9911796707
TMI Blog2023 (6) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) also have analysed the issue, only on the basis of fact that the bills raised on the buyer s has no mention about the selling agent thus the argument of the assessee is not backed by any documentary evidence. In absence of any cogent finding by the authorities below, we are unable to understand that how it was perceived that the commission paid was bogus without making any enquiries with the concerned payees. The fact that the similar payment of commission, which was a practice of the trade of the assessee, was allowed by the department in the immediately succeeding assessment years makes the assessee s contention more believable. No specific details to dislodge the contention of the assessee were brought to our knowledge - Decided in favour of assessee. Addition u/s. 14A r.w.r 8D - sufficiency of own funds - HELD THAT:- It is the settled law now that No disallowance u/s 14A can be made if there are interest free funds available with the assessee exceeds the investment. In the present case Ld AO has not checked this aspect, which was observed by the Ld CIT(A). It was also a fact that there was no exempt income of the assessee during the relevant AY, therefore, disallowance u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed view has substance to concur with. AO s observation was based on half facts which is evident from the observation of the ld. CIT(A) while deciding this issue that in the ensuing year the explanation for the similar transaction has been accepted by the revenue, thus, contains no merits. In sight of such factual findings by the ld. CIT(A), the view of the ld. AO is unacceptable and deserves to be quashed. Suppression of income - amounts received as per agreement for making expenses and payment - CIT(A) deleted the addition - HELD THAT:- AO has made his observations based on information furnished in the form of ledger account of the parties without considering the other aspects of issue or supporting evidence, nor any further explanation regarding the issue were called for from the assessee. Ld. CIT(A) has deliberated on the issue exhaustively and arrived at a just and appropriate finding that the amount available on the liability side of the assessee s balance sheet were not receipts of the assessee in the nature of income but were amounts received towards contractual obligations of the assessee towards agreements entered into. Thus we refrain ourselves from interfering with the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the addition and consequential enhancement to the total income may kindly be deleted. 2. On the facts and in the circumstances of the case, the Learned AO has erred on facts and in law in making disallowance of Rs. 11,54, 593/- on account of sales commission and the Learned CIT (Appeals)-2, Raipur is not justified in confirming the disallowance on account of extraneous reasons, hence, it is prayed that the disallowance made by the Learned AO and confirmed by the Learned CIT (Appeals)-2, Raipur may kindly be deleted. 3. The Appellant craves leave to add, amend, alter vary and or withdraw any or all the above grounds of Appeal." 3. Brief facts of the case are that the assessee derives income from running business of manufacturing, trading of refractory and other allied items, besides rendering services on commission basis and filed its return of income for the year under consideration on 28.11.2015 declaring a total income of Rs. 7,43,550/-. During the course of assessment proceedings, on being queried by the Ld AO, the assessee produced its books of accounts, written submissions were made and was also personally heard. However, Ld. AO dissatisfied with the response of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue and observed as under:- "8.3 I have gone through the facts and the submissions of the appellant. The AO has questioned the clarification in respect of commission. The appellant has contended that the work was done by these parties. It was stated that the payments have been made for the services of sales performed by these persons which are recorded in the respective ledgers. As per the assessee total sales of Rs 92.89 lakh has been made by these six persons for which they were paid the commission of Rs 11,54,593/- Ld AR has submitted sale bills. As per details filed, M/s AVN Steeltech has made sales to JSW Steels, Mukund Ld and Neclanchal Ispat Ltd. Total sales was Rs 53,35,000/-on which commission 7.5% has been paid. On going through the bills raised by JSW Steels, Mukund Ld and Neelanchal Ispat Ld the bills have been raised directly on the purchaser party and in none of the bills there is any mentioned of selling agent. The fact is similar in respect of other recipients of commission. Thus, the argument of the assessee is not backed by any documentary evidence. In view of these, the disallowance is hereby sustained, and the ground is dismissed." 