TMI Blog2010 (4) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The only issue in this appeal of the Revenue is against the order of CIT(A) in deleting the addition made by the Assessing Officer on account of disallowance of foreign buyer s agent commission amounting to ₹ 42,98,215/- u/s. 37 r.w.s. 93 of the Act. 3. We have heard the rival contentions and gone through the facts and circumstances of the case. We have also peruse the case records including the assessment order, the order of CIT(A) and assessee s paper filed pages 1 to 57. We find that the confirmation letter from M/s Vistar Trading LLC had been furnished in course of the assessment proceedings and copy of this confirmation letter was annexed by the Assessing Officer to the assessment order. The letter dated 20-11-2006 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e buyers. In the face of such overwhelming and conclusive evidence regarding the identity of the agent, the services rendered and the amounts received by them as also the details of the parties to whom sales were affected by their services, there remains no scope to raise any further doubt about the genuineness of the assessee s claim. In view of these facts, we find that the issue is squarely covered in favour of the assessee and against the Revenue by various decisions of this Tribunal and as referred by the Ld. counsel for the assessee the decision of this Tribunal in the case of Shri Samir A Batra v. ITO in ITA No.4130/Ahd/2007 dated12-12-2008, wherein it is held as under:- 25. We have heard the rival contentions and gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admissible as deduction u/s. 37(1) of the Act. We find that the AO has relied upon the contents of the Accounting Standard-I, which however was not applicable to the Assessee s case, given the nature of the transactions entered into by the assessee. The AO has also referred to Sec. 5 of the Act which defines total income. It is obvious in the circumstances and the nature of transactions which have been discussed above in details, that, what may have accrued to the Assessee was the gross invoice values, yet, the Assessee under the terms of the agreement or understanding with the buyer, had to deduct from the invoices the amount of commission payable. In the background of such fats, it could not be held that the gross invoice amounts were wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Club (2002) 255 ITR 98, the Hon. Court observed that in order to decide whether there has been diversion of income by overriding title, the true test is whether the amount sought to be deducted, in truth, never reach the Assessee as his income. Whereby an obligation, income is diverted before it reaches the Assessee, it is deductible, but where the income is required to be applied to discharge an obligation after such income reaches the Assessee, the same consequence in law does not follow. In the present case the gross export proceeds never reached its hands, no such income had therefore accrued to the assessee and this was because of an obligation or compulsion to deduct the commission from the export invoices which clearly showed this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book page No. 516 and 518 as well as in the case of Saudi Extension Agency at paper book page 507. So except one party namely, Mohmed Abdulla of Dubai as mentioned above, all other confirmations were on letter head of the respective parties. 27. We find from the records as well as the arguments of both the sides that none of the payment has come beyond six months but it was within six months as can be verifiable from bank realization certificate enclosed at paper book page No. 390 to 451. The assessee has received the aforesaid payment within six months as per RBI rules and guidelines. The AO has presumed that assessee s buyer has to pay commission as and when buyer received the payment from the assessee, which is not correct bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyers were mediated by agents, whole existence was established beyond doubt, by the confirmation letters. Secondly, there was rendering of services. The agents had clearly written that they have rendered services; in procuring samples, deciding the orders and settling all matters between the buyers and seller including payments by the buyers to the seller. Considering the nature of such services rendered by the agents, even if they were appointed by the buyers, services were indirectly rendered to the Assessee as the seller s well. The samples were produced by them from the Assessee, they decided on the quantum of the order and the price, they settled all disputes between the buyers and the seller, and they also ensured the payments to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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