M/s Himalya International Ltd., Himachal Pradesh V. DCIT, New Delhi

ITA 1750/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74333 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: SANJEEV BINDAL
• Keywords: Business income; Business expenditure; Rule of consistency; Corroborative evidences; Onus to prove
• Section: 142(1); 37(1)

Judgement Text

ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER ITA NO.1750/DEL/ 2011 (ASSESSMENT YEAR : 2005-06) HIMALYA INTERNATIONAL LTD. VS. DCIT VILLAGE SUBHKHERA, CIRCLE-12(1), PAONTA SAHIB, NEW DELHI. HIMACHAL PRADESH-173025 PAN:AAACH0158H ITA NO.2611/DEL/ 2011 (ASSESSMENT YEAR : 2005-06) ITO VS. HIMALYA INTERNATIONAL LTD. WARD-12(4), 4, COMMERCIAL COMPLEX, ROOM NO.331, MINTO ROAD HOSTEL C. R. BUILDING, NEW DELHI. NEW DELHI. ASSESSEE BY : SHRI SANJEEV BINDAL REVENUE BY: SHRI T. VASANTHAN. SR. DR ORDER PER C. M. GARG, J M: THESE APPEALS HAVE BEEN PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI VIDE DATED 25.02.2012 IN APPEAL NO- 318/2007-08 FOR THE ASSESS MENT YEAR 2005-06. SINCE THE APPEAL OF THE ASSESSEE AS WELL AS REVENUE HAVE BEEN PREFERRED ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 2 AGAINST THE SAME ORDER THEREFORE, FOR THE SAKE OF C ONVENIENCE AND CLARITY IN THE OBSERVATIONS AND FINDINGS WE ARE DISPOSING BOTH THE APPEALS BY THIS CONSOLIDATED ORDER. 2. IN THE BEGINNING OF THE ARGUMENTS THE ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NOS.2 AND 3. THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. GR OUND NO.4 OF THE ASSESSEE IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION AN D WE ALSO DISMISS THE SAME. THE SOLE REMAINING GROUND OF THE ASSESSEE IN ITA NO . 1750/DEL/2011 READS AS UNDER: (1). THE LD. CIT (APPEALS) ERRED IN LAW AND ON FAC TS IN CONFIRMING DISALLOWANCE OF A SUM OF RS.25,85,419/- OUT OF RS.4,33,78,000/- INCURRED BY THE CONSIGNEE AGENT IN THE USA ON BEHALF OF THE APPELLANT MERELY BECAUSE T HE ASSESSEE COULD NOT PRODUCE THE BILLS FOR THE SAME A ND ALSO THAT THE SAID EXPENSES WERE PAID TO THE AGENT THROUGH PROPER BANKING CHANNELS. THEREFORE, THE DISALLOWANCE SO MADE MUST BE DELETED. 3. THE GROUNDS RAISED BY THE REVENUE IN ITA NO.2611/DE L/2011 READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASES AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDI TION OF RS.4,07,92,581/- OUT OF TOTAL ADDITION OF RS.4,33,7 8,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF OCEAN FREIGHT, CUSTOM DUTY, WAREHOUSING EXPENSES, ROAD FR EIGHT USA, SELLING AND ADMINISTRATIVE EXPENSES. ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 3 2. THE LD. CIT (A) HAS ERRED IS DELETING THE ADDITI ON OF RS.4,07,92,581/- MADE ON ACCOUNT OF FOLLOWING EXPENSES: 1. OCEAN FREIGHT :1,28,81,000/- 2. CUSTOM DUTY PAID IN USA BY G. R. I :43,85,000/- 3. WARE HOUSING EXPENSES :11,83,000/- 4. ROAD FREIGHT IN USA :92,22,000/- 5. SELLING & ADMINISTRATIVE EXPENSES INCLUDING COMMISSION @ 9.05% TO GRI: 1,25,21,828/- BEING THE FACT THE EVIDENCES DUES NOT PROVE THAT TH ESE EXPENSES PERTAINS TO ASSESSEE, NEITHER THESE HAVE B EEN PAID BY THE ASSESSEE. 3. THE EXPENSE CLAIMED BY THE ASSESSSEE ARE NOT ALLOWABLE TO THE ASSESSSEE AS NO TDS HAS BEEN DEDUCTED BY THE ASSESSEE, ON THESE PAYMENT, WHICH A S PER VERSION OF THE ASSESSEE ARE CONTRACTUAL PAYMENTS. 4. THE LD. CIT (A) HAS ERRED IN ACCEPTING THE VERSION OF THE ASESSEE THAT A CENTRAL GOVT. DEPARTM ENT HAS GRANTED THE SUBSIDY TO THE ASSESSEE ON THE BASI S OF THESE EXPENSES. THE ASSESSEE IN THE RETURN OF INCOM E HAS NOT DECLARED THE SUBSIDY AS ITS INCOME ON THE OTHER HAND IT HAS JUST NETTED OFF THE EXPENSES. THIS VERY FACT PROVES THAT THE ASSESSEE HAS NOT INTENTION TO DECLARE THE INCOME ACCRUED OR RECEIVED BY IT. 4. BRIEFLY STATED THE FACTS GIVING RISE TO THESE AP PEALS ARE THAT THE CASE WAS SELECTED FOR SCRUTINY UNDER COMPULSORY CRITERIA AND NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT 1961 (FOR SHORT TH E ACT) ALONG WITH ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 4 QUESTIONNAIRE WERE SERVED ON THE ASSESSEE. THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, FOOD PROCESSING AND INFO TECH. 5. THE ASSESSING OFFICER MADE CERTAIN ADDITIONS INC LUDING IMPUGNED ADDITION OF RS.4,33,78,000/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWED AND CLAIMED EXPENSES AS USA OFFICE EXPE NSES WHEN ASSESSING OFFICER ASKED ASSESSEE TO JUSTIFY ITS CLA IM WITH SUPPORTING EVIDENCE THEN IN RESPONSE, THE ASSESSEE SUBMITTED T HAT M/S GLOBAL RELIANCE INC. DEDUCTED THE BUSINESS EXPENSES AMOUNTING TO US D 343347/- EQUIVALENT TO RS.1,51,07,247/- IN THE COURSE OF THE EXPORT SAL ES OF THE GOODS ON BEHALF OF THE ASSESSEE IN THE RELEVANT YEAR. THE ASSESSEE ALSO ENCLOSED THE CERTIFICATES FROM M/S GLOBAL RELIANCE INC. AND A CE RTIFICATE IN RESPECT OF SELLING AND ADMINISTRATIVE EXPENSES CLAIMED TO HAVE BEEN VERIFIED BY THE CPA IN THE USA. THE ASSESSING OFFICER POINTED OUT T HAT IN REALITY THE ASSESSEE DOES NOT MAINTAIN ANY OFFICE IN THE USA. 6. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NO SUBSTANTIVE EVIDENCE IN ITS POSSESSION TO SHOW THAT THESE CLAIM ED EXPENSES HAVE ACTUALLY BEEN INCURRED FOR THE PURPOSE OF BUSINESS OF THE AS SESSEE AND SECONDLY, THAT THE ASSESSEE HAS MADE ITS ENTIRE EXPORT SALE OF M/S GLOBAL RELIANCE INC. AND ALL EXPORT INVOICES HAVE BEEN RAISED IN THE NAME OF M/S GLOBAL RELIANCE INC. THEREFORE, THE SO CALLED CLAIMED EXPENSES OF THE AS SESSEE, WHICH HAD BEEN ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 5 INCURRED BY THE M/S GLOBAL RELIANCE INC. AND CLAIME D BY THE ASSESSEE AS ITS USA OFFICE EXPENSES WERE IN ANY CASE IN THE NATUR E OF POST SALE EXPENSES AND THE SAME COULD NOT BE SAID TO BE EXPENSES PERTA INING TO THE EXPORT BUSINESS OF THE ASSESSEE. FOR THE SAKE OF CLARITY IN OUR FINDINGS, THE RELEVANT OPERATIVE PART OF THE ASSESSMENT ORDER IS BEING REP RODUCED BELOW: THUS, INSPITE OF THE FACT THAT THE ASSESSEE WAS AS KED TO JUSTIFY THE SO CALLED USA OFFICE EXPENSES ALONG W ITH NECESSARY SUPPORTING EVIDENCE, ALL THAT THE ASESSEE HAS FURNISHED IS A CERTIFICATE FROM M/S GLOBAL RELIANCE INC. THAT THE LATTER HAD INCURRED EXPENSES AMOUNTING TO RS.15107247/- AS SELLING AND ADMINISTRATIVE EXPENSE S ON BEHALF OF THE FORMER. IN SUPPORT OF THIS CLAIM THE ASSESSEE HAS ENCLOSED A COPY OC A SO CALLED CERTIFICATE FROM THE AUDITOR IN USA WHICH IN ANY CASE IS UNVERIFIABLE. I T IS PERTINENT TO POINT OUT THAT THE SO CALLED CONFIRMAT ION FURNISHED FROM IS ALSO IN RESPECT OF ONLY THE PART OF THE EXPENSES AND NOT FOR THE ENTIRE USA OFFICE EXPENSES . IN RESPECT OF THESE SO CALLED USA OFFICE EXPENSES T HERE ARE CERTAIN INTERESTING POINTS WHICH NEED TO BE POI NTED OUT. WHILE THE ASSESSEE CLAIMS TO HAVE INCURRED THE AFORESAID EXPENSES AS ITS USA OFFICE EXPENSES, IN REALITY THE ASSESSEE DOES NOT MAINTAIN ANY OFFICE I N USA. THE ONLY OFFICE WHICH IS BEING RUN IN USA IS THAT O F M/S GLOBAL RELIANCE INC. IT IS ALSO PERTINENT TO POINT OUT THAT THE ENTIRE EXPORT SALES HAVE BEEN MADE BY THE ASSES SEE TO THIS ENTITY M/S GLOBAL RELIANCE INC. FURTHER, M/S G LOBAL RELIANCE INC. IS A SISTER CONCERN OF THE ASSESSSEE COMPANY AS BOTH THESE ENTITIES HAVE COMMON DIRECTOR S PARTICULARLY ONE SH. SANJEEV KAKKAR, WHO IS A NON RESIDENT BASED IN USA. FURTHER, THE ONLY EVIDENCE W HICH THE ASSESSEE HAS OF HAVING INCURRED THE AFORESAID EXPENSES IS A CERTIFICATE FROM M/S GLOBAL RELIANCE INC. TO THAT EFFECT AND A CERTIFICATE FROM THE SO CALLED CP A (AUDITOR) OF USA FOR PART OF THE EXPENSES. THUS EVE N M/S ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 6 GLOBAL RELIANCE INC. HAS ONLY CONFIRMED EXPENSES AMOUNTING TO RS.15107247/- OUT OF THE TOTAL EXPENSE S CLAIMED OF RS.43378000/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE ALSO FURNISHED A COPY OF ITS AGREEMENT DATED 30/03/2004 WITH M/S GLO BAL RELIANCE INC. WHEREIN IT IS CLAIMED THAT THE ASSESS EE WOULD BEAR ALL EXPENSES INCURRED OUT OF INDIA ON AC COUNT OF MARKETING WHICH WOULD INCLUDE ROAD FREIGHT, OCE AN FREIGHT, CUSTOM DUTY, WAREHOUSING, SELLING AND ADMINISTRATIVE EXPENSES, ETC. AND M/S GLOBAL RELIAN CE INC. WILL DEDUCT ALL SUCH EXPENSES OUT OF THE SALE PROCEEDS AND REMIT THE NET PAYABLES TO THE ASSESSEE IN INDIA . THIS SO CALLED AGREEMENT HAS BEEN MADE BETWEEN RELATED PARTIES I.E. M/S HIMALYA INTERNATIONAL LTD. AND M/S GLOBAL RELIANCE INC. AND HAS NOT BEEN MADE ON ANY N ON JUDICIAL STAMP PAPER AND IS NOT REGISTERED. IT IS O NLY A SELF SERVING DOCUMENT WHICH HAS BEEN SIGNED BY THE TWO RELATED PARTIES AND IS CLEARLY IN THE NATURE OF A S HAM AGREEMENT TO AVOID PAYMENT OF TAXES IN INDIA. OUT OF THE AFORESAID DISCUSSION TWO IMPORTANT POINT S EMERGE. FIRSTLY, THE ASSESSEE HAS NO SUBSTANTIVE EV IDENCE IN ITS POSSESSION TO SHOW THAT THESE EXPENSES HAVE ACTUALLY BEEN INCURRED. SECONDLY, THE MOST IMPORTAN T FACT WHICH EMERGES OUT OF THE AFORESAID DISCUSSION IS TH AT THE ASSESSEE HAS MADE ITS ENTIRE EXPORT INVOICES ISSUED BY THE ASSESSEE COMPANY ONLY BEAR THE NAME OF M/S GLOBAL RELIANCE INC.THEREFORE, IT IS CLEAR THAT THE SO CAL LED EXPENSES WHICH HAD BEEN INCURRED BY M/S GLOBAL RELIANCE INC. AND WHICH HAD BEEN CLAIMED BY THE ASSESSSEE AS ITS USA OFFICE EXPENSES WERE IN ANY CA SE IN THE NATURE OF POST-SALE EXPENSES AND COULD NOT BE S AID TO BE THE EXPENSES PERTAINING TO THE ASSESSEE. IF AT A LL THESE EXPENSES HAVE ACTUALLY BEEN INCURRED, THESE EXPENSE S PERTAIN TO M/S GLOBAL RELIANCE INC. TO WHOM THE EXP ORT SALES HAVE BEEN MADE BY THE ASSESSEE. THEREFORE, IN VIEW OF THE ABOVE, THE ASSESSESE VID E ORDER SHEET ENTRY DATED 14.12.2007 WAS ASKED TO EXPLAIN T HE ALLOWABILITY OF THESE EXPENSES AS PRIMA FACIE THESE WERE ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 7 POST-SALE EXPENSES WHICH COULD NOT BE SAID TO BE PERTAINING TO THE ASSESSEE. IN RESPONSE THE ASSESSEE VIDE ITS REPLY SUBMITTED O N 24.12.2007 STATED THAT M/S GLOBAL RELIANCE INC. WAS WORKING AS A CONSIGNEE AGENT OF THE ASSESSEE COMPAN Y AND WAS RENDERING A HOST OF SERVICES LIKE MAKING MA RKET SURVEY PROCURING ORDERS, ARRANGING FOR WAREHOUSING, TRANSPORT, PAYMENT OF DUTY, ETC. IT WAS ALSO SUBMIT TED THAT M/S GLOBAL RELIANCE INC. WAS COLLECTING THE PAYMENT S FROM THE MARKET ON BEHALF OF THE ASSESSSEE AND REMI TTING THE SAME TO THE ASSESSEE AFTER DEDUCTING THE AFORES AID EXPENSES. IT WAS PLEADED THAT THESE EXPENSES HAD BE EN