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Income Tax Officer Versus M/s Om Bakeries Pvt. Ltd.

2015 (6) TMI 275 - ITAT LUCKNOW

Disallowance of commission paid - decision of CIT(A) is that no services were rendered by the commission agents and that expenditure on commission payment is for influencing the decision making process in the contract awarded by PSU of the Government of India i.e. M/s Modern Food Industries (India) Ltd. - Held that:- As per the agreement of the assessee company with M/s Modern Food Industries (India) Ltd., we find that there is no fixed date or credit period for making payment by M/s Modern Food .....

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ctually done by the commission agent. The allegation of the authorities below that no services were rendered by the commission agent is on the basis that contract was already awarded by M/s Modern Food Industries (India) Ltd. in the year 1999 and delivery was to be made by the assessee company at its own premises but these two aspects regarding negotiation for rate difference and follow up of payment realization has not been considered by authorities below before holding that no services were re .....

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experience and expertise. The expenditure incurred by the supplier on such work in any one of the two manners, as discussed above are allowable and the same cannot be disallowed unless it is established that such expenditure is for effecting the decision making process of a PSU of Government of India. In the present case, we have seen that the contract was awarded by the PSU of the Government of India in the year 1999 and the agreement with the commission agents has been entered into on 01/04/2 .....

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onics. - Decided in favour of assesse. - ITA No.53/LKW/2007 - Dated:- 17-3-2015 - Shri Sunil Kumar Yadav And Shri A.K. Garodia JJ. For the Appellant : Shri S. K. Garg, Advocate , Shri P. K. Kapoor, C.A. For the Respondent : Shri Puneet Kumar, D.R. ORDER PER A. K. GARODIA, A.M. This is assessee s appeal directed against the order passed by learned CIT(A)-II, Kanpur dated 07/11/2006 for the assessment year 2001-2002. 2. In this appeal, the assessee has raised the following grounds: 1. BECAUSE the .....

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. BECAUSE the appellant had led sufficient evidences in support of its contention that the payments had been made to the persons mentioned above, in lieu of rendition of services by them and in pursuance of valid and enforceable agreements in writing [in the cases of persons mentioned at Serial No.(i) & (ii)] and accordingly the claim should have been allowed in full, instead of being restricted to a sum of ₹ 1 lakh only. 3. BECAUSE the Id. CIT(A), on a due consideration of the facts a .....

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the uncontroverted fact that Shri N.K. Bali had been handling the activities as had been assigned to M/s. Premier Ispat (P) Ltd., in relation to the job work as had been carried out by the appellant on behalf of MIFL; and (iv) other relevant facts and circumstances of the case; should, have allowed the entire commission amounting to ₹ 12,47,268 as had been paid to M/s. Premier Ispat Pvt. Ltd. 4. BECAUSE even the statement given by the director of the payee M/s. Premier Ispat Pvt. Ltd., can .....

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ts to each one of them had been made on business considerations and during the course of carrying on of business by the appellant and the same was liable to be allowed in full. 7. BECAUSE both the payees namely; (i) M/s. Premier Ispat Pvt. Ltd.; and (ii) M/s. Kundan Castings Pvt. Ltd., had been carrying on liaisoning activities as part of their usual business activities, for which they had accounted for huge receipts in their respective returns and on that consideration alone, the payments made .....

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into with them. 8.2 BECAUSE non-existence of written agreement cannot be made the basis of disallowance and in view of the fact that valuable services had been rendered by them, the claim for admissibility of payments under the head 'Commission' should have been considered from the point of view of a business man and the same should have been allowed. 9. BECAUSE the order appealed against is contrary to the facts, law and principles of natural justice. 3. It was submitted by Learned A.R. .....

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otiation etc. for supply to M/s Modern Food Industries (India) Ltd. He also furnished copy of agreement dated 19th April 1999 between M/s Modern Food Industries (India) Ltd. with the assessee company in respect of supply of nutro biscuits of the assessee company to that company. He also submitted that the copy of the agreement between the assessee company and M/s Kundan Castings (P) Ltd. is available on pages 29 to 30 of the paper book. Regarding the remaining two parties i.e. Rainbow Merchantil .....

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154 (Del) (iii) CIT vs. Suzlon Energy Ltd. [2013] 354 ITR 630 (Guj) (iv) V.I.P. Industries Ltd. vs. Inspecting Assistant Commissioner [1991] 36 ITD (Bom) 70 (v) Cossul Co. (P) Ltd. vs. CIT [2000] 245 ITR 312 (All) (vi) Jamshedpur Motor Accessories Stores vs. CIT [1974] 95 ITR 664 (Pat) (vii) CIT vs. Gobald Motor Service (P) Ltd. [1975] 100 ITR 240 (Mad) (viii) I.T.A.T. Lucknow Bench order in I.T.A. No.241/All/1992 dated 20/04/2001 (ix) Quality Steel Tubes (P) Ltd. vs. ACIT, I.T.A. No.308/All/96 .....

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decision making process in the contract awarded by PSU of the Government of India i.e. M/s Modern Food Industries (India) Ltd. Now we examine the contents of the agreement of the assessee company with M/s Modern Food Industries (India) Ltd. As per this agreement, in case of any statutory revision in the tariff or rate of electricity and fuel during the pendency of the conversion contract, the conversion rate of nutro biscuits shall get revised accordingly from the date of such revisions. Hence, .....

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s (India) Ltd. to the assessee company after the dispatch. Under these facts, this is very vital work to follow up for getting payment from M/s Modern Food Industries (India) Ltd. Hence, it cannot be said that no services were rendered by these commission agents to the assessee company. Negotiation of rate difference and follow up of payment realization are two very vital work for which payment of commission to a commission agent is justified unless it is proved that no such work was actually do .....

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nce, on this aspect, we are of the considered opinion that the orders of the authorities below are not sustainable. 6. Regarding the second basis on which it is held by CIT(A) that the payment is not allowable is that the payment of commission is to effect the decision making process in a contract awarded by PSU of Government of India. He has held that the expenditure of this nature cannot be allowed as it is opposed to the public interest. In this regard, we find that when the agreement was alr .....

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