TMI Blog2017 (1) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered in the light of the agreements with the sale commission agents. Thus the assessee is entitled for the deduction of sales commission during the year under consideration. We accordingly direct the A.O. to allow the claim in respect of commission expenses. Disallowance on account of deduction u/s. 80HHC on interest on bank fixed deposits - Held that:- The Hon’ble Supreme Court in the Case of ACG Associated Capsules Pvt. Ltd. [2012 (2) TMI 101 - SUPREME COURT OF INDIA] we direct the A.O. to re-compute the deduction u/s. 80HHC of the act after netting off of the impugned interest. Deduction u/s. 80HHC on exchange rate difference allowed - ITA. Nos: 1179 & 1604/AHD/2013 - - - Dated:- 5-1-2017 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER For The Appellant : Shri S.N. Soparkar with Parin Shah, A.R For The Respondent : Shri Vilas V. Shinde, Sr. D.R. PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA Nos. 1179 1604/Ahd/2013 are cross appeals by the Assessee and the Revenue preferred against the very same order of the Ld. CIT(A)-XI, Ahmedabad dated 15.03.2013 pertaining to A.Y. 2002-03. 2. Both these appeals were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrues or crystallizes the same has to be claimed in the year in which such accrual take placed. With reference to the above referred sales commission Foreign of ₹ 1,36,59,714/- we have to state that the amount of such commission was not certain in the year of export sales itself. The dispute with the parties of recipients of such sales commission- foreign was going on at the time of balance sheet. We would like to draw your kind attention to the matter that the amount of commission is not paid or payable only after sales is effected. The foreign commission agent has to fulfill some other conditions also. He has also provide after sales services like coordination with the parties. Payment realization, market survey and trend, helping foreign buyers to market our products. Helping in custom or other government related work to foreign buyers etc. Further to above the foreign commission agent is also has to submit periodical statement and reports to us. All the above and others services has to be compete by the foreign commission agent, then we make payment to them. Since in relation to above sales commission- foreign there was some disputes with foreign commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the set aside assessment proceedings also. Perusal of the Hon'ble ITAT's order reveals that the Hon'ble I TAT was not satisfied with the conclusions drawn by the CIT(A) in respect of allowance of earlier year commissions during the year under consideration without verifying the fact whether assessee's contentions were correct and how the commission expenses of earlier year could be allowed in this year. This fact makes it very clear that the Hon'ble ITAT has directed the A.O. to verify the fact of disputes; the appellant was having with the commission agents. During the appellate proceedings the appellant has not furnished any evidence to substantiate the fact of dispute. During the appellate proceedings also the appellant has not furnished any evidence to substantiate the fact of dispute with the commission agents. On the other hand the appellant contended that the commissions were paid at the time of realization of sale proceeds. The appellant has also contended that in addition to the realization of sale proceeds the commission agents are also required to render after sale services like coordination with parties, payment realization, market survey an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below and with the assistance of the ld. counsel; we have gone through the relevant documentary evidences placed before us in the form of a paper book in the light of Rule 18(6) of the Income Tax Appellate Tribunal Rules. It is not in dispute that the sales were made in earlier years though the commission has been paid during the year under consideration. A perusal of the commission statement marked as exhibit 85 in the paper book shows that the sale considerations have been realized during the year under consideration. Therefore, we find force in the contention of the assessee that as per the agreements with the agents which are also part of the paper book, the agents are entitled for sales commission only when the assessee has realized the sale considerations. 11. We also do not find any merit in the observations of the lower authorities that since the Tribunal in the first round of litigation has restored this issue to the files for verification of the claim, the assessee is not entitled to adduce evidences in support of its renewed/fresh claim of the same disputed sales commission. The Tribunal has directed to verify the claim of the assessee afresh. Therefore, the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced under clause (1)of Explanation (baa) from the profits of the business. In other words, only ninety per cent. of the net amount of any receipt of the nature mentioned in clause (1) which is actually included in the profits of the assessee is to be deducted from the profits of the assessee for determining profits of the business of the assessee under Explanation (baa) to section 80HHC. 16. Respectfully following the ratio laid down by the Hon ble Supreme Court (supra), we direct the A.O. to re-compute the deduction u/s. 80HHC of the act after netting off of the impugned interest. 17. The next grievance of the assessee relates to the levy of interest u/s. 234A, 234B, 234C 234D of the Act. The levy of interest is mandatory though consequential. The A.O. is directed to charge interest as per the provisions of the law. 18. The other grievance of the assessee relates to the initiation of penalty u/s. 271(1)(c) of the Act. This grievance of the assessee is premature and is accordingly dismissed. 19. In the result, the appeal filed by the Assessee is allowed. ITA No. 1604/Ahd/2013 Revenue s appeal for A.Y. 2002-03 20. The only grievance of the revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Difference A/c. It was also informed that the said method of accounting was as per the Accounting Standard 11 prescribed. Hence the Currency Rat Difference was claimed as business income for the purpose of computation of deduction u/s.Sec. 80HHC. Case Laws relied upon were CIT vs Amba Impex 282 ITR 144 (Guj.), Gami Exports 94 TTJ 557 (Ahd.) Along with the copy of this letter the assessee has also placed before us a chart to explain that the realization was done within the statutory period. Assessee has annexed 'Bank Certificate of Export and Realization'. Once all such details were very much available before the lower authorities then it not fair on the part of the Revenue to again challenge those factual findings. Applying the principal laid down by the Hon'ble Courts Lt CIT(A) has rightly allowed the claim. Resultantly this ground is hereby dismissed. 4.3 In view of above, the A.O. is directed to allow deduction u/s.80HHC on exchange rate difference of ₹ 2,58,22,615/-. This ground of appeal is allowed. 23. As no distinguishing decision has been brought on record respectfully following the findings of the Hon ble Jurisdictional High Court (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X
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