INCURRED BY M/S GLOBAL RELIANCE INC. ON BEHALF OF T HE ASSESSEE COMPANY AND AS SUCH THE SAID EXPENSES HAD NOT BEEN INCURRED AFTER SALES. THE REPLY OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND TO BE UNACCEPTABLE. AS ALREADY MENTIONED ABOV E, THE ASSESSSEE DOES NOT HAVE IN ITS POSSESSION ANY EVIDENCE TO PROVE THAT THE AFORESAID EXPENSES HAVE ACTUALLY BEEN INCURRED. ALL THAT IT HAS BEEN ABLE T O FURNISH IS A CERTIFICATE FROM THE AUDITOR IN USA AN D THAT TOO ONLY FOR A PART OF THESE EXPENSES. THEREFORE, I T CAN BE REASONABLY HELD THAT NO SUCH EXPENSES HAVE ACTUALLY BEEN INCURRED BY THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, EVEN IF WE, FOR ARGUMENTS SAKE, ACCEPT THAT SUCH EX PENSES HAVE BEEN INCURRED THESE ARE PURELY IN THE NATURE O F POST- SALE EXPENSES PERTAINING TO THE PURCHASER M/S GLOBA L RELIANCE INC. AND NOT PERTAINING TO THE ASSESSEE. I T IS AGAIN PERTINENT TO POINT OUT THAT ALL THE EXPORT IN VOICES ISSUED BY THE ASSESSEE BEAR THE NAME OF M/S GLOBAL RELIANCE INC. AS THE PURCHASER OF THE ASSESSEES EX PORT PRODUCT AND IT IS CLEAR THAT THE ASSESSSEE HAS MADE EXPORT SALES TO M/S GLOBAL RELIANCE INC. THEREFORE, IF AT ALL ANY EXPENSES HAVE BEEN INCURRED BY M/S GLOBAL RELIANCE INC. IT IS FOR THE PURPOSE OF ITS OWN BUSINESS AND NOT F OR THE BUSINESS OF THE ASSESSEE. FURTHER, THE ASSESSEES P LEA THAT M/S GLOBAL RELIANCE INC. IS ITS CONSIGNMENT AGENT I S ALSO AN AFTER THOUGHT AS THE ASSESSEE HAS NOT FURNISHED ANY ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 8 EVIDENCE TO SHOW THAT M/S GLOBAL RELIANCE INC. WAS ITS CONSIGNMENT AGENT. EVEN THE SO CALLED AGREEMENT ENT ERED INTO BY THE ASSESSEE WITH M/S GLOBAL RELIANCE INC. (WHICH IN ANY CASE HAS BEEN PROVED TO BE A SHAM AGREEMENT) DOES NOT MENTION THAT M/S GLOBAL RELIANC E INC. IS A CONSIGNMENT AGENT OF THE ASSESSEE. IN VIEW OF THE DETAILED DISCUSSION MADE ABOVE, THE AFORESAID CLAIM OF THE ASSESSEE AMOUNTING TO RS.43378000/- IS HEREBY DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. 7. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFOR E COMMISSIONER OF INCOME TAX (APPEALS), WHICH WAS PARTLY ALLOWED. THE CIT (A) ALLOWED THE MAJOR PART OF THE CLAIM OF THE ASSESSEE AND DELETED THE PART ADDITION AMOUNTING TO RS.4,07,92,581/- BUT REMAINING PART OF THE DISALLOWANCE AMOUNTING TO RS.25,85,419/- WAS UPHELD AND CONFIRME D. NOW BEING AGGRIEVED BY THIS ORDER, THE ASSESSEE AS WELL AS RE VENUE IS BEFORE THIS TRIBUNAL IN THESE APPEALS WITH THE GROUNDS AS MENTI ONED HEREINABOVE. 8. THE RELEVANT OBSERVATIONS AND FINDINGS OF CIT (A ) READ AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT , THE FINDINGS OF THE ASSESSING OFFICER AND THE FACTS ON RECORD. I HAVE ALSO CONSIDERED THE REMAND REPORT OF THE ASSESSING OFFICER AND THE APPELLANTS REJOINDER THE REON. PERUSALS OF THE FACTS ON RECORD SHOW THAT THE APPEL LANT HAD ENTERED INTO AN AGREEMENT WITH M/S GLOBAL RELIA NCE INC. USA ON 30.03.2004 WHICH WAS EFFECTIVE FROM 01.04.2004 TO31.03.2005. AS PER THE AGREEMENT IT IS SEEN THAT THE APPELLANT WAS TO BEAR ALL THE EXPENSES INC URRED OUT OF INDIA ON ACCOUNT OF MARKETING WHICH WOULD INCLUDE ROAD FREIGHT, OCEAN FREIGHT, CUSTOM DUTY, ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 9 WAREHOUSING CHARGES ETC. ON ACTUAL BASIS. IN ADDITI ON TO' THE ABOVE IT WAS ALSO A PART OF THE AGREEMENT THAT THE APPELLANT WOULD PAY AN AMOUNT @ 9.05% OF THE TOTAL SALES ON ACCOUNT OF SELLING AND ADMINISTRATIVE EXPE NSES, REMUNERATION AND OTHER INCIDENTAL. IT WAS ALSO AGRE ED TO THAT ALL THE ABOVE EXPENSES WOULD BE DEDUCTED BY GL OBAL RELIANCE INC. OUT OF THE SALE PROCEEDS AND THE NET AMOUNT PAYABLE WOULD BE CREDITED TO THE ACCOUNT OF THE APPELLANT. ONE OF THE IMPORTANT CONTENTIONS IN THE APPELLANT'S ARGUMENT 'IS THAT ALL THE PAYMENTS HAVE BEEN MADE TO GLOBAL RELIANCE INC UNDER A MUTUAL AGREEMEN T AND SINCE THE COUNTER PARTIES TO THE AGREEMENT HAD NOT MADE ANY MISGIVINGS ABOUT THE GENUINENESS OR THE REASONABLENESS OF THE PAYMENT, THEREFORE, THE AO CO ULD NOT DISREGARD THE PAYMENT MADE BY VIRTUE OF THE ABO VE AGREEMENT. THE AO HAS' OBSERVED THAT THE AGREEMENT WAS NOT REGISTERED AND IT WAS ONLY IN THE NATURE .OF A SELF SERVING DOCUMENT BETWEEN .TWO RELATED PARTIES AND THEREFORE, THE AGREEMENT' WAS A SHAM AGREEMENT ONLY FOR THE PURPOSE OF AVOIDANCE OF PAYMENT OF TAXES. THE APPELLANT HAS ALSO CLAIMED EXPENSES BY WAY OF SELLING AND ADMINISTRATIVE EXPENSES OF RS.15651000/ - UNDER THE USA OFFICES EXPENSES. AS PER THE AGREEMEN T THE LIABILITY OF THE APPELLANT TOWARDS SELLING AND ADMINISTRATIVE EXPENSES WAS TO AN EXTENT OF MAXIMUM OF 9.05% OF THE SALES AS FIXED BY THE AGREEMENT DISCUS SED ABOVE. THE ASSESSING OFFICER HAS OBSERVED THAT THES E EXPENSES WERE BEING DISALLOWED SINCE THE APPELLANT HAD NOT SUBMITTED ANY EVIDENCE REGARDING THE ABOVE EXPENDITURE. PERUSALS OF THE FACTS ON RECORD SHOW T HAT THE APPELLANT HAD FILED THE DETAILS OF THE MAJOR EXPENS ES INCURRED UNDER THE HEAD SELLING AND ADMINISTRATIVE EXPENSES. THE BILLS AND VOUCHERS REGARDING THE ABOV E WERE ALSO SENT TO THE ASSESSING OFFICER. THE ASSESS ING OFFICER HAS NOT MADE ANY OBSERVATION REGARDING THE ABOVE EXPENSES IN THE REMAND