M/s Chemcaps Ltd., New Delhi V. ITO, New Delhi

ITA 1288/DEL/2011

• Counselvise Citation: 128820114 RSA 2011
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-12-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 14-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: RAJ KUMAR S
• Keywords: Retrospective amendment
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1288 & 1289/DEL/2011 ASSESSMENT YEAR : 2002-03 & 2007-08 M/S CHEMCAP LTD. ITO, 205-ELITE HOUSE, WARD-3 (3), 36-COMMUNITY CENTRE, NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABCC AABCC AABCC AABCC- -- -1120 1120 1120 1120- -- -D DD D APPELLANT BY : SHRI K. SAMPATH, & SHRI RAJKUMAR, ADVOCATES. RESPONDENT BY : MS. NIDHI SRIVASTAVA, SR. DR. ORDER PER TS KAPOOR, AM: THESE ARE TWO APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT Y EAR 2002-03 & 2007-08 RESPECTIVELY AGAINST THE COMMON ORD ER OF LD CIT(A) DATED 18.1.2011. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE INJ THESE TWO APPEALS ARE AS UNDER:- I.T.A. NO. 1288/DEL/2011: I.T.A. NO. 1288/DEL/2011: I.T.A. NO. 1288/DEL/2011: I.T.A. NO. 1288/DEL/2011: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AUTHORITIES BELOW ERRED IN MAKING THE FOLLOWING ADDI TIONS TO THE RETURNED INCOME. 1. IN MAKING ADDITIONS OF ` .13,92,785/- ON ACCOUNT OF COMMISSION PAID TO THE VARIOUS SALES AGENTS OF THE COMPANY. 2. IN MAKING ADDITION OF ` .9,75,150/- ON ACCOUNT OF ARREARS OF SALARY PAID TO THE DIRECTORS OF THE COMPANY. ITA NO1288 & 1289/DEL/2011 2 ABOVE ACTIONS BEING MOST ARBITRARY, ERRONEOUS AND UNLA WFUL MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. I.T.A. NO.1289/DEL/2011: I.T.A. NO.1289/DEL/2011: I.T.A. NO.1289/DEL/2011: I.T.A. NO.1289/DEL/2011: THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE AUTHORITIES BELOW ERRED IN MAKING THE FOLLOWING ADDI TIONS TO THE RETURNED INCOME. 1 IN MAKING ADDITIONS OF ` 20,51,634/ - ON ACCOUNT OF COMMISSION PAID TO THE VARIOUS SALES AGENTS OF THE COMPANY. 3. IN MAKING ADDITION OF ` .1,75,523/- ON ACCOUNT OF MISCELLANEOUS SALES EXPENSES. ABOVE ACTIONS BEING MOST ARBITRARY, ERRONEOUS AND UNLA WFUL MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR ASSESSMENT YE AR 2002-03 THE ASSESSEE HAD CLAIMED AN AMOUNT OF ` .13,92,785/- AS COMMISSION PAID TO VARIOUS SALES AGENTS WHICH WAS ADDED BACK BY T HE ASSESSING OFFICER. ON APPEAL BEFORE LD CIT(A), THE SAME WAS DE LETED., HOWEVER, ON APPEAL BY REVENUE BEFORE ITAT, THE SAME WAS REMITT ED BACK TO THE ASSESSING OFFICER FOR RE-ADJUDICATION ON ACCOUNT OF VIO LATION OF PROVISIONS OF RULE 46A OF THE IT RULES, 1962. SIMILARL Y, THE SECOND ADDITION OF ` .9,75,150/- CLAIMED ON ACCOUNT OF ARREARS OFF SALARY PAID TO DIRECTOR WAS ALSO REMITTED BACK TO THE OFFICE OF ASSESSIN G OFFICER FOR FRESH ADJUDICATION. 