M/s. Supreme India Overseas Corporation, Surat v. The ACIT.,Circle-2,, Surat

ITA 258/AHD/2009 | 2005-2006
Pronouncement Date: 21-12-2011 | Result: Dismissed

Appeal Details

RSA Number 25820514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 258/AHD/2009
Duration Of Justice 2 year(s) 10 month(s) 23 day(s)
Appellant M/s. Supreme India Overseas Corporation, Surat
Respondent The ACIT.,Circle-2,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-12-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-12-2011
Date Of Final Hearing 01-12-2011
Next Hearing Date 01-12-2011
Assessment Year 2005-2006
Appeal Filed On 28-01-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K.TYAGI JM AND A. K. GARODIA AM. SUPREME INDIA OVERSEAS CORPORATION 823/2 ROAD NO.8 GIDC SACHIN SURAT. VS. ASSTT. CIT CIRCLE-2 SURAT. (APPELLANT) .. (RESPONDENT) ASSTT.CIT CIRCLE-2 SURAT. VS. SUPREME INDIA OVERSEAS CORPORATION 823/2 ROAD NO.8 GIDC SACHIN SURAT. (APPELLANT) .. (RESPONDENT) AND ASSTT.CIT CIRCLE-2 SURAT. VS. SUPREME INDIA OVERSEAS CORPORATION 823/2 ROAD NO.8 GIDC SACHIN SURAT. (APPELLANT) .. (RESPONDENT) ITA NO.258/AHD/2009 ASST. YEAR :2005-06 ITA NOS.564/AHD/2009 ASST. YEAR :2005-06 ITA NOS.216/AHD/2010 ASST. YEAR :2006-07 ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 2 ASSESSEE BY :- SHRI RAMESH K. MALPANI AR REVENUE BY:- SHRI KRISHNA MURARI CIT DR DATE OF HEARING :1/12/2011 DATE OF PRONOUNCEMENT : 21.12.11. O R D E R PER D. K. TYAGI JUDICIAL MEMBER . OUT OF THESE THREE APPEALS ONE APPEAL HAS BEEN FIL ED BY THE ASSESSEE AND TWO APPEALS BY THE REVENUE AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) DATED 19/11/2008 AND 29/10/2009 FOR ASST. YEARS 200 5-06 & 2006-07 RESPECTIVELY. ITA NO.258/AHD/2009 ASST. YEAR 2005-06 (ASSESSEES APPEAL): 2. IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : (1) THAT ON FACTS AND IN THE CIRCUMSTANCES OF CASE THE HONBLE CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS.1 22 06 493/- OF LEGITIMATE BUSINESS EXPENDITURE OF JOB WORK CHARGES . (2) THAT THE HONBLE CIT(A) HAS ERRED IN SUSTAINING CHA RGING OF INTEREST U/S 234B OF THE ACT IN RESPECT OF JOB WORK EXPENSES DISALLOWED. ITA NO.564/AHD/2009 ASST. YEAR 2005-06 (REVENUES A PPEAL): 3. THE REVENUE HAS RAISED FOLLOWING GROUND : (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A)-I SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.3 42 93 984/- MADE BY AO ON ACCOUNT OF FOREIGN B UYERS AGENT COMMISSION HOLDING THAT (A) EACH OF THE TRANSACTION BETWEEN THE ASSESSEE AS A S ELLER AND THE BUYER ARE MEDIATED BY AGENT WHOSE EXISTENCE WAS ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 3 ESTABLISHED BEYOND DOUBT ESPECIALLY AFTER THEY HAD RESPONDED TO THE AO AND RECONFIRMED AND REVALIDATED THE CONFIRMATION LETTER EARLIER SUBMITTED BY THEM. (B) ALL THE ELEMENTS WHICH ARE REQUIRED IN THE TRANSACT ION INVOLVING PAYMENT OF COMMISSION ARE EXISTED IN THE CASE OF THE ASSESSEE. IGNORING THE MATERIAL FACTS THAT - (I) THE LD. CIT(A) HAD ALLOWED AN APPEAL OF THE ASSESSE E MAINLY RELYING ON THE CONFIRMATION LETTER OF THE SO CALLED COMMISSION AGENT BUT HAS NOT APPRECIATED THAT THE A SSESSEE HAD SIMPLY FURNISHED SUCH CONFRMATION LETTER FROM T HE SO CALLED COMMISSION AGENT AND HAS NOT FURNISHED ANY SUPPORTING DETAILS TO SUBSTANTIATE ITS CLAIM AND CO NFIRMATION OF THE SO CALLED COMMISSION. (II) THE IDENTICAL ISSUE WAS INVOLVED IN THE CASE OF M/S PRESIDENCY EXPORT IN THE ASST. YEAR 2004-05. THE LD . CIT(A) HIMSELF HAS DISMISSED THE APPEAL OF M/S PRESIDENCY EXPORT ON THIS VERY ISSUE VIDE HIS ORDER DATED 31.08.2008. A RELEVANT PARA OF THE APPELLATE ORDER PASSED BY CIT( A) IN THE CASE OF PRESIDENCY EXPORT IS REPRODUCED AS UNDER :- THERE WAS NO RETURN AGREEMENT EVEN THOUGH IT HAS B EEN REPEATEDLY CLAIMED BY THE AR THAT THERE WERE ORAL A GREEMENT WITH ALL THE BUYERS. THE TERMS AND CONDITION REPEAT EDLY REFERRED BY THE AR SIMPLY DID NOT EXIST. THERE WAS ABSOLUTELY NO EVIDENCE TO SUPPORT THE AMOUNTS DEDUCTED FROM TH E INVOICE VALUES OR EVEN THE PERCENTAGE AGREED UPON B ETWEEN THE ASSESSEE AND THE BUYERS. ITA NO.216/AHD/2010 ASST. YEAR 2006-07 (REVENUES A PPEAL): 4. THE REVENUE HAS RAISED FOLLOWING GROUND IN THIS APPEAL :- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A)-I SURAT HAS ERRED IN DELETING THE ADDIT ION OF RS.12 42 689/- MADE BY AO ON ACCOUNT OF FOREIGN BUY ERS AGENT COMMISSION. ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 4 5. FIRST WE TAKE UP ASSESSEES APPEAL FOR ASST. YEA R 2005-06. THE FIRST GROUND RAISED IN THE APPEAL RELATES TO SUSTAINING A DDITION OF RS.1 22 06 493/- OF BUSINESS EXPENDITURE OF JOB WOR K CHARGES. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED I N THE BUSINESS OF EXPORT OF TEXTILES. FOR THE YEAR UNDER APPEAL THE RETURN O F INCOME WAS FILED 31/10/2005 FOR TOTAL INCOME AT RS.26 86 140/-. THE AO FINALIZED THE ASSESSMENT ORDER U/S 143(3) DETERMINING TOTAL INCOM E AT RS.4 91 86 620/- BY MAKING FOLLOWING ADDITIONS/DISALLOWANCES :- I. DISALLOWANCES OF JOB WORK EXPENSES - RS.1 22 06 493/- II. ADDITION ATTRIBUTABLE TO COMMISSION AMOUNT DEDUCTED IN SALES INVOCES. RS.3 42 93 984/- RS.5 25 88 927/- HERE WE ARE CONCERNED ABOUT DISALLOWANCES OF RS.1 2 2 06 493/- OF JOB WORK EXPENSES ONLY OUT OF TOTAL EXPENSES CLAIMED OF RS.5 25 88 927/-. THE AO DISALLOWED THE JOB WORK CHARGES PAID ONLY TO THREE PARTIES M/S VIKRAM JOB-WORKS (RS.38 94 234/) M/S SHALINI SCREE N PRINTING WORKS (RS.42 13 963) AND M/S PRITIKA HAND PRINTING WORKS (RS.40 98 296) TOTALING RS.1 22 06 493/-. THE AO HAD DISALLOWED TH E JOB-WORK CHARGES PAID TO THE SAME THREE PARTIES IN THE PRECEDING YEA R WHEN THE PAYMENTS TOTALED RS.2 13 84 300/-. THE FACTS OF THE CASE ON THIS ISSUE HAD REMAINED THE SAME IN BOTH THE YEARS. IN DISALLOWING THE PAYM ENTS THIS YEAR THE AO HAD BASICALLY FOLLOWED THE VIEW TAKEN IN THAT YEAR AND ASKED THE ASSESSEE ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 5 TO PRODUCE EVIDENCE IN SUPPORT OF THE CLAIM OF PAYM ENTS MADE TO THE SAID THREE PARTIES WHICH THE ASSESSEE WAS UNABLE TO DO. ON THE BASIS OF SUCH FINDINGS DURING THE YEAR UNDER CONSIDERATION AND AL SO STRONGLY RELYING ON THE FINDINGS IN THE PRECEDING YEAR THE AO DISALLOW ED THE JOB WORK CHARGES ALLEGEDLY PAID TO THE SAID THREE PARTIES. 6. IN APPEAL THE LD. CIT(A) CONFIRMED THE ACTION O F AO BY OBSERVING AS UNDER :- 4.2 I FIND THAT THE GROUNDS TAKEN BY THE AR AGAINS T THE ADDITION OF THE AO IN DISALLOWING SUCH EXPENSES HAVE ALSO REMAINED THE SAME AS IN THE PRECEDING YEAR. 4.3 SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE O N THE ISSUE CONCERNING THE DISALLOWANCE OF JOB-CHARGES HAVE REM AINED THE SAME IT ONCE AGAIN BECOMES NECESSARY TO GO BACK TO MY APPEL LATE ORDER FOR THE ASST. YEAR 2004-05. FOLLOWING THE DECISION TAKEN BY ME IN THAT YEAR I HAVE NO OTHER OPTION BUT TO SUSTAIN THE ACTION TAKE N BY THE AO AND CONFIRM THE ADDITION OF RS.1 22 06 493/-. AGAINST THIS ORDER OF THE LD. CIT(A) THE ASSESSEE I S IN APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ISSUE IS NOW SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE TRIBUNAL IN THE CASE OF M/S SUPREME (INDIA) IMPEX L TD. VS. ADDL.CIT RANGE-4 SURAT. VIDE ITS ORDER IN ITA NO.2411/AHD/2 008 & OTHER ASST. YEAR 2005-06 DATED 18.11.2011 (COPY OF ORDER PLACE D ON RECORD) WHEREIN ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 6 ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE AN I DENTICAL ISSUE HAS BEEN DECIDED. 8. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDE RS OF LOWER AUTHORITIES. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOIN G THROUGH THE MATERIAL ON RECORD WE FIND THE HONBLE TRIBUNAL IN ITA NO.1941/AHD/2005 FOR ASST. YEAR 2004-05 IN ASSESSE ES OWN CASE VIDE PARA 19 OF ITS ORDER DATED 08/01/2010 HAS HELD AS U NDER :- 19. AFTER HEARING THE RIVAL CONTENTIONS AND GOING THROUGH THE FACTS OF THE CASE WE FIND THAT EXACTLY ON SIMILAR FACTS WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE IN ITA NO.1938/AHD/2008 IN PARA 9 & 10 ABOV E. TAKING A CONSISTENT VIEW WE ALLOW THIS ISSUE OF THE ASSESSE ES APPEAL. PARA NOS.9 & 10 OF ITA NO.1938/AHD/2008 FOR ASST. Y EAR 2004-05 READ AS UNDER :- 9. WE FIND THAT EXACTLY ON SAME FACTS THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1939/AHD/2008 DATED 26-06-2009 HAS ALLOWE D THE CLAIM BY HOLDING AS UNDER:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE CI T(A). WE HAVE ALSO PERUSED THE PAPER BOOK FURNISHED BY THE ASSESSEE. WE FIND T HAT THE ASSESSEE IS AN EXPORTER OF VALUE ADDED TEXTILE FABRICS. WE FIND TH AT THE AVERAGE ANNUAL EXPORT SALES RATE IS RS.72.50 PER MTR. AS AGAINST RAW MATE RIAL COST OF RS.51.74 PER MTR. IF D. E. P.B. IS REDUCED FROM RAW MATERIAL COS T THE AVERAGE INPUT COST WORKS OUT TO BE RS.43.70 PER MTR. AND SALES REALIZA TION IS R.72.50 PER MTR. SUCH A HIGH REALIZATION CANNOT BE ACHIEVED WITHOUT VALUE ADDITION WORK. THE SALES REALIZATION ITSELF PROVES THAT THE VALUE ADDI TION WORK DONE ON THESE FABRICS ON BEHALF OF THE ASSESSEE. WE FURTHER FIND THAT THE FOLLOWING VALUE ADDITION WORK WAS GOT DONE FROM THIS JOB WORK PARTY : ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 7 LACE WORK CHAMKI WORK BINDI WORK GOTAN WORK GLASS WORK HIRA MOTI WORK MANY MORE FANCY AND DECORATIVE VALUE ADDITION WORK GENERALLY DONE ON THESE FABRICS WE FIND FROM THE NATURE OF BUSINESS THAT THE JOB WO RK IS VERY COMMON FEATURE OF TEXTILE INDUSTRY IN SURAT. THE ASSESSEE ASSIGNED THESE WORK OF JOB PARTIES ENGAGED IN THIS BUSINESS AND THESE JOB PARTIES GET THE WORK DONE FROM NUMBER OF SUB-JOB WORKERS WHO ARE INDIVIDUALS SMALL GROUP S FAMILIES ETC. THIS IS THE HOME INDUSTRY OF THE CITY OF SURAT. THESE JOB PARTI ES ASSIST THE ASSESSEE BY CONSULTING THE TYPE OF VALUE ADDITION WORK AND FASH ION GOING ON IN THE MARKET. THEY ARE LATEST IN THIS FIELD AND CREATE THE IDEAS. THEY LIFT THE GOODS FROM THE PREMISES OF THE ASSESSEE AND GET THE VALUE ADDITION WORK DONE FROM DIFFERENT SUB-JOB WORKERS IN THE CITY. THESE JOB-WORKERS ARE IN UNORGANIZED SECTOR. THEY ARE SMALL INDIVIDUALS GROUP OF INDIVIDUALS FAMILI ES ETC. WHO ARE DOING WORK AS PER INSTRUCTION OF JOB-WORK PARTIES. THE ASSESSE E DOES NOT KNOW THESE SUB- JOB WORKERS AS THEY ARE SCATTERED OVER THE CITY OF SURAT AND HE HAS NO CONTACT WITH THEM. WE FURTHER FIND THAT THE ASSESSEE DURING ASSESSMENT PROCEEDINGS HAS FURNISHED FOLLOWING EVIDENCES IN SUPPORT OF EXP ENDITURE:- JOB CHARGES INVOICES RAISED BY JOB PARTY. BANK STATEMENTS EVIDENCING PAYMENTS TO THE JOB PART Y BY ACCOUNT PAYEE CHEQUES. COPIES OF TDS CERTIFICATES IN RESPECT OF TDS DEDUCT ED U/S 194C FROM THIS JOB PARTY. CONFIRMATION FROM THIS JOB PARTY THAT THEY HAVE DON E JOB WORK OF VALUE ADDITION AND RECEIVED PAYMENT FOR IT. LEDGER ACCOUNT COPY OF THIS JOB PARTY. WE FIND THAT THE ASSESSEE HAS DISCHARGED HIS ONUS B Y ADDUCING SUFFICIENT EVIDENCES AND IT IS WELL ESTABLISHED LAW THAT ASSES SEE IS REQUIRED TO PROVE HIS SOURCE ONLY. HE CANNOT BE EXPECTED TO PROVE THE SOU RCE OF HIS SUPPLIERS OR DEPOSITORS OF HIS DEPOSITORS. ONCE THE ASSESSEE PRO VES HIS SOURCE (SUPPLY OF SERVICE) ADDITION CANNOT BE MADE IN HIS HAND. WE A LSO FIND THAT THE JOB PARTY IS ASSESSED TO TAX AND THE JOB CHARGES RECEIVED BY HIM FROM ASSESSEE ARE INCLUDED IN THEIR TOTAL JOB RECEIPTS. THE JOB PARTY HAS CONFIRMED TO THE A. O. THAT THEY HAVE DONE JOB WORK FOR ASSESSEE. SUFFICIE NT EVIDENCES AS MENTIONED ABOVE WERE FURNISHED TO A. O. PRICE REALIZATION OF THE ASSESSEE PROVE THAT THE VALUE ADDITION WORK HAVE BEEN DONE ON THESE GOODS. IN THIS WAY THE ASSESSEE HAS DISCHARGES HIS ONUS AND PROVED THAT JOB WORK EX PENSES ARE BONA FIDE AND GENUINE IN HIS CASE. IN SUCH SITUATION THERE REMAI NS NO BASIS WITH A.O. TO DISBELIEVE THE JOB WORK EXPENSES IN HANDS OF ASSESS EE. ASSESSEE DOES NOT KNOW THEM HOW THEN HE CAN PRODUCE THEM OR FURNISH THE D ETAILS IN RESPECT OF THEM. THEY ARE NOT IN CONTACT WITH HIM AND MERELY BECAUSE THE ASSESSEES JOB PARTIES COULD NOT FURNISH DETAILS OF THESE SUB-JOB PARTIES IN THEIR ASSESSMENT ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 8 PROCEEDINGS HE CANNOT BE PENALIZED OR PUNISHED. TH ERE IS NO FAULT ON PART OF THE ASSESSEE. 8. WE FIND THAT THE ASSESSEES CASE IS COVERED BY D ECISION OF HON'BLE GUJARAT HIGH COURT IN CASE OF CIT VS. M. K. BROTHER S 163 ITR 249 (GUJ). IN THE ASSESSMENT ORDER THE A. O. HAS PRESUMED THAT TH E PAYMENTS MADE BY THE APPELLANT FOR JOB WORK EXPENSES MIGHT HAVE BEEN BAC K INTEREST H FORM OF CROSS CHEQUES ETC. THIS IS JUST A PRESUMPTION WITHOUT ANY FINDING THE A. O. COULD HAVE VERY WELL CHECKED THE PAYMENTS MADE BY JOB PAR TIES. THERE IS NO FINDING AT ALL THAT ANY PORTION OF THESE PAYMENTS HAS COME BACK TO THE ASSESSEE. MERELY BY ARBITRARY PRESUMPTIONS IT CANNOT BE SAID THAT THE AMOUNTS MIGHT HAVE COME BACK TO ASSESSEE. THERE IS NO SUCH FINDIN G AT ALL. THERE IS NO BASIS AT ALL FOR THIS PRESUMPTION. THE A. O. MUST HAVE CH ECKED THE PAYMENTS MADE BY THIS JOB PARTY AND IF AT ALL THERE WAS ANY FINDI NG AGAINST ASSESSEE THEN HE COULD HAVE CLEARLY BROUGHT OUT THE SAME ON RECORD. BUT THERE IS NO SUCH FINDING AT ALL. THIS RENDERS THE ARBITRARY PRESUMPT ION OF THE A. O. TO BE COMPLETELY BASELESS AND UNSUSTAINABLE. IN THE ABSEN CE OF ANY SUCH FINDING THE GENUINE EXPENDITURE INCURRED BY ASSESSEE FOR VALUE ADDITION JOB WORK PAID BY A/C PAYEE CHEQUES CANNOT BE DISALLOWED. THIS ISSUE IS CLEARLY COVERED BY THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN ABOVE CAS E LAW. 9. WE FURTHER FIND THAT THE SIMILAR ISSUE WAS DEALT WITH BY THE TRIBUNAL IN THE CASE OF SHALU DYEING & PRINTING MILLS PVT. LTD. VS ACIT IN ITA NO. 1491 AND 1492/AHD/2008 DATED 11-7-2008 WHEREIN RELYING ON THE CASE OF THIS TRIBUNAL IN THE CASE OF AKRUTI DYEING & PRINTING MI LLS PVT. LTD. IN ITA NO.2551 AND 2552/AHD/2006 ORDER DATED 26-10-2007 HE LD THE PURCHASED AS GENUINE BY HOLDING AS UNDER: 5 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE FIND THAT THIS TRIBUNAL IN THE CASE OF AKRUTI DYEING & P RINTING MILLS PVT. LTD. IN ITA NO.2551/AHD/2006 AND ITA NO.2752/AHD/2006 VIDE ORDER DATED 26-10- 2007 WHILE DEALING WITH GROUND NO.3 RELATING TO THE ADDITION ON ACCOUNT OF BOGUS PURCHASES IN RESPECT OF COLOUR AND CHEMICALS MADE ON THE BASIS OF STATEMENT OF SHRI ROHIT PANWALA HELD AS UNDER: 20. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES AND THE MATERIALS AVAILABLE ON RECO RD WE FIND THAT A SEARCH OPERATION WAS CARRIED OUT ON SHRI ROHIT PANW ALLA AND HIS ASSOCIATES AND OTHER PROCEEDINGS WERE ALSO TAKEN AG AINST THEM WHEREIN SHRI ROHIT PANWALLA STATED THAT HE USED TO PROVIDE ACCOMMODATION/FAKE BILLS AT THE REQUEST OF THE PART IES. ON THE BASIS OF THIS THE A O HAS TREATED THE PURCHASES MADE BY THE ASSESSEE FROM 3 PARTIES WHICH DO NOT INCLUDE ROHIT PANWALLA FOR RS. 7 21 950/- AS BOGUS. THE ASSESSEE CLAIMED THAT THE PAYMENTS TO TH E PARTIES WERE MADE BY ACCOUNT PAYEE CHEQUES AND AGAINST RECEIPT O F GOODS. WE FIND THAT THE REVENUE HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE PURCHASES SHOWN BY THE ASSESSEE VVV ACCOMMODATION F ROM THE AFORESAID 3 PARTIES WERE NOT GENUINE AND WHERE V AC COMMODATION/FAKE BILLS SHOWN BY THE ASSESSEE. NO STATEMENT RECORDED FROM THE ABOVE 3 ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 9 PARTIES BY THE REVENUE WERE BROUGHT ON RECORD. WE F IND NO MATERIAL ON THE BASIS OF WHICH IT CAN BE ALLEGED THAT THE ABOVE PARTIES ADMITTED THAT THE BILLS RAISED BY THEM AGAINST THE ASSESSEE WERE MERELY ACCOMMODATION BILLS. IN THE ABOVE CIRCUMSTANCES THE DISALLOWANCE MADE BY THE REVENUE ON THE BASIS OF SURMISES AND CO NJECTURES WITHOUT ANY POSITIVE MATERIAL ON RECORD. THEREFORE IN OUR CONSIDERED OPINION THE DISALLOWANCE MADE IS UNSUSTAINABLE. ACCORDINGLY WE DELETE THE ADDITION MADE AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE AFORESAID ORDER OF THE T RIBUNAL WE DELETE THE ADDITIONS IN EACH OF THE ASSESSMENT YEARS. 10. IN VIEW OF THE ABOVE FACTS AND THE CASE LAWS DI SCUSSED ABOVE WE ARE OF THE VIEW THAT THE JOB WORK CHARGES INCURRED BY THE ASSESSEE IS A LEGITIMATE BUSINESS EXPENDITURE AND ALLOWABLE. ACCORDINGLY WE REVERSE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND THE APPEAL OF T HE ASSESSEE IS ALLOWED. 10. WE FIND THAT THE FACTS BEING EXACTLY IDENTICAL AS DISCUSSED ABOVE AND TAKING A CONSISTENT VIEW WE ALLOW THE CLAIM OF THE ASSESSEE AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TR IBUNAL WE DELETE THE ADDITION MADE BY THE AO AND SUSTAINED BY LD. CIT(A) . THIS GROUND OF THE ASSESSEE IS ALLOWED. 10. THE SECOND GROUND RAISED IN ASSESSEES APPEAL I S REGARDING CHARGING OF INTEREST U/S 234B WHICH IS CONSEQUENTIA L AND NO ADJUDICATION IS NEEDED. THE APPEAL FILED BY THE ASSESSEE IS ALLO WED. 11. THE GROUNDS RAISED IN BOTH THE APPEALS OF REVEN UE ARE COMMON WHICH RELATE TO DELETION OF ADDITION MADE BY AO ON ACCOUNT OF FOREIGN BUYERS AGENT COMMISSION. ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 10 12. FOR ASST. YEAR 2005-06 THE FACTS OF THE CASE AR E THAT THE AO MADE ADDITION OF RS.3 42 93 984/- BEING THE AMOUNT ATTRI BUTABLE TO COMMISSION DEDUCTED IN SALES INVOICES. AS PER TERMS AND CONDIT IONS OF EXPORT SALES TRANSACTIONS THE RATES WERE FIXED AS GROSS RATE LES S CERTAIN PERCENTAGE BEING COMMISSION PAYABLE BY THE FOREIGN BUYER TO TH E AGENT. THIS WAS A PATTER OF RATE FIXING FOR THE SALE TRANSACTION I.E. GROSS RATE LESS COMMISSION PAYABLE TO THE AGENT BY FOREIGN PARTY. THE REDUCTIO N OF COMMISSION AMOUNT AS PERCENTAGE WAS A PART OF PRICE FIXING PRO CESS. THE ACTUAL SELLING RATE FOR THE SELLER IS GROSS SALES RATE LES S DEDUCTION FOR COMMISSION AS AGREED. THE AGENT WAS THE REPRESENTATIVE OF THE FOREIGN BUYER AND IT WAS THE RESPONSIBILITY OF THE FOREIGN BUYER TO MAKE PAYMENT OF COMMISSION TO THE AGENT. THE ASSESSEE WAS NOT LIABL E TO MAKE PAYMENT OF COMMISSION TO THE AGENT DIRECTLY. HOWEVER AS A PAR T OF PRICE