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TMI Blog2012 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld. CIT(A) has erred in deleting the addition of Rs.48,61,158/- being disallowance of warranty provision debited to spares account, contrary to auditor's finding in the audit report that it was in the nature of contingent liability. On the facts and in the circumstances of the caser and in law, the CIT(A) ought to have upheld the order of the A.O. The order of the CIT(A) on the issues raised in the aforesaid grounds be set aside and that of the A.O. be restored." 2.1 Ld. D.R. of the revenue supported the assessment order whereas Ld. A.R. supported the order of Ld. CIT(A). he also submitted that Ld. CIT(A) has followed the judgment of Hon'ble Apex Court rendered in the case of Rotork Controls (India) Ltd. Vs CIT as reported in 314 ITR 52. He submitted that in the first round, the Tribunal has restored back this matter to the file of Ld. CIT(A) for a first decision in I.T.A.No. 1380/Ahd/2009 dated 17.07.2009. He submitted a copy of this tribunal decision. He further pointed out that it was held by the Tribunal in this order in the first round that the decision of Hon'ble Madras High Court rendered in the case of Rotork Controls (India) Ltd. (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - being disallowance of warranty provision debited to spares account , contrary to auditor's finding in the Audit report that it was in the nature of contingent liability. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer. Relief claimed in appeal. The order of the CIT(A) on the issues raised in the aforesaid Grounds be set aside and that of the Assessing Officer be restored." 3.1 It was agreed by both the sides that this issue is identical to the issue raised by the revenue in the appeal for the assessment year 2005-06 and the same can be decided on similar lines. 3.2 In that year, we have held as per para 2.3 above that no interference is called for in the order of Ld. CIT(A) and on the same lines, we hold in the present year also that no interference is called for in the order of Ld. CIT(A) on this issue. 3.3 In the result, the appeal of the revenue for this year also is dismissed. 4. Now, we take up the assessee's appeal for the assessment year 2006-07 in I.T.A.No. 3254/ahd/2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Boyce Manufacturing Pvt. Ltd. (supra), Rule 8D is not applicable in the present case because assessment year involved is assessment year 2006-07. Still some disallowance u/s 14A out of the administrative expenses is called for. Normally we restore such matters to the file of the A.O. for a fresh decision but considering smallness of the amount of disallowance made by the A.O. regarding administrative expenses of Rs.1,02,484/- we feel that an estimated disallowance could be confirmed on reasonable basis and no effective purpose will be served by restoring this matter back to the file of the A.O. Considering the facts of the present case,. We feel that disallowance of Rs.50,000/- out of administrative expenses will meet the ends of justice. We hold accordingly. This ground is partly allowed. 4.3 Ground No.3 is as under: "3. The Hon'ble CIT (A) has erred in confirming the disallowance of Rs.1,09,16,495/-being export commission paid to four parties. Your appellant submits that the same was paid for securing export orders through agents who assisted in bidding, technical evaluation, price negotiation, liaison with customers, collection of outstanding etc. Commission paid is wholly an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otiations and liaison with customers was unsubstantiated and in spite of adequate opportunities to put forth documentary evidences in support of this contention, no evidences other than copy of handwritten debit note of M/s. Marfatia & Co. could be submitted. Assessing Officer further observed that the contention about agent visiting Bangladesh on its behalf also remained unsubstantiated. Assessing Officer further observed that in spite of being specifically asked, appellant failed to give any basis for bifurcation of the commission on a single order between four different agents and no details of specific services rendered by each of these agents were furnished. Also, no details of any qualification or past experience in similar line for Soma Mukherjee, Fatima S. Broachwala and Saifuddin F. Broachwala were furnished. Assessing Officer also observed that non collection of service tax from payments made to three persons showed that no services were rendered by these persons and the payments were in the nature of gratuitous payments. Assessing Officer also observed that the fact that appellant was able to charge premium of 800 to 900% of the domestic sale value of spares indicated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices and payment for that. The services were rendered by M/s. Marfatia & Co and if he in turn has taken help form others and instead of making payment directly to them, he asked the assessee to make direct payments to those persons in part, then no adverse inference should be drawn against the assessee on the basis of such direct payments to other persons who had rendered services to the assessee through M/s. Marfatia & Co. (agent). It is submitted that this can be explained by a hypothetical example. Suppose, a person 'A' goes to a restaurant and order for some drinks, Chinese dishes, Indian dishes and some ice creams from that restaurant. This restaurant offers Indian dishes from own sources and out sources the balance items and for the same the restaurant presents four bills including one bill of the restaurant and three bills of the outsiders and ask 'A' to make payment of the entire amount, the same is equivalent to the present case and since those things in a restaurant is happening day in and day out, no adverse inference should be drawn against the us on this account that part payments were made to three different persons. As against this, it was submitted by the Ld. D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion between the assessee and the agent and as per letter dated 30.06.2005, the agent M/s. Marfatia & Co. made a request to the assessee that since they cannot alone handle the whole project, there were some other persons also involved in the execution of this contract and, therefore, they have requested the assessee company to make payment of Rs.65 lacs to three different persons and only the balance amount of Rs.46,78,986/- was to be paid to M/s. Marfatia & Co. The assessee made the payments accordingly. Considering all these facts, we are satisfied that the assessee have brought on record sufficient material in support of this contention that services were rendered by the agent. Regarding this aspect that on what basis the payment were made to four different persons in connection with single order, we are satisfied that for this also, the assessee has furnished a reasonable explanation that the entire project could not be handled by M/s. Marfatia & Co. and they have engaged services of three other persons and as per their terms between themselves, the payment was distributed by them among themselves. It makes no difference to the assessee as to whether the entire payment was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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