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TMI Blog2014 (10) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.A. No.32/Lkw/2010. 3. Ground No. 1 and the additional grounds being ground No. 9 to 13, raised by the Revenue are in connection with the same issue, which are as under: "1. That the Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs. 1,05,70,057/-, being the payment of commission to M/s Lohia Europe GmbH, Germany ignoring the fact that the payment is covered by the provisions of section 9(1)(vii)(b) read with section 40(a)(i)(A) of the Income Tax Act, 1961." 4. Additional grounds: "9. The CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 1,05,70,057/- made by A. O., being the sales commission paid to M/s Lohia Europe GmbH, (LEG), without discussing the non-admissibility of this commission u/s 37 of the Income Tax Act whereas the A. O. while making such disallowance has given reasoned findings on non-admissibility of this expense u/s 37 of the Income Tax Act. 10. The CIT(A) has erred in law and on facts in failing to deal with or appreciate the alternative findings of the A. O. that impugned commission was not allowable u/s 37 or alternatively by application of section 92. 11. Without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as an expense not allowed under the provisions of Income Tax Act, 1961. Assessee's income shall be enhanced to extent of this payment. @@@Without prejudice to the above deliberation, it is also brought on record that the payment for the alleged services rendered by LEG also qualify for deduction of tax at source u/s 195 of the I.T.Act, 1961. Even if by any stretch of imagination, the payments made to LEG be considered remunerations for the services rendered in supervising the operations conducted by the local area agents, the same shall fall within the ambit of section 9(1)(vii)(b), relevant portion of which reads as under..." "...Now when the agreement with LEG (Annexure-A, the part of assessment order) is read in the background of section 9, it is clear that the services are being rendered which are not consideration for any construction, assembly, mining or light project undertaken by the LEG. # The services rendered clearly fall in the category of managerial, technical or consultancy services. # In view of Apex Court judgment the services are rendered where they are received. As the services are being received by the assessee company in India and the receipts arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Co. Ltd. Vs. CIT [1998] 229 ITR 383 (S.C.) (iv) IVAX Paper Chemical ltd. vs. Addl. CIT [2014] 44 Taxman.com 173 (Hyd. Trib.) 9. We have considered the rival submissions, perused the material available on record, gone through the orders of the authorities below and the judgments cited by both the sides. First of all, we reproduce Para No. 4 from the order of CIT (A), which contains his decision. This Para is as under: "4. DECISION 4.1 The LEG and the appellant company have entered into an agreement dated 01/04/2006 which was basically renewal of the earlier agreement dated 01/04/2004. As per this agreement :- 1. LEG shall act as agent of LSL to negotiate order for supply of machinery mainly in the American (North and South), European, Middle Eastern and North African markets. 2. LEG would actively canvass and promote export of Machinery made by LSL. LEG would be provided technical assistance and other information required for the purpose by LSL. 3. In consideration of services to be rendered by LEG for procuring exports orders, LEG would be entitled to commission @ 5% only on sales by LSL against orders that have been obtained through the active support of LEG. 4.2 The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales representatives / sales coordinators for which they are being paid commission. Such Commission cannot be termed as fees for technical services. Accordingly, I hold that provisions of section 9(1)(vii) do not apply to the instant case. 4.4 The only thing that Department has to ascertain is whether the commission paid to LEG is at arms length ( since LEG and the appellant companies are associated enterprises). The commission payable to LEG is @ 5%. From the data made available by the assessee company, the A.O. has prepared a chart which shows that avg. commission paid to LSAs (Local Sales Agent) is 6.17% . These LSAs are local agents in the countries for which LEG also gets a commission @ 5% on sales made. Sales commission at an avg. rate of 5.07% is being paid to Independent Agents who are agents of the company in countries like Turkey, Thailand, Indonesia etc. Based on this chart, it has been held by the A.O. that the Arm's length rate of commission paid / payable of LEG should be Zero. The logic is that the commission payable to the independent agents