NACH ENGINEERING PVT.LTD,,PUNE vs. INCOME-TAX OFFICER, WARD - (2)(4),, PUNE

The assessee has raised the following grounds of appeal:- The Appellant prays that the disallowance of Rs.6,00,000/- made in respect of Liasioning Charges be deleted.

The only issue raised in the present appeal is against disallowance of ₹ 6 lakhs made in respect of liasoning charges.

Briefly, in the facts of the case, the assessee was engaged in the business of manufacturing of special purpose machineries. The case of assessee was taken up for scrutiny and it was noted that the assessee had paid liasoning charges of ₹ 15,18,423/- to various parties towards securing business. The assessee was asked to justify its claim of expenditure and information was sought from the respective parties. Two of the parties i.e. Shri Sai Enterprises, Jabalpur and Grace Trans Tech, Hyderabad supplied the information partly. The third party ASP Industries Co., New Delhi did not furnish any information. The Assessing Officer in view of the provisions of section 37(1) of the Act observed that the genuineness of liasoning charges

Before the CIT(A), the assessee pointed out that it had supplied special purpose machineries mainly Oil Filtration Plants, as per order on the basis of tenders to various Government and semi Government customers all over India. These orders were cleared by submitting tenders floated by the customers and the assessee had to take the help of local consultants for various consultancies and follow-up with the Government and semi Government organizations. The charges paid to them were debited as liasoning charges. The assessee explained that it had its unit in Pune and done the liasoning work and has done the job work of parties at Hyderabad, New Delhi and Jabalpur through liasoning agents. The assessee also produced bills / vouchers in respect of payments to the parties and also pointed out that tax at source had been deducted from the aforesaid payments. He also furnished the confirmations from the said parties. The CIT(A) allowed the payments made to ASP Industries Co., New Delhi and Shri Sai Enterprises, Jabalpur as genuine. However, since the payment to Grace Trans Tech, Hyderabad was made in cash and the said party had not furnished any correspondence and the assessee had failed to establish the services rendered by the said party, hence the disallowance of ₹ 6 lakhs was upheld.

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee pointed out that the amount was not paid through cash but was also paid through bank entries. The learned Authorized Representative for the assessee pointed out that the proprietor of Grace Trans Tech, Hyderabad had filed the return of income and

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below.

On perusal of record and after hearing both the learned Authorized Representatives, the only issue which is raised in the present appeal is against disallowance of commission paid to the concern Grace Trans Tech, Hyderabad. The main plea of authorities below was that the said concern has not furnished information completely and was also not assessable to tax. First of all, the said concern had filed information in response to notice issued under section 133(6) of the Act, which is duly acknowledged by the Assessing Officer in the assessment order. The information may be incomplete but the perusal of Ledger Account reflects the said party to have received the payments through bank and also through cash entries. So, there is no merit in holding that the whole amount was paid in cash.

Another aspect to be kept in mind is that in the confirmation letter, copy of which is placed at page 12 of Paper Book, PAN number of said party was also mentioned. The assessee before the Tribunal has also referred to the

In the result, the appeal of assessee is allowed.