7.2 Ld AR of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nigam AXRPN8596N 200,000.00 245 to 250 5 Vinita Shrivastava AVPPS0684Q 534445.00 259 to 265_ Total 1,154,593.00 The Return of Income filed by the aforesaid parties have been duly accepted by the Income Tax Department. 10.3 Moreover, the commission has been paid to the very same parties in the subsequent year which stands accepted, therefore, there is no reason to take an adverse view in the year under consideration, kind attention is invited to Page 234 to 235 and 239 to 240 of the paper book which is internal page No. 2, 3, 7 and 8 of the assessment order wherein name of the parties has been mentioned by the Learned AO in the assessment order to whom commission was paid from which it is discernible that commission was paid to the very same parties." 7.3 Arguing on the issue further, Ld AR of the assessee drew our attention to page 345 of their paper book having details of commission paid and submitted that, the commission was paid to persons towards their services rendered after deduction of tax at source as applicable under the Income Tax Act. Ld AR also drew our attention to page 242 to 265 of the paper book having copies of ITRs, Computation, P&L A/c and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other assessment years also. Ld AO has made the addition, assigning the reason that the assessee was unable to substantiate its contention by not furnishing the evidence in support of the job performed by the service providers. Assessee has furnished information and evidence like ITR, Computation form 16A of the commission recipients. AO has not initiated or conducted any further enquiry from the beneficiaries concerned. Merely on the basis of information which was not available with the Ld AO regarding qualification and experience of service providers, since some of them are connected people to the assessee the disallowance was made. No specific finding / reasoning to the disallowance was commented by the Ld AO. Ld CIT(A) also have analysed the issue, only on the basis of fact that the bills raised on the buyer's has no mention about the selling agent thus the argument of the assessee is not backed by any documentary evidence. We have thoughtfully considered the issue, material available on records and have noted that in absence of any cogent finding by the authorities below, we are unable to understand that how it was perceived that the commission paid was bogus without mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself, as income of the assessee?". 4. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 26,27,464/-, made by the AO who treated the stock purchased on 31.03.2015 i.e. on the last day of the financial year as suppressed closing stock due to lack of any entry regarding consumption or sale of the said stock and the closing stock did not include the said purchase?". 5. Whether on points of law and on facts & circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs. 2,89,21,363.89/- received from Eco Master Beads India (P) LTD made by the AO who treated the advances received as suppressed income by categorically mentioning in the assessment order that the narration against the alleged entry dtd. 27/01/2015 reads as USD 238750.32 @ 61.18 expenses for setting up technical equipments for demonstrating new technologies (Against Advance Payment material supply), by relying on assessees contention that the entire amounts were spent on R 8& D contract with Pragti Construction between December , 2018 to February 2019. 6. Whether on points of law and on facts & circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2,42,085/- u/s.14A. The assessee had no exempt income and sufficient own funds, hence, the disallowance u/s 14A is not sustainable. Reliance is placed on the following decisions: S. No. Case Law Issue / Held Remarks 1. South Indian Bank Ltd. vs. CIT (2021) 438 1TR 001 No disallowance u/s 14A when interest free own funds available with the assessee exceeds the investments. Hon'ble Supreme Court of India 2. Maxopp Investment Ltd. vs. CIT (2018) 402 ITR 0640 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 3. PCIT vs. Oil Industries Development Board (2019) 262 Taxman 103 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 4. CIT vs. Chettinad Logistics Pvt. Ltd. (2018) 257 Taxman 2 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 5. CIT vs. Essar Teleholdings Ltd.(2018) 401 ITR 0445 No exempt income then no disallowance u/s 14A. Hon'ble Supreme Court of India 6. PCIT vs. Patel Alloy Steel Co. Pvt. Ltd.(2019) 262 Taxman 166 No disallowance u/s 14A when assessee having enough surplus funds. Hon'ble Supreme Court of India 7. PCIT (Central)-2 vs. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted shares of Chhattisgarh Captive Coal Mining Limited, a joint venture company, thus, called upon the assesee to explain as to why corresponding expenditures may not be disallowed by triggering the provisions of section 14A r.w.r.8D. As the reply filed by the assessee did not find favor with the Assessing Officer, therefore, he worked out the disallowance u/s.14A r.w.r.8D at Rs. 13,29,277/-. 