is 5.07 % whereas the avg. commission paid to the LSAs itself is 6.17 %. Thus, LEG can have no further sales commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the payment made by the assessee company to its subsidiary LEG is higher. He has also noted that the entire commission paid to LEG is not allowable. He has held that it is a sham transaction. The second objection of the Assessing Officer is that even if it is held that this payment of commission is allowable then the same is not allowable for this reason that the assessee has not deducted TDS and therefore, deduction is not allowable for this expenditure. In this regard, the additional grounds are also raised by the Revenue to further strengthen the case of the Assessing Officer in view of two retrospective amendments as stated in additional ground No. 11. 9.2 First of all, we examine the allowability of this payment with regard to the first objection of the Assessing Officer as to whether the expenditure is allowable or not as per the Arm's length price i.e. ALP. In this regard, we find that it is noted by the CIT(A) in his order that LEG has been paid commission @5% which is well under 5.07% and also under 6.17% paid to independent agents and local sales agents respectively. In this regard, there was one more objection of the Assessing Officer as well as Learned D.R. of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) inserted by Finance (No. 2) Act, 1977 with effect from 01/04/1977:- "Explanation 2.--For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". Explanation 2 to section 195(1) inserted by the Finance Act, 2012 with retrospective effect from 01/04/1962 "Explanation 2.- For the removal of doubts, it is hereby clarified that the obligation to comply with sub-section (1) and to make deduction there under applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has- (i) a residence or place of business or business connection in India ; or (ii) any other presence in any manner whatsoever in India." 9.4 In this regard, we find that explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and as per explanation 2, that any person in section 195 (1) will include even non-resident not having any place of residence or business and business connection in India. Hence, in our considered opinion, this explanation 2 to section 195(1) has no relevance and therefore, it also does not render any help to the Revenue. We would also like to observe that the stand of the revenue is this that as per this explanation 2 to section 195 (1), TDS is to be deducted u/s 195 in all cases where payment is made to a non resident. But there is no force in this contention because this requirement has to satisfied that the amount being paid to the payee is liable to tax in India in the hands of the payee. As per this explanation, the amendment is this that if the payee is liable to tax in India in respect of the impugned payment than the payer cannot claim that he is not supposed to deduct TDS because the payer is neither a resident of India nor the payer has any place of business in India or business connection in India as it was in the much discussed case of Vodafone. Demand was raised in that case in spite of adverse judgment of Supreme Court on the basis of this Explanation. Although th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t regarding applicability of explanation added to section 9(1)(vii) by Finance Act 2010 is covered against the revenue by this judgment of Hon'ble Jurisdictional High Court and therefore, we do not examine the applicability of other three judgments cited by Learned A.R. of the assessee out of which two are Tribunal decisions and one is the judgment of Hon'ble Apex Court rendered in the case of National Thermal Power Co. Ltd. Vs. CIT (supra) which is in connection with admission of additional ground being legal issue. 9.9 We have already seen and discussed that the second amendment cited by Revenue being insertion of explanation 2 to section 195(1) of the Act, has no relevance because in the present case, payer is already resident of India and therefore, already within the purview of section 195 (1) and there is no need in the present case to extend or broaden the scope of the term "any person responsible for paying to a non-resident" appearing in sub section 1 to section 195 of the Act. But the requirement that the payee is liable to tax in India in respect of the impugned payment has to be there to attract the provisions of section 195 (1) but in the present case, this as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawal of approval by IRDA.] (vi) thus, by way of collusion, this deduction was devised by the assessee and the insurer to take advantage of nomenclature of Keyman Insurance." 13. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) who has decided the issue in favour of the assessee and now the Revenue is in further appeal before us. 14. Learned D.R. of the Revenue supported the assessment order. He also submitted certain additional evidence along with the letter dated 19th May, 2014. This includes a letter dated 30/06/2006 from IRDA. It also includes Circular dated 30/01/2006 issued by IRDA. He submitted that as per these circular and clarifications issued by IRDA, only term insurance can be considered as Keyman Insurance and since in the present case, the insurance is not term insurance, the same cannot be considered as Keyman insurance. He also submitted that as per letter dated 30/06/2006, issued by IRDA, even top up premium is not allowable because it will amount to issuance of a fresh insurance policy to the extent of increased sum assured. 15. As against this, Learned A.R. of the assessee supported the order of CIT(A). He also submitted copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... policy issued was other than the term insurance plan would not be permissible, as it tantamount to issuing of a fresh insurance policy to the extent of the increased sum assured. All the life insurers are requested to comply with these instructions. Please acknowledge the receipt of this communication. Yours faithfully, Sd/. (C R Muralidharan)" "Ref:036/IRDA/LIFE/JAN-06 Date 30/01/2006 To All Life Insurers, Attention is invited to IRDA Circular No.IRDA/Life/006/2006 dated 27/04/2005 on the subject to keyman insurance. It has been reported that some insurers are disregarding the spirit behind that circular and are selling partnership insurance through endowment of unit-linked plans. Insurers should not lose sight of the basic principle that a person purchasing life insurance can only do so to the extent of his insurable interest in the life assured. An employer buying keyman insurance purportedly for his own benefit cannot prove insurable interest beyond a certain cover protecting against death of the key employee and similar is the position of a partner buying insurance on the life of another partner or the partnership firm buying insurance on the lives of its partners. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was specified that any alteration to sum assured under the keyman insurance policy where the plan of policy issued was other than the term insurance plan would not be permissible as it tantamount to issuing of a fresh insurance policy to the extent of the increased sum assured. Hence, in our considered opinion, if any top up premium is paid after 30/06/2006, the same will be hit by this circular of IRDA but in the present case, the top up premium has been paid by the assessee and received by insurance company on 31/12/2005 which is before the date of these last two circulars dated 3/01/2006 and 30/06/2006 in which such increase in sum assured in respect of earlier policy was barred. In our considered opinion, under these facts, no interference is called for in the order of CIT (A) on this issue. We hold accordingly. This ground of Revenue is rejected. 18. Ground No. 3 is as under: "3. The Commissioner of Income Tax (Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of Rs. 35,44,195/- u/s 43B of the Income Tax Act, 1961 ignoring the fact that Rs. 35,44,195/- is not actual payment of Excise Duty but represents adjustment in Cenvat Receivable A/c." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pta on 22/10/2008 in reply to the notice issued by the Assessing Officer u/s 133(6) of the Act and the copy of this letter is available on page No. 170 of the paper book. He also drawn our attention to letter dated 16/09/2009 filed by the assessee before the CIT(A) as written submissions, copy of which is available on page No. 186 to 219 of the paper book and in particular, our attention was drawn to page No. 211 to 213 of the paper book. 23. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that this issue has been decided by the CIT(A) as per Para 8.3 to 8.7 of his order which are reproduced below for the sake of ready reference: "8.3 I have perused the sale bills of machinery (amounting to Rs. 1 Crore) related to sales made by the appellant company to M/s Shiva Polymers Pvt. Ltd. All these bills have been raised in the Financial Year 2005-2006. Therefore, even though the agent i.e. M/s Super Smelters Ltd. had booked its commission income in the F.Y. 2004-2005 for coordinating the sales to M/s Shiva Polymers Pvt. Ltd., the same norm cannot be thrust on the appellant company. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid company and we enjoy utmost trust and confidence in many respect including critical decisions for growth and development of business. From time to time Shri Rajesh S Gupta came to me for strategic decisions. One of such matters came up for discussion amongst us regarding purchase of Circular Weaving Machines, Machinery for manufacturing of Woven Sacks. We have taken interest in reading technical and business profiles in print form as well as on internet. It was a matter of confidence by reading the technical profile of machines manufactured by M/s. Lohia Starlinger Limited, which had collaboration with Starlinger Group of Austria till few years back Therefore, I recommended to them to go for purchase of machinery from M/s. Lohia Starlinger Ltd. My job in the whole transaction was to motivate and convince Shri Rajesh S. Gupta in selection of machines, therefore, the same does not have documentary evidence except catalogue and technical details collected before finalization of the purchase order by M/s. Patwari Plastics Pvt. Ltd., Hyderabad. The observation of the Ld. Assessing Office! is unfounded and the payment of Commission to Shri Siyaram Gupta stands fully explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis that mere admitting receipt of commission from the assessee and showing the same in its income, does not fulfill the parameters laid down u/s 37 of the Income Tax Act, 1961 which requires that expenditure be made wholly and exclusively for the purposes of the business of the assessee. On this aspect, this finding is given by CIT(A) in Para 8.6 of his order that there is no requirement under the Income Tax Law to have a written agreement. He has also noted that the Assessing Officer had made direct enquiry with the payee on two occasions and the reply was given by the payee directly to the Assessing Officer. It is also noted that the assessee has also submitted copy of the letter dated 22/10/2009 from the buyers who also have confirmed the services rendered by Shri Siyaram Gupta. These findings of CIT (A) could not be controverted by Learned D.R. of the Revenue and hence, on this aspect also, we do not find any reason to interfere with the order of CIT (A). This ground of the Revenue is also rejected. 24. Ground No. 5 is as under: "5. The learned CIT(A)-II, Kanpur has erred in law and on facts in deleting the addition Rs. 36,98,000/-, being commission paid to its Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation allowed to the assessee and thereby the entire amount of Rs. 4,17,811/- as revenue expenditure, ignoring the fact that the same being expenditure on New Aluminum Structure and Water Proofing was capital expenditure." 28. Learned D.R. of the Revenue supported the assessment order. He placed reliance on the following judicial pronouncements: (i) Ramkishan Sunderlal Vs Commissioner of Income-tax [1951] 19 ITR 324 (All) (ii) L.H. Sugar Factories and Oil Mills Ltd., In re [1952] 21 ITR 325 (All) 29. Learned AR of the assessee supported the order of Learned CIT (A). We have considered the rival submissions, perused the material available on record, gone through the orders of the authorities below and the judgments cited by both the sides. We find that this issue was decided by CIT(A) vide Para No. 11 of his order, which is reproduced below: 11. Issue (vii) - Rs. 3,96,920/- "Disallowance out of Current Repairs - 11.1 During the year, the appellant company got some repair work done in different units and incurred following expenses aggregating to Rs. 4,17,811/- 23/11/2005 New Aluminum Structure Rs.1,02,569/- 30/11/2008 Water Proofing Rs. 83,600/- 25/01/2006 Water Proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not applicable in the facts of the present case. 29.4 The second judgment cited by Learned D.R. of the Revenue is the judgment of Hon'ble Allahabad High Court rendered in the case of L.H. Sugar Factories and Oil Mills Ltd. (supra). In this case, the dispute was as to whether changing of entire roof by using new khaprails (tiles) in place of old ones was in the nature of current repairs. Under these facts, it was held that the replacement of old roofs by using new tiles for old ones was not revenue expenditure because it cannot be classified as current repair. In the present case, the facts are different. There is no replacement of existing roof by new roof and only water proofing has been done and partition has been done on the existing shed. Hence, in our considered opinion, this judgment of Hon'ble Allahabad High Court is not applicable in the facts of the present case. This ground of the Revenue is rejected. 30. In the result, the appeal of the Revenue stands dismissed. 31. Now we take up the appeal of the Revenue for assessment year 2007-08 i.e. I.T.A. No.531/Lkw/2010. 32. In this appeal, the Revenue has raised the following grounds along with additional grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust and bad in law in view of amended provisions of explanation to section 9 w.r.e. f. 01.06.1976 and explanation 2 to section 195(1) w.r.e.f. 01.04.1962. 