed as deduction u/s 37 of the I.T.Act. On appeal by the assessee before the Hon ble High Court u/s 260A of the I.T.Act, the Hon ble High Court set aside the issue to the Tribunal for de novo consideration (supra). 4. When the matter was taken up for hearing, the assessee had furnished the details with reference to summary of agency commission paid from financial year 2006-2007 to 2015-2016, copies of the assessment order for assessment years 2006-2007 to 2015-2016. The learned AR submitted that for the assessment year 2006-2007, the Tribunal even after noticing the adverse order against the assessee for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements entered into between appellant and the local agents. All the agents were third parties unrelated to appellant and all commission payments were made by account payee cheques. The agents, to whom the commissions were paid, are entities on their own right. The appellant in its paper book had produced the agreement entered between the appellant and the commission agents. In the agreement, the various works that is to be undertaken by the commission agents is explained. The agreement also explains the terms of commission payments. The commission is paid, for example, in the case of S R Engineers is at 15% of the profit amount (Machinery supplied to Virender Dogra Power Project P Ltd.). The terms of commission payment is (a) 5% immediately on receipt of order; (b) 5% during the execution of the order; (c) 5% after receipt of full value of contract. Had the Assessing Officer doubted about the services rendered by commission agents or actual receipt of commission, the Assessing Officer ought to have examined the commission agents, who were unrelated to appellant and were independent parties in their own right, especially when commission payments have been made through account pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue is remitted back to the file of the AO with a specific direction with reference to the facts of the issue for the relevant assessment year under consideration. The AO, shall, however, keep in view the rulings of the judiciary cited supra, while taking an independent consideration with the reference to the issue under dispute. It is ordered accordingly. 8. Subsequent to the remand by the Tribunal for assessment year 2006-2007, the matter was examined by the A.O. The A.O. issued notice u/s 133(6) of the I.T.Act with regard to the confirmation of payment of commission from the local agents as well as foreign agents. After examining the issue in detail, the A.O. allowed the commission payments as an allowable deduction, except to the extent of Rs.6,32,626, wherein the parties did not respond to the notice issued u/s 133(6) of the I.T.Act. The relevant finding the A.O. in this regard reads as follows:- In response to the notice issued u/s 133(6), the following parties have confirmed the payment of commissions as under and also enclosed copy of the agreements entered into by the assessee with the commission agents for carrying out specific projects and the services ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee before a decision is taken in the matter. It is ordered accordingly. ITA Nos.846/Bang/2014 and 848/Bang/2014 (Assessment Year 2010-2011) 10. These are cross appeals directed against the CIT(A) s order dated 27.02.2014. The assessee has also filed an appeal, since the CIT(A) had disallowed the provisions of the commission payments as not allowable u/s 37 of the I.T.Act. Since we have allowed the appeal of the Revenue for statistical purposes and restored the issue of commission payments for de novo consideration by the A.O. (concerning assessment year 2009-2010), both the Revenue s appeal and assessee s appeal with regard the commission payments concerning assessment year 2010-2011 is allowed for statistical purposes. The reasoning given by us from para 6 to 9 will hold good for these appeals also. ITA No.646/Bang/2020 (Assessment Year 2008-2009) 11. This appeal at the instance of the Revenue is directed against the order of the CIT(A) dated 28.02.2020. The relevant assessment year is 2008-2009. The solitary issue raised is whether commission payments made by the assessee is an allowable deduction? We have restored an identical issue to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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