TMI Blog2015 (12) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... pted by the department in earlier years as well as in the subsequent year. In our opinion, we are not concerned with the any other year which are not before us. In our opinion, if the department has accepted in earlier year, it was a mistake and there is no merit in continuing the same mistake in the assessment year under consideration. The payment of commission accrued only on realization of sale value and it is to be allowed when the realization of sale value which is in compliance with the agreement cited supra and disallowance is based on the above agreement brought on record by the authorities and hence, we do not find any infirmity in the orders of the authorities below, which is confirmed.- Decided against assessee. - ITA No.399/Coc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the actual remittance made during the period towards commission should not be the actual debit and not ₹ 77,32,218, the assessee submitted that as per accrual system of accounting, the commission has become due and hence the debit of ₹ 77,32,218/- was reflected in the books of account. It was submitted that the commission was based on actual sales and becomes due only as and when the entire export proceedings are completed. According to the AO, the actual remittance alone should be debited in the P L account because that was the amount accrued and due on account of commission. Further, the Commission was solely depended on actual sale or export of goods. According to the AO, only after the export proceeds are realized, sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has specifically stated in such approval that such agents shall not pledge or hypothecate or otherwise give as security any of the goods till payments in respect of such goods is received. According to the CIT(A), this payment in respect of goods received was a pre-requisite for payment of commission. Further, since payment of commission was linked to such payments of goods; therefore, the AO was justified in making the addition. Accordingly, he confirmed the disallowance made by the AO. Aggrieved, the assessee is in appeal before us. 3 The ld AR of the assessee submitted that the CIT(A) erred in disregarding the fact that the commission expenses debited to profit and loss account are genuine expenses incurred for the purpose of business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of actual cash outflow to avoid out of pocket payment and is only for operational convenience. The ld AR further submitted that in the case of an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice and accountancy and it is not as if such deduction is permissible only in case of amounts actually expended or paid. It was submitted that just as actual receipts as well as those accrued are brought in for income-tax assessment, so also liabilities accrued would be taken into account while working out the profits and ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd, Singapore. Clause 4 of the agreement reads as under: 4 For all export orders materializing during the period of this contract, the company will pay KSB Singapore (Asia Pacific) a commission at the rate not exceeding 12.5% (Twelve and a half percent) for all countries of the world of the FOB value of the order in the currency in which the order is placed. These charges will fall due for payment on receipt of payment from the clients. This would cover the usual services of KSB Singapore (Asia Pacific) for securing the order and the expenses incurred in connection with the same. 3.1 As per clause 4 of the agreement, the commission payable to KSB Singapore(Asia Pacific) at the rate not exceeding 12.5% on FOB value of the order in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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