REPORT. AS REGARDS THE AGREEMENT WITH GLOBAL RELIANCE INC. ENTERED INTO BY THE APPELLANT, IT IS A FACT TH AT PARTIES ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 10 TO THE AGREEMENT HAVE DISCHARGED THEIR PART OF THE AGREEMENT, PRINCIPALLY SUPPLIED BY THE APPELLANT A ND RECEIPT OF SUPPLIES AND SALE BY GLOBAL RELIANCE INC .. NOW, A CONTRACT CAN BE ORAL OR WRITTEN. AN AGREEMEN T RESULTING IN A CONTRACT NEED NOT BE IN WRITING UNLE SS THERE IS SPECIFIC PROVISION IN LAW THAT THE CONTRACT SHOU LD BE IN WRITING I.E. SALE OF IMMOVABLE PROPERTY CONTRACTS N EEDING REGISTRATION, BILL OF EXCHANGE OR PROMISSORY NOTE, CREATION OF TRUST PROMISE TO PAY A TIME BARRED LOAN , CONTRACT MADE WITHOUT CONSIDERATION ON ACCOUNT OF NATURAL LOVE AND AFFECTION ETC. A VERBAL AGREEMENT OR A CONTRACT IS EQUALLY ENFORCEABLE IT CAN BE PROVIDE. EXISTENCE OF AN ORAL CONTRACT CAN BE PROVED IN LAW BY EVIDENCE. THE FACT THAT THE APPELLANT MADE SHIPMENT S OF ITS PRODUCTS NAMELY MUSHROOM, VEGETABLES, SPINACH, AND BABY POTATOES TO USA AND GLOBAL RECEIVED THE CONSIGNMENTS, SOLD AND REMITTED THE PROCEEDS BACK T O THE APPELLANT BEFORE AND AFTER THE AGREEMENT DATED 30.03.2004 PROVE BY IMPLICATION THAT THE PARTIES TO THE AGREEMENT HAVE DISCHARGED PART OF THEIR OBLIGATIONS ELABORATED IN THE AGREEMENT, EVEN BEFORE THE DATE O F THE AGREEMENT. THE TERMS OF THE AGREEMENT HAVING BEEN TRAVERSED BY THE PARTIES, BOTH IDENTIFIABLE BY LAW, IN LINE WITH S 186/187 OF THE CONTRACT ACT, I HOLD THAT THE TERMS OF THE AGREEMENT AS REGARDS PAYMENT OF EXPENSES AND OTHER SPECIFIED CHARGES WOULD EQUALLY BE APPLICABLE FOR SHIPMENTS AFTER THE AGREEMENT DATED 30.03.2004. THUS, IN ACCORDANCE WITH CLAUSE 2 OF THE AGREEMENT, THE APPELLANT IS RESPONSIBLE FOR ALL CO STS, TAXES (DIRECT AND INDIRECT), DUTIES, CHARGES OR OTH ER EXPENSES ASSOCIATED WITH THE MANUFACTURE OF THE PRO DUCT. IN CLAUSE 2 OF THE AGREEMENT IT HAS BEEN MADE EXPLI CIT THAT THE APPELLANT WOULD BE RESPONSIBLE FOR ALL THE COSTS, TAXES, AND OTHER EXPENSES RELATING TO THE IMPORT AN D SALE OF THE PRODUCT. THE EXPENSES REFERRED TO IN CLAUSE 2 OF THE AGREEMENT ARE CUSTOMS DUTIES, OCEAN, FREIGHT INLAND FREIGHT, WAREHOUSING ETC. ON ACTUAL BASIS. GLOBAL I S ENTITLED TO SELLING AND ADMINISTRATIVE EXPENSES AT THE RATE OF 9.05% OF THE TOTAL SALES. NO WHERE IN THE AGREEM ENT IS ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 11 THEREBY ANY SUGGESTION THAT GLOBAL WILL NOT BE ENTI TLED FOR REIMBURSEMENT OF ANY EXPENSES UNDER CUSTOM DUTI ES, OCEAN, FREIGHT, WAREHOUSING AND BROKERAGE. THE ASSESSING OFFICER REFERS TO THE INVOICES OF THE EXP ENSES MADE IN THE LETTER HEAD OF THIRD PARTIES AND REFUSE THE CLAIM OF THE APPELLANT. THE VIEW IS WITHOUT MERITS. SHIPPING BILLS ARE IN THE NAME OF THE APPELLANT AND THE CONSIGNEES NAME AND DESTINATION PORT HAVE BEEN CLE ARLY MENTIONED. ONCE THE CONSIGNEE TAKES CHARGES OF THE SHIPMENT, THE WAREHOUSING AND INLAND ROAD CARRIERS WOULD ONLY RECOGNIZE THE CONSIGNEE. SINCE IT IS TH E CONSIGNEE WHO WOULD DIRECT THE SUBSEQUENT PROCESSES UPON RECEIPTS OF GOODS IN USA. HERE IT IS ALSO PERT INENT TO NOTE THAT AFTER ACCEPTING THE OCEAN FREIGHT EXPE NSES OF RS.16488000/- THE APPELLANT WAS ALLOWED A SUBSIDY O F RS.3607000/- BY APEDA MINISTRY OF COMMERCE UNDER THE TRANSPORT ASSISTANCE SCHEME WHICH SHOWS THAT TH E EXPENSES HAD BEEN INCURRED BY THE APPELLANT ONLY. MOREOVER, IT IS ALSO PERTINENT TO NOTE THAT THE AGR EEMENTS ENTERED INTO BY THE APPELLANT WERE ALSO ACCEPTED BY THE ASSESSING OFFICER IN A. Y. 2002-03 AND 2004-05 WHER EIN THE EXPENSES CLAIMED BY THE APPELLANT ON THE BASIS OF SIMILAR AGREEMENTS WERE ALLOWED BY THE DEPARTMENT. IN THE CASE OF ACIT VS VALVOLINE CUMMINS LTD. IN ITA NOS. 1026 & 1059/DEL/2009 AND ITA NO.1159 & 1451/DEL/2009 WHEREIN THE ASSESSING OFFICER HAS HEL D THAT AGREEMENTS WERE SHAM, THE HONBLE DELHI ITAT H AS HELD AS UNDER: THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY EIT HER FROM CASL OR ITS APPOINTED DEALERS OR ITS OVERALL NETWOR K TO FIND OUT AS TO WHETHER THE ASSESSEE HAD USED THE MARKETING NETW ORK AND OTHER RELATED INFRASTRUCTURAL SERVICES OF CASL AS S O AGREED BY THE PARTIES VIDE AGREEMENT DATED 01.01.2001. THE ASSESS ING OFFICER HAS ALSO NOT MADE ANY ENQUIRY IN THIS REGARD TO DIS PROVE THE ASSESSEES CLAIM THAT THE ASSESEE USED THE MARKETIN G NETWORK AND OTHER RELATED INFRASTRUCTURAL SERVICES OF CASL WITH A VIEW TO INCREASE OR PROMOTE THE ASSESSEES SALES OF VARIOUS ITEMS SUCH AS LUBRICANTS, GREASES AND INDUSTRIAL OILS THROUGH THE MARKETING ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 12 NETWORK, AND OTHER RELATED INFRASTRUCTURAL SERVICES ALREADY SET UP BY CASL. THE ASSESSING OFFICER HAS TAKEN A VIEW THA T THE AGREEMENT DATED 01.01.2001 WAS MERELY A DEVICE TO G IVE A COLOUR OF GENUINENESS SO THAT THE INCOME OF THE ASS ESSEE CAN BE DIVERTED OR PASS OVER TO ANOTHER COMPANY BUT THE AS SESSING OFFICER HAS FAILED TO BRING ANY IOTA OF EVIDENCE TO ESTABLISH THAT THE AGREEMENT IN QUESTION IS MERELY A COLOURABLE D EVICE TO PASS OVER THE ASSESSEES INCOME TO ANOTHER COMPANY. IT I S NOT THE CASE OF THE ASSESSING OFFICER THAT THE CASL IS NOT AN INCOME TAX ASSESSEE OR HAS NOT INCLUDED