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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
The Revenue has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-3, Chennai, dated 31.03.2016 for assessment year 2011-12 and the assessee has filed the cross-objection against the same order of the CIT(Appeals). Therefore, we heard both the appeal and cross- objection together and disposing of the same by this common order.
When the appeal was taken up for hearing, Shri AR.V.
Sreenivasan, the Ld. Departmental Representative, submitted that the Principal Commissioner, on examination of file, found that notwithstanding the administrative approval granted by the Administrative Commissioner, the Revenue has little material to press this appeal before this Tribunal. Therefore, on the basis of the letter of the Principal Commissioner dated 26.07.2017, the appeal may be treated as withdrawn. Accordingly, the appeal of the Revenue in is dismissed as withdrawn.
Now coming to the cross-objection filed by the assessee, Sh. T. Banusekar, the Ld. representative for the assessee, submitted that the only issue arises for consideration is disallowance of `74,35,221/- under Section 40(a)(i) of the Income- tax Act, 1961 (in short 'the Act') in respect of payment made for commission. The Assessing Officer claims that the payment was made for design and development charges. Since the nature of payment was not discussed by either authorities below and facts are also not brought on record by both the authorities, the Ld. representative submitted that the matter may be remitted back to the file of the Assessing Officer for reconsideration.
We have heard Shri AR.V. Sreenivasan, the Ld. D.R. also.
The Ld. D.R. also submitted that the matter may be remitted back to the file of the Assessing Officer for re-examination in order to find out the nature of payment made by the assessee.
Having heard the Ld. representative for the assessee and the Ld. Departmental Representative, this Tribunal is of the considered opinion that the nature of payment needs to be brought on record, whether the payment is fee for technical services or for commission has to be determined only after considering the purpose for which the payment was made. Even though the assessee claims that the payment was for the purpose of commission, the fact was not examined by both the authorities below. Therefore, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Assessing Officer.
Accordingly, the orders of both the authorities below in respect of the disallowance made under Section 40(a)(i) of the Act to the extent of ` 74,35,221/- are set aside and the issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re- examine the matter afresh on the basis of the material that may be produced by the assessee and thereafter bring on record the actual purpose / nature of payment and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
In the result, the appeal of the Revenue is dismissed as withdrawn. However, the cross-objection of the assessee is allowed for statistical purposes.
Order pronounced on 23rd August, 2017 at Chennai.