7. Before us, it was submitted by the Ld. Authorized Representative (for short 'AR') that as the assessee has not earned any exempt dividend income during the year under consideration, therefore, no part of the expenditure in question could have been disallowed u/s.14A of the Act. It was claimed by the Ld. AR that now when the assessee company during the year under consideration had not earned any exempt income, therefore, the authorities below had erred in working out disallowance u/s 14A of the Act. After deliberating at length on the aforesaid issue in question, we find, that as stated by the Ld. AR, and rightly so, now when the assessee company had admittedly not received any exempt income during the year under consideration, therefore, no disallowance u/s.14A could have been made in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) on this issue needs no further interference. In the result Ground No 1 of the revenue in the instant appeal is dismissed. Ground No 2: Deleting the addition of Rs. 64,59,510/-u/s. 41(1) of the Act. 12. Ld CITDR, on this issue has submitted that the assessee was asked to file list of sundry creditors for last 3 years to examine the movement of the balances and genuineness of liability shown in its books of accounts. It was the observation of the ld. AO that as per the details provided by the assessee, six parties were found with very old balances and are casually continuing. Ld. AO further observed that the credit amount shown against these six creditors were outstanding intact consecutively for more than previous three years without any reason. This fact establishes that these entries are paper entries without any intention to pay back and therefore, assessable to tax u/s 41(1) of the Act, as cessation and remission of liability. As per Ld CITDR, however, Ld. CIT(A) has deleted the addition without appreciating the fact that the credit amounts shown as outstanding consecutively for more than three years without any reason, therefore, the same should have been treated in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wherein it has been held that no addition u/s 41(1) is warranted if the creditor is appearing in the Balance sheet. S. No. Title Citation Authority 1. PCIT Vs. Batliboi Environmental Engineering Ltd. (2022) 6 NYPCTR 731 (Bom) Hon'ble High Court of Bombay 2. ACIT Vs. Popular Vehicles & Services Ltd. (2006) 5 SOT 739 (Coch) Hon'ble ITAT, COCHIN BENCH Nitin M. Panchamiya Vs. ACIT (2012) 148 TTJ (Mumbai) 96 Hon'ble ITAT, MUMBA Prayer: It is prayed that appeal filed by the Revenue may kindly be dismissed. 12.3 To substantiate the contentions advanced by ld. AR in their written submission, following case laws were relied upon: CIT vs. Jain Exports (P.) Ltd. (2013) 217 taxmann.com 54 (DEL), in this judgment Hon'ble Delhi High Court has held that "in order to attract the provisions of section 41(1) of the Act, it is necessary that there should have been a cessation or remission of liability. Section 41(1) contemplates obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be of a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y required before giving the liabilities in question a color as that of "ceased liabilities", and much the less in the year under consideration. Neither is anything discernible from the orders of the lower authorities which would reveal that the liabilities in question had ceased, nor anything can be gathered therefrom as to on what basis the alleged remission or cessation of the liabilities in question were to be assessed during the year under consideration. Merely for the reason that the aforesaid liabilities are outstanding would by no means justify dubbing the same as ceased liabilities in the hands of the assessee company. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of CIT, Delhi-II Vs. Jain Exports (P) Ltd. (2013) 217 Taxman.com 54 (Del). In the aforesaid case, the Hon'ble High Court had observed that in order to attract the provisions of Sec. 41(1) of the Act it is necessary that there should be a cessation or remission of liability. It was further observed by the Hon'ble High Court, that as the assessee before them had acknowledged its debt payable to the creditor under consideration, and there was no material to indicate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, wherein Ld AO has observed that there was a credit balance in the balance sheet of the asseseee, recorded under the head "Reimbursement for BG" for Rs. 11,50,000/-, explanation for the same were sought from the assessee, in response the assessee submitted that the amount was received from the party to whom they were rendering services and copy of ledger account has been filed. Taking into consideration the submissions of the assessee, Ld AO observed that as per narration against the relevant entries the bills were raised in the earlier years but there is no outstanding balance in the account, hence it was taken this year. Ld AO further stated that if the amount was spent in the preceding year and there is no outstanding