FIXING TERM A GROSS RATE WAS FIXED OUT OF WHICH THE COMMISSION PAYABLE BY FOREIGN BUYER WAS TO BE DEDUCTED. IN THIS WAY ACTUAL SELLIN G RATE WAS SUCH GROSS RATE LESS COMMISSION PAYABLE BY FOREIGN BUYER TO TH E AGENT. THIS NET AMOUNT IS THE ACTUAL FINAL SALES AMOUNT OF THE ASSE SSEE. THIS NET AMOUNT WAS ACTUALLY RECEIVED AND REALIZED BY THE ASSESSEE AND WAS IN FACT ACTUAL SALES INCOME OF THE ASSESSEE. THE COMMISSION AMOUNT WAS DEDUCTED IN THE SALES INVOICE ITSELF AND NET AMOUNT AFTER THIS DEDUCTION WAS THE FINAL SALES AMOUNT. THIS FINAL SALES AMOUNT WAS ACTUALLY RECEIVED BY THE ASSESSEE. THUS THE AMOUNT OF COMMISSION DEDUCTED IN SALES INVOICES WAS ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 11 NEVER THE INCOME OF ASSESSEE. IT WAS NOT A PART OF SALES AMOUNT. IT WAS NEVER RECEIVED NOR WAS RECEIVABLE BY THE ASSESSEE. THE AO HAS DISCUSSED THE ISSUE IN DETAIL IN PARAS 4-48 AT PAGES 2- 23 OF THE ASSESSMENT ORDER. THE TREATMENT GIVEN AND THE VIEW TAKEN BY THE AO REGARDING THE COMMISSION PAID TO THE FOREIGN PAR TIES IS IDENTICAL TO THE TREATMENT GIVEN AND THE VIEW TAKEN IN THE IMMED IATELY PRECEDING YEAR I.E. THE ASST. YEAR 2004-05. THE ONLY DIFFERENCE IS THAT DURING THE ASST. YEAR 2004-05 NO EVIDENCE HAD BEEN FURNISHED BEFORE THE AO AND WAS SUBMITTED ONLY IN APPELLATE PROCEEDINGS. THE SAME H AD BEEN CONFIRMED IN REMAND PROCEEDINGS. THIS YEAR THERE WAS ONLY ONE F OREIGN AGENT AS COMPARED TO FIVE IN THE PRECEDING YEAR. DURING THE YEAR UNDER CONSIDERATION EVEN THOUGH THE ASSESSEE HAD FURNISHE D THE REQUISITE CONFIRMATION FROM THE ONLY FOREIGN AGENT I.E. M/S A MBITIOUS IMPEX LLC THE AO TOOK THE VIEW THAT (PARA -9 PAGE -6) THERE WAS NO EVIDENCE TO SHOW THAT SERVICES WERE RENDERED BY THE AGENT AND T HAT SUCH SERVICES WERE RENDERED ONLY FOR THE ASSESSEES BUSINESS. THE GROU NDS ON WHICH THE AO REJECTED THE ASSESSEES SUBMISSIONS WERE IDENTICAL TO THE GROUNDS TAKEN BY THE AO IN ASST. YEAR 2004-05. 13. THE ASSESSEE WENT IN APPEAL AND PRESENTED THE S AME ARGUMENTS THAT IT DID IN THE ASST. YEAR 2004-05. THE LD. CIT(A) OB SERVED THAT GIVEN THAT THE FACTS AND CIRCUMSTANCES OF THE CASE HAVE REMAIN ED IDENTICAL AS ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 12 COMPARED TO THE PRECEDING YEAR AND THAT THE GROUNDS ON WHICH THE AO DISALLOWED THE FOREIGN COMMISSION PAYMENT HAVE REMA INED THE SAME AND THE AR HAD ALSO TAKEN THE SAME GROUNDS AS IN ASST. YEAR 2004-05 IT BECAME IMPERATIVE FOR HIM TO FOLLOW THE FINDINGS GI VEN BY HIM AND THE DECISION TAKEN IN THE SAME YEAR. THUS BY FOLLOWING HIS ORDER FOR ASST. YEAR 2004-05 IN ASSESSEES OWN CASE HE HELD THAT T HE AO WAS NOT JUSTIFIED IN DISALLOWING THE FOREIGN COMMISSION AND HE DELETED THE IMPUGNED ADDITION OF RS.3 42 93 984/-. AGAINST THIS ORDER OF LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 14. THE LD. DR VEHEMENTLY OPPOSED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE FAILED IN ESTABLISHING THAT THE COMMISSION AMOUNT HAD BEEN PAID TO THE ALLEGED FOREIGN AGENTS. IN ADDITION THE ASSESSEE HAD SQUARELY FAILED TO EXPLAIN THE ABNORMA L RATE OF 10 TO 12% OF COMMISSION PAID. HENCE DISALLOWANCE OF THE CLAIMED FOREIGN AGENT COMMISSION OF RS.3 42 93 984/- WAS MADE ON ACCOUNT OF FAILURE TO ESTABLISH THE BUSINESS NEXUS SERVICES RENDERED U/S 37. IT WAS AN WILLFUL ATTEMPT TO MINIMIZE THE TAX LIABILITY BY FISCAL EVA SION AND SIPHONING OF THE INCOME ACCRUED ON EXPORT PROCEEDS WHICH WAS NO T ALLOWABLE UNDER THE SAME SECTION AND THE AO HAD RIGHTLY DISALLOWED THE CLAIM OF ASSESSEE. THE LD. CIT(A) HAS NOT APPRECIATED THE FACTS OF THE CASE AND WRONGLY ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 13 DELETED THE IMPUGNED ADDITION. HIS ORDER MAY KINDLY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 15. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT SIMILAR FACTS THE AO HAD MADE ADDITION ON FOREIGN B UYERS AGENT COMMISSION. THE ASSESSEE WENT IN APPEAL WHEREIN LD. CIT(A) AFTER OBTAINING REMAND REPORT AND CONSIDERING THE FACTS O F THE CASE DELETED THE ADDITION. THE REVENUE FILED APPEAL IN ITA NO.2019/A HD/2008 FOR ASST. YEAR 2004-05 BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A). THE TRIBUNAL AFTER CONSIDERING ALL THE RELEVANT FACTS H AS UPHELD THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION VIDE ITS ORDER DATE D 08/01/2010. THIS YEAR ALSO THE LD. CIT(A) AFTER CONSIDERING THE FACTS AND FOLLOWING HIS EARLIER ORDER HAS DELETED THE ADDITION. THEREFORE THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHICH MAY KINDLY BE UPHELD. 