THE AMOUNT OF SERVICE CHARGES RECEIVED FROM THE ASSESSEE IN ITS INCOME DECLARED T O THE DEPARTMENT. THE ASSESSING OFFICER HAS MERELY DRAWN ASSUMPTION AND PRESUMPTION AS TO THE GENUINENESS OF THE AGREEM ENT IN QUESTION WITHOUT THERE BEING ANY IOTA OF EVIDENCE O R MATERIAL TO SAY SO. DURING THE COURSE OF HEARING OF THESE APPEA LS BEFORE ITAT THE ASSESSEE HAS SUCCESSFULLY BEEN ABLE TO DEM ONSTRATE THE VARIOUS ACTIVITIES IN THE COURSE OF MAKING SALE S OF ITS PRODUCT WERE CARRIED OUT THROUGH THE DEALERS/ DISTRIBUTION NETWORK OF CASL AND AS A RESULT THEREOF, THE ASSESSEES TURNOV ER HAS ALSO BEEN CONSIDERABLY INCREASED FROM YEAR TO YEAR. THUS THE ASSESSEES CLAIM OF PAYMENT OF RS.52,00,000/- IN EA CH YEAR ON ACCOUNT OF SERVICE CHARGES PAID TO CASL IS TO BE AL LOWED AS A BUSINESS EXPENDITURE. IN THE INSTANT CASE ALSO NO EVIDENCE HAVE BEEN BRO UGHT ON RECORD BY THE ASSESSING OFFICER WHICH SHOW THAT THE AGREEMENT IN QUESTION WAS NOT GENUINE OR WAS THE SH AM AGREEMENT. IN VIEW OF THE FINDINGS ABOVE AND AS PE R THE AGREEMENT I HOLD THAT CUSTOM DUTIES OF RS.4385000/- OCEAN FREIGHT OF RS.12,881000/- WAREHOUSING EXPENSES OF RS.1183000/- AND ROAD FREIGHT IN USA OF RS.9822000/ - INCURRED BY GLOBAL/HIM INFOTECH DBA TRANS ATLANTIC MARKETING ON BEHALF OF THE APPELLANT IS ALLOWABLE AS AN EXPENDITURE IN THE HANDS OF THE APPELLANT SINCE THERE IS CORRELATION BETWEEN TH E APPELLANTS EXPORT OF MUSHROOM, VEGETABLES AND BABY POTATOES AN D EXPENSES INCURRED BY THE ABOVE PARTIES IN CONNECTIO N WITH THE APPELLANTS EXPORT. A PART OF THE CLAIM UNDER USA OFFICE EXPENSES IS BY WAY OF SELLING AND ADMINISTRATIVE EXPENSES. THE CLAIM IF F OR ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 13 RS.15107247/-. THE CLAIM ARE UNDER ADVERTISEMENT, A QL EXAM, AUTOMOBILE EXPENSES, BANK CHARGES, BUSINESS FLEX, C OMPUTER REPAIR, COURIER AND WAREHOUSING CREDIT CARD EXPENSE S CUSTOM BROKERAGE CUSTOM EXAM DEMURRAGE DISCOUNT AND RATE DIFFERENCE, FEES, AND MEMBERSHIP, INSURANCE, LEASE S RENT, LEGAL AND PROFESSIONAL FEES, MISC. EXPENSES, POSTAGE AND DELIVERY, QUALITY TESTING, SALARY, TAXES TELEPHONE EXPENSES, TRAVELING AND ADVERTISEMENT. THE ASSESSING OFFICER IN HIS REMAND REPORT CONTENDS THAT NO BILLS HAVE BEEN SUBMITTED IN SUPPO RT OF THE CLAIM OF SELLING AND ADMINISTRATIVE EXPENSES AND IF AT ALL, THE EXPENSES PERTAIN TO GLOBAL OR TRANS ALTANTIC AND TH E EXPENDITURE DOES NOT BEFALL IN THE HANDS OF THE APP ELLANT. PERUSAL OF THE RECORDS SHOW THAT THE EXPENSES HAD B EEN CERTIFIED BY THE AUDITOR. MOREOVER THE DETAILS SHOW THAT LEASE RENT WAS PAID FOR OFFICE SPACE HIRED BY M/S GLOBAL RELIANCE . PERUSAL OF THE BILLS ALSO SHOW THAT IT WAS CLEARLY MENTIONED THERE THAT THE PAYMENT WAS MADE FOR AND ON BEHALF O F HIMALAYA INTERNATIONAL LTD. SIMILARLY BILLS RELATIN G TO OTHER EXPENSES WERE ALSO FILED BY THE APPELLANT, AND MANY OF THE EXPENSES WERE RELATED TO THE SALES OF THE PRODUCTS OF THE APPELLANT. THE ASSESSING OFFICER HAS NOT BROUGHT AN Y FACTS ON RECORDS TO PROVE THAT THE EXPENSES WERE NOT GENUINE OR NOT RELATED TO THE BUSINESS THE EXPENSES WERE FILED BY THE APPELLANT, THEREFORE, IT WAS THE RESPONSIBILITY OF THE ASSESSING OFFICER TO VERIFY THE EXPENSES INSTEAD OF OBSERVING THAT IF DEEMED FIT THEY MAY BE VERIFIED THROUGH FTD. GROUND NO. 1 TO 4 OF THE REVENUE 9. APROPOS THESE GROUNDS, WE HAVE HEARD SUBMISSIONS AND CONTENTIONS OF BOTH THE PARTIES AND CAREFULLY PERUSED THE RECORD, INTER ALIA, PAPER BOOK FILED BY THE ASSESSEE SPREAD OVER 143 PAGES. DURING THE ARGUMENTS, THE ASSESSEES REPRESENTATIVE SUBMITTED A COPY OF DECISION OF ITAT DELHI C BENCH IN ASSESSEES OWN CASE FOR AY 2003-04 DATED 14.10.2009 PASSED IN ASSESSEES ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 14 APPEAL IN ITA NO.228/DEL/2009 AND REVENUES APPEAL FOR THE SAME ASSESSMENT YEAR IN ITA NO. 815/DEL/2009 WHEREIN THE ENTIRE CONTROVERSY WAS RESTORED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO EXAMINE ASSESSEES CLAIM AFRESH. THE AR HAS ALSO FILED A C OPY OF THE ORDER OF COMMISSIONER OF INCOME TAX(A) DATED 30.3.2013 FOR A Y 2003-04 BY WHICH APPEAL OF THE ASSESSEE HAS BEEN ALLOWED BY DELETING IMPUGNED ADDITION IN RESPECT OF EXPENSES INCURRED BY M/S GLOBAL RELIANCE INCORPORATED, USA ON BEHALF OF THE ASSESSEE. 10. LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOM E TAX(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,0 7,92,581 OUT OF TOTAL ADDITION OF RS.4,33,78,000 MADE BY THE ASSESSING OF FICER ON ACCOUNT OF OCEAN FREIGHT, CUSTOM DUTY, WAREHOUSING EXPENSES, R OAD FREIGHT OF USA AND SELLING AND ADMINISTRATIVE EXPENSES. THE DR FURTHE R CONTENDED THAT THE COMMISSIONER OF INCOME TAX(A) HAS ERRED IN DELETING ABOVE ADDITION BEING THE FACT THAT THE EVIDENCES SUBMITTED BY THE ASSESS EE COULD NOT PROVE THAT THESE EXPENSES ACTUALLY PERTAIN TO ASSESSEES BUSIN ESS. THE DR FURTHER CONTENDED THAT THE EXPENSES CLAIMED BY THE ASSESSEE ARE NOT ALLOWABLE TO THE ASSESSEE AS NO TDS HAS BEEN DEDUCTED BY THE ASSESSE E ON THESE PAYMENTS WHICH AS PER VERSION OF THE ASSESSEE WERE CONTRACTU AL PAYMENTS. THE DR ALSO CONTENDED THAT THE COMMISSIONER OF INCOME TAX( A) GROSSLY ERRED AND ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 15 WAS NOT JUSTIFIED IN ACCEPTING THE EXPLANATION OF T HE ASSESSEE THAT THE CENTRAL GOVERNMENT DEPARTMENT HAS GRANTED SUBSIDY TO THE AS SESSEE ON THE BASIS OF THESE EXPENSES. THE DR ALSO POINTED OUT THAT IN TH E RETURN OF INCOME, THE ASSESSEE HAS NOT DECLARED ANY SUBSIDY AS ITS INCOME AND, ON THE OTHER HAND, IT HAS JUST NETTED OFF THE EXPENSES WHICH PROVES THAT THE ASSESSEE HAS NO INTENTION TO DECLARE THE INCOME ACTUALLY ACCRUED OR RECEIVED BY IT. THE DR FINALLY SUBMITTED THAT THE ASSESSING OFFICER MADE D ISALLOWANCE AND ADDITION ON REASONABLE AND COGENT GROUNDS WHICH WAS WRONGLY DELETED BY THE COMMISSIONER OF INCOME TAX(A), THEREFORE, THE IMPUG NED ORDER MAY BE SET ASIDE IN THIS REGARD BY RESTORING THAT OF THE ASSES SING OFFICER. 