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2016 (6) TMI 599 - GUJARAT HIGH COURT

2016 (6) TMI 599 - GUJARAT HIGH COURT - TMI - Allowability of commission expenditure - case of the Revenue was confined to the contention that the assessee without filing a revised return could not have made such a claim and the Tribunal therefore, ought not to have accepted the same - Held that:- The assessee had in the returns filed, appended a note suggesting that the commission expenditure is not being currently claimed but would be claimed after actual payment. During the course of assessme .....

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SOPARKAR, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Tax appeals are filed by the Revenue raising similar question. We may notice facts from Tax Appeal No.207/2016. For the assessment year 2004-2005, the assessee had filed return of income on 28.10.2004 declaring total income of ₹ 12,95,33,579/-. In the return, the assessee had claimed expenditure of ₹ 3,20,07,330/-which was expended by the assessee by way of commission given to the suppliers. The assessee had .....

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the Assessing Officer. During the assessment proceedings, the assessee changed the stand and claimed the commission of ₹ 3,20,07,330/-which the Assessing Officer disallowed making the following observations : Since, the assessee has claimed at Point No. 16 to reply dated 11/8/06 that the above commission expenses are allowable, he was time and again requested to substantiate the claim. In response to the request at Point No 2 to reply dated 20/10/06 it has submitted that this payment are .....

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guarantee amount has been clarified. In the calculation formula, it is mentioned that it will be equal to 1% of the annual sum guaranteed. However, no details of annual sum guaranteed appear have been filed by the assessee. With a View to verify this, the assessee was time and again requested to submit the complete details. Till the date of finalisation of the assessment proceedings the assessee has not submitted further details. As regard commission, the calculation formula has been provided in .....

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ssessee despite requests. Under the circumstances, it is difficult to believe as to how the withdrawal of the stand already taken in the statement of income is made. It is also not understood as to how these amounts are shown under the head purchase when title like "guarantee/commission" have been attached to these amounts. In the absence of clearcut details, despite so many requests, it is not clear as to what term the amount so shown be given during the assessment. In View of these, .....

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ove expenses and has filed a simple letter before the Assessing Officer and further the full facts have not been placed before the A.O. and details and evidences have not been filed before the AO and further I find from whatever details have been filed before 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 t .....

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nd the expenditure has been disallowed 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 nature of services received by the assessee; Thus, grounds raised in this appeal are restored to file of A0 for .....

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pted the same. 6. We may recall that the Assessing Officer had not rejected the claim on this ground. It was CIT(Appeals) who along side confirming the view of Assessing Officer on merits had pressed this issue in service referring to the decision of Supreme Court in case of Goetz (India) Ltd. v, CIT reported in (2006) 284 ITR 323(SC). The Tribunal after rejecting such a contention held that the assessee was entitled to claim of expenditure but placed the matter back before the Assessing Officer .....

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case of Commissioner of Incometax v. Mitesh Implex reported in (2014) 367 ITR 85(Guj) had occasion to consider whether CIT(Appeals) or the Tribunal can entertain a new ground or contention for the first time. In this context, after referring to the decisions of Supreme Court in case of Goetz (India) Ltd.(supra) and National Thermal Power Company Ltd.(supra), it was observed as under : 38. It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd. vs. Commissi .....

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or the Tribunal, the Courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the Courts have also, as noted above, recognized the powers of the Appellate Commissioner and the Trib .....

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