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2015 (8) TMI 1207 - ITAT CHENNAI

2015 (8) TMI 1207 - ITAT CHENNAI - TMI - Revision u/s 263 - as per CIT(A) AO in the present case failed to examine correct facts relating to export agency commission paid to the non-residents which were actually paid for various market services partaking the character of technical services - Held that:- The AO in the present case failed to examine the correct facts relating to the Export Agency Commission paid to the non-residents which were actually paid for various market service partaking the .....

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s made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act is certainly an order passed erroneously and prejudicial to the interests of the Revenue. Therefore, we hold that the Commissioner of Income Tax rightly invoked the provisions under section 263 of the Act directing the Assessing Officer to complete the assessment afresh after providing effective opportunity to the assessee. - Decided against assessee. .....

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sed under section 143(3) on 30.12.2010 is erroneous and prejudicial to the interests of the Revenue and in directing the Assessing Officer to complete the assessment afresh after giving effective opportunity to the assessee. 2. Brief facts are that assessee, a limited company engaged in manufacture and sale of float glass, mirror and trading in float glass. The assessee filed its return of income on 15.11.2007 declaring loss of ₹ 32,13,27,441/- under the head income from business and decla .....

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on 28.12.2012 holding that assessment order passed by the Assessing Officer under section 143(3) read with section 144C is erroneous and prejudicial to the interests of the Revenue for the reason that the Assessing Officer failed to examine the payments made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act. Commissioner of Income Tax on examining the records held that Assessing Officer failed to examine th .....

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vices rendered by the agents were also not furnished. Commissioner of Income Tax observed that this goes to show that Assessing Officer did not call for relevant information and also did not examine whether payments made to agents were in the nature of technical services within the meaning of clause (vii) read with Explanation 2 of section 9(1)(vii) of the Act. Before the Commissioner of Income Tax, assessee contended that Assessing Officer in the course of assessment proceedings had taken a vie .....

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fore, in such circumstances, it cannot be said that Assessing Officer had taken one of the two possible views on the issue. Commissioner of Income Tax therefore held that Assessing Officer in the present case failed to examine correct facts relating to export agency commission paid to the non-residents which were actually paid for various market services partaking the character of technical services. In the circumstances, Commissioner of Income Tax held that assessment order passed is erroneous .....

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ature of payments and commission paid and has taken one of the possible views that sales commission paid by the assessee outside India is allowable as deduction without deducting TDS. Referring to the reply filed during the course of assessment proceedings, counsel submits that all particulars of export commission were submitted before the Assessing Officer. Counsel for the assessee submits that in view of the decision of the Hon ble Supreme Court in the case of M/s. Malabar Industrial Co.Ltd. V .....

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prejudicial to the interests of the Revenue. Departmental Representative submits that Assessing Officer has not examined sales commission said to have been paid by the assessee to foreign agents and applicability of provisions of section 9(1)(vii) read with section 40(a)(i) of the Act and therefore Commissioner of Income Tax is perfectly justified in invoking the provisions of section 263 and setting aside the assessment for fresh assessment. 5. Heard both sides. Perused orders of lower authori .....

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the Act holding as under:- 3.2. So far as the commission paid to various other agencies were concerned the assessee had only mentioned that commission was paid to such agents at the rate of 5%. No details were furnished regarding any specific agreement for payment of commission. The details of services rendered by these agents have also not been furnished. This would show that the A.O. did not call for the relevant information and also did not examine whether the payment made to the agents were .....

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the nature of the payments made to the non-resident. Accordingly it was never examined whether the payments were in the nature of technical services within the meaning of clause (vii) of section 9(1) of IT Act. As such it cannot be said that the A.O. had taken one of the two possible views on the issue. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd Vs Cl'T .(243 ITR 83) had clearly noted that the Commissioner of Income-tax is within his jurisdiction to set aside th .....

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tegory fall orders passed without applying the principles of natural justice or without application of mind". The AO in the present case failed to examine the correct facts relating to the Export Agency Commission paid to the non-residents which were actually paid for various market service partaking the character of "technical services". In the above context, the decisions cited by the assessee (as discussed in para 2.1 of this order) have no. applicability to the facts of the pr .....

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y the requirement of the order being erroneous. Similarly, orders passed without applying the principles of natural justice or without application of mind are also erroneous . In the instant case, the Assessing Officer while completing the assessment under section 143(3) read with section 147 did not examine the payments made to nonresident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act. The Assessing Officer has passed .....

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dit balance and therefore, the order passed was erroneous and prejudicial to the interests of the Revenue. 8. The Hon ble jurisdictional High Court in the case of CIT Vs. Seshasayee Paper and Boards Ltd. (242 ITR 490) while examining the powers of Commissioner of Income Tax under section 263 observed as under:- That the Commissioner found that the Incometax Officer was not correct in granting relief with respect to some of the items considered in the original assessment proceedings and from the .....

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