TMI Blog2018 (12) TMI 1893X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue back to the file of AO for deciding the same afresh after hearing the assessee in the light of the additional documents submitted by the assessee. Hence, this ground of appeal is allowed for the statistical purposes. Disallowance towards commission on sale on the ground that payments made on account of commission on sales is not a genuine transaction or not incurred in relation to the business of the appellant - HELD THAT:- In the case of Commissioner of Income Tax vs. Septu India Pvt. Ltd.[ 2008 (2) TMI 306 - PUNJAB AND HARYANA HIGH COURT] has held that when the assessee had proved the actual payments of amounts of commission and service charges as well as receipt of the same amount by the parties concerned then the claim put forth by the assessee should not have been disallowed merely on the ground that the same was not supported by any documentary evidence - the assessee has discharged the primary onus of establishing the genuineness of the expenditure made in connection with its business. DRP has confirmed the disallowance without pointing out any cogent evidence which rebut the claim of the assessee. We accordingly allow this ground of appeal and set aside the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Since, it was noticed that the assessee had entered into an international transaction, a reference in respect of the said transaction was sent to the Transfer Pricing Officer (TPO) for determining arm s length price. The TPO after hearing the assessee made upward adjustment of ₹ 25,25,184/- vide order passed u/s 92CA (3) of the Act. 3. The AO further made disallowance of ₹ 9,00,000/- paid by the assessee company to M/s Inventa Research Pvt. Ltd., an associated entity of the assessee towards technical consultancy fees by treating the transaction the transaction shame and bogus or the that expenditure was not incurred in relation to the business of the assessee. The AO further made disallowance of ₹ 15,20,000/- paid to M/s Captain K N George Company and Smit Enterprises Pvt. Ltd. towards commission on sales on the ground that the transactions are not genuine or that the same was not incurred in relation to the business of the assessee. Similarly, AO made disallowance of ₹ 5,94,000/- paid each to Ms. Namrata Goel and Ms. Nidhi Goel towards fees for providing consultancy services holding that the transactions are not genuine. The AO after making inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and human resource consultancy services to Ms. Namrata Goel and Ms. Nidhi Goel INR 594,000 each 3) On the facts and in the circumstances of the case and in law, the Hon ble DRP erred in upholding/confirming the action of AO in disallowing a sum of INR 594,000/- each incurred on account fees paid for providing consultancy services to Ms. Namrata Goel and Ms. Nidhi Goel alleging it to be not a genuine transaction. Each of the above grounds of appeal are independent and without prejudice to each other. 7. Ground No. 1 pertains to disallowance of ₹ 9,00,000/- paid by the assessee towards legal and professional expenses to an associate company M/s Inventa Research Pvt. Ltd. The Ld. counsel submitted before us that the assessee has submitted the invoices raised by M/s Inventa Research Pvt. Ltd. which are available at page no. 46 to 50 of the Paper Book. The assessee has also submitted the copy of TDS certificates issued by the assessee which are available at page 51 to 58 of the Paper Book. The Ld. counsel further submitted that the services provided by M/s Inventa are mentioned on the invoices as per which the company provided technical services which helped the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing as additional evidence. We have perused these documents and we are also of the considered view that these documents are essential for proper adjudication of the issue raised by the appellant/ assessee. Admittedly, these documents were not available with the assessee during the assessment proceedings or proceedings before the Ld. DRP, the assessee could not furnish the same before the authorities concerned. We therefore, admit these documents as additional evidence in the interest of justice. However, since these documents have been placed for the first time the same are required to be verified and taken into consideration by the AO. Accordingly, we set aside the findings of the Ld. DRP and send this issue back to the file of AO for deciding the same afresh after hearing the assessee in the light of the additional documents submitted by the assessee. Hence, this ground of appeal is allowed for the statistical purposes. 11. Vide Ground No. 2, the assessee has challenged the direction of Ld. DRP confirming disallowance ₹ 15,20,000/- incurred by the assessee towards commission on sale, on the ground that payments made to M/s Captain N K George Company and Smit Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, the Ld. DR relying on the findings of the AO based on the directions issued by the Ld. DRP submitted that since the assessee has failed to prove that the amounts in question were paid to the agents for the sale of goods of the assessee company or that the expenses were incurred exclusively for the business of the assessee, the Ld. DRP has rightly confirmed the disallowance. Moreover, as per the service tax returns of M/s Smit Enterprises Pvt. Ltd., it had paid tax for consulting engineering services. Therefore, it cannot be concluded that the assessee had paid commission for sales to the concerned agents. 13. We have perused the relevant material in the light of the rival submissions. We notice that the assessee has furnished the following documents before the AO to substantiate its claim that the commission of ₹ 8,00,000/-was paid to Smit Enterprises Pvt. Ltd. 1. Copy of Agency Agreement entered into between assessee and Smit Enterprises. 2. Details of sales made through Smit Enterprises. 3. Copy of the ledger account of Smit Enterprises in the books of the assessee. 4. Confirmation from Smit Enterprises Pvt. Ltd. showing the income earned from as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2010-11, before the Ld. DRP. Both the agents have confirmed the nature of services tender and payment receipt from the assessee. 16. We further notice that the authorities below have not pointed out any document/evidence which was called for by the AO or Ld. DRP and the assessee failed to produce the same. The assessee has submitted each and every detail called for by the authorities below to substantiate its claim. Moreover, the ITAT has allowed the similar claim in assesses s case for the earlier assessment years. 17. The Hon ble Delhi High Court has held in the case of Principal Commissioner of Income Tax vs. Mohan Export India Pvt. Ltd. 90 Taxmann.com 168 (Del) that commission paid by the assessee to various agents in order to secure orders from other countries and to ensure payment is to be allowed u/s 137 (1) of the Act. The Hon ble Punjab and Haryana High Court in the case of Commissioner of Income Tax vs. Septu India Pvt. Ltd. 305 ITR 295 (P H), has held that when the assessee had proved the actual payments of amounts of commission and service charges as well as receipt of the same amount by the parties concerned then the claim put forth by the assessee should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. We notice that the assessee has not produced any evidence to establish that the services of Smt. Namrata Goel and Nidhi Goel were availed by the assessee. Further, the assessee has not placed on record any evidence to explain the nature of services rendered by them for which the assessee company had paid ₹ 5,94,000/- each to the aforesaid parties during the year relevant to the assessment year under consideration. Even before us, the Ld. counsel did not point out any evidence available on record to substantiate that the expenditure was incurred and that too in connection with the business of the assessee. Under section 37(1) of the Act, expenditures incurred wholly and exclusively for the purposes of the business are allowed in computing the income chargeable under the head. In the present case, even if it is assumed that the assessee had paid the said amount to the aforesaid parties, it has failed to establish that the expenditure has been laid out wholly and exclusively for the purpose of the business of the assessee. Hence, we endorse the findings of the Ld. DRP and uphold the disallowance of ₹ 11, 88,000/- (₹ 5,94,000/- each) made by the AO in terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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