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2015 (8) TMI 219 - ITAT AHMEDABAD

2015 (8) TMI 219 - ITAT AHMEDABAD - TMI - Disallowance of commission on performance guarantee - Held that:- The contention of the assessee is that the expenditure was required to be incurred under a contract, therefore being a contractual liability, the assessee was required to make the payment of commission as per the terms of the agreement. The liability of the expenditure is not disputed and the expenditure has been disallowed on the basis that the details were not available before the author .....

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e assessee for AY 2004-05 and for this AY 2005-06 also is treated as allowed but for statistical purposes. - I.T.A.No.2176/Ahd/2008, I.T.A.No.2176/Ahd/2008 - Dated:- 31-7-2015 - SHRI G.D. AGARWAL AND SHRI KUL BHARAT, JJ. For The Appellant : Shri S.N.Soparkar, AR For The Respondent : Shri Narendra Singh,Sr.DR ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : These two appeals by the assessee are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-VIII, Ahmedabad [ CI .....

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nt craves leave to submit the following concise grounds of appeal before the Hon ble ITAT. 1. General 2. (a) Ld. CIT (A) erred in law and on facts in confirming action of AO in not granting deduction of ₹ 1, 45, 04,757/- commission on performance guarantee claimed during the assessment proceedings as per the agreement. Ld. CIT (A) ought to have allowed the deduction claimed, (b) Ld. CIT (A) further erred in law and on fact in confirming action of AO in not granting deduction of ₹ 3,2 .....

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the assessment proceedings of genuine & legitimate expenses. 6. Ld. CIT (A) erred in law and on fact in confirming action of AO in making addition of ₹ 1, 11, 330/- towards the purchase commission for the typographical error ignoring the submissions & details on record. 3. Ground No.1 is general in nature. Ground Nos.2 to 6 are interconnected and, therefore, the same are decided together. 4. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessme .....

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t the assessee was required to make payment of commission as per the agreement. In support of the contention, ld.counsel for the assessee drew our attention towards paper-book at page Nos.53 to 57 & 58 to 65. The ld.counsel for the assessee submitted that the authorities below ought to have allowed the expenditure. The ld.counsel for the assessee submitted that the expenditure was essential for the purpose of business. He further submitted that the orders of the authorities below are cryptic .....

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ssion Rs.3,18,96,000/- In this connection the assessee has appended a note to the statement as under:- During the year under review the assessee company has made provision for commission for performance guarantee given to supplier on behalf of the company of ₹ 1,45,04,757/- and has also provided for commission on purchase aggregating to ₹ 3,18,96,000/-. The same has been disallowed and will be claimed at the time of actual payment with necessary documents, as per law. However, agains .....

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0/- against the purchase commission added back in the statement at ₹ 3,18,96,000/-. From time and again during the course of assessment proceedings the assessee was requested to explain the difference of ₹ 1,11,330/-. In response to this specific request, the assessee vide at Point No.1 submission dated 7/11/06 has corrected the mistake and agreed that the correct amount is ₹ 3,20,07,330/-. The difference amount of ₹ 1,11,330/- is therefore added to the total income of th .....

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me the necessity of incurring the expenses is not established and also it is not established that services have been rendered by the payees, the claims made by the appellant are dismissed. Further the addition of ₹ 1,11,330/- made by the A.O. is found to be proper and so the same is upheld. 6.2. The contention of the ld.counsel for the assessee is that all the details were available before the ld.CIT(A) and ld.CIT(A) ought to have allowed the claim. He submitted that the claim otherwise av .....

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he course of assessment proceedings, vide letter dated 11/08/2006, the assessee claimed the expenditure stating that the expense was allowable. We find that the ld.CIT(A) has rejected the ground on the basis that the assessee has not filed the revised return claiming the above expenditure and has filed a simple letter before the AO and further the full facts have not been placed before the AO and also details and evidences have not been filed before the A.O. The ld.CIT(A) also observed that the .....

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d on the basis that the details were not available before the authorities below. Under these facts of the case and taking a note of the fact that the assessee has produced copies of various agreements relating to the payment of commission were required to be paid by the assessee, we are of the considered view that the AO should verify the evidences placed before him about the quantum of commission paid and also the nature of services received by the assessee. Thus, grounds raised in this appeal .....

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bad in law and on fact and hence it is requested that the same be suitably modified. 2. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer of the appellant's claim for deduction of Rs.l,28,55,000/- and of ₹ 1,45,80,000/- being expenses payable towards purchase commission and commission on performance guarantee respectively to British Energy Holdings Limited. 3. The learned CIT (Appeals) has grossly erred .....

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eements called for substantiating the appellant's claim that this expenditure is a genuine business expenditure. 4. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer without appreciating the fact that the expenditure in question has been incurred wholly and exclusively for the purpose of the business of the appellant and the liability on account of such expenditure has crystallized during the previous year rel .....

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red by BG Energy Holdings Limited during the year under appeal. The appellant submits hereby that it had produced all the evidences and records for the services rendered by the BG Energy Holdings Limited during the assessment proceedings as well as appellate proceedings however the submissions have been ignored while confirming the disallowance. 6. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer by arbitrarily h .....

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ellant exercised prudence in not claiming these amounts as deductible expenditure till they were paid should not be used against the appellant. 7. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer by arbitrarily holding that the payments in question are in the nature of commission attracting deduction of tax at source as per the provisions of Chapter XVTI-B I.T. Act without appreciating the fact that the payments .....

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aced on record, the payment being in the nature of income from business in the hands of the non resident, there was no liability to deduct tax at source and therefore the provisions of Section 40 (a) (ia) are not applicable to the facts of the appellant case. 8. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the disallowance made by the learned Assessing Officer without clearly stating or bringing on record the additional specific evidences required from the appell .....

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he learned Assessing Officer and confirmed by the CIT (A) of the appellant's claim for deduction of expenditure on purchase commission and commission on performance guarantee payable to British Gas Energy Holdings Ltd may please be deleted. 10. The learned CIT (Appeals) has grossly erred in law and on facts in confirming the addition of ₹ 26,00,000/- made by the learned Assessing Officer on account of interest received from M/s. United Phosperous without appreciating the fact that the .....

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