TMI Blog2017 (5) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has failed to furnish the details of services rendered for the appellant - Held that:- When the respondent – assessee had produced necessary documentary evidence in the form of confirmation letters of the commission paid to the foreign agents, necessary documents /invoices on which the commission have been paid have been produced and the commission has been paid through banking channel and with respect to the very foreign agents in the previous years the claim of the respondent – assessee had been accepted consistently, learned CIT(A) as well as the learned tribunal has rightly deleted the disallowance made by the Assessing Officer.- Decided in favour of assessee. - Tax Appeal No. 252-261 of 2017 - - - Dated:- 26-4-2017 - M. R. Shah And B. N. Karia, JJ. Mr Sudhir M Mehta, Advocate for the Appellant JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) [1.0] As common question of law and facts arise in both these Tax Appeals and as such arising out of the impugned common judgment and order passed by the learned Income Tax Appellate Tribunal and with respect to the same respondent assessee but for different Assessment Years, both these Tax Appeals are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciple of res judicata does not apply in the income tax proceedings as held by the Hon ble Supreme Court in various cases and as also mentioned by the AO in his assessment order? (B) Whether on the facts and in the circumstances of the case and in law, the Hon ble ITAT is justified in deleting the addition by ignoring that at no point of time assessee could produce evidences of services rendered by the alleged commission agent and thus not fulfilled the condition envisaged in Section 37(1), as held by the Hon ble ITAT, Ahmedabad in the case of M/s. Desai Fruits Vegetables Pvt. Ltd. in ITA No.1707/Ahd/2012? [3.0] The facts leading to the present Tax Appeals in nutshell are as under; [3.1] The respondent assessee filed the return of income of the Assessment Years 2011-12 2012-13. For the Assessment Year 2011-12 the respondent assessee claimed deduction under Section 40 (a)(ia) of the Income Tax Act for an amount of ₹ 61,37,440/- qua commission paid to the foreign agents. Similar claim was made by the respondent assessee for the Assessment Year 2012-13 for an amount of ₹ 1,46,62,048/-. The Assessing Officer doubted the genuineness of the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent assessee on the ground of commission paid to the foreign agents, the learned CIT(A) observed that none of the foreign agents had any operation carried out in India as per the provisions of Section 9(1)(i) of the Income Tax Act, and therefore, income of a nonresident is deemed to have been accrued or have arisen in India only. Consequently, the learned CIT(A) allowed the Appeals and deleted the disallowance made by the Assessing Officer. On the Appeals preferred by the revenue, learned tribunal by its impugned judgment and order has dismissed the said Appeals, which have given rise to the present Tax Appeals. [4.0] We have heard Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue at length. We have considered and gone through in detail the respective assessment orders, orders passed by the learned CIT(A) as well as the impugned common judgment and order passed by the learned tribunal. At the outset, it is required to be noted that the Assessing Officer doubted the claim made by the respondent assessee of commission paid to the foreign agents, and therefore, made the disallowance. However, considering the fact that the respondent assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(a)9ia) r.w.s. 195 of the Act, my predecessor has dealt with this issue in his order dated 22/05/2012 in ITA No.CIT(A)/VLS/310/11-12. The decision has been given in para 4.3 of the order which is reproduced below: I have considered the facts of the case, material on record as well as the contentions of the appellant as well as the observation of the AO in the assessment order. There is no plausible reason to even doubt the genuineness of the commission paid to Dr.Paul Le Provost, a foreign agent as the appellant has filed sufficient documentary evidence and expenditure on this front is inevitable and has been incurred year after year. Since the commission has been paid to the above name foreign agent through banking channel, his identity is proved and confirmations has been obtained from him, I am inclined to accept that the said expense is a genuine business expenditure, Secondly I find that nothing has been brought on record by the revenue to show that commission of ₹ 2167383/- paid to Dr. Paul Le Provost, had any operation carried out in India as per the provisions of Section 9(1)(i) of the Income Tax Act, 1961. On an identical issue, the jurisdictional ITAT, Ahmeda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer concluded that the appellant has not produced any clinching evidence of services rendered. During the appellate proceedings the appellant submitted that the nature of business of appellant is that without the help of any mediator his product cannot be sold. Whatever product the appellant is producing is not the end product for use rather it is a sort of part used of the making of final machinery to be made ready for and used. So it requires lot of specifications which involves the services of agents who can procure orders for the appellant. If the Assessing Officer would have wanted to make any inquiry in this regard then he could have made such but he wholly relied upon the response of the appellant who in turn submitted all the relevant details which were not accepted and rejected by him just with the remark that it is not accompanied by any clinching evidence. In my view the appellant has been doing his business since long and whenever there was any requirement to engage any agent for procuring order it was done by him and for the services rendered commission has been paid to them. In this case the Assessing Officer has not found false the explanation given by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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