3. DURING ASSESSMENT YEAR 2007-08 THERE IS AGAIN ADDITI ON ON ACCOUNT OF ISSUE OF COMMISSION PAID TO SALES AGENTS AMOU NTING TO ` .20,51,634/- WHICH WAS ADDED BACK BY THE ASSESSING OFFIC ER ON THE SAME BASIS AS IN ASSESSMENT YEAR 2002-03. THE LD CIT(A) ALSO CONFIRMED THE ADDITION ON THE SAME BASIS AS IN ASSESSMENT Y EAR 2002- 03. THE SECOND ADDITION OF ` .1,75,523/- IS ON ACCOUNT OF DISALLOWANCE OF CLAIM OF MISC. SALES EXPENSES WHICH WERE DISALLOWED B Y ASSESSING OFFICER AS THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE ITA NO1288 & 1289/DEL/2011 3 EXPENDITURE. BOTH THESE APPEALS WERE HEARD TOGETHER A ND THEREFORE FOR THE SAKE OF CONVENIENCE A COMMON ORDER IS BEING PASSED. 4. FIRST OF ALL WE TAKE UP THE ISSUE OF DISALLOWANCE OF SALES COMMISSION PAID TO VARIOUS SALES AGENTS OF THE COMPANY. THE SALES COMMISSION WERE PAID TO VARIOUS PARTIES AS DETAILED BELO W:- A.Y.2002-03 A.Y.2007-08 1. ALPHAITES CONSULTANTS. 647477/- 1205980/ - 2. OMNI SALES & AGENCY. 439964/- 394193 3. COMMISSION PAID TO FOREIGN PARTIES. 305344/- 4. AAREX PHARMACHEM PVT.LTD. 58642/- 5. MELLOW ENTERPRISES. 323721/- 6. VENUS INTERNATIONAL. 18813/- 7. DEAL ENGINEERS. 49720/- FOR THE ASSESSMENT YEAR 2002-03 ON REMAND FROM ITAT THE ASSESSING OFFICER REQUIRED THE PARTIES LISTED AT SL. NO.1 & 2 A LONG WITH FROM OTHER PARTIES LISTED AT PAGE 2 OF ASSESSMENT ORDER TO SUBMIT THE FOLLOWING DETAILS WHICH ARE REPRODUCED AT PAGE 6 OF LD CIT(A) S ORDER:- 1. YOUR ASSESSMENT PARTICULARS INCLUDING PAN NUMBERS/WARD/CIRCLE WHERE ASSESSED TO INCOME-TAX. 2. GIVE NOTE ON TRANSACTIONS ENTERED INTO WITH THE ABOVE MENTIONED COMPANY DURING F.Y. 2001-02 ALONG WITH C OPY OF RELEVANT DOCUMENTS. 3. FURNISH COPY OF LEDGER ACCOUNT AS APPEARING IN YOUR B OOKS OF AMOUNT FOR THE PERIOD 1.4.2001 TO 31.3.2002. 4. FURNISH COPY OF BANK STATEMENT HIGHLIGHTING THE BANK TRANSACTIONS. 5. THE ASSESSING OFFICER, HOWEVER, HELD THAT COMMISSION AGENTS DID NOT REPLY ABOUT THE RECEIPT OF COMMISSION, MODE OF RE CEIPT AND COPY OF ITA NO1288 & 1289/DEL/2011 4 LEDGER ACCOUNT, THEREFORE, HE HELD THAT NO COMMISSION WAS PAID AND MADE THE ADDITION THEREOF. THE ASSESSEE BEFORE LD CIT( A) SUBMITTED THAT PARTIES LISTED AT SL. NO.1 & 2 HAD FILED REPLY W HEREAS THE COMMISSION WAS NOT PAID TO OTHER PARTIES LISTED AT PAGE 2 OF ASSESSMENT ORDER AND THEREFORE THEY DID NOT REPLY. IN VIEW OF THE ABOVE, FOR ASCERTAINING THE FACTUAL POSITION, THE ASSESSI NG OFFICER WAS REQUIRED TO ATTEND THE PROCEEDINGS ALONG ASSESSMENT REC ORDS FROM WHERE THE LD CIT(A) HAD HELD THAT THOUGH REPLY WAS F ILED BY TWO PARTIES BUT THE REPLY WAS NOT COMPLETE AS THE PARTIES DID NOT REPLY ABOUT THE DETAILS OF TRANSACTION FOR WHICH COMMISSION WAS PAID AN D THEREFORE HE UPHELD THE ADDITION. 6. REGARDING COMMISSION OF ` .3,05,343/- CLAIMED TO HAVE BEEN PAID TO FOREIGN PARTIES, THE LD CIT(A) UPHELD THE DISALLOW ANCE BY HOLDING AS UNDER:- I FURTHER FIND THAT OUT OF TOTAL DISALLOWANCES OF ` .13,92,785/- AN AMOUNT OF ` .3,05,349/- IS CLAIMED ON ACCOUNT OF COMMISSION PAYMENTS TO FOREIGN PARTIES FOR WHICH THE APPELLANT H AS RELIED ON BANK REALIZATION CERTIFICATES WHICH WERE FILED DURIN G THE ORIGINAL ASSESSMENT PROCEEDINGS. NO FURTHER PROOF OF COMMISSION PAYMENT HAS ADMITTEDLY BEEN FILED DURING THE PROCEED INGS U/S 143(3) R.W.S. 254 OF THE ACT ON THE GROUND THAT THE SAME WAS NOT ASKED BY THE ASSESSING OFFICER. ON CAREFUL PERUSAL I FIND THAT IN THE ORIGINAL ASSESSME NT ORDER THE ASSESSING OFFICER REJECTED THE APPELLANTS CLAIM ON THE GROUND THAT THE ASSESSEE DID NOT MENTION THE NAME OF THE PERSON OR OTHER DETAILS FOR COMMISSION AMOUNTING TO ` .305344/-. HON'BLE TRIBUNAL HAS SET ASIDE THE ISSUE OF COMMISSION PAYMENT, INCLUDING THE COMMISSION PAYMENTS TO OTHER PARTIES, WI TH SPECIFIC DIRECTIONS TO FURNISH COMPLETE DETAILS OF THE PAYMENT, ADDRESS OF THE RECIPIENTS ETC. TO SUBSTANTIATE THE CLAIM . HENCE ITA NO1288 & 1289/DEL/2011 5 THE ONUS WAS ON THE APPELLANT TO FILE COMPLETE DETAI LS AND DOCUMENTS WITH REGARD TO THESE PAYMENTS. IN THE ABSENCE OF COMPLETE DETAILS AND DOCUMENTS, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING DISALLOWANCE ON ACCOU NT OF COMMISSION PAYMENT AND THE SAME IS THEREFORE UPHELD. 7. THE SECOND ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF PAYMENT OF ARREARS OF DIRECTORS SALARY WAS CONFIRMED BY THE LD CIT(A) BY HOLDING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD AR AN D HAVE GONE THROUGH THE ASSESSMENT ORDER AND REMAND REPORT. TH E APPELLANTS CONTENTION IS THAT REMUNERATION OF DIRECT ORS WAS REDUCED TO THE EXTENT OF HRA W.E.F. APRIL, 1999 AND IT WAS DECIDED IN BOARDS MEETING HELD ON 29.5.29.5.1999 T HAT THE SAME SHALL BE ACCOUNTED FOR LATER CONSIDERING THE PROF ITS AND FINANCIAL REQUIREMENTS OF THE COMPANY. IT HAS FURTHE R BEEN SUBMITTED THAT THE AREA OF SALARY HAS BEEN GIVEN BY RE SOLUTION DATED 18.1.2002. THUS FOR JUSTIFICATION OF ITS CLAIM, THE APPELLANT