DCIT CORPORATE CIRCLE 2(1), CHENNAI vs. GEM SPINNERS INDIA LTD., CHENNAI

The Revenue filed this appeal against the order of Commissioner of Income Tax (Appeals)-6, Chennai in dated 23.08.2017 for assessment year 2009-10.

The Revenue filed an affidavit seeking condonation of one day delay in filing the appeal. Since there was none from the assessee’s side, we heard the DR and condone the delay.

M/s. Gem Spinners (I) Ltd, the assessee, is a manufacturer of cotton yarn and knitted fabric. While making the assessment for assessment year 2009-10, the AO found that the assessee company paid, inter alia, Commission of Rs. 52,90,110/- and sales commission (trading) of Rs. 1,07,53,580/- to foreign entities without deducting TDS and hence he disallowed an aggregate amount of commission of Rs. 1,60,43,690/- u/s. 40(a)(ia). Aggrieved, the assessee filed an appeal before the CIT(A). The CIT(A) allowed the appeal. Aggrieved, the Revenue filed this appeal.

The DR argued the case on the lines of grounds of appeal and submitted that the CIT(A) recorded the pleadings of the assessee and allowed the appeal without recording is independent findings/conclusions. None was present from the assessee’s side. In the facts and circumstances, we deem it fit to remit these issues back to the AO for a fresh examination as to whether there was a PE in India etc and decide the issues in accordance with law. The AO shall afford adequate opportunity to the assessee and then pass a speaking order.

In the result, the Revenue’s appeal is allowed for statistical purposes.