8. The order of the CIT(A), Kanpur being erroneous, unjust and bad in law be vacated and the order of the A. O. be restored. 9. That the appellant craves leave to modify any of the grounds of appeal or take additional ground during the pendency of this appeal." 34. Both the sides agreed that ground No. 1 and additional grounds raised by the Revenue in the present year are similar to ground No. 1 and additional grounds of the Revenue's appeal in assessment year 2006-07. Both the sides also agreed that ground No. 2 is similar to ground No. 5 raised by the Revenue in assessment year 2006-07. Both the sides agreed that these issues can be decided on similar line as in assessment year 2006-07. Both these issues were decided in favour of the assessee as Para No 9 to 10 and 26 of this order. Accordingly, in the present year also, both these issues are decided in favour of the assessee. All these grounds of the Revenue are rejected. 35. Regarding ground No. 3, Learned D.R. of the Revenue supported the assessment order. He also placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the Assessing Officer has proceeded on the basis that DLW is government organization where there is no role to play for any middle man. But it is noted by CIT(A) that DLW is not government organization but it is Public Sector Undertaking which is making direct purchases from the open market from local suppliers as well as directly from the manufacturers and therefore, in order to promote the sales, the assessee company had to maintain a continuous information feedback and take the services of Industrial Marketing Corporation i.e. the agent. Considering all these facts, we do not find any reason to interfere in the order CIT(A) on this issue also. Ground No. 3 of the Revenue is rejected. 38. Regarding ground No. 4 of the Revenue's appeal, Learned D.R. of the Revenue supported the assessment order. He also submitted that no finding is given by CIT(A) regarding this objection of the Assessing Officer that there was no new construction in R&D building as has been noted by the Assessing Officer in Para 16 of the assessment order. He submitted that under these facts, the order of CIT(A) should be reversed and that of the Assessing Officer should be restored. 39. As against this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he internal engineer's report. Thereafter, he has further held that in absence of anything to the contrary brought by the Assessing Officer on record, the said allocation cannot be disturbed. He deleted the disallowance on this basis. This finding of CIT(A) could not be controverted by Learned D.R. In respect of second disallowance of Rs. 10.46,954/- under the head "cement", this finding is given by CIT(A) that as per the contract, the material i.e. cement and steel was to be supplied by the assessee in addition to the labour and other costs for which the bills totaling to Rs. 63,77,073/- were raised by the contractor and therefore, there is no reason to disallow the said expenditure incurred on account of cement consumed on construction carried out in R&D Division. On this aspect also, Learned D.R. of the Revenue could not controvert this finding of CIT(A) that as per the contract, the material was to be supplied by the assessee in addition to the labour and other costs. Hence, on this aspect also, we do not find any reason to interfere in the order of CIT(A). 42. The third disallowance is the disallowance of Rs. 1,00,000/- under the head "Steel" on the same basis that allocation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h approximately 16,188 sq. ft. was used for R&D division and approximately 800 sq. ft. was earmarked for Excise office and, therefore, the ratio between R&D Unit and Excise office worked out to 95% and 5% respectively. He also noted that total expenditure incurred was Rs. 32,83,024/- and out of this, Rs. 3,00,000/- approximately 10% was allocated to the Excise office and Rs. 29,83,024/- approximately 95% was allocated to the R&D unit. Considering all these facts, we do not find any reason to interfere in the order of CIT(A). 47. The next disallowance deleted by CIT(A) is the disallowance of Rs. 3,04,765/- for civil work. This disallowance was deleted by CIT(A) on the basis that since the electronic wing is an integral part of R&D centre, the expenditure incurred on that wing is an allowable expenditure. Considering the facts of the present case, we do not find any reason to interfere in the order of CIT(A) on this issue also. Hence, ground No. 4 of the Revenue is rejected. 48. In the result, the appeal of the Revenue stands dismissed. 49. Now we take up the appeal of the assessee for assessment year 2007-08 i.e. I.T.A. No.389/Lkw/2010. 50. In this appeal, the assessee has raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In the result, the appeal of the assessee stands allowed for statistical purposes. 55. Now we take up the appeal of the Revenue for assessment year 2008-09 i.e. I.T.A. No.632/Lkw/2011. 56. In this appeal, the Revenue has raised the following grounds: "1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 39,50,000/- being commission paid to its managing director ignoring the fact that the assessee could not prove the specific services rendered by the managing director in spite of sufficient opportunity given. 2. The Ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 3,30,516/- on account of commission paid for sale by Industrial marketing Co. to Diesel locomotive Works, Varanasi without appreciating the fact that DLW, Varanasi is a govt. organization where absolutely no role was to be played for any middle man. 3. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 62,40,515/- being the payment of commission to M/s Lohia Europe GmbH, Germany ignoring the facts that it is covered by the provisions of section 9(1)(vii)(b) read with section 40(a)(i)(A) of the Act. 4. The Ld. CIT(A) has erred in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In earlier two years i.e. assessment year 2006-07 & 2007-08, all these three issues were decided by us in favour of the assessee as per Para 9 to 10, 26, 34 and 37 of this order. Accordingly, in the present year also, these issues are decided in favour of the assessee. Accordingly ground No. 1,2 & 3 and all the additional grounds are rejected. 60. Regarding ground No. 4, Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). 61. We have considered the rival submissions. We find that a clear finding is given by CIT(A) in Para 9.4 of his order that the liability to pay interest on the amount of advance received from Plastene (India) Ltd. arose on the date of compromise in terms of MOU dated 09/08/2007 and therefore, the entire interest had arisen in financial year 2007-08 relevant to assessment year 2008-09 and same was rightly claimed by the assessee in this year. 62. Learned D.R. of the Revenue could not controvert this finding of CIT(A) and hence, we decline to interfere in the order of CIT(A). This ground is rejected. 63. In the result, the appeal of the Revenue stands dismissed. 64. Now we take up the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round No. 1 & 2 are same as has been raised by the Revenue in earlier years also i.e. regarding payment of commission to Managing Director and payment of commission to Industrial Marketing Corporation. Both the sides agreed that these grounds can be decided on similar line. In earlier years, both these grounds were decided in favour of the assessee and accordingly both the issues are decided in favour of the assessee. Accordingly ground No. 1 & 2 are rejected. 67. Regarding ground No. 3, Learned D.R. of the Revenue supported the order of the Assessing Officer whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that admittedly, TDS was deducted in the present year and therefore, as per section 40(a)(ia), the deduction is allowable in the present year. 68. We have considered the rival submissions. We find that it is noted by CIT(A) that the assessee company made the provisions of Rs. 45 lacs for expenses on estimate basis for financial year 2007-08 and deducted tax u/s 194C of the Act and claimed the same in profit & loss account for the financial year 2007-08 relevant to assessment year 2008-09. Subsequently after the close of the accounts for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. Now we take up the appeal of the Revenue for assessment year 2010-11 i.e. I.T.A. No.559/Lkw/2012. 74. In this appeal the Revenue has raised the following grounds: "1. That the Ld. Commissioner of Income Tax (Appeals) has erred, in law and on facts in deleting the disallowance of commission amounting to Rs. 62,40,000/- paid to Shri Raj Kumar Lohia, MD without appreciating the fact that it was not commercial expenditure relatable to business of the assessee especially considering the decreasing growth in the business of the assessee in successive years. 2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts of the case in deleting the disallowance of commission amounting to Rs. 12,60,910/- paid to M/s Industrial Marketing Corpn., Varanasi without appreciating the fact that the alleged commission was paid in respect of orders pertaining to DLW, Varanasi which is part of a government department where occasion for payment of such commission would not arise and without appreciating that as per the assessee's own submission before CIT (A) the amount of commissions paid in a year bear no relation to the value of sales, during that year as is the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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