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2017 (7) TMI 994 - ITAT DELHIDisallowing the commission expenses - genuineness of expenditure - Held that:- Disallowance of the claim of payment of commission to the service agent by AO is that, “part of the commission is still payable”, is not tenable for the reasons that AO has lost sight of the fact that as per terms and conditions of the agreement entered into between assessee and the agent commission is to be paid after receipt of payment by the assessee for the goods exported” Second ground for disallowing the claim of payment of commission to the service agent that the agreement does not suggest any specific reference to any specific service rendered to the agent to the assessee company is, “also not tenable for the reasons inter alia that in each agreement, the services to be rendered by the commission agents are extensively elaborated. Statement furnished by the assessee company shows that the FOB value of export to the parties where agency commission is payable along with updated statement of commission agent/payable during AY 2006-07 in respect of the export made and as such, the outstanding commission payable continues to be shown as liable in the books of account which have never been rejected by the AO. In these circumstances, genuineness of the business transaction and payment made to the service agent cannot be disputed Observation made by the AO that no invoice below has been raised by the service agents which makes the business transaction doubtful is not tenable because when as per agreement, commission @ 4% or 10% in case of different agents, as the case may be, is already agreed upon between the parties on the goods exported and services have been rendered and export contracts stands executed, we do not find any reason to disallow the claim only because of the fact that invoices have not been raised by the service agents. Even otherwise, when assessee company has categorically spread its income into 3 years then expenditure have also to be spread in 3 years and the disallowance cannot be made on the ground that the amount of agency commission was payable even during 2010. The contention of the ld. DR that no document / correspondence is there on record to prove that as to what services have been rendered by the service agents, is again not tenable for the reason that when intricate projects have been executed by the assessee company as per terms and conditions of the agreement, which could not have been completed without local assistance and only thereafter assessee company has earned turnover of ₹ 167 crores with net profit of 17%, the ld. CIT (A) has rightly concluded that the services have been rendered for a genuine business transaction and payment for the agency services is allowable. - Decided against revenue
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