11. REPLYING TO THE ABOVE, ASSESSEES REPRESENTA TIVE POINTED OUT NOTARIZED MOU DATED 19.09.2002 BETWEEN THE ASSESSEE AND M/S G LOBAL RELIANCE INC. (PAPER BOOK PAGE NO. 1 TO 6) AND SUBMITTED THAT THI S AGREEMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER AS WELL AS B EFORE THE COMMISSIONER OF INCOME TAX(A) AND ON THE BASIS OF WHICH YEARLY A GREEMENTS WERE MADE BY THE ASSESSEE AND M/S GLOBAL RELIANCE INC. BUT TH E ASSESSING OFFICER HAS NOT MADE ANY REFERENCE OF THE SAME IN THE ASSESSMEN T ORDER. THE AR SUBMITTED THAT THE ASSESSEE PRODUCED ALL SUPPORTING EVIDENCE BUT FURNISHED THESE IN RESPECT OF MAJOR EXPENSES ONLY AS DESIRED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND THE SAME SET OF SUPPORTING VOUCHERS ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 16 AND EVIDENCE WAS ALSO FURNISHED BEFORE THE COMMISS IONER OF INCOME TAX(A) TO AVOID FURNISHING OF ANY FRESH EVIDENCE. THE AR FURTHER SUBMITTED THAT A CERTIFICATE ISSUED BY CPA IN USA WAS ALSO PR ODUCED IN RESPECT OF ALL EXPENSES INCURRED AT USA AND REIMBURSED BY THE ASSE SSEE, THEREFORE, EVEN IN ABSENCE OF ALL SUPPORTING EVIDENCE, THE SAME SHOULD HAVE BEEN CONSIDERED FOR ALLOWABILITY. 12. THE AR ALSO CONTENDED THAT THE CLAIMED EXPEN SES WERE RESTRICTED TO THE EXTENT OF FIXED PERCENTAGE AS AGREED BEFOREHAND BY THE PARTIES IN THE AGREEMENT DATED 30.03.2004 WITH BONAFDE INTENTION T O REGULATE AND MONITOR THE SAME TO REMAIN WITHIN THE BUDGETED ALLOCATION. THIS PRUDENT BUSINESS DECISION AND AGREEMENT CANNOT BE USED AGAINST THE A SSESSEE BY DISALLOWING OF THOSE EXPENSES. THE AR VEHEMENTLY CONTENDED THA T AS PER ADOPTED PROCEDURE, THE ASSESSEE RAISES THE INVOICES BY ESTI MATING NET REALIZABLE VALUE (I.E. GROSS SALES VALUE IN US US EXPENSES) AND UN DER THE RELEVANT CUSTOMS RULES, AN ANNUAL RETURN OF EXPORTS (ARE) IS FILED O N ARE-I IN RESPECT OF ALL GOODS LEAVING THE INDIAN CUSTOM BOUNDARIES. THE AR FURTHER POINTED OUT THAT THE SAID INVOICE VALUE WAS DULY DECLARED IN AR E-I BY THE ASSESSEE ALSO AND THE TOTAL AMOUNT FOR THE SAME CAME TO RS. 9.65 CRORES. THE AR ALSO POINTED OUT THAT GROSS SALES REALIZED IN USA WAS DE CLARED AS TURNOVER BY THE ASSESSEE IN THE P& L ACCOUNT AND US EXPENSES WERE A LSO CLAIMED SEPARATELY ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 17 THEREIN. THE AR POINTED OUT THAT THE ASSESSING OFF ICER FOLLOWED TWO VIEWS WHICH ARE SELF-CONTRADICTORY BECAUSE ON ONE HAND, T HE ASSESSING OFFICER HAS CONSIDERED GROSS SALES REALIZED IN THE USA AS SALES OF THE ASSESSEE, WHILE ON THE OTHER HAND, THE ASSESSING OFFICER HAS AVERRED T HAT THE EXPORT SALE WAS COMPLETED AT THE TIME WHEN GOODS LEFT THE INDIAN CU STOMS BORDERS AND ALL EXPENSES INCURRED THEREAFTER WERE POST SALES EXPENS ES. 13. THE AR HAS DRAWN OUR ATTENTION TOWARDS ORDER OF COMMISSIONER OF INCOME TAX(A) DATED 30.3.2013 IN ASSESSEES OWN CAS E FOR AY 2003-04 AND SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) HA S ACCEPTED THE CLAIM OF THE ASSESSEE IN THE SECOND ROUND AFTER REMAND OF THE CASE FROM ITAT AND SUBMITTED THAT AS PER DISCUSSIONS MADE IN THIS ORDE R FROM PARA 8 TO 8.7.2, THE COMMISSIONER OF INCOME TAX(A) HAS ACCEPTED THE CLAI M OF THE ASSESSEE IN CONSONANCE WITH THE MOU DATED 19.09.2002 WHEREIN TH E NATURE OF EXPENSES EMBEDDED IN THE HEAD OF ADMINISTRATIVE AND GENERAL EXPENSES WAS CLARIFIED. THE AR VEHEMENTLY CONTENDED THAT WHEN THE DEPARTMEN T HAS TAKEN A PARTICULAR STAND ABOUT THE CLAIM OF THE ASSESSEE WH ICH IS IN FAVOUR OF THE ASSESSEE, THEN THE DEPARTMENT IS NOT PERMITTED TO T AKE A DEVIATED STAND AGAINST THE ASSESSEE PERTAINING TO THE SAME CLAIM D URING THE SUBSEQUENT ASSESSMENT YEARS. THE AR PLACED RELIANCE ON THE RE CENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS EXCEL ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 18 INDUSTRIES 358 ITR 295(SC) WHEREIN IT HAS BEEN HELD THAT THE DEPARTMENT SHOULD CAUTIOUSLY FOLLOW THE RULE OF CONSISTENCY UN LESS AND UNTIL THE DEPARTMENT HAS FOUND OR DISCOVERED NEW FACTS AND CI RCUMSTANCES FOR TAKING A DIFFERENT STAND OR VIEW. 14. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBM ISSIONS AND CONTENTIONS OF BOTH THE PARTIES AND CAREFUL PERUSAL OF THE RECORD, AT THE OUTSET, WE FIND IT APPROPRIATE TO REPRODUCE THE TERMS AND CONDITIONS I N REGARD TO MARKETING AND SALES EXPENSES STIPULATED IN PARA 03 OF THE MOU DAT ED 19.09.2002 SIGNED AND NOTARIZED BETWEEN THE ASSESSEE AND M/S GLOBAL R ELIANCE INC. (CONSIGNMENT AGENT OF THE ASSESSEE IN USA) WHICH RE AD AS UNDER:- 03. MARKETING AND SALES: GLOBAL SHALL HAVE THE EXCLUSIVE RIGHT TO MARKET, DISTRIBUTE AND SELL PROD UCT THROUGHOUT THE UNITED STATES. HIMALYA SHALL BE RESPONSIBLE FOR ALL THE COSTS, TAX AND OTHER EXPENS ES RELATING TO THE IMPORT AND SALE OF PRODUCTS MADE BY GLOBAL RELIANCE INC (E.G. CUSTOM DUTIES, OCEAN FREI GHT, INLAND FREIGHT, WAREHOUSING, OTHER ADMINISTRATIVE A ND GENERAL EXPENSES INCLUDING USA SALARIES PAYMENTS, TELEPHONE EXPENSES, TRAVELLING EXPENSES, STAFF EDUCATION AND MEDICAL EXPENSES, COURIER EXPENSES, WEB HOSTING EXPENSES, USA LOCAL EXPENSES, MEMBERSHIP FEES PAID TO DIFFERENT ASSOCIATIONS, LEG AL & PROFESSIONAL FEES, CAR EXPENSES, USA TRANSPORTATION EXPENSES, INSURANCE EXPENSES, QUALITY TESTING EXPEN SES, PREPAYMENT DISCOUNTS, FINANCE CHARGES, SUPPLIES OFF ICE, MORTGAGE EXPENSES, LEASE RENT, COMPUTER EXPENSES, POSTAGE DELIVERY, TAXES ETC. THROUGHOUT THE UNITED STATES ON ACTUAL BASIS. GLOBAL SHALL BE RESPONSIBLE FOR COMPLYING WITH ALL APPLICABLE AND FEDERAL, STAT E AND/OR LOCAL LAWS AND REGULATION RELATING TO THE ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 19 MARKETING, SALE AND DISTRIBUTORS OF PRODUCTS THROUG HOUT THE UNITED STATES. AS A CONSIDERATION HIMALYA SHALL PAY A COMMISSION @3% OF THE SALES TO GLOBAL, OVER AND ABOVE ACTUAL EXPENSES INCURRED BY GLOBAL AS ABOVE MENTIONED. 15. IN VIEW OF ABOVE, IT IS EVIDENT THAT AS PER TERMS OF THE AGREEMENT (MOU) DATED 19.9.2002 BETWEEN THE ASSESSEE AND M/S GLOBAL RELIANCE INC., THE EXPENSES IN THE NATURE OF SELLING AND ADMINISTR ATIVE EXPENSES WERE CLEARLY THE RESPONSIBILITY OF THE ASSESSEE AND THE ASSESSEE HAD TO REIMBURSE THE SAME TO ITS CONSIGNMENT AGENT I.E. M/S GLOBAL R ELIANCE INC. IT IS A WELL ACCEPTED PROPOSITION THAT IN CASE OF A STANDARD CON SIGNMENT, SALE IS EFFECTED BY THE CONSIGNMENT AGENT ON BEHALF OF THE CONSIGNOR AND THE AGENT IS NOT RESPONSIBLE FOR ANY EXPENSES INCURRED FOR SUCH SALE AND EXPENSES ACTUALLY INCURRED OR PAID ON BEHALF OF THE CONSIGNER IS REIM BURSED TO THE CONSIGNMENT AGENT. THE ARS CONTENTION ON THIS POINT IS THAT A PART FROM ACTUAL OCEAN FREIGHT, CUSTOM DUTY PAID IN USA, WAREHOUSING EXPEN SES IN USA, ROAD FREIGHT IN USA, SELLING AND ADMINISTRATIVE EXPENSES IN USA AND OTHER INCIDENTAL EXPENSES AND THE REMUNERATION OF THE CON SIGNMENT AGENT WAS FIXED @9.05% OF THE SALES MADE IN USA BY GLOBAL REL IANCE INC. AS PER TERMS OF THE SUBSEQUENT AGREEMENT DATED 30.03.2004 (PAPER BOOK PAGE NO. 7) TO REGULATE AND MONITOR THE SAME REMAIN WITHIN T HE BUDGETED COST ALLOCATION WHICH IS A PRUDENT BUSINESS DECISION OF THE ASSESSEE TO CONTROL THE ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 20 EXPENSES INCURRED BY CONSIGNMENT AGENT. THE AR ALS O CONTENDED THAT THE DEPARTMENT SHOULD FOLLOW THE RULE OF CONSISTENCY AS PER DECISION OF HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES (SUPR A). 16. THE AR ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF GE INDIA TECHNOLOGY C ENTRE P. LTD. VS COMMISSIONER OF INCOME TAX (2010) 327 ITR 456(SC) AND DECISION OF SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF MAHINDR A & MAHINDRA LTD. VS DCIT (2009) 313 ITR AT 263 (MUMBAI ITAT)(SB ) . THE AR POINTED OUT THAT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. (SUPRA), HONBLE APEX COURT HAS HELD THAT MERE REMITTANCE TO NON-RESIDENT AND THE DUTY OF THE ASSESSEE TO DEDUCT TAX AT SOURCE DOES N OT ARISE UNLESS REMITTANCE CONTAINS WHOLLY OR PARTLY TAXABLE INCOME. THE AR F URTHER CONTENDED THAT AS PER DECISION OF ITAT MUMBAI (SB) IN THE CASE OF MAH INDRA & MAHINDRA LTD. (SUPRA), EXPLANATION 2 ATTACHED TO SECTION 9(1 )(VII) OF THE ACT IN THE CASE OF REMITTANCE OR REIMBURSEMENT OF EXPENSES WHERE NO ELEMENT OF TAXABLE INCOME IN INDIA IS FOUND, THEN THE QUESTION OF TAX DEDUCTION AT SOURCE DOES NOT ARISE. 17. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT CIRCULAR NO. 715 DATED 8.8.1995 IS APPLICABLE TO THE CASE OF THE ASSESSEE AND TDS SHOULD BE DEDUCTED ON REIMBURSEMENT. THE DR ALSO POINTED OUT THAT APART FROM ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 21 REIMBURSEMENT OF EXPENSES, THE PAYMENT MADE TO GLOB AL RELIANCE INC. ALSO CONTAINS COMMISSION PAID TO CONSIGNMENT AGENT, THER EFORE, THE ASSESSEE IS UNDER AN OBLIGATION TO DEDUCT TDS THEREON. THE DR FURTHER POINTED OUT THAT IF TDS HAS NOT BEEN DEDUCTED BY THE ASSESSEE, THEN THE ENTIRE AMOUNT OF PAYMENT AS CLAIMED BY THE ASSESSEE WAS RIGHTLY DISA LLOWED BY THE ASSESSING OFFICER. 18. ON CAREFUL CONSIDERATION OF ABOVE CONTENTION S, WE ARE OF THE VIEW THAT ON CAREFUL PERUSAL OF THE AGREEMENT/MOU DATED 19.9. 