TMI Blog2018 (10) TMI 1701X X X X Extracts X X X X X X X X Extracts X X X X ..... fit - whether material brought on record when assessee had failed to satisfactorily explain the discrepancy in stocks? - CIT-A deleted the addition - HELD THAT:- Assessing Officer was confronted with the explanation of the assessee, he did not have anything to say beyond that action taken in the original assessment proceedings was correct as, according to the Assessing Officer, there were discrepancies . These findings of the CIT(A) are not claimed to be perverse or factually incorrect. When an Assessing Officer declines to meet the specific points raised by the assessee in first appellate proceedings, there is obviously no point in challenging the conclusions arrived at in the first appellate proceedings based on vague generalities. No specific issues are raised in appeal before us. We have also noted that the learned CIT(A) has granted impugned relief on the basis of specific explanations of the assessee which have remained uncontroverted. In the light of these discussions as also bearing in mind entirety of the case, we approve well reasoned conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. - ITA No. 2143/Ahd/2014 & CO No. 262/Ahd/2014 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the payments made were governed by clause(b) to Sub section(2) of Section 5 of the IT Act and not u/s.9(2) of IT Act. 8. Learned representatives fairly agree that this issue in appeal is now squarely covered, in favour of the assessee, by a series of decisions of this Tribunal including in the cases of ITO vs. Excel Chemicals India Ltd [(2017) 184 TTJ 114 (Ahd)] and DCIT vs. Welspun Corporation Ltd [(2017) 55 ITR (Trib) 405 (Ahd)]. Learned Departmental Representative, however, relies upon the stand of the Assessing Officer. 9. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 10. As we have noted above, the issue about taxability of commission earnings by non-resident, for work done outside India, is now decided in favour of the assessee by a large number of judicial precedents. That precisely is the issue in this case, and we must, therefore, uphold the relief granted by the CIT(A) on this point. As we do so, and dealing with the specific issue referred to in the ground of appeal, we may refer to the following observations made by a co-ordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head Salaries .' * Not relevant for our purposes 32. So far as deeming fiction under section 9(1)(i) is concerned, it cannot be invoked in the present case since no part of the operations of the recipient's business, as commission agent, was carried out in India. Even though deeming fiction under section 9(1)(i) is triggered on the facts of this case, on account of commission agent's business connection in India, it has no impact on taxability in the hands of commission agent because admittedly no business operations were carried out in India, and, therefore, Explanation 1 to Section 9(1)(i) comes into play. 33. There are a couple of rulings by the Authority for Advance Ruling, which support taxability of commission paid to non-residents under section 9(1)(i), but, neither these rulings are binding precedents for us nor are we persuaded by the line of reasoning adopted in these rulings. As for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortant to ascertain as to what extent would the rigour of Section 9(1)(i) be relaxed by Explanation 1 to Section 9(1)(i). When we examine things from this perspective, the inevitable conclusion is that since no part of the operations of the business of the commission agent is carried out in India, no part of the income of the commission agent can be brought to tax in India. In this view of the matter, views expressed by the Hon'ble AAR, which do not fetter our independent opinion anyway in view of its limited binding force under s. 245S of the Act, do not impress us, and we decline to be guided by the same. The stand of the revenue, however, is that these rulings, being from such a high quasi-judicial forum, even if not binding, cannot simply be brushed aside either, and that these rulings at least have persuasive value. We have no quarrel with this proposition. We have, with utmost care and deepest respect, perused the above rulings rendered by the Hon'ble Authority for Advance Ruling. With greatest respect, but without slightest hesitation, we humbly come to the conclusion that we are not persuaded by these rulings. 11. Ground no.2 is thus also dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tality of the assessee's case, I consider it reasonable to estimate the G.P. of the assessee at 8% for A.Y. 2009-10. Accordingly, the G.P. of the assessee is worked out to ₹ 3,77,19,856/-, The assessee has shown the G.P, of ₹ 2,28,01,637/-, therefore, the difference of ₹ 1,49,18,2197- [37719856 - 22801637] is added to the total income of the assessee. Penalty proceeding u/s. 27l(l)(c) are separately initiated for furnishing inaccurate particulars of income. 