balance in account, it establishes that there was no such liability really exists in the accounts. It is also found from the ledger entries that assessee firm had issued invoices for services against such charges and payments were received, two amounts of Rs. 2.00 Lac and Rs. 4,15,630/- of similar transactions were shown as income in name of reimbursement. In light of such facts, Assessee's explanations were not found satisfactory by the Ld AO that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .83 to 99 of the paper Book, the aforesaid fixed deposits were kept as margin money for Bank Guarantee, copy of Bank Guarantee issued by the bank wherein name of foreign company is explicitly appearing is placed on Page No.99 of the paper Book. 3.4 Thus, there is a direct nexus between the funds received from the principal foreign company and fixed deposit made on its behalf for the purpose of Bank Guarantee, due to above reasons, there was no income element in the impugned sum of Rs. 11,50,000/- the fixed deposits made out of impugned amount of Rs. 11,50,000/- is duly appearing in the Balance sheet of the assessee, kind attention is invited to Page No.21 of the Paper Book. 3.5 Supplementary agreement dated 15.12.2014 between Refratechnik Steel GmbH and the assessee particularly in respect of Bank Guarantee to be secured by Refratechnik Steel GmbH to its parties/customers in India, kind attention is invited to supplementary agreement between the assessee and Refratechnik Steel GmbH dated 15.12.2014 wherein it has been clearly mentioned that the assessee executed Bank Guarantee for Refratechnik Steel GmbH in India for the purposes of complying with the tender conditions and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ik GmbH as the principle. The ld. AO could not establish the fact that how and why the amount of the bank guarantees has to be treated as income of the assessee. The ld. CIT(A) has correctly appreciated the facts of the issues and deleted the addition. The revenue has reiterated the observations of ld. AO, nothing new has been brought to our attention in order to substantiate the contentions of the department, we therefore, are of the opinion that the issue has dealt with justifiably by the ld. CIT(A), thus, no interference is called for. In the result Ground No. 3 of the revenue is dismissed. Ground No. 4: Deleting the addition of Rs. 26,27,464/- on account of suppression of closing stock. 14. Regarding Ground 4 of the revenue, ld. CIT-DR drew our attention to para 6 of the assessment order and narrated that the ld. AO has inquired about quantitatively details of the stocks like opening stock, purchase, sales and closing stock and details of valuation of closing stock along with supporting documents were also called for. In compliance, details were submitted by the assessee, after examining the details, ld. AO observed that there was a purchase of Rs. 26,27,464/- on 31st March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence covered by provisions of rule 46A, ld. AR submitted that all the books of accounts, details and information were available before the ld. AO also, but ld. AO has decided the issue in haste without causing any further inquiry or further explanation from the assessee on the issue, therefore, the contention of the revenue are baseless, bereft of merit are liable to be rejected. Ld. AR also submitted a written submission on Ground No. 4 of the revenue the same is extracted here under: 4. Ground No.4 of Revenues Appeal directed against addition of Rs. 26,27,464/- on account of under valuation of closing stock. 4.1 Neelachal Ispat Nigam Limited (PSU) had issued Purchased Order to Refratechnik Steel GmbH dated 09.10.2014, copy whereof is placed on Page No. 107 to 112 of the paper Book, in pursuance thereof the assessee had procured goods from M/s Gita Refractories Pvt. Ltd (GFPL) which were supplied to Neelachal Ispat Nigam Limited (NINL) directly, details whereof are as under: - SI. No. Invoice date Invoice No. Amount Date of passing of accounting entry in the books 1 16.02.2015 0338 4,53,376/- 31.03.2015 2 17.02.2015 0339 5,78,346/- 31.03.2015 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue that in the ensuing year the explanation for the similar transaction has been accepted by the revenue, thus, contains no merits. In sight of such factual findings by the ld. CIT(A), the view of the ld. AO is unacceptable and deserves to be quashed. Ld. CIT(A) therefore, has rightly deleted the addition, thus, needs to be acclaimed. With regard to applicability of provisions of rule 46A as contended by ld. CIT-DR, since, all the information were available with the ld. AO, also the similar transactions were accepted by the revenue in assessment year 2016-17, sending the matter back to AO for re-adjudication would cause further prolonging the litigation on the issue on which department has already taken a view in favour of the assesee, thus, we do not see any reason to restore the matter back to the files of ld. AO. Consequently, Ground No.4 of the revenue is dismissed. Ground Nos. 5 & 6: Deleting the addition of Rs. 2,91,21,363.89 and Rs. 1,08,95,414/- on account of suppression of income. 