2002 AND ADDITIONAL AGREEMENT DATED 30.3.2004 BETWEEN THE ASSESSEE AND GLOBAL RELIANCE INC., WE CLEARLY OBSERVE THAT THE EXPENSES INCURRED ON BE HALF OF THE ASSESSEE BY ITS CONSIGNMENT AGENT M/S GLOBAL RELIANCE INC, THE ENTI RE EXPENSES CLAIMED BY THE ASSESSEE WERE RELATED TO MARKETING AND SALES EX PENSES AND AS PER CLAUSE 03 OF THE FIRST AGREEMENT DATED 19.9.2002, THE ASSE SSEE WAS RESPONSIBLE FOR ALL COSTS, TAXES AND OTHER TAX EXPENSES RELATING TO THE IMPORT FROM INDIA TO USA AND SALE OF PRODUCTS MADE BY GLOBAL RELIANCE IN C. INCLUDING CUSTOM DUTY, OCEAN FREIGHT AND LAND FREIGHT OF USA, WAREHO USING EXPENSES IN USA AND OTHER GENERAL AND ADMINISTRATIVE EXPENSES INCLU DING USA SALARIES PAYMENTS, TELEPHONE EXPENSES, TRAVELLING EXPENSES, STAFF EDUCATION AND MEDICAL EXPENSES, COURIER EXPENSES, WEB HOSTING EXP ENSES, USA LOCAL EXPENSES, MEMBERSHIP FEES PAID TO DIFFERENT ASSOCIA TIONS, LEGAL & ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 22 PROFESSIONAL FEES, CAR EXPENSES ETC. WE ALSO OBSER VE THAT AS A PRUDENT BUSINESS DECISION AND WITH AN AIM TO RESTRICT AND C ONTROL EXPENSES IN USA, THE ASSESSEE ALSO FIXED THE SELLING AND ADMINISTRAT IVE EXPENSES REMUNERATION AND OTHER INCIDENTALS @9.05% OF THE SALES EFFECTED IN USA. UNDISPUTEDLY, THE AMOUNT OF REMITTANCE OR REIMBURSEMENT MADE TO G LOBAL RELIANCE INC. ALSO CONTAINED AN ELEMENT OF COMMISSION OF CONSIGNM ENT AGENT I.E. GLOBAL RELIANCE INC. BUT AT THE SAME TIME, WE CLEARLY OBSE RVE THAT THE CONSIGNMENT AGENT HAS NOT RENDERED ANY SERVICE IN INDIA AND, TH EREFORE, CONSIGNMENT COMMISSION IS NOT TAXABLE IN INDIA. 19. ON VERY CAREFUL PERUSAL OF ASSESSMENT ORDER, IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX(A) AND ENTIRE RECORD AND MATERIAL PLACED BEFORE US, WE OBSERVE THAT THE AUTHORITIES BELOW HA VE NOT DISPUTED THE PROCEDURE ADOPTED BY THE ASSESSEE AND ITS CONSIGNME NT AGENT I.E. M/S GLOBAL RELIANCE INC. THAT THE ASSESSEE RAISES BILLS/INVOIC ES BY ESTIMATING NET REALIZABLE VALUE (I.E. GROSS SALES VALUE IN US MINU S US EXPENSES) AND UNDER THE RELEVANT CUSTOM RULES AN ARE-1 WAS FIELD BY THE ASSESSEE IN RESPECT OF ALL GOODS LEAVING INDIAN CUSTOM BOUNDARIES AND SAME DETAIL WAS DULY DECLARED IN ARE-I BY THE ASSESSEE AND TOTAL AMOUNT FOR THE SAME WAS AMOUNTING TO RS. 9.65 CRORES. WE ALSO OBSERVE THAT THE AUTHORITIES BELOW HAVE ALSO NOT DISPUTED RATHER ACCEPTED THE ACCOUNTI NG METHOD OF THE ASSESSEE ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 23 THAT OUT OF THE GROSS SALES REALIZED IN USA WAS DEC LARED AS TURNOVER BY THE ASSESSEE IN THE FINAL ACCOUNT AND US EXPENSES WERE ALSO CLAIMED SEPARATELY THEREIN. 20. IN VIEW OF OUR ABOVE OBSERVATION MADE IN EAR LIER PARA, WE HOLD THAT THE ASSESSING OFFICER CONCLUDED THE ASSESSMENT N CONTRA DICTORY FINDING BECAUSE ON THE ONE HAND, THE ASSESSING OFFICER HAS CONSIDER ED GROSS SALES REALIZED VALUE IN USA AS SALES OF THE ASSESSEE FOR THE FINAN CIAL YEAR UNDER CONSIDERATION AND ON THE OTHER HAND THE AO HELD THA T THE EXPORT SALE WAS COMPLETED WHEN THE CONSIGNED GOODS LEFT THE INDIAN CUSTOMS BORDER AND ALL EXPENSES INCURRED THEREAFTER WERE POST SALE EXPENSE S. ACCORDINGLY, WE ARE INCLINED TO HOLD THAT FIRST PART OF FINDINGS OF THE ASSESSING OFFICER ARE CORRECT THAT THE GROSS SALES REALIZED VALUE IN USA IS THE E XPORT SALES OF THE ASSESSEE BUT EXPORT SALES WAS NOT COMPLETED WHEN THE GOODS L EFT THE INDIAN CUSTOM BORDERS BECAUSE IT WAS CONSIGNMENT WHICH WAS INTEND ED TO BE SOLD THROUGH CONSIGNMENT AGENT OF THE ASSESSEE I.E. M/S GLOBAL R ELIANCE IN. IN USA. 21. WE FURTHER CLEARLY OBSERVE THAT AS PER ABOVE SET OF FACTS, ALL US EXPENSES INCURRED BY THE CONSIGNMENT AGENT ON BEHAL F OF THE ASSESSEE WERE THE RESPONSIBILITY OF THE ASSESSEE AS PER MOU DATED 19.9.2002 AND SUBSEQUENT AGREEMENT DATED 30.3.2004, WHICH WERE AL SO CERTIFIED BY CPA AUDIT REPORT, WHEN ACTUAL EXPORT SALE WAS EFFECTED AT USA THROUGH ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 24 CONSIGNMENT AGENT ON BEHALF OF THE ASSESSEE, THEN E XPENSES CLAIMED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS CAN NOT BE TRE ATED AS POST SALES EXPENSES AND OBSERVATIONS AND FINDINGS OF THE ASSESSING OFFI CER ARE NOT CORRECT AND JUSTIFIED IN THIS REGARD AND WE SET ASIDE THE SAME TO THIS EXTENT ONLY. 22. ON THE BASIS OF ABOVE FACTUAL MATRIX EMERGED FROM THE EVIDENCE SUBMITTED BY THE ASSESSEE BEFORE THE AUTHORITIES BE LOW, WE CLEARLY OBSERVE THAT THE RATIO OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. (SUPRA) IS APPLICABLE TO THE PRESENT CASE. WE ALSO HOLD THAT THE BENEFIT OF THE RATIO OF THE DECISION OF SPECIAL BENCH, MUMBAI IN THE CASE OF MAHINDRA & MAHINDRA (SUPRA) IS ALSO SQU ARELY APPLICABLE TO THE PRESENT CASE IN FAVOUR OF THE ASSESSEE. HENCE, IN THIS SITUATION AND ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, CIRCULAR NO. 7 15 DATED 8.8.95 IS NOT APPLICABLE TO THE PRESENT CASE. 23. COMING TO THE ISSUE OF CONSISTENCY, WE CLEAR LY OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) HAS GRANTED RELIEF TO THE ASSESSEE IN THE AY 2003-04 PERTAINING TO THE SAME CLAIM OF THE ASSESSE E AND WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE SAME IN THE IMPUGNED ORDER. UNDER THESE CIRCUMSTANCES, WE ARE INCLINED TO HOLD THAT THE DEPARTMENT DOES NOT HAVE ANY VALID REASON TO TAKE A DIFFERENT STAND ON THIS ISSUE WHICH THE ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 25 COMMISSIONER OF INCOME TAX(A) HAS TAKEN IN FAVOUR O F THE ASSESSEE FOR AY 2003-04. 24. IN THE RESULT, WE HOLD THAT THE COMMISSIONER OF INCOME TAX(A) HAS GRANTED RELIEF FOR THE ASSESSEE ON REASONABLE, JUST IFIED AND COGENT GROUNDS WHICH WERE AGAIN FOLLOWED BY COMMISSