TMI Blog2016 (12) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law. - Decided in favour of assessee - ITA No.6837/Mum/2008, ITA No.1753/Mum/2009 - - - Dated:- 30-11-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain , Judicial Member For The Appellant : Ms. Vasantiben Patel For The Respondent : Shri Rajat Mittal ORDER Per Jason P. Boaz, A.M. These appeals by the assessee are directed against the orders of the CIT(A)-XXVII, Mumbai dated 30.12.2008 for A.Y. 2003-04 and dated 29.08.2008 for A.Y. 2005-06. Since common issue is involved, the appeals were heard together and are being disposed off by way of this common order for the sake of convenience. 2. The facts of the case, briefly, are as under: - 2.1 The assessee is a company engaged mainly in the business of trading in export of electrical goods and appliances. For A.Y. 2003-04, the assessee filed its return of income on 27.11.2003 declaring total income of ₹ 90,14,086/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 28.02.2006 wherein the total income was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Deputy Commissioner of Income-tax in disallowing an amount of ₹ 37,44,597/- out of commission paid in respect of exports made to Iraq. 4. Ground No. 2 (A.Y. 2003-04) and ground No. 1 (A.Y. 2005-06) Disallowance of Commission paid in respect of exports to Iraq 4.1 In these common grounds the assessee assails the orders of the learned CIT(A) in upholding the AO s disallowance of ₹ 2,33,389/- and ₹ 37,44,597/- for assessment year s 2003-04 and 2005-06 respectively out of commission paid in respect of exports made to Iraq. At the outset of the hearing before us, the learned A.R. of the assessee submitted that this issue has been dealt with and held in favour of the assessee and against the Revenue by a Coordinate Bench of the Tribunal in the case of Metro Exporters Pvt. Ltd. in ITA No. 2026/Mum/2008 for A.Y. 2002-03 vide order dated 08.06.2016, following the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Rajrani Exporters Pvt. Ltd. (AIT 2013-75- High Court) and Coordinate Bench decisions in the case of NSIL Exports Ltd. vs. DCIT (2014) 44 taxmann.com 246 and Air Pac Exports vs. ACIT 152 ITD 634 (Mumbai ITAT). It was prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the orders of the authorities below it has not been proved that the assessee company was involved in illicit payments of commission to the Iraqi Government. Therefore it cannot be concluded that commission payments were not made for the purpose of assessee s business. Explanation to section 37 of the Act cannot be invoked merely on the basis of an unestablished doubt that expenditure incurred could be for infraction of law. 4.3.3 On similar facts as in the case on hand, the Coordinate Bench of the Tribunal in the case of Metro Exports P. Ltd. in ITA No. 2026/Mum/2008 dated 08.06.2016, following the decisions of the Hon'ble Calcutta High Court in the case of CIT vs. Rajrani Exports (AIT 2013-75-High Court) and other Coordinate Benches in the case of NSIL Exports Ltd. (2014) 44 taxmann.com 246 and Air Pac Exports Ltd. (152 ITD 634) has decided this issue in favour of the assessee holding as under at paras 7 and 8 thereof, as under: - 7. Ground No.5 raised in the present appeal is in respect of commission of export to Iraq. AR of assessee argued that this ground of appeal is also covered in favour of assessee by the order Hon ble Calcutta High Court in CIT vs. Rajrani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. The Authorities below failed to bring anything on record to establish that the payments in question were illegally made by the assessee to the Iraqi Authorities. On the contrary, the assessee has produced the evidence of payment to the agent who is not connected to the Iraqi authorities. Therefore, in the absence of specific finding that the payments were made to the Iraqi Authorities, it cannot be held as illegal payment infraction of law. Even if the assessee fail to prove beyond doubt that the payments in question inconsonance to the service rendered by the agent the same cannot be held as illegal in the absence of any evidence to prove that the assessee intended to pay the amount illegally through agent. Similar view was taken by Co-ordinate Bench of Mumbai Tribunal in Air Pac Exports V/s ACIT [152 ITD 634]-Mum in ITA No. 2981 to 2983/M/2012 for AY-2001-02 to 2002-03 vide order dated 11.06.2014. We have also gone through the order of Co-ordinate Bench of this Tribunal in M/s Cipla Ltd. Vs. DCIT vide order dated 27.09.2009, relied by Ld. DR for Revenue, wherein this Tribunal has taken a contrary view. We have noticed that the order passed in M/s Cipla Ltd. was diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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