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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
These two appeals have been filed by the Revenue are directed against the order of the Commissioner of Income Tax (‘hereinafter called CIT(A)’) order no. CIT(A)- VIII/DCIT/Cir. 4/45/2013-14 order dated 24/12/2013 arising out of penalty order dated 18/03/2013. Revenue has taken following grounds of appeal: & 3412/A/2016 2 . A.Ys. 2010-11 & 2011-12
1. Whether the Ld. CIT(A) had erred in treating the Overseas Commission expenses as a genuine business expense without properly appreciating the facts of the case and material on record.
2. Whether the Ld. CIT(A) had decided the issue of non-genuineness of overseas commission expense in violation of Rule 46A(3) of IT Rules 1962 by admitting the additional evidences?
2. Brief facts of the case are that the assesee debited an amount of Rs. 3,94,14,339/- against overseas commission expenses. The assesse filed all the details of such commission. Thereafter Ld. A.O. asked assesse to furnish details of such commission paid and whether provisions as envisaged u/s 195 of the Act but applied or not.
Thereafter assesse in its reply stated that assesse Company has made payment to number of overseas vendors as Commission to the tune of Rs. 3,94,14,339/- of the Act.
And in support of its contention, assesse cited a judgment of Hon’ble Supreme Court in the matter of CIT vs. Toshoku Limited (125 ITR 525) wherein it is held that the commission agent who does not carry out any business operation in India and acts as a selling agent outside India is not chargeable t tax in India and that the receipt in India of the sale proceeds remitted by the purchasers from abroad did not amount to an operation carried out by the non-resident commission agent in India as contemplated by clause (a) of the Explanation to Section 9(1)(i) of the Act. And Hon’ble Supreme Court has categorically held that the commission amounts which were earned by the non-resident for services rendered outside India could not be deemed to be income which had either accrued or arisen in India.
But Ld. A.O. did not agree with the contention of the assesse and held that as assesse could not file copies of any agreement of commission or any other communication with the said commission agents. The assesse however, in order to justify its claim, furnished a copy of an appointment letter pertaining to only one overseas agent and & 3412/A/2016 3 . A.Ys. 2010-11 & 2011-12 rest of the details were not filed by the assesse. Therefore, Ld. A.O. disallowed an amount of Rs. 3,94,14,339/- on which TDS has not been deducted.
Against the said order of the Ld. A.O., assesse preferred first statutory appeal before the Ld. CIT(A) and reiterated before the ld. CIT(A) that assesse is not liable to deduct TDS and filed following additional evidence before the ld. CIT(A). a) Break-up of Direct Expenses giving amount of domestic and overseas commission vide letter dated 08/01/2013.
(b) Chart giving name and address of overseas commission agents vide letter dated 16/01/2013 giving following particulars: (i) Overseas Agent Name (ii) Amount of Commission paid (iii) Address of the Overseas Agent (iv) Name and Address of the Buyer party (v) Name of Buyer country
(c) Declaration/Confirmation of the overseas agents along with agreements with them, proof of non-resident status and payment evidences on sample basis vide letter dated 28/01/2013.
(d) Reconciliation of correct commission paid to overseas agent and domestic agents vide letter dated 11/03/2013. 7. After considering the above said additional evidences, Ld. CIT(A) deleted the disallowance made by the Ld. A.O. of Rs. 3,94,14,339/- u/s 40(a)(ia) of the Act.
Now revenue has come before us and challenged the order of the Ld. CIT(A).
On the other hand, Ld. D.R. relied on the order of the A.O.
We have heard both the parties and have given thoughtful consideration. Apart from overseas commission expenses, revenue has also challenged the action of the Ld. CIT(A) in admitting additional evidence filed by the assesse. & 3412/A/2016 4 . A.Ys. 2010-11 & 2011-12 11. Rule 46-A contemplates that Ld. CIT(A) may admit any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings (a) where the [Assessing Officer] has refused to admit evidence which ought to have been admitted; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; or (c) where the appellant was prevented by sufficient cause from producing before the A.O. any evidence which is relevant to any ground of appeal.
The power of the appellate authority to direct for the production of a document or examination of the witness as a matter of fact is in furtherance of any enquiry contemplated by Section 250(4) of the Act is contained in sub Rule 4 of Rule 46-A of the Rules and it can be exercised to enable the appellate authority to dispose of the appeal or for any other substantial cause necessary for the adjudication of the controversy involved in appeal. The power of the appellate authority is like a inherent power which can be exercised suo-motu without any application from any of the contesting party. And in order to follow the principles of natural justice or fair play, Appellate Authority can ask for the any detail which are relevant for the disposal of the an appeal.
So far commission agent to overseas commission is concerned as per Hon’ble Supreme Court judgment the assesse is not liable to deduct TDS for any payment which is made to overseas agent. And we do not find any infirmity in the order passed by the Ld. CIT(A). However, we refuse to entertain the present appeal.
In the result, appeal filed by the Revenue is dismissed. & 3412/A/2016 5 . A.Ys. 2010-11 & 2011-12 15. Now we come to A.Y. 2011-12, Revenue has taken following grounds of appeal:
1. The Ld.CIT (A) has erred in law and facts in deleting the disallowance of Rs.6,43,52,553/- u/s.40(a)(ia) of the Act on account of non-deduction of tax on commission payment to overseas agents.
On the facts and in the circumstances of the case, the Ld. CIT (A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that of the Assessing Officer may be restored to the above extent.
Since facts and circumstances of this appeal are same as of and only assessment years is different. Thus, in parity with the above said appeal, we dismiss this appeal of the Revenue.
In the combined result, both the appeal filed by the Revenue are dismissed. Order pronounced in Open Court on 06- 05- 2021