TMI Blog2017 (11) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... d follow-up services only required use of telephone or email or personal interaction, but it has not provided any documentary evidence before us, which could establish that the sub-agent followed with M/s ‘PCGIL’. The assessee has submitted that due to services of the sub-agent, the supplier got contract for supply of transformer, but the assessee has not given any detail what kind of services actually helped the supplier in getting the contract. In our opinion, the Ld. CIT-(A) is not correct in concluding that the assessee established the fact of rendering services by the subagent. - Decided against assessee. - ITA No. 4268/Del/2014 - - - Dated:- 31-10-2017 - SH. AMIT SHUKLA, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Sh. Sandip Kumar Mishra, Sr.DR For The Respondent : Sh. Venkatesh Chaurasia, Adv. ORDER PER O.P. KANT, A.M.: This appeal by the Revenue is directed against order dated 26/05/2014 passed by the Commissioner of Income-tax (Appeals)-IV, New Delhi [in short the CIT-(A) ] for assessment year 2010-11, raising following grounds: 1. On the facts and in the circumstances of the case, the learned CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps Private Limited . The Assessing Officer issued notice under section 133(6) of the Act calling for information from the said party containing details of services rendered and documentary evidence supporting the services rendered, services rendered to any other parties etc. M/s AGR Steel Strips Private Limited replied to the Assessing Officer that it provided requisites services to procure purchase order for supply of power transformers from PGCIL and incurred necessary expenses of travelling, conveyance, telephone etc. for providing the services, as reflected in the profit and loss account. 4.2 The Assessing Officer was not satisfied with the reply furnished by the said party. The Assessing Officer observed that said party had not provided detail of services rendered to the assessee and no supporting documentary evidence which could prove the fact of having expert technical staff and field experience in providing services in the Power sector by the said party. 4.3 In view of the above observation, the Assessing Officer asked the assessee to justify the allowability of commission paid. The submission of assessee company in respect of technical expertise and services rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the first appellate authority, the assessee elaborated the submissions which were made before the Assessing Officer. On the issue of proof of services rendered, the Ld. CIT-(A) has reproduced the submission of the assessee as under: xv) That the AO has alleged in the order that the sub-agent and the assessee has failed to give date wise details of services and person contacted etc. Attention drawn to assessee's letter dated 6/3/2013, whereby it has been clarified that in the present high- tech business environment for rendering such services one need communication facility as most of the work is done telephonically or verbally and sometimes the agent has to visit various offices leaving behind almost no paper work. That in such a business scenario, it is not necessary that always reports are prepared and submitted by the agents to earn income. The business of coordination and followup is done through communication channels like telephones/mail/etc., which does not require maintenance of detailed physical documents /demonstrative evidence and date wise details of services etc., except the happening of the end result. This fact was elaborately brought to the notice of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services to the appellant in the immediately preceding year also is an established fact and is apparent from the order of the AO itself I find that AGR is rendering such services to other parties also established. In view of the detailed evidences submitted by the appellant, it cannot be said that the appellant has failed to establish the genuineness and business need for incurring the expenses. The services provided have also been duly explained. 4.3.1 It is a settled law that revenue authorities cannot sit into the shoe of the businessman to judge whether a particular expenditure was required to be done or not as business expediency is to be decided by the businessman and not by the assessing officer. I find that the Apex Court in the case of CIT, Bombay Vs. Walchand and Co. Private Ltd. 65 ITR 381 (SC) has held that in applying the test of commercial expediency for determining whether an expenditure was wholly and exclusively for the purposes of business, the expenditure has to be adjudged from the point of view of the business and not of revenue. Considering the facts and circumstances of the case and judicial pronouncements on the issue, I hold that the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imize its profit. Income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. In support of the contention, the learned counsel relied on following decisions: 1. SA Builders Ltd. Vs. CIT (2007) 288 ITR1(SC) 2. Hero Cycles Private Limited Vs. CIT (2015) 379 ITR 347 (SC) 3. CIT Vs. Dalmia Cement (P) Ltd 254 ITR 377 (Delhi). 8. We have heard the rival submissions and perused the relevant material on record including the paper book filed by the Ld. counsel of the assessee. The Ld. counsel of the assessee has relied on the finding of the Ld. CIT-(A) on the issue in dispute and also emphasized on the rule of consistency. We find that the Ld. CIT-(A) has concluded that the assessee has discharged its onus to establish the fact of rendering services by the sub-agent. In our opinion, this conclusion of the Ld. CIT- (A) is not based on the proper appreciation of the facts on record, due to following reasons: (i) The ld. CIT(A) has recorded that the sub-agent had directly filed reply to the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the services rendered in one year, it cannot be established that the assessee might have rendered services in another year also and thus the rule of consistency, cannot be applied in the facts of the case. 9. In our opinion, the learned CIT-(A) has committed error in appreciating the facts of the case. One of the important requirement to examine, whether the expenses were incurred wholly and exclusively for the purpose of business, it was required for the assessee to furnish necessary documentary evidence in support of services rendered by the sub-agent. The Assessing Officer has specifically held that assessee failed in submitting: (a) the details of services rendered by the sub-agent; (b) the details of expenses incurred in relation to rendering such services; (c) the persons contacted in the process of rendering services; and (d) the report submitted by the subagent in the process of rendering services etc. 9.1 But neither the assessee nor the sub-agent submitted these crucial evidences in support of their claim of services rendered by the sub-agent before the lower authorities. Before us, also, the learned counsel of the assessee, failed to submit any evid ..... 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