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2013 (2) TMI 503 - AT - Income TaxCommission to foreign agent - Assessee paid commission to foreign agent - Assessee’s name was appearing in the report of Volcker Committee, wherein it was mentioned that commission paid to parties outside India in respect of sale of goods to Iraq is unethical - On this basis AO disallowed the commission payments as it is illegal payment – Held that:- Mere appearance of the name of the appellant-company in the Volcker Committee’s Report could not lead to an adverse inference against the appellant because the appellant itself has admitted to have made export gainst sale contracts procured from the Govt. of Iraq and payment of commission therefor - Payment of commission by the appellant for the services rendered in procuring the sale contracts and for facilitating smooth execution of the sale contracts. The appellant has produced ample material in support of the reasonableness and legality of the payment of commission - commission was paid through the normal Banking channel - payment of commission was made for the purpose of business on grounds of business expediency and there was no element of illegality in making the payment – Against the revenue. Further, Section 40(a)(i) shall not be applicable in the given case since there is no liability on the appellant to deduct taxes at the time of payment of the commission to an agent outside India and deposit the same with the tax authorities – No violation of Section 195 - Against the revenue.
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