15. Concerning Ground 5 & 6, the ld. CIT-DR drew our attention to para 7 and 8 of the assessment order. For better examination of facts on the issue, para 7 and 8 of the assessment order ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd resulting concealment of income to the tune total of Rs. 3,98,16,777/- (Rs. 2,89,21,363.89 and Rs. 1,08,95,414/-) and assessable to tax accordingly. In the case of Pest-O-Kill vs.CIT reported in (2009) 30 DTR 285, the Hon'ble Jurisdictional High Court has held that the entire receipt suppressed by assessee is assessable to tax. Therefore the above amount of Rs. 3,98,16,777/- is added to the total income on account of suppression of receipts. Penalty proceedings u/s 271(1)(c) of the Income-tax Act, 1961 are separately initiated." 15.1 Based on observations of the ld. AO in para 7 & 8 of the assessment order ld. CIT-DR further submitted that there was an amount of Rs. 3,74,89,676.53/- shown as advance received from customers as liability, whereas in the immediate the previous year the corresponding figure of this head was Nil. As per copies of ledger account furnished by the assessee before the ld. AO, these amounts were received from M/s Eco Master Beads India Pvt. Ltd and M/s Refratechnik GmbH. The assessee has received Rs. 2,89,21,363.89/- from Master Beads, the entry for the said amount has a narration that "USD 238750.32 @ 61.18 expense for setting up technical equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2 It is discernible from the said clause in the agreement that the purpose was furthering of the research and development of project in India, in this view of the matter the remittance of US$ 470341 which was remitted to the assessee equivalent to INR 289.21 Lacs constituted nothing else but the capital receipt/liability for the assessee and by no stretch of imagination one can infer that it had any element of income in it so far as the assessee is concerned. The Learned A.O made wild presumption that the entire sum of Rs. 289.21 Lacs is income of the assessee from business and the said inference has been drawn merely by misinterpreting the nomenclature in FIRC which is placed on Page No. 124 to 126 of the Paper Book. 5.3 The assessee has maintained regular books of accounts as required u/s 44AA on mercantile basis and the accounts are duly audited u/s 44AB, the auditor has given clean report as regards Balance sheet and Profit & Loss account maintained by the assessee based on its books of accounts. 5.4 The Learned AO did not reject the books of accounts of the assessee by invoking statement, there is no definite finding that:- (a) The assessee has not following any noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on record which establishes that the income had accrued or arisen to the assessee in the year under consideration, other documentary evidence as per details given below:- S.No. Details of Evidence Placed on following Page No. of the Paper Book 1 Year wise ledger Copy of Ecomaister Company Limited, Korea alongwith confirmation 127 to 131 2 Copy of correspondence made with Ecomaister Company Limited, Korea in the matter. 132 to 134 3 Copy of R and D Agreement entered between Metex Engineers and Pragati Construction 135 to 140 4 Complete project details of technical know how. 141 to 174 5 Acceptance Letter by Ecomaister Company Limited, Korea. 175 6 Ledger Copy of Pragati Construction alongwith confirmation. 176 to 178 7 Ledger Copy Ecomaister Company Limited, Korea against repayment of the advance as on 31.03.2019 127 5.10 It is respectfully submitted that the case of the assessee was selected for scrutiny assessment for A.Y. 2018-19 in view of large creditors, during the assessment, the Learned AO enquired into the nature of credit appearing in the Balance sheet of the assessee amounting to Rs. 289.21 Lacs towards ECL, after considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbH and after elaborate discussion in the assessment order, the AO accepted the explanation of the assessee and no adverse view was drawn against the assessee.. 5.13 Regarding contention of the Learned AO that out of sum of Rs. 289.21 Lacs the assessee had transferred sum of Rs. 277.00 Lacs to Ecomaister Co. Ltd for investing in share capital of Ecomaister India Private Limited, it is respectfully submitted that the said contention of the Learned AO is factually incorrect inasmuch as the assessee had made investment in shares of Ecomaister India Private Limited during the year under consideration to the tune of Rs. 125.00 Lacs only and not Rs. 277.00 Lacs as inferred wrongly by the Learned AO, the same is evident from the ledger account of investment in shares of Ecomaister India Private Limited from the audited books of accounts of the assessee, from which it is discernible that the investment in share was made by the assessee in the earlier year which was carried forward as opening balance to the tune of