TMI Blog2020 (12) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... ices which implies that he has accepted all the contentions of the assessee. Assessee in the set-aside proceedings has duly complied with the direction of the ITAT as discussed above and the AO has not pointed out any infirmity in the submission of the assessee. Thus in the present facts and circumstances, the AO has no power to make the disallowance of the commission expenses as claimed by the assessee for any other reason i.e. Non deduction of TDS which is beyond his power in the given facts and circumstances. Revenue has accepted the identical expenses incurred by the assessee in the other assessment years, more particularly in the assessment years 2007-08 to 2012-13. As such these assessment years, the disallowance was made on account of non-deduction of TDS under section 195 of the Act. Thus it can be inferred that the question of arm length and business expediency does not arise in the given facts and circumstances. Accordingly we do not find any merit in the grounds of appeal raised by the revenue. Hence the ground of appeal of the revenue is dismissed. TDS u/s 195 - payment of commission expenses - HELD THAT:- We find that the learned CIT (A) has deleted the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly TDS was required to be made in terms of Sec. 195 on such payments. 6. The appellant prays for leave, to amend or alter any ground or add a new ground which may be necessary. 3. The interconnected issue raised by the revenue in ground numbers 1 to 3 is that the learned CIT (A) erred in allowing the deduction of the commission expenses of ₹ 4,65,12,087/- paid to its holding company. 4. The facts necessary for disposing off the present appeal are that the assessee in the present case is a limited company and engaged in the business of distribution and transmission of natural gas. The assessee while filing its income tax return has added certain expenses in its computation of income as detailed under: Commission on performance guarantee ₹ 1,45,04,757/- Purchase commission ₹ 3,18,96,000/- 4.1 However the assessee during the assessment proceedings vide letter dated 11th August 2006 contended that the aforesaid expenses were incurred in connection with the business as per the agreement with BG energy holding Co Ltd. Therefore, the assessee requested the AO to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal purposes 7.1 The assessee in the set-aside proceedings filed the necessary details in support of his claim for the amount of impugned commission expenses. The assessee without prejudice to the above also submitted that impugned amount of commission expenses paid to BG energy holding company was allowed by the learned CIT (A) for the assessment year 2007-08 to 2012-13. 7.2 However, the AO rejected the contention of the assessee by observing that the impugned amount of commission has been disallowed consistently in the other assessment years in the case of the assessee. Furthermore, the orders of the learned CIT (A) for the assessment year 2007-08 to 2012-13 have been challenged before the ITAT which is pending for the adjudication. Accordingly, the AO confirmed its earlier assessment order dated 19th December 2006. 8. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO following the order of his predecessor in the own case of the assessee pertaining to the assessment year 2011-12. Being aggrieved by the order of the learned CIT (A) the revenue is in appeal before us. 9. The learned DR before us reiterated the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd Vs. CIT reported in 302 ITR126 wherein it was held as under: Similarly even where an assessment is set aside simpliciter, without any enhancement proposal, it is always in the context of the appeal against an order of assessment and cannot be read to mean that the appellate authority granted powers to the Assessing Officer in relation to items of assessment which were never forming part of the appeal before the appellate authority. At the cost of repetition it is required to be noted that processing a new source of income which was on the record before the Assessing Officer but is not forming part of subject-matter of appeal before the appellate authority can be undertaken by the appellate authority only in the course of enhancement of the assessment and, therefore, any set aside, which does not involve a proposal for enhancement, cannot be used for the purpose of expanding the scope of the powers available to the Assessing Officer while making a fresh assessment pursuant to a set aside. 11.2 We also find support and guidance from the judgement of Hon ble Gujarat High Court in the case of the CIT versus server electricity company Ltd reported in 337 ITR 271 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the floor price and ceiling price there GTCL .has to pay commission to BGEH for support in purchasing natural gas. for the Long term contract from Lakshmi Field. At this juncture, it .is important to note that Gas is a natural commodity and the availability of the same is very limited. GTCL due to this agreement was in a capacity to enter into a long term i.e. almost 22 years' contract for supply of gas. In gas distribution industry, such long-term supply is considered vital-factor rather than the price as the gas distributor have commitments/to meet for supply of gas to its buyers. Due to this contract irregularity of gas supply risk. risk of gas price fluctuation could be mitigated. With reference to the transaction of Guarantee Commission BGEH was required to give guarantee for performance of the contract. BGEH has given such a guarantee to Cairn Energy and in consideration of BGEH entering into a guarantee agreement with/the Cairn Energy, GTCL pays BGEH an annual fee, equal to one percent of the annual; sum Guaranteed. 11.4 Undeniably, the AO has not pointed out any defect in the contentions of the assessee as well as the documents filed by it. Thus it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no issue qua the non-deduction of TDS on the payment of commission expenses under the provisions of section 195 of the Act. 14. Admittedly, the assessee before the AO in the set-aside proceedings has made alternate submission that it has been allowed deduction of the impugned commission expenses by the learned CIT (A) for the assessment years 2007-08 to 2012-13. As such the issue in the assessment years was in relation to non-deduction of TDS under section 195 of the Act. The relevant submission of the assessee before the AO in the set-aside proceedings stands as under: Without prejudice to our claim contentions, as stated above, we had submitted that commission expenses be allowed at the time of actual payment. In this connection, we have to state that assessee has made payment to above commission on 20-06-07 i.e during F.Y.2007-08 (A.Y. 2008-09) hence if you intend to disallow the same for the year under consideration i.e for F.Y. 2003-04 (A.Y. 2004-05) then we request you to allow the same for F.Y. 2007-08 (A.Y. 2008-09) i.e at the time when actual payment was made. Further we draw your attention to the fact that for f.Y. 2007-08 (A.Y. 2008-09) to F.Y.2012-13 (A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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