TMI Blog2016 (9) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... ay commission to its foreign agent has been acknowledged by the AO as is apparent from his decision in restricting the deduction to 2.88% of the turnover. Once the commission is accepted to have been paid, there is no logic in disallowing such expenditure by holding that it was excessive. It is for the assessee to determine the way in which it has to carry on its business. The assessee has to decide the percentage of commission which is to be allowed by him considering all the attending circumstances and the business exigencies. In our considered opinion, the ld. CIT(A) was justified in deleting this addition - Decided in favour of assessee - ITA Nos. 3021/Mum/2012, ITA Nos. 6481/Mum/2012, ITA Nos. 6747/Mum/2013 - - - Dated:- 11-8-2016 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to finished the details of such commission, which was outstanding for payment at the year end. In response, the assessee submitted that it had an agent Mr. Lenny King of England for securing sales order from the foreign market on which commission @10% was payable on the FOB value, which was duly approved by the Reserve Bank of India. The commission payable was credited to the account and paid as and when the same was demanded by the foreign agent or upon realisation of export proceeds. Thereafter, the AO not being satisfied with the reply required the assessee to furnish the details of statement of commission paid/payable and TDS deducted thereon. These details were filed by the assessee on 11.10.2010, showing details as to the sale invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find that there was no formal written agreement between the assessee and the agent, but commission has been paid on regular basis to the agent in earlier as well as subsequent assessment years. At least in three earlier assessment years AO had passed assessment orders u/s. 143(3) of the Act. It is true that principle of res-judicata does not apply to income tax proceedings, but it is also true that AO.s should not disturb the earlier assessment orders if the facts and circumstances remain in subsequent years. Rule of consistency is also one of the important rules of tax jurisprudence. In other words, by accepting an expenditure permissible in a particular year, AO allows the assessee to believe that claim made by it is as per the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have upheld such disallowance, because in such cases there was no evidence of rendering of services by the agent or the payment made by the assessee had come back to the assessee in one or other form. Mere existence of an agreement cannot decide the allowability of commission payment it is the presence of surrounding circumstances and basic facts that decide the issue in conclusive manner. Similarly, non existence of written agreement cannot be sole base for disallowance of commission payment, if other evidences prove the fact of incurring of such expenditure wholly and exclusively. We find that in the matter of Gautam Creation (supra) Hon ble Delhi High Court has held that commission paid in absence of a written agreement can be allowed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of manufacturing and export of garments in the year in question, it had claimed deduction under the head Agency Commission , that the commission was paid only to one party, namely, Mr. Lenny King. The assessee was called upon to furnish details of commission paid and services provided. The assessee submitted that the agency commission was payable at 10% of F.O.B. value as mentioned in GRs, which were approved by the Reserve Bank of India. The AO held the submissions of the assessee were general in nature, that there was no new buyer introduced by the said agent. He allowed commission agency expenditure @ 2.88%, following the rate at which commission was paid last year. Resultantly, an addition of ₹ 32,11,200/- was made to the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss exigencies. In our considered opinion, the ld. CIT(A) was justified in deleting this addition. Considering the peculiar facts and circumstance of the case under appeal and following the order of the coordinating bench delivered in the case of Anand Enterprises (supra),we are of the opinion that commission paid by the assessee to its agent is an allowable expenditure. Facts of the case being identical to the one as decided in ITA No. 3782/Mum/2008 (supra) in assessee s own case and in the case of the assessee s sister concern, we, respectfully following the same, set aside the order passed by the CIT(A) and direct the AO to delete the addition of ₹ 85,72,459/- for the year under consideration. 5. The issue involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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