MARVEL CONSULTANCY SERVICES,THANE vs. A.C.I.T.CIRCLE 3, THANE

The facts relating to the above said issue are in brief. The assessee is a partnership firm engaged in the business as marketing organization specializing in liaison works. During the year under consideration, it received commission income of Rs.1.22 crores against which, the assessee

The ld. Counsel appearing for the assessee submitted that the assessee had obtained contract for liaisoning work from M/s Kirloskar Ebara Pumps Ltd for liaisoning with M/s Reliance Petroleum Ltd. The assessee entered into a Memorandum of Understanding with M/s Indravarun Sales Agency Pvt Ltd., as per which the assessee has given the work on subcontract basis. As per the MOU, M/s Indravarun Sales Agency Pvt Ltd raised invoices upon the assessee and payments thereof were made through banking channel. The ld. Counsel submitted that the AO was not correct in observing that the assessee has failed to produce any bills raised by Indravarun Sales Agency Pvt Ltd. He submitted that the assessee had furnished copies of bills raised by the above said company to the AO. The ld. Counsel further submitted that the rate of net profit declared by the assessee was consistent with the earlier years and hence there is no reason to suspect the genuineness of commission expenses. In support of his contention, the ld. AR placed his reliance on various case laws.

On the contrary, the ld. DR submitted that the MOU, bills raised by M/s Indravarun Sales Agency Pvt Ltd are self serving documents. The ld. DR submitted that the AO has correctly observed that, in order to prove the genuineness of the commission payment, the assessee has to show that the agent has rendered some services to the assessee and further the same should be substantiated by documentary evidences showing the nature of services rendered. The ld.DR submitted that the assessee, in the instant case, has failed to show that the recipient of the payment has actually rendered any services to the assessee and also have failed to explain the nature of services rendered by payee. Further, no evidence was produced to show that the sub-contract was actually executed by the agent.

We have heard the rival contentions of the parties and perused the record. We notice that the AO has made the impugned addition on the reasoning that the assessee has failed to explain about the nature of services rendered by the recipients of the commission payments and further it has also failed to produce necessary documentary evidences in support of those services. Even though the AO has stated that the assessee has failed to produce the bills, which does not appear to be correct observation, yet the moot point is that the assessee has failed to prove the nature of services and also actual services rendered by M/s Indravarun Sales Agency Pvt Ltd. We notice that the ld. CIT(A) has correctly appreciated these facts and has also observed that the payment through cheque by itself is of no consequence as held by the Hon’ble

The assessee has also raised the following additional grounds : a) Without prejudice to ground No.1, the ld.CIT(A) has erred in not granting the credit for TDS on the said commission, which has been disallowed and thereby taxed in the hands of the appellant only; b) Without prejudice to ground No.1 and ground no.2, the ld. CIT(A) has erred in not allowing deduction u/s 37 for the TDS paod to government treasury on the said commission. In our view, these matters are required to be taken up before the AO. Accordingly, we decline to interfere with the same.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 3rd,Dec,2015. (संदीप गोसधई/SANDEEP GOSAIN) (बी.आर.बधस्करि/ B.R.BASKARAN) न्यधनयक सदस्य/Judicial Member ऱेखध सदस्य /Accountant Member मुंबई Mumbai; ददनांक Dated.. 3rd , Dec,2015 व.नि.स./ SRL, Sr. PS

DR, ITAT, Mumbai concerned 6. गार्ड पाईर / Guard file. आदेशानुसाय/ BY ORDER,सहामक ऩंजीकाय (Asstt.