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2016 (3) TMI 678 - ITAT DELHI

2016 (3) TMI 678 - ITAT DELHI - TMI - Disallowance of commission - assessee is an individual engaged in the business of export of engineering goods to USA and gulf countries - CIT(A) deleted the disallowance of commission u/s 37(1) - Held that:- Assessee has discharged his onus regarding the commission on both the counts viz. (i) that the payment was actually made; and (ii) that the payment was made for the purpose of business. As far as the issue of allowing additional evidence to be submitted .....

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IDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For the Petitioner : Shri Atiq Ahmad, Sr. DR For the Respondent : Shri Sudhir Jain, CA ORDER PER SUDHANSHU SRIVASTAVA, JM The present appeal has been preferred by the Department against order dated 29.2.2012 passed by the Ld. CIT(A)-XXIII, New Delhi for Assessment Year 2008-09. 2. The facts of the case are that the assessee is an individual engaged in the business of export of engineering goods to USA and gulf countries under the name and styl .....

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e to similar disallowance in AY 2006-07. The observations of the AO in paragraph 8 are extracted here under: 8. The facts of the current year case is no way different from that of A.Y. 2006-07 except that the assessee has made available a copy of agreement but he has completely failed to prove as to what was the actual effort made by Mrs. Rakhi Arora in affecting the sale. A number of opportunities were given to assessee to produce the recipient so that the same can be examined. However, those w .....

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for Assessment Year 2006-07 came up before F Bench of ITAT, Delhi and the matter was restored to Assessing Officer by the Bench vide order dated 25.10.2011 in I.T.A. No. 252/Del/2010 with the following observations:- In the present case, it is not in dispute that the assessee had produced the copy of agreement and the details of the payment before the Assessing Officer. The details of commission paid and payable was also furnished. The details of sales made by the assessee to overseas customers .....

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s now collected the various e-mail communication made between the parties from time to time and filed before us for consideration to further prove the assessee s claim. Since these e-mail communications go to the root of the issue regarding activities or services rendered by Mrs. Rakhi Arora, we are inclined to admit these evidences for consideration so that the issue whether Mrs. Rakhi Arora had actually rendered any services to the assessee, can be decided in its right and correct perspective. .....

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urse of which he shall provide reasonable opportunity of being heard to the assessee. The assessee shall produce all these details and evidences before the AO for his examined and verification. We order accordingly, thus ground No. 1 raised by the assessee is restored back to the file of the AO for his fresh adjudication. 6. Subsequently, in pursuance of directions of Tribunal, AO accepted the claim of commission vide order u/s 254/143(3) dated 19.11.2012 for AY 2006-07. 7. In the year under con .....

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laced on the assessment order for the A.Y. 2006-07, and the CIT (A) s order of that year. However, the assessment for that year has been set aside by the Hon ble ITAT, with specific Directions for verification of such evidences as Affidavit and copy of passport of Smt. Rakhi Arora, copies of purchase orders, debit notes, payments of commission, payments received from M/s WFI, email communications between the parties, and copies of invoices. All these relevant evidences have been produced and ver .....

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ture deductible from the profits of the business. Accordingly, the appellant succeeds at ground no. 1. The remaining grounds of appeal is general/consequential in nature and require no separate adjudication. 8. Aggrieved and now in the appeal before us, the Department has raised the following grounds of appeal:- (i) On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the disallowance of commission u/s 37(1) of ₹ 1,04,08,243/- claimed as deduction by assessee. (i .....

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. The assessee had made available a copy of agreement entered by him with Mrs. Rakhi Arora and also a copy of the bank statement identifying the payment. However, the assessee had failed to prove the nexus of payment made by him vis-à-vis sales made. The Ld. DR submitted that the mere existence of an agreement between the assessee and its selling agent or payment of certain amounts as commission, does not bind the Assessing Officer to hold that the payment was made exclusively and wholly .....

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rd. We find that the issues disputed by the Department have been addressed by the Ld. CIT(A) in para nos. 4 to 5.2 of his order which are being reproduced below for ready reference:- 4. I have carefully considered the written submissions made on behalf of the appellant and perused the assessment order. I have also carefully gone through the order of the CIT (A) and of the ITAT for the Assessment Year 2006-07. The CIT(A)XXIII, vide order dated 16.11.2009, had confirmed the order of the Assessing .....

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f the ITAT's order is reproduced in the appellant's submissions above. The ITAT has directed that the Assessing Officer should verify the invoices issued by the assessee to M/s Waukesha Foundry Inc., USA (hereafter referred to as WFI), details of payment received by WFI, copies of purchase orders from WFI, email communication between the assessee and Smt. Rakhi Arora, and the relevant entries in the books of accounts. The learned Bench has directed that 'the issue whether Smt. Rakhi .....

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on of US$ 249,065 from M/s Vortex Systems for mobilizing orders and supplies to M/s WFI in the Financial Year 2007-08. The appellant has further produced the copies of bills issued to M/s WFI by the appellant, along with debit notes of commission of 12.5% of the same invoice value issued by Smt. Arora. Copies of regular and frequent email correspondence between the appellant and Smt. Arora have been filed. The e-mail correspondence shows that Smt. Arora has placed the orders, monitored short sup .....

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by Wednesday every week >Return by Wed. 10/10 The parts highlighted in "Red" are the critical parts, please advise status on each. What are you going to do to catch up on the negative quantities? We will wait for your reply. Please advise status on the following parts: 40676- When shipping by Air? What is your plan to catch up on the negative quantities? 101860- You have 30 pcs scheduled for Oct 20- Do not ship- We will not take- (No requirements) 130001000C- You have an extra 40 pc .....

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t? Thanks Rakhi Arora. (5.1) The agreement signed by the appellant with Smt Arora, being 'appointment of canvasser for promoting sales of castings and machine parts to WFI, USA' dated 12.3.2007 for the period 1.4.2007 to 31.3.2008 is on record. The main terms and conditions for payment of commission @ 12.5% are stated in detail in the agreement. The appellant has also furnished the copy of account of commission in the books showing the amount payable, and the copy of the bank account sho .....

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ed that all the evidences relied upon were provided to the Assessing Officer during assessment proceedings. {5.2} It may be seen from the assessment order, that the disallowance of claim of commission has been made principally on the grounds that evidence of the services rendered was not provided, and that Smt. Arora was not produced for examination. Reliance was also placed on the assessment order for the Assessment Year 2006-07, and the CIT (A)'s order for that year. However, the assessmen .....

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