ITO, NEW DELHI vs. M/S. D.R. EXPORTS INTERNATIONAL, DELHI

PER SUCHITRA KAMBLE, JM

are as under:- On the facts and circumstances of the case and in law CIT(A) has erred in~

1. Whether on the facts and circumstances of the case & in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 2,97,70,427/- made by the Assessing Officer (AO) on account of disallowance of loss on rate settlement (Contracts) by accepting additional evidence without giving opportunity to the AO, which is in contravention of provisions of Rule 46A of IT Rule, 1962.

2. On the facts and circumstances of the case & in law, the Ld. CIT (A) has erred in not appreciating the facts that the assessee could not establish whether any dispute arose because of the failure on the part of the assessee to fulfill contractual terms resulting in the arbitration award.

3. Whether on the facts & circumstances of the case & in law, the Ld. CIT (A) is justified in deleting the addition of Rs. 56,05,298/- made by the AO under section 40a(i) of the Act for violation of section 195 of the Act?.

before or during the course of the hearing of the appeal.”

3. Return of income declaring total income of Rs.97,05,780/- was filed on 30.09.2011. During the previous year, the assessee derived income from business and profession (processing trading & export of food products and processing of mustard oil cakes and trading in commodities). The case was processed u/s 143(1) of the Income Tax Act, 1961. Statutory notice u/s 143(2) was issued on 01.08.2012. Subsequently, notice u/s 142(1) dated 12.09.2013 was issued. In compliance to the statutory notices authority representative attended the assessment proceedings and produced necessary details before the Assessing Officer. During the course of assessment proceeding, the assessee was asked to provide the details of commission paid to the foreign agents and was further asked why the said payments of Rs.56,05,297.57/- should not be disallowed as no TDS has been deducted on these payments. The assessee filed reply dated 09.12.2013. The Assessing Officer observed that from the combined reason of Clause 9(1)(i) & (vii)(b) an explanation to provides that any consideration whether lump sum otherwise paid by a person is resident in India to non-resident for running any managerial services would fall within the ambit of “income deemed to accrue or arise in India”. Therefore, provisions of marketing commission paid to the foreign agents which is paid by the assessee company would be chargeable to Income tax. The Assessing Officer further held that the assessee has not deducted TDS on commission paid to non-resident, which is covered by section 195 dealing with TDS for payment to non-resident.

There is no provision in the Act for making payment to non-resident without deduction of TDS in absence of any decision/no objection certificate from the assessing authorities u/s 195(2) of the Act. The Assessing Officer further made disallowance on rate of difference of Rs.2,97,70,427/- as claimed by the expenses. Thus, the Assessing Officer made addition to the extent of Rs.4,52,10,530/-.

4. Being aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.