Rs. 152.00 Lacs and after adding the amount of investment in shares made during the year under consideration amounting to Rs. 125.00 lacs the total investment in shares at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the judgment in the case of CIT vs. Shyam Telelink Ltd. (2019) 410 ITR 31 (Del.). Findings of the Hon'ble Delhi High Court are as under:- "9. However, we would not like to dispose of the present appeals only on the aforesaid basis, for we find that there is merit in the findings recorded by the Tribunal, accepting the method of accounting followed by the respondent- assessee. The Tribunal in the impugned order has referred to the difference between receipt of an amount and accrual of income. Every receipt is not income, for income is something which the assessee is legally entitled to appropriate to the exclusion of the giver. However, contention of the Revenue that the prepaid amount once paid and received by the assessee was foregone by the subscriber and accordingly appropriated by the respondent- assessee is substantially correct. At the same time, the payment was an advance and was subject to the respondent-assessee providing basic telecom service as promised, failing which the unutilized amount was required to be refunded to the pre-paid subscribers." "17. The appropriation of prepaid amount was contingent upon the respondent-assessee performing its obligation and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gies". By observing as above, the AO erroneously presumed that the impugned sum was received against supply of material/execution of work. According to AO, the impugned sum should have been shown as income and not as advance received from the principals. On this erroneous consideration and understanding of facts, the impugned addition was made by the Leamed AO Whereas the fact is that the assessee was approached by a South Korean company viz, M/s. Ecomaister Co., Ltd. with a request to oversee an R&D work on their behalf for supervising fees to be paid to the assessee on each stage of completion which is accepted by them. The nature of work is that the said R&D works needs to be conducted as instructed by M/s. Ecomaister Co., Ltd. by coordinating various stages of process for successfully finalizing technology called "Immediate freezing of concretes as compared to the traditional method of splashing water and periodical vetting which takes a long period for setting of concrete. Accordingly, the assessee had, during the previous year relevant to the assessment year, under consideration, entered into an agreement on 20.09.2014 with M/s. ECOMAISTER Co., Ltd, South Korea for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount received by the assessee were in odd figures the same cannot be advances. In this respect as per clause 3.5 of the agreement "The recipient can receive the sam in remittance of their need against their demand to the Sponsor. This could eithe be on installment or in toto." Farther as per clause 3.6 of the agreement the sum received by the assessee is neither any compensation nor any consideration for the agreed work carried by the recipient. Therefore it shall not be used directly or indirectly for any purpose other than the development of the said project. This clause makes it clear that the amount received was pure advance and not income of the assessee. Thus the entire advance will not be received in one amount how it will be remitted as per the need and as demanded. As per the ledger account and bank statement the assessee has made full payment of company M/s. Pragati Infrastructure Private Limited, Bhilai who had carried out the job assigned to them. As per the satisfaction certificate issued by the Echomaister Co., Limited. The assessee has received a confirmation cum satisfaction letter against the said payment duly singed by Ecomaister Co. Ltd Korea dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for making expenses and payment and no part of the amount was income of the assessee. Therefore, the addition of Rs. 3,98,16,777/- is hereby deleted." 15.7 Regarding Ground No. 6 written submission furnished by the assessee are as under:- 6. Ground No.6 of Revenues Appeal directed against addition of Rs. 1,08,95,414/-made by the Learned AO presuming that the same was commission income earned by the assessee in the year under consideration. 