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL ON RECORD WE FIND THAT IN ASST. YEAR 2004 -05 THE AO HAD MADE SIMILAR ADDITION IN ASSESSEES OWN CASE AND THE LD. CIT(A) HAD DELETED THE ADDITION. THE REVENUE CAME IN APPEAL BEFORE THE TRI BUNAL IN ITA NO.2019/AHD/2008 AND VIDE ITS ORDER DATED 08/01/200 8 THE TRIBUNAL UPHELD THE ORDER OF LD. CIT(A) IN DELETING THE ADDI TION. THIS YEAR ALSO THE AO HAS MADE THE ADDITION ON SIMILAR GROUNDS AND THE LD. CIT(A) BY FOLLOWING HIS EARLIER ORDER HAS DELETED THE ADDITIO N. IN OUR CONSIDERED ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 14 OPINION THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL VIDE ITS ORDER DATED 08/01/2010 (SUPRA) BY OBSERVING AS UNDER :- 25. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND SEEN FROM THE ORDER OF CIT(A) THAT THE MATTER WAS DECIDED AFTER TAKING REM AND PROCEEDINGS FROM THE ASSESSING OFFICER. THE AO FURNISHED HIS REMAND REP ORT VIDE LETTER DATED 06- 11-2007. WE FIND THAT THE CIT(A) HAS ELABORATELY DI SCUSSED THIS ISSUE IN PARA 10 TO 10.4 OF HIS APPELLATE ORDER AS THE HE HAS DEC IDED THE ISSUE AFTER TAKING REMAND REPORT FROM THE ASSESSING OFFICER. WE ARE O F THE CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN ADMITTING THE ADDITIONAL E VIDENCES. ACCORDINGLY THIS ISSUE OF REVENUES APPEALS IS DECIDED AGAINST. 26. COMING TO THE MERITS OF THE CASE THE LEARNED C OUNSEL FOR THE ASSESSEE REPEATED THE SAME ARGUMENT AS WERE MADE BEFORE THE CIT(A). HE CARRIED US THROUGH THE PAPER BOOK FILE BY HIM PARTICULARLY TH E COPIES OF CONFIRMATION LETTERS FROM FOREIGN BUYERS AND FOREIGN AGENTS (PLA CED ON PAGE NO. 75 TO 85) AND ALSO THROUGH THE SALES INVOICES AND BRCS AND AR GUED THAT THE ASSESSEE FIRM WAS ENTITLED TO RECEIVE ONLY NET AMOUNT AFTER DEDUCTING THE COMMISSION. HE ARGUED THAT IT WAS EVIDENT FROM THE BRCS THAT ON LY NET AMOUNT WAS ULTIMATELY RECEIVED BY THE ASSESSEE-COMPANY-FIRM. H E ALSO MENTIONED THAT EVEN IN THE CALCULATING DEDUCTION U/S. 80HHC OF THE ACT THE A.O. HIMSELF HAS TAKEN THE NET SALES AMOUNT AS THE EXPORT TURNOVER O F THE ASSESSEE. HE FURTHER BROUGHT TO OUR NOTICE THAT THE IDENTICAL ISSUE OF F OREIGN AGENTS COMMISSION DEDUCTED IN SALES INVOICES HAS ALREADY BEEN DECIDED BY THE BENCHES OF ITAT AHMEDABAD IN FAVOUR OF ASSESSES IN NUMBER OF CASES. HE PLACES RELIANCE ON THE ORDERS OF ITAT AHMEDABAD IN FOLLOWING CASES IN WHICH IDENTICAL ADDITIONS HAS ALREADY BEEN DELETED BY THE TRIBUNAL. HE PARTIC ULARLY REFERRED TO THE CASE LAW OF THIS TRIBUNAL IN THE CASE OF SHRI SAMIR A B ATRA V ITO IN ITA NO.4130/AHD/2007 DATED 12-12-2008 WHEREIN IT IS HE LD AS UNDER:- 25.WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. FIRST OF ALL IT IS SEEN FROM THE ASSESSEES PAPER BOOK IN THE CASE OF GURIA TEXTILES AT PAPER BOOK PAGE 494 TO 519 THAT COMMISSION WAS PAYABLE TO THEM BY THE BUYER AND SUCH SUMS WERE TO BE DEDUCTED FROM THE GROSS IN VOICE ALOES SO THAT THE SELLER WAS ENTITLED TO RECEIVE ONLY THE NE T AMOUNT AFTER DEDUCTING THE COMMISSION IN RESPONSE OF EACH TRANSA CTION. THEREFORE THE RECEIPT OF THE COMMISSION AMOUNT HAD BEEN DULY CONFIRMED BY THE AGENTS WHICH IN TURN MEANT THAT THE AMOUNTS WHICH WERE DEDUCTED FROM THE INVOICE VALUES ACTUALLY REPRESENTED COMMIS SION PAYMENTS WHICH WERE FINALLY RECEIVED BY THE AGENT. THIS FACT CLEARLY ESTABLISHED THE GENUINENESS OF THE TRANSACTIONS AND WHAT IS IMP ORTANT IS THAT THIS WAS DONE IN ACCORDANCE WITH THE TERMS AND CONDITION S AGREED UPON BETWEEN THE BUYERS AND SELLER EVEN THOUGH THERE WA S NO FORMAL AGREEMENT AS ARGUED BY THE LD. COUNSEL FOR THE ASSE SSEE. WE FIND THAT THE AGENTS HAD UNEQUIVOCALLY CONFIRMED AND REC ONFIRMED THE NATURE OF THE TRANSACTIONS AND IN THE ABSENCE OF A NY FORMAL AGREEMENT IT COULD NOT BE HELD AS A GROUND TO DISM ISS THE CLAIM OF THE ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 15 ASSESSEE. THERE WERE CLEAR CONTRA CONFIRMATIONS FRO M THE AGENTS WHICH SIMPLY COULD NOT BE WHISKED AWAY BY THE LOWER AUTHORITIES FOR THE DISALLOWANCE OF COMMISSION EXPENDITURE. THUS ONCE THE GENUINENESS OF THE COMMISSION PAYMENTS AS WELL AS ITS JUSTIFICA TION OF HAVING BEEN WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF ASSESSEES BUSINESS THE SAME BECOMES ADMISSIBLE AS DEDUCTION U/S. 37(1) OF THE ACT. WE FIND THAT THE AO HAS RELIED UPON THE CONTE NTS OF THE ACCOUNTING STANDARD-I WHICH HOWEVER WAS NOT APPLIC ABLE TO THE