TMI Blog2017 (12) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee by : Shri Shailesh Parmar Department by : Shri M.V. Rajguru ORDER Per B.R. Baskaran ( AM ) The appeal filed by the Revenue is directed against the order dated 29.6.2012 passed by the learned CIT(A)-29, Mumbai and it relates to A.Y. 2007-08. The Revenue is aggrieved by the decision rendered by the learned CIT(A) on following issues :- (a) Disallowance of commission expenses : ₹ 48.94 lakhs (b) Disallowance of legal expenses u/s. 40(a)(ia) of the Act : ₹ 45.97 lakhs 2. We heard the parties and perused the record. The assessee is engaged in the business of advertising agency. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has paid commission to a concern named M/s Inorbit Advertising to the tune of ₹ 48.94 lakhs. The Assessing Officer noticed that above said concern belonged to one Mr. Sandeep Sitani in whose hands search was taken u/s. 132 of the Act. During the course of search proceedings, Mr. Sandeep Sitani had admitted that he is not doing any real business in his concerns and was providing only accommodation entries. Accordingly, the Assessing Officer took the view that commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42(1) of the Act way back in 2008, but the assessee sought for the cross examination only in the month of December 2009 i.e. at the fag end of the assessment proceedings. Learned Departmental Representative further submitted that the Coordinate Bench has considered an identical issue in the case of R.W. Promotions Pvt. Ltd. Vs. ACIT (2013) 35 CCH 0491 (Mum) and has confirmed the disallowance of commission expenditure made to very same party, viz., M/s Inorbit Advertising. 6. On the contrary, learned AR submitted that the assessee in the case of R.W. Promotions Pvt. Ltd. (supra) has failed to discharge the onus placed upon it to prove the genuineness of the expenditure and hence disallowance was confirmed by the Coordinate Bench on this legal ground. Learned AR submitted that the assessee had set up sign boards at various places in Mumbai and the parties were introduced for those sign boards by M/s Inorbit Advertising. He submitted that the assessee has given all the details to the AO in order to prove the genuineness of the commission expenditure. The assessee had generated income of ₹ 290.70 lakhs from out of the sign boards and the assessee paid commission to M/s Inorbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled facilitator of the spurious bills have not appeared before the AO. 2. The payments to lnorbit Advertising Marketing Services Pvt. Ltd. have been done by a/c payee cheques. The company has filed return for A.Y.2007-08 and has reflected the receipts in its P L a/c. The gross receipts of the company for the year amounts to ₹ 2,87,40,572/-. Necessary TDS has been deducted against the payment. The company has filed return of income with PAN AABCI 38181 G. 3. The Assessing Officer has pointed out that the dubious companies are from the address 3 Tata Nagar, Saki Vihar, Mumbai. The address of Inorbit Advertising is not of this place. It is at 7, Laxman Nagar, Kurar Village Malad (E), Mumbai. 4. It is a fact that Mr.Sitani is associated with 25 companies, the list of which was given during survey proceedings. However the A.O. has listed up only 20 companies to be of doubtful antecedent. 5. Nowhere in the statements given by Mr.Sitani the name of appellant company has been mentioned. No incriminating materials relating to in the commission paid or bills raised have been found during the course of search. 6. The only thing to be seen is whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of sign boards against which order was procured by Inorbit Advertising. We noticed that the Assessing Officer did not find fault with the documents filed by the assessee. Hence we are of the view that it cannot said that the assessee has failed to prove the genuineness of the commission expenditure. On the contrary, Assessing Officer has placed on the general statement given by Mr. Sandeep Sitani. We also noticed that Mr. Sandeep Sitani did not implicate the assessee specifically in his statement. Further, the cross examination asked for by the assessee could not be provided by the AO. We noticed that the learned CIT(A) has addressed all the points raised by the Assessing Officer while disallowing this expenditure. No other material was placed before us by the Revenue to contradict the findings given by the learned CIT(A). The decision relied upon by learned Departmental Representative namely R.W. Promoters Pvt. Ltd. (supra)have been rendered on the basis of facts available in that case and hence it is distinguishable. Accordingly, we are of the view that the order passed by the learned CIT(A) on this issue does not call for any interference. 9. Next issue relates to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability by the payer was to make an application to the Assessing Officer under section 195(2) for non-deduction of tax or for deduction at a lower rate. However this decision has been overruled by the Supreme Court in the case of GE (India) Technology Centre 327 ITR 456 (SC). It has been held that where a person responsible for deduction is fairly certain then, he can make his own determination as to whether tax is deductible at source. Hence Samsung Electronics is no more good law. (iv) Similar issues have been considered recently by Kolkata ITAT in the case of Andaman Sea Food Pvt. Ltd. in ITA No.1412/Kol/2011 dated 19.6.2012. In this case Tribunal examined the issue that consultancy fees paid to a Singapore based foreign company were not chargeable to tax in India. The ITAT also examined applicability of section 40(a)(ia) for failure to deduct tax u/s.195. Under similar circumstances the Tribunal held that when recipient of income does not have primary tax liability in respect of an income the payer cannot have vicarious tax withholding liability either. In view of the above the payment of ₹ 45,97,135/- made to Coredato Partners cannot be disallowed under 40(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