6.1 It is respectfully submitted that an agency agreement was entered into between the assessee and Refratechnik Steel GmbH a Germany based company on 15.12.2009, copy of the agreement is placed on Page No. 185 to 190 of the paper Book, in pursuance of the said agreement, the assessee was appointed as an Agent of M/s Refratechnik Steel GmbH for undertaking sale of produict of Refratechnik Steel GmbH, kind attention is invited to Clause-6 of the said agreement regarding the payment of commission by Refratechnik Steel GmbH to the assessee, in pursuance of the aforesaid agreement the assessee had received aggregate amount of Rs. 108.95 Lacs in the year under consideration towards reimbursement of expenses. The Learned AO presumed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -19 and after considering the explanation of the assessee that the sum represents advance from customer/principal, the Learned AO accepted the submissions of the assessee and did not draw any adverse inference as has been drawn in the scrutiny assessment of A.Y 2015-16, copy of assessment order passed u/s 143(3) for A.Y 2018-19 is placed on Page No. 181 to 184 of the Paper Book, copy of query letter issued by the A.O is placed on Page No.179 to 180 of the Paper Book. The impugned sum of Rs. 108.95 had been spent/utilized by the assessee in making payments towards the purchase of material and services on behalf of Refratechnik Steel GmbH, in pursuance of the work order issued by NINL to Refratechnik Steel GmbH which is placed on Page No.107 to 112 of the Paper Book, the same is also evident from the ledger account of Refratechnik Steel GmbH in the books of accounts of the assessee for the F.Y 2015-16 which is placed on Page No.195 to 197 of Paper Book, It would be relevant to mention here that there is a direct nexus between the goods purchased by the assessee from GRPL and supplied to NINL on behalf of the principal namely Refratechnik Steel GmbH as on 31.03.2015 the ledger accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were called for from the assessee, thus, the ld. CIT(A) has rightly deleted the addition. The ld. AR further drew our attention to para 3 on page 27 of the ld. CIT(A), which is already extracted hereinabove. 15.9 We have considered the rival submissions, have carefully perused the orders of authorities below and have gone through the material available on record. While appreciating the factual details of the issue and its adjudication by ld. AO as well as ld. CIT(A), we have appraised the fact that ld. AO has made his observations based on information furnished in the form of ledger account of the parties without considering the other aspects of issue or supporting evidence, nor any further explanation regarding the issue were called for from the assessee. Ld. CIT(A) has deliberated on the issue exhaustively and arrived at a just and appropriate finding that the amount available on the liability side of the assessee's balance sheet were not receipts of the assessee in the nature of income but were amounts received towards contractual obligations of the assessee towards agreements entered into. Since, we are in agreement with the observations and finding arrived at by ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment u/s 69, it is not the case of the Learned AO that the assessee had made payment of on money to the foreign supplier which is condition precedent for applying the deeming fiction of Section 69, the Learned AO cannot resort to deeming fiction by referring to another deemed value i.e. assessable value which has limited relevance i.e. only for the payment of custom duty it cannot be over stretched to conclude that the assessee had actually made the payment of RS.47,894/- and therefore, the addition has been rightly deleted by the Learned CIT (A)." 16.2 We have heard the rival contentions, perused the material place before us and carefully analyzed the issue. Admittedly, the assessee has imported material from abroad for Rs. 26,55,892/- however the custom authorities had assessed the value of the same at Rs. 27,03,784/- for the purpose of levying of duty, the difference of Rs. 47,894/- was considered as unexplained investment u/s 69. We do not find any merit in the observation of the Ld AO, therefore, are of the considered opinion that view taken by the Ld CIT(A) has no infirmity in it and thus deserves to be upheld and we do so. In the result Ground No 7 of the revenue is dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred for the purpose of business and thus allowable as deduction. The supporting documentary evidences are placed on Page No. 220 to 232 of the Paper Book, expenses claimed are genuine business expenses. Ground regarding business promotion expenses, the assessee had incurred expenditure under the head business promotion even in A.Y. 2016-17 and claimed deduction of Rs. 4,30,470 which has been duly accepted and allowed in the scrutiny assessment completed in u/s 143(3) in the assessee's case for A.Y. 2016-17, copy of the assessment order is placed on Page No. 233 to 240 of the Paper Book, kind attention is invited on page No. 237 of the paper book which is internal page number 5 of the assessment order of A.Y 2016-17 wherein the details of business promotion expenses has been duly mentioned by the Learned AO and allowed as deduction. 17.2 We have considered the rival submissions and contentions and carefully perused the material available on record. Ld AO has allegedly doubted certain expense incurred by the assessee under the head Business Promotion expenses and has made an estimated adhoc disallowance of Rs. 2,00,000/-. The disallowance was on lumpsum basis stating the reas ..... 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