ASSESSEES CASE GIVEN THE NATURE OF THE TRANSACTIO NS ENTERED INTO BY THE ASSESSEE. THE AO HAS ALSO REFERRED TO SEC. 5 O F THE ACT WHICH DEFINES TOTAL INCOME. IT IS OBVIOUS IN THE CIRCUMS TANCES AND THE NATURE OF TRANSACTIONS WHICH HAVE BEEN DISCUSSED ABOVE IN DETAILS THAT WHAT MAY HAVE ACCRUED TO THE ASSESSEE WAS THE GROSS INVO ICE VALUES YET THE ASSESSEE UNDER THE TERMS OF THE AGREEMENT OR UN DERSTANDING WITH THE BUYER HAD TO DEDUCT FROM THE INVOICES THE AMOU NT OF COMMISSION PAYABLE. IN THE BACKGROUND OF SUCH FATS IT COULD NOT BE HELD THAT THE GROSS INVOICE AMOUNTS WERE WHAT HAD ACCRUED TO THE ASSESSEE AND THESE WERE THE AMOUNTS ON WHICH THE ASSESSEE SHOULD HAVE BEEN ASSESSED. THE OUTGOING COMMISSION FROM THE INVOICE VALUES WOULD HAVE TO BE REDUCED FROM THE GROSS AMOUNTS AND TH E NET AMOUNT WHICH WAS THE ACTUAL SUM RECEIVED BY THE ASSESSEE I N INDIA AND WHICH WAS DULY CERTIFIED AND PERMITTED BY THE RBI AND I TS AUTHORIZED DEALER WAS WHAT HAD BEEN EARNED BY THE ASSESSEE FROM SUCH TRANSACTIONS. WE FIND THAT THE AO HIMSELF HAD NOTED IN THE ASSES SMENT ORDER THAT THE AMOUNTS DEDUCTED AS COMMISSION FROM THE SALE IN VOICES WERE NEITHER RECEIVED BY THE ASSESSEE DURING THE YEAR N OR WAS IT EVER GOING TO BE RECEIVED IN FUTURE. IF THIS WAS THE VIEW OF THE AO THEN HE CONTRADICTED HIMSELF BY TAXING AMOUNTS WHICH HAD NO T BEEN RECEIVED AT ALL NOR DID THE ASSESSEE HAVE ANY LEGAL RIGHT TO R ECEIVE SUCH AMOUNTS. 26. WE FIND THAT THE COMMISSION WAS NOT DEDUCTED FROM THE EXPORT INVOICES IN AN AD HOC MANNER AND IT WAS CLEARLY UND ER AN AGREEMENT BETWEEN THE BUYER AND THE SELLER AS ALSO BETWEEN T HE BUYER AND THE AGENT. CONSEQUENTLY THE ASSESSEE WAS UNDER AN OBL IGATION TO DEDUCT COMMISSION FROM THE GROSS INVOICE VALUES. IN THE PR ESENT CASE THERE WAS A COMPULSION TO DEDUCT THE COMMISSION FROM THE EXPORT INVOICES WHICH WAS CLEARLY INDICATED IN THE CONFIRMATION LET TERS OF THE AGENTS THE INGREDIENTS WHICH WERE NECESSARY FOR SUCH DEDUCTION OF COMMISSION TO BE TREATED AS DIVERSION OF INCOME BY OVERRIDING TIT LE WAS CLEARLY PRESENT. IN THE CASE OF CIT V. MADRAS RACE CLUB (2002) 255 ITR 98 THE HON. COURT OBSERVED THAT IN ORDER TO DECIDE W HETHER THERE HAS BEEN DIVERSION OF INCOME BY OVERRIDING TITLE THE T RUE TEST IS WHETHER THE AMOUNT SOUGHT TO BE DEDUCTED IN TRUTH NEVER R EACH THE ASSESSEE AS HIS INCOME. WHEREBY AN OBLIGATION INCOME IS DIV ERTED BEFORE IT REACHES THE ASSESSEE IT IS DEDUCTIBLE BUT WHERE T HE INCOME IS REQUIRED TO BE APPLIED TO DISCHARGE AN OBLIGATION A FTER SUCH INCOME REACHES THE ASSESSEE THE SAME CONSEQUENCE IN LAW D OES NOT FOLLOW. IN THE PRESENT CASE THE GROSS EXPORT PROCEEDS NEVER REACHED ITS HANDS NO SUCH INCOME HAD THEREFORE ACCRUED TO THE ASSESSE E AND THIS WAS BECAUSE OF AN OBLIGATION OR COMPULSION TO DEDUCT TH E COMMISSION FROM ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 16 THE EXPORT INVOICES WHICH CLEARLY SHOWED THIS TO BE A CASE OF DIVERSION OF INCOME BY OVERRIDING TITLE. THE AMOUNTS DEDUCTED FROM THE EXPORT INVOICES WERE THUS CLEARLY ALLOWABLE AS DEDUCTION. THE LOWER AUTHORITIES HAVE NOTED THAT MOST OF THE SO-CALLED C ONFIRMATIONS ARE ON PAPER AND DOES NOT BEAR THE LETTER HEAD OF THE SAID BUYERS. THIS IS PARTLY CORRECT BECAUSE PLAIN PAPER CONFIRMATION WAS IN REFERENCE TO ONE PARTY MOHMED ABDULA OF DUBAI I.E. AT ASSESSEES PAP ER BOOK PAGE NO. 509 WHICH IS ON PLAIN PAPER. HOWEVER IN SUCH SITU ATION THE AO OUGHT TO HAVE MAKE INQUIRY IF HE HAS ANY DOUBT IN THIS RE GARD. BUT HE SIMPLY CONCLUDED THAT IT IS ON A PLAIN PAPER AND DID NOT BELIEVE THE AFORESAID COMMISSION PAYMENT PARTICULARLY WHEN THE ASSESSE E IS HAVING SUPPORTING EVIDENCE IN REFERENCE TO THE CONFIRMATI ON LIKE SALES INVOICES EXCHANGE CONTROL COPY OF SHIPPING BILLS A ND BANK REALIZATION CERTIFICATE . ALL THESE EVIDENCE GOES WITHOUT SAYIN G THAT DE FACTO COMMISSION HAS BEEN PAID BY ASSESSEES BUYER TO THE AGENTS DIRECTLY. THE OTHER CONFIRMATION IS FROM AL AHED JAHID TEXTIL ES OF KUVAIT IS ENCLOSED AT PAPER BOOK PAGE NO. 508 WHICH IS ON LET TER HEAD THEN P.T. SINAR OF INDONESIA IS AGAIN ON LETTER HAD AT PAPER BOOK PAGE NO. 511 TO 515 THEN AGAIN AL AHEED ALJAHEED OF KUVAIT IS O N LETTER HEAD AT PAPER BOOK PAGE NO. 508 THEN AGAIN P.T. SINAR IS O N LETTER HEAD AT PAPER BOOK PAGE NO. 511 TO 515 JAY PRAKASH TRADIN G OF DUBAI IS AGAIN ON LETTER HEAD AT PAPER BOOK PAGE NO. 504 TO 506 THEN LIPINGE TEXTILE OF DUBAI IS AGAIN ON LETTER HEAD AT PAPER BOOK PAGE NO. 516 AND 518 AS WELL AS IN THE CASE OF SAUDI EXTENSION A GENCY AT PAPER BOOK PAGE 507. SO EXCEPT ONE PARTY NAMELY MOHMED A BDULLA OF DUBAI AS MENTIONED ABOVE ALL OTHER CONFIRMATIONS W ERE ON LETTER HEAD OF THE RESPECTIVE PARTIES. 