14. Aggrieved, assessee carried the matter in appeal before the CIT(A). Learned CIT(A) took note of the explanation of the assessee, confronted the Assessing Officer with the same, and finally deleted the impugned addition by observing as follows:- 6.1 Before me the A.R. argued that the addition made is arbitrary and has given following written submission :- 5.1 The appellant respectfully submits that the gross profit additions made by the A.O. being contrary to the facts and provision of law in not tenable in the eyes of law. It is stated that the books of account of the appellant was got audited under the provision of the Companies Act as well as necessary report was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors had copied figures related to other party inadvertently as the schedule 19 clearly show packing material purchases was ₹ 7863240/-. Considering the above facts, it is submitted that all the purchases and sales are vouched, difference in quantity was due to taking of incorrect figure and the difference stands reconciled, books of account are audited and there in no qualification made by auditors. Hence, the addition made by the A.O. of ₹ 14918219/- The A.R. had claimed that there were certain arithmetical / presentation error and which were made basis for making huge additions. Accordingly, it was thought fit to call for remand report from the A.O. in the matter. The A,O. was accordingly provided a copy of the paper book and asked to look into matter afresh and give his report. However, the A.O. did not submit the report in the time and was again requested to send the report. The A.O. sent his remand report wherein he has reiterated that there were discrepancies in Audit report and therefore the addition made was in order. The A.R was provided a copy of the remand report for its comments. The A.R. submitted as under :- In continuation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no opportunity was given to explain the alleged difference according to the A.O. since actually there was quantitative tallied and no difference was there. Accordingly, the A.O. was further requested to send remand report after verifying the submission of the appellant with the facts of the case. However, again no hearing was done and the remand report dated 15/10/2013 was received stating that action taken in original assessment proceeding was correct as according to the A.O. there were discrepancy. The A.R. was provided a copy of the report and asked to submit his reply, if any. The A.R. in the second remand report stated as under:- In continuation to the earlier submission, the appellant in response to the remand report dated 15/10/2013 of the A.O., submits as under:- The appellant company had submitted a letter to the Income Tax Officer on 02/08/2013 attaching a copy of letter dated 15/03/2013 as received from statutory auditors Nimesh M. Shah Co A copy of the said letter submitted to the A. 0. is enclosed herewith for your honour's kind perusal. It is added that the auditor had accepted the typographical mistakes occurred due to his team and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2059296 ======= Made ups The difference of 403712 nos of made ups are due to not considering the production of 403712 out of the consumption of 2059296 Mts. Therefore, nothing is remained to be reconciled. In view of the above facts and submission made by the appellant, there is no quantity difference which was calculated by the A.O. and accordingly G.P. addition made based thereon deserves to be deleted- The A.R. stated that in view of the facts addition deserves to be deleted. 6.2 I have considered the, facts, assessment order, remand report as well as written and oral submission made by the A.R. on behalf of the appellant. I find that there were some mistake done by auditor in his report but the same were rectified by him in a letter addressed to The Board of Directors dated 15/03/2013 wherein he has accepted the typographical mistake and stated correct amount of quantity. The A.O. had calculated the discrepancy and that was rebutted by the A.R. by reconciling it with the figures given in the audit report itself. I also agree with the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, we approve well reasoned conclusions arrived at by the learned CIT(A) and decline to interfere in the matter. 18. Ground no.3 is thus dismissed. 19. In ground no. 4, the Assessing Officer has raised the following grievance:- 4. The Ld.CIT(A) has erred in. law and on facts in deleting- the disallowance of administrative expenses of ₹ 1,63,485/- made u/s 14A of the Act, without properly appreciating the facts of the case and the material brought on record. 20. As far as this grievance is concerned, it is sufficient to take note of the fact that learned CIT(A) has deleted entire disallowance of ₹ 19,10,816/- under section 14A r.w.r. 8D on the short ground that the assessee did not use any borrowed funds in making investments yielding tax exempt income. What he, however, overlooked was the fact that out of disallowance of ₹ 19,10,816/-, the disallowance of ₹ 17,47,331/- was on account of interest expenses and ₹ 1,63,485/- on account of administrative expenses being 0.5% of average investments. Learned counsel for the assessee has nothing to say on this factual aspect. Clearly, there was no cause and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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