DY. COMMISSIONER OF INCOME TAX , CIRCLE-3(1), HYDERABAD vs. ROLEX METERS PRIVATE LIMITED , HYDERABAD

Heard Shri S.Moharana, Ld.CIT-DR representing Revenue and Shri KC Devdas, learned AR appearing at assessee’s behest. Case file perused.

The Revenue has raised the following substantive grounds in the instant appeal. 2. Whether in the facts and circumstances of the case, the Ld CIT(A) is correct in allowing the appeal of assessee by completely ignoring the fact that a Government authority viz. the Chief Engineer, Maharashtra State Electricity Distribution Company has clearly spelled out the process of e-tender, design, specification of a public utility product and confirmed that no third party was involved in any of the services as mentioned in the relied upon agreement? 3. Whether in the facts and circumstances of the case, the Ld CIT(A) is correct in allowing the appeal of assessee by ignoring the fact that the parties namely M/s. Ghankun Steels Private Limited, Raipur and M/s. Nutan Ispat and Power Private Limited, Raipur were not involved in the Iiasoning work/ tender management / payments as confirmed by the Chief Engineer, Maharashtra State Electricity Distribution Company? 4. Whether in the facts and circumstances of the case, the Ld CIT(A) is correct in allowing the appeal by deleting the addition made of Rs.16,78,07,963/- being commission paid to the services rendered by the agents for the business of assessee solely depending on cheque payments, TDS, 26AS and an agreement with said agents by completely ignoring the fact that what was being questioned during assessment proceedings was the actual nature of services rendered, if any, by the said agents for the expenses to fall under the head commission?

It transpires during the course of hearing that the Revenue’s instant appeal itself is not maintainable in view of the clinching fact that the Assessing officer himself had filed remand report 2 dated 19.09.2018 before the CIT(A) regarding commission payment(s) of Rs. 16.78 crores as follows:- Office of the Dy. Commissioner of Income-tax, Circle - 3(1), Hyderabad. F.No. Cir-3(1)/Remand Reports/2018-19 Dt : 19-09-2018. To: The Commissioner of Income-tax (Appeals) - 3, Hyderabad. (Through Proper Channel) Sub:- Remand report - In the case of M/s Rolex Meters Pvt. Ltd., Hyderabad - AY 2015-16 - Submission of - Reg. Ref:- Letter of CIT(A)-3, Hyd in F.No. Remand Rep/CIT(A)-3/ 2018-19 dated 30- 07-2018. ---------------- Kind attention is Invited to the above cited subject and reference. In this connection, it is submitted that vide letter under reference, this office was asked to submit a factual report. After examining the additional evidences submitted by the assessee, the report called for is submitted as under: During the course of assessment proceedings, the AO made an addition of Rs. 16,78,07,963/- being commission payments to two agents namely M/s Ghankun Steel Pvt. Ltd. and M/s Nutan Ispat and Power Pvt. Ltd. treating the same as payments not for the actual services rendered but to reduce tax incidence. During the appeal proceedings, the assessee contended that these payments were actually made to the agents for the services rendered by them and after deduction of TDS. For this the assessee submitted affidavit and other documents an additional evidence basing on which a remand report was called for. During the Course of remand proceedings, Summons u/s 131 were issued to both the two contractors. In response, Sri Bimal Kishore Khetan, MD of M/s Ghankun Steels Pvt. Ltd. appeared on 11-09-2018. A sworn statement was recorded from him Wherein, he clearly stated that his company has entered into agreement with the assessee company for providing services in facilitating supply of digital meters and timely follow up of payments. He further stated that these monies were received by his company and was duly offered to tax in its return.