27. WE FIND FROM THE RECORDS AS WELL AS THE ARGUMEN TS OF BOTH THE SIDES THAT NONE OF THE PAYMENT HAS COME BEYOND SIX MONTHS BUT IT WAS WITHIN SIX MONTHS AS CAN BE VERIFIABLE FROM BANK RE ALIZATION CERTIFICATE ENCLOSED AT PAPER BOOK PAGE NO. 390 TO 451. THE ASS ESSEE HAS RECEIVED THE AFORESAID PAYMENT WITHIN SIX MONTHS AS PER RBI RULES AND GUIDELINES. THE AO HAS PRESUMED THAT ASSESSEES B UYER HAS TO PAY COMMISSION AS AND WHEN BUYER RECEIVED THE PAYMENT FROM THE ASSESSEE WHICH IS NOT CORRECT BECAUSE IN ANY CASE THE ASSESSEE HAVE RECEIVED THE NET PAYMENT I.E. AFTER DEDUCTING COMMISSION AND PAYMENT OF COMMISSION IS NEVER DEPENDENT ON PAYMENT TO BE RECEIVED BY THE ASSESSEE. SO IT HAS NO CONNECTION WITH THE REALIZATION OR SIX MONTHS CRITERIA. IN VIEW OF THE ABOVE FACTS NOW WE WILL DISCUSS THE PRINCIPLE LAID DOWN BY THE HON'BLE GUJARAT HIGH COU RT IN THE CASE OF AHMEDABAD STAMP VENDORS ASSOCIATION (SUPRA). AS HEL D BY THE HON'BLE HIGH COURT THE INGREDIENTS OF WHAT IS COMM ISSION ARE CONTAINED IN THE EXPLANATION TO SECT. 194H. THERE HAS TO BE RENDERING OF SERVICES SUCH SERVICES HAVE TO BE RENDERED IN T HE COURSE OF BUYING AND SELLING OF GOODS OR IN RELATION TO ANY TRANSACT ION INVOLVING ANY ASSET VALUABLE ARTICLE OR THING. THERE HAS TO BE AN ELEMENT OF AGENCY IN THE RENDERING OF ALL SUCH SERVICES OR TRANSACTIO NS AND THE AGENT SHOULD HAVE BEEN AUTHORIZED TO BUY OR SELL ON BEHAL F OF THE PRINCIPAL. WHILE THE TRANSFEREE OR THE BUYER IS LIABLE TO THE TRANSFEROR OR THE SELLER ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 17 TO PAY THE PRICE FOR THE GOODS THE LIABILITY OF TH E AGENT IS TO ENSURE THE DELIVERY OF THE GOODS TO THE BUYER NOT AS HIS OWN P ROPERTY BUT AS THE PROPERTY OF THE PRINCIPAL OR THE SELLER/TRANSFEROR. IF SUCH PRINCIPLES AS ENUNCIATED BY THE HON. COURTS ARE TO BE APPLIED IN THE CASE OF THE ASSESSEE IT WILL BE SEEN THAT ALL THE ELEMENTS WHI CH ARE REQUISITE FOR ANY TRANSACTION INVOLVING PAYMENT OF COMMISSION WE RE PRESENT. FIRSTLY EACH OF THE TRANSACTIONS BETWEEN THE ASSESSEE AS TH E SELLER AND THE TWO BUYERS WERE MEDIATED BY AGENTS WHOLE EXISTENCE WAS ESTABLISHED BEYOND DOUBT BY THE CONFIRMATION LETTERS. SECONDLY THERE WAS RENDERING OF SERVICES. THE AGENTS HAD CLEARLY WRI TTEN THAT THEY HAVE RENDERED SERVICES; IN PROCURING SAMPLES DECIDING T HE ORDERS AND SETTLING ALL MATTERS BETWEEN THE BUYERS AND SELLER INCLUDING PAYMENTS BY THE BUYERS TO THE SELLER. CONSIDERING THE NATUR E OF SUCH SERVICES RENDERED BY THE AGENTS EVEN IF THEY WERE APPOINTED BY THE BUYERS SERVICES WERE INDIRECTLY RENDERED TO THE ASSESSEE A S THE SELLER S WELL. THE SAMPLES WERE PRODUCED BY THEM FROM THE ASSESSEE THEY DECIDED ON THE QUANTUM OF THE ORDER AND THE PRICE THEY SET TLED ALL DISPUTES BETWEEN THE BUYERS AND THE SELLER AND THEY ALSO EN SURED THE PAYMENTS TO THE SELLER. THE EXISTENCE OF THE AGENT S AND THEIR FUNCTIONING WAS FOR THE BENEFIT OF THE ASSESSEE AS WELL. THEREFORE THE EVIDENCE PRODUCED BY THE ASSESSEE CANNOT BE WISHED AWAY ON THE GROUND THAT THE AGENTS ONLY PROVIDED SERVICES TO TH E BUYER AND NOT TO THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCU MSTANCES WE ARE OF THE VIEW THAT THE COMMISSION PAYMENT IS TO BE ALLOW ED TO THE ASSESSEE AND ACCORDINGLY WE ALLOW THE CLAIM OF THE ASSESSEE AND THE ORDERS OF THE LOWER AUTHORITIES ARE REVERED. THIS ISSUE OF T HE ASSESSEES APPEAL IS ALLOWED. 27. AS THE FACTS ARE EXACTLY IDENTICAL IN THE PRESE NT CASE AS NARRATED ABOVE TO THE FACTS OF CASE OF SHRI SAMIR A BATRA (SUPRA) RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISION WE CONFIRM THE ORDER OF CIT(A) DELETING THE ADDITION. THIS ISSUE OF THE REVENUES APPEALS IS D ISMISSED. 17. AS THE FACTS DURING THE ASST. YEAR 2005-06 AND 2006-07 ARE IDENTICAL RESPECTFULLY FOLLOWING THE ABOVE DECISIO N OF THE TRIBUNAL WE UPHOLD THE ORDERS OF LD. CIT(A). THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ITA NOS.258 564 & 216 ASST. YEARS 2005-06 & 2006-07 18 18. IN THE RESULT ASSESSEES APPEAL IS ALLOWED AND BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 21.12.11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 1/12/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 8/12/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..