HA S REFERRED TO THE BOARDS MEETING OF 29.5.1999 WHEREBY HRA OF THE DIRECTORS WAS REDUCED. ON THE OTHER HAND THE ARREAR SALARY IS STA TED TO BE GIVEN AS PER THE BOARDS RESOLUTION DATED 18.1.2002. I N THIS RESOLUTION IT IS STATED THAT INCREMENTS OF DIRECTORS S ALARY W.E.F. 1.9.1999 ALONG WITH OTHER PERQUISITES ARE TO BE GIVE N AS PER RESOLUTION DATED 29.5.1999. IN LAST PARA OF THE RESOLU TION DATED 18.1.2002 IT IS MENTIONED AS UNDER:- RESOLVED THAT THE INCREMENTS OF THE SALARY OF WHOLE T IME DIRECTORS NAMELY SHRI PC GOEL, SHRI ARUN MITAL AND S HRI VINAY MAHAJAN, IN TERMS OF THEIR APPOINTMENT AS APPROVED B Y THE MEMBERS, VIDE RESOLUTION DATED 18.,9.1999 BE GIVEN W. E.F. 1.9.1999. ITA NO1288 & 1289/DEL/2011 6 THE APPELLANT HAS NOT LINKED UP THE DECISION TAKEN ON 29.5.1999 WITH RESOLUTION DATED 18.1.2002. FURTHER THE DETAILS OF RESOLUTION DATED 18.9.1999 HAVE NOT BEEN FILED, NOR THE WORKIN G OF THE ARREAR SALARY HAS BEEN GIVEN. IT IS ALSO AN ADMITTED FACT THAT NO PROVISION WAS MADE FOR THESE ARREARS IN EARLIER YEARS IN SUCH CIRC UMSTANCES, I FIND THAT THE ASSESSING OFFICER WAS JUSTIFIED IN NOT ALL OWING THE CLAIM OF THE APPELLANT. HENCE, THE ADDITION MADE BY HIM I S UPHELD. 8. IN ASSESSMENT YEAR 2007-08, THE LD CIT(A) UPHELD THE DISALLOWANCE OF SALES COMMISSION TO PARTIES LISTED AT PAGE 2 OF THIS ORDER BY HOLDING AS UNDER:- FOR THE ASSESSMENT YEAR 2007-08, THE FACTS AND CIRCUMST ANCES ARE IDENTICAL, THE APPELLANT CLAIMED AN AMOUNT OF ` /.20,51,634/- ON ACCOUNT OF SALES COMMISSION. THE DETAILS OF THESE PAY MENTS ARE REPRODUCED ON PAGE 3 & 4 OF THIS ORDER. THE ASSESSIN G OFFICER HAS DISALLOWED THESE EXPENSES AS NEITHER THE ASSESSEE COMPAN Y NOR THE ALLEGED RECIPIENTS COULD ESTABLISH AS TO WHAT W ERE THE SERVICES RENDERED. IT IS AN ADMITTED FACT THAT THE ASS ESSING OFFICER HAD ASKED FOR THE CONFIRMATION OF THESE PARTI ES BUT THE ASSESSEE COMPANY INTIMATED THE SAID PARTIES FOR SENDING TH E CONFIRMATIONS. IN HIS REMAND REPORT ALSO, THE ASSESSING OF FICER HAS EMPHASIZED THAT THE REQUISITE INFORMATION WAS NOT G IVEN BY ANY OF THE PARTIES. ON THE OTHER HAND, THE APPELLANT S CONTENTION IS THAT REPLIES TO THE N9TICE U/S 133(6) WERE FILED BY M/S OMNI SALES & AGENCIES AND M/S ALPHAITIES CONSULTANTS BY SPEED POST AND M/S AAREX PHARMACHEM, PVT. LTD. FILED REPLY BY H AND. 9. THE SECOND ADDITION IN ASSESSMENT YEAR 2007-08 WAS UP HELD BY LD CIT(A) AS UNDER:- BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY HAS CLAIMED ` .1,75,523/- AS MISC. SELLING EXPENSES. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT DESPITE ITA NO1288 & 1289/DEL/2011 7 OPPORTUNITIES, THE ASSESSEE COMPANY COULD NOT ESTABLISH TH E GENUINENESS OF THE EXPENDITURE AND CLAIM. DURING THE PROCEEDINGS BEFORE ME IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS NEVER ASKED TO PROVE THE GENUINENESS OF THE SAID EXPENDITURE. THE ABOVE EXPENSES HAVE BEEN IN CURRED ON FOLLOWING ACCOUNTS:- DOCUMENTATION EXPENSES EXPORT SALES GENERAL 50,640/- EXP. DOMESTIC SALES GENERAL. 31,782/- EXP. EXPORT. 93,101/- THE COMPANY HAD AN EXPORT TURNOVER AMOUNTING TO ` .2,30,94,219/- DURING THE F.Y. 2006-07 WHICH IS DULY SHOWN IN THE AUDITED BALANCE SHEET OF THE COMPANY. THE ABOVE EXPENSES ARE DULY VERIFIED WITH SUPPORTS THEREOF BY THE AUDITO RS. THE DOCUMENTATION FEE HAS BEEN PAID TO PHD CHAMBER OF CO MMERCE FOR CERTIFICATION, WHICH IS A GOVT. RECOGNIZED AGENC Y. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD AR AND HAVE GONE THROUGH THE ASSESSMENT ORDER. THE APPELLANTS SUBMISSI ON IS THAT THESE EXPENSES ARE INCURRED FOR BUSINESS PURPOSES. HOWEVER, THESE SUBMISSIONS ARE NOT SUPPORTED BY ANY EVIDE NCE WHATSOEVER. IN SUCH CIRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD. 10. BEFORE US AT THE OUTSET, THE LD AR SUBMITTED THAT THE PARTIES TO WHOM COMMISSION WERE PAID WERE REGULAR PARTIES. THEY H AD SUBMITTED THEIR PAN NUMBERS AND TDS WAS ALSO DEDUCTED WHEREVER I S APPLICABLE AND NONE OF THE PARTIES RELATED TO THE ASSESSEE. IT WAS SU BMITTED THAT IN THE FIRST ROUND, THE FIRST REVENUE APPELLATE AUTHO RITIES HAD ACCEPTED THE CONTENTIONS OF ASSESSEE AND IN THE SECOND ROUND THE S AME LEVEL OF AUTHORITY HAS NOT ACCEPTED THE CONTENTIONS WHICH IS NO T JUSTIFIED SPECIFICALLY KEEPING IN VIEW THE FACT THAT ALL NECESSA RY PARTICULARS WERE ITA NO1288 & 1289/DEL/2011 8 FURNISHED. THE LD CIT(A) CONFIRMED THE ADDITION ONLY ON THE BASIS THAT THE PARTIES HAD NOT SUBMITTED DOCUMENTS WITH REGARD TO NATURE OF TRANSACTIONS. THE LD AR RELIED UPON THE CASE LAW OF CI T, ORISSA V. ORISSA CORPORATION PVT. LTD. 159 ITR 79 WITH THE PROP OSITION THAT WHERE THE ASSESSEE HAD PROVIDED DETAILS OF CREDITORS AND DEPART MENT DID NOTHING TO EXAMINE THE CREDITORS EXCEPT SENDING THE L ETTERS WHICH WERE RETURNED BACK, THE DEPARTMENT WAS NOT JUSTIFIED IN MA KING THE ADDITION. COMMENTING UPON THE CASE LAW RELIED UPON B Y LD CIT(A), THE LD AR SUBMITTED THAT THESE WERE NOT APPLICABLE TO TH E FACTS AND CIRCUMSTANCES OF THE CASE AS IN THE CASE OF ASSESSEE THE PAR TIES WERE DOING BUSINESS WITH THE ASSESSEE FOR THE LAST SO MANY YEARS A ND THEY HAD CONFIRMED THE RECEIPT OF PAYMENT AND ALSO APPROP RIATE TDS WAS DEDUCTED. 11. REGARDING DISALLOWANCE OF COMMISSION PAID TO FOREI GN PARTIES THE LD AR INVITED OUR ATTENTION TO PAPER BOOK PAGE 8 TO 17 WHERE COPIES OF BANK CERTIFICATE FOR EXPORT REALIZATION WAS PLACED W HEREIN THE FACT OF DISCOUNT ON EACH CERTIFICATE WAS MENTIONED. 12. REGARDING SECOND ADDITION IN ASSESSMENT YEAR 2002-03 THE LD AR SUBMITTED THAT PAYMENTS TO DIRECTORS WERE MADE ON T HE BASIS OF DULY PASSED BOARDS RESOLUTION AND THE DIRECTORS HAD INC LUDED THE AMOUNTS IN THEIR RESPECTIVE INCOME TAX RETURNS AND IN THIS RESPECT INVITED OUR ATTENTION TO PAPER BOOK PAGE 42, 45 & 4 7 WHERE COPIES OF FORM NO.16 A RELATING TO DIRECTORS WERE PLACED. 13. AS REGARDS THE DISALLOWANCE OF SALES EXPENSES IN ASSESSME NT YEAR 2007-08 THE LD AR OFFERED TO GO BACK TO THE ASSE SSING OFFICER AGAIN FOR GETTING THE VERIFICATION OF EXPENSES DONE. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE INVOLVING PAYMENT OF COMMISSION TO SALES AGENTS IN ASSESSME NT YEAR 2002-03 CONSIST OF TWO PARTS. THE FIST BEING PAYMENT MA DE TO SALES ITA NO1288 & 1289/DEL/2011 9 AGENTS DIRECTLY AND SECOND IS AMOUNT DEPICTED ON EXPOR T REALIZATION CERTIFICATES CLAIMED TO HAVE BEEN PAID AS COMMISSION. R EGARDING FIRST PART THOUGH THE PAYMENTS ON ACCOUNT OF RECEIPT OF CO MMISSION HAS BEEN CONFIRMED BY RECIPIENTS YET THEY COULD NOT ESTAB LISH AS TO WHY COMMISSION WAS PAID I.E. FOR WHAT SERVICES THE COMMISSION WAS PAID. THE EXPENSES FROM THE INCOME OF ANY ASSESSEE WHO IS ENGAG ED IN BUSINESS OR PROFESSION ARE ALLOWED ONLY IF THEY ARE INCU RRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WHICH ESSENTIAL IN GREDIENTS WAS NOT ESTABLISHED IN THE PRESENT CASES AS THE RECIPIENTS DID NOT EXP[LAIN THE NATURE OF SERVICES RENDERED BY THEM. HOWEVER, BEF ORE MAKING DISALLOWANCE THE ASSESSING OFFICER SHOULD HAVE EXAMINED THE NATURE OF SERVICES BY EXAMINING THE ASSESSEE WHICH HE HAD NOT DONE. THEREFORE, IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE TO THE OF FICE OF ASSESSING OFFICER FOR RE-ADJUDICATION WHO ON THE BASIS OF NATUR E OF SERVICES RENDERED BY THE RECIPIENTS MAY ALLOW THE SAME IF FOUN D TO HAVE BEEN INCURRED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND IF ON THE CONTRARY IT IS FOUND THAT COMMISS ION WAS NOT PAID WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS THEN THE ASSESSING OFFICER CAN DEAL WITH THE SAME AS PER LAW. 15. THE SECOND COMPONENT OF COMMISSION EXPENSES RELATES T O PAYMENTS OF COMMISSION TO FOREIGN PARTIES FOR WHICH LD AR HAD RELIED AT PAPER BOOK PAGES 18 TO 37. ON THE EXAMINATION OF THESE DOCUMENTS WE FIND THAT ON THESE CERTIFICATES THE WORD MENTIONE D IS DISCOUNT AND NOT COMMISSION, THEREFORE, THIS ISSUE IS ALSO RESTORED BAC K TO THE OFFICE OF ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE AS TO WHETHER THE DISCOUNT CLAIMED ON EXPORT REALIZATION CERTIFICATE W AS CLAIMED BY THE ASSESSEE AS REDUCTION FROM TURNOVER OR WHETHER THE ASSESSEE HAD CLAIMED IT AS A SEPARATE ITEM OF EXPENDITURE AND IF O N EXAMINATION IT IS FOUND THAT DISCOUNT AS MENTIONED ON THESE CERTIFICATES WAS NOT CLAIMED BY THE ASSESSEE IN THE MANNER AS MENTIONED ABOVE THEN HE CAN ALLOW ITA NO1288 & 1289/DEL/2011 10 THE SAME AS PER LAW AND IF ON THE OTHER HAND. HE OBSER VES THAT THE SAME WAS ALREADY ALLOWED AS DISCOUNT OR OTHERWISE AS REDU CTION FROM TURNOVER THEN CONCLUDE AS PER LAW. IN VIEW OF THE AB OVE GROUND NO.1 IN BOTH YEARS IS ALLOWED FOR STATISTICAL PURPOSES. 16. REGARDING SECOND ISSUE OF DIRECTORS SALARY IN ASSESSME NT YEAR 2002-03 WE FIND FROM THE COPY OF RESOLUTION THAT INC REASE IN SALARY WAS WITH RETROSPECTIVE EFFECT AND SOME PART OF IT RELATED TO EARLIER YEAR BUT THE LIABILITY TO PAY WITH RETROSPECTIVE EFFECT HAPPE NED DUE TO RESOLUTION PASSED ON 18.1.2002. THE LD CIT(A) HAS HIMSELF NOTED TH ESE FACTS ON PAGE 12 OF HIS ORDER. THEREFORE, PAYMENT OF SUCH SALAR Y CANNOT BE SAID TO BELONG TO EARLIER YEARS. MOREOVER, WE FIND THAT A MOUNT OF ` .975150/- HAS BEEN INCLUDED AS ARREARS OF SALARY IN THE INCOMES OF THE THREE DIRECTORS AMOUNTING TO ` .325050/- EACH WHICH FACT IS VERIFIABLE FROM PAPER BOOK PAGE 42, 45 & 47. MOREOVER, THERE IS NO L OSS TO REVENUE AS ALL THE THREE DIRECTORS WERE IN THE TAX BRACKET OF 3 0%. IN VIEW OF THE ABOVE, WE ALLOW GROUND NO.2 FOR ASSESSMENT YEAR 2002-0 3. 17. AS REGARDS ISSUE OF DISALLOWANCE OF MISC. SALES EXPENSES, THE SAME IS REMITTED BACK TO THE OFFICE OF ASSESSING OFFICER WHO ON THE BASIS OF EXAMINATION OF VOUCHERS ETC. AND ON THE BASIS O F NATURE OF EXPENSES CAN ARRIVE AT THE APPROPRIATE DECISION. 18. IN VIEW OF THE ABOVE, THE APPEAL FOR ASSESSMENT YE AR 2002-03 IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PUR POSES WHEREAS APPEAL FOR ASSESSMENT YEAR 2007-08 IS ALLOWED FOR STATIST ICAL PURPOSES. 19. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DAY OF MARCH, 2014. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.14.03.2014. HMS ITA NO1288 & 1289/DEL/2011 11 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 23.12.2013 DATE OF DICTATION 4.3.2014 DATE OF TYPING 4.3.2014 DATE OF ORDER SIGNED BY 14.3.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.