TMI Blog2014 (10) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. - CIT(A) observed that before the addition, it was necessary for the AO to ascertain the true and correct facts - The CIT(A) has noted that there was no material available in assessment record regarding the existence of M/s. Astek Infracom Ltd (M/s. AIL) - The initial confirmation of M/s. Quantium Agencies Ltd was later on explained by them as a clerical mistake as services were rendered in connection with M/s. PHSPL – the order of the CIT(A) is upheld that there is no evidence on record that the assessee has rendered services in connection with arranging of bank loan to M/s. AIL – Decided against revenue. - I.T.A No. 1302Kol/2012 - - - Dated:- 24-10-2014 - Sri Mahavir Singh, JM And Sri Shamim Yahya, AM,JJ. For the Appellant : Shri S.S Alam, JCIT/ld.Sr.DR For the Respondent : Shri Miraj D.Shah Advocate, ld.AR ORDER Shri Shamim Yahya, AM This appeal by the revenue is directed against the order of the Ld. CIT(A) dated 13/06/2012 pertaining to assessment year 2009-10. 2. The grounds of appeal raised by the revenue read as under:- 1. The ld.CIT(A) has erred in law and on facts by deleting the suppressed income of ₹ 13,39,330/- by accepting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponent of ₹ 13,39,330/- was not routed through assessee's profit loss account but through separate service tax account. In support of this, a copy of service tax return and tax payment challan was also filed by the assessee. 6. Considering the assessee's submissions the ld.CIT(A) held as under:- 24. On due consideration of the explanation furnished, I find that the alleged discrepancy of ₹ 13,39,330/- arose solely because of accounting of service tax component through separate service tax account instead of routing it through assessee's profit loss account. I find force in the submissions of A/R that as per Accounting Standard of ICAI the assessee was permitted to credit income/revenue in its profit loss account 'net off' indirect taxes. With cogent and relevant documents the assessee has been able to explain the manner in which the service tax component was accounted in the appellant's books and there is no infirmity in the accounting treatment given in assessee's books to the service tax component of ₹ 13,39,330/-. On due consideration of the facts, therefore, I hold that there was no discrepancy or infirmity as alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to these parties. As per reply received from Reliable Barter Pvt. Ltd and Quantum Agencies Pvt. Ltd, they have received commission against arranging negotiating and syndication of bank guarantee as below:- 10.2 Reliable Barter Pvt. Ltd : As per reply received from the party, the party submitted that 'We have charged above client ₹ 23,39,335.20 for arranging, negotiating and syndication of bank guarantee for ₹ 41.64 Cr for Platinum Hospitality Service Pvt. Ltd' But the assessee company has not shown the receipt of commission from Platinum Hospitality Services Pvt. Ltd against which the commission has been paid to this party. 10.3 Quantum Agencies Pvt. Ltd : As per reply received from the party, the party submitted that 'during FY 2008-09 we had received ₹ 77,00,030/- from Gurukripa Software Solutions (P) Ltd for syndicating loan of various companies. Among this ₹ 60,87,664.80 for arranging negotiating and syndication of bank guarantee had been received of ₹ 108.36 Cr. for palladium Consturctions Pvt. Ltd and ₹ 16,12,366/- had been received for arranging negotiating and syndication of bank guarantee of ₹ 41.00 Cr for Astek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k guarantee of ₹ 41.64 Cr and ₹ 41 Cr respectively. Thus the assessee company has not disclosed the commission received on amount for negotiating syndicating of bank guarantee of ₹ 82.64 Cr. Since the assessee company has charged commission of ₹ 1,21,75,330/- @1.123% from Palladium Construction Pvt. Ltd for arranging bank guarantee of ₹ 108.36Cr. Therefore, the undisclosed commission on ₹ 82.64 Cr is also taken @ 1.123% and which comes to ₹ 92,80,472/-. Therefore, ₹ 92,80,472/- is added to the income of the assesssee as undisclosed income. 15. As regards commission from M/s. Platinium Hospitality Services Pvt. Ltd the ld.CIT(A) noted that even though the assessee has rendered services to two companies belonging to a group company the assessee has raised invoice only on one, M/s. PCPL and no invoice whatsoever was raised on M/s. PHSPL. The ld. CIT(A) observed that from the AO's perspective, therefore, it may be a case where the assessee rendered gratis services to M/s. PHSPL. However, just because the assessee chose to raise invoice for the services rendered only on one company. Such fact did not authorize the AO to hold and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee on one hand and PCPL and PHSPL on the other under which the assessee had right to demand commission from both the companies at the same rate of @1.123% of the loan amount sanctioned. In absence of any documentary evidence or agreement between the parties; entitling the assessee to claim fees from both the parties, the AO suo moto could not presume that the assessee was entitled to receive commission from both the parties at the same rate for the services were rendered. 20. The ld.CIT(A) held as under:- In my opinion the provisions of the I.T Act as they now subsist did not permit the AO to presume accrual of income in every case where an assessee rendered services to another. For the purpose of assessing real income it was necessary for the AO to ascertain true facts and bring on record the agreed terms between the parties. If the parties to the transaction did not bargain for making any payment of commission in every case then the AO had no legal sanction to presume accrual of income and bring to tax notional or hypothetical income. 21. Finally the ld.CIT(A) deleted the addition made by the AO by observing/holding as under:- Although the practice adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard. As noted above by us there is no evidence whatsoever for such understanding/agreement to pay such commission. We find that the AO has made inquiries in regard to commission payment to M/s. Reliable Barter Pvt. Ltd and M/s. Quantum Agencies Pvt. Ltd in connection with rendering of above services to M/s. PHSPL. M/s. Reliable Barter Pvt. Ltd had confirmed that they had received ₹ 23.39 lakh for arranging and negotiating bank guarantee for M/s. PHSPL. Similarly M/s. Quantum Agencies Pvt. Ltd has stated that they have received ₹ 16.12 lakhs for negotiating and syndicating of bank guarantee for M/s. PHSPL. Now the assessee's explanation is that the above commission was paid in connection with combined services provided to M/s. PCPL M/s. PHSPL. We find that the assessee has also paid separate commission for rendering of such services in respect of M/s. PCPL. When the services were rendered without any doubt and the assessee has chosen not to raise any bill for rendering such services, whether the same needs to be considered from the point of view of real income or whether the same is an application of income has not been examined by the ld.CIT. Hence, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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