TMI Blog2013 (6) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... dmissible to the loss shown in the P/L a/c, which resulted in net loss during the year under consideration at ₹ 6,36,502/-. Besides this it has shown unabsorbed depreciation of Assessment Year 2003-04 at ₹ 5,83,856/- and shown total unabsorbed depreciation to be carried forward at ₹ 12,20,358/- to be carried forward to next year. 3. The Assessing Officer completed the assessment u/s 143(3) on 10.12.2007 determining total income at ₹ 21,46,400/- as against the loss of ₹ 6,36,502/- claimed by the assessee in its return of income filed on 25.10.2005. The Assessing Officer made an addition of ₹ 5 lakhs on the ground that the subsidy received by the assessee was a revenue receipt. He further made disallowance of ₹ 22,83,903/- being incentives and commission claimed by the assessee on the ground that such expenditure is not justifiable for the reason that all the sales were made to a Govt. of India Enterprise i.e. Northern Coal Fields Ltd. Aggrieved the assessee carried the matter in appeal. 4. The Fist Appellate Authority after considering the arguments of the assessee and also obtaining a remand report from the Assessing Officer dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere given and that payments were made by way of changes after deducting tax at source. He pointed out that the Assessing Officer has not doubted the genuineness of the payments. He submitted that in the case of one of the commission agents namely M/s. Combined Associates, Singrauli, a certificate u/s 197(1) dt. 14.5.2004 was issued by the department for deduction of tax at a lower rate. He relied on the submissions made before the lower authorities prayed for relief. 9. The Ld.D.R. Mr.Bhim Singh on the other hand relied on the order of the Assessing Officer as well as the CIT(A) and submitted that the assessee has never submitted a copy of the incentive scheme formulated by the Government under which it received subsidy to the revenue authorities. He further pointed out that the crucial documents such as utilization certificate etc. were also not given. Hence he argued that the First Appellate Authority was right in confirming the addition. Alternatively he submitted that the issue may be set aside to the file of the Assessing Officer for fresh consideration. 10. On the second issue, the Ld.DR submitted that the assessee was dealing with government organization and that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment concern. The First Appellate Authority followed the order of his predecessor for the Assessment Year 2002-03 and upheld the disallowance. On a query from the Bench the Ld.Counsel submitted that this addition has not been challenged previously by the assessee during the Assessment Year 2003-04, for the reason that the amount was small. A perusal of the order of the Ld.Commissioner of Income Tax (Appeals) for the Assessment Year 2003-04 demonstrates that the disallowance was upheld on the ground that commission of 3% paid for handling and getting order from M/s Coal India Ltd. and to pursue the realization of payments, was not justified at any stage by the assessee. 14. Before us the assessee made similar submissions. The issue is whether the assessee could prove that the parties who received the commission/incentive have rendered services. The submissions of the assessee are as follows:- Since there is no bar in law in appointing commission agents to deal with government concerns where such commission agents may not play any role in the award of tenders but all other follow up work has to be conducted through agents which includes paper work, pursuing payments, checkin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income Tax (Appeals) has also ignored the same. 15. Coming to the case law on the matter in the case of CIT vs. Bharath Medical Stores, the Hon ble Court held as follows: Likewise, there are findings by the Tribunal that the expenditure on payment of commission was for advancing the purpose of the assessee s business and the services of the agents procured by the assessee firm, in fact, helped in persuading the institutions to place orders with the IDPL and arrange acceptance of supplies made by the IDPL. Accordingly, a categorical finding has been recorded that the agents were instrumental in getting all the terms of the contract between IDPL and the assessee firm complied with and that the agents were appointed for commercial expediency because the assessee firm was not in a position to cover all 13 districts of Punjab and Chandigarh left to itself. Therefore, these are questions of fact as has been held by a Division Bench of this Court in the case of CIT vs. Ishwar Prakash and Bros.(1986) 159 ITR 843 (P H). Likewise, reliance could be placed on a judgement of the Hon ble Supreme Court in the case of Shahzada Nand and Sons vs. CIT (1977) 108 ITR 358, wherein it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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