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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of CIT (A)-33, Mumbai, in appeal No. CIT (A)-33/IT/192/11-12 dated 20-03-2013. The Assessment was framed by JCIT, Range 22(2), Mumbai for the A.Y. 2009-10 vide order dated 09-11-2011 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee against the order of CIT(A) confirming the action of the AO in disallowing the commission paid to foreign agents and other aspect whether this commission pertains to assessment year 2009-10 or 2010-11. For this assessee has raised following three grounds: -
“1. The learned CIT(A) erred in upholding the disallowance of Rs. 22,81,747/- on account of Commission paid by the Appellant to the Foreign agents without appreciating the facts and circumstances of the Appellant’s case.
The learned CIT(A), held that the disallowance by the learned AO are on technical issue which is covered in favour of appellant and Manish Jagdishprasad Goyal; AY 09-10
however went on to uphold the aforesaid disallowance and erred in alleging that the Commission paid by the appellant pertains to the previous year 2009-10 relevant to the assessment year 2010-11 and not to the assessment year 2009-10.
3. The leaned CIT(A) further has failed to appreciate the fact that the appellant is following “Mercantile Basis” of accounting and has to provide for expenses pertaining to the period for which it belongs that is for the previous year ended 31.03.2009 and hence the expenses are allowable for the period AY 2009-10.”
Briefly stated facts are that the assessee is a manufacturer and exporter of garments operating under the name of Goyal Garb. The assessee is exporting mainly to USA and Europe from where orders are obtained through foreign agents. During the year under consideration the assessee has claimed expense of commission paid to foreign agents on sales at Rs. 45,85,488/-and provision for commission was made to the extent of Rs. 24,48,211/-. The assessee before the AO filed details of commission on sales amounting to Rs.23,03,741/- for which CA certificate for non-deduction of TDS were filed during the course of assessment proceedings. The AO while completing assessment disallowed commission to foreign agents amounting to Rs. 22,81,747/- out of total foreign commission of Rs. 45,85,488 being commission payment for which no CA certificate was submitted. The AO disallowed the commission amounting to Rs. 22,81,747/- and CIT(A) also confirmed the action of the act. Now before us, the learned Counsel for the assessee made only submission that this commission was paid and claimed after 31-03-2009. sFor this he is filed additional evidences. The additional evidences filed by assessee are as under: -
“ 3. The additional evidences are annexures to Form No A2. Form No A2 was filed before the lower authorities. These annexures were not filed as they were not relevant to the issue of TDS. However, CIT(A) has sustained the disallowance on the ground that commission expenses has not accrued. This decision of CIT(A) was without giving assessee proper opportunity. Hence, the additional evidence are filled
Manish Jagdishprasad Goyal; AY 09-10 now before the Hon’ble ITAT for the first time to demonstrate that commission expenses had accrued during the year.”
It was claimed that the commission disallowed by AO was actually paid in the financial year 2009-10 relevant to the assessment year 2010-11 and not in assessment year 2009-10. Hence, learned Counsel for the assessee requested for verification of this facts in view of additional evidences and further requested for setting aside the issue to the file of the AO. The learned Sr. DR has not objected to admission of additional evidences but only requested for remanding the matter back to the file of the AO for deciding afresh.
After hearing rival contentions and going through the additional evidences, we are of the view that these evidences are vital for deciding the issue whether the foreign commission pertains to assessment year 2009-10 or 2010-11. Let AO to decide the issue after verifying the facts and matter restore back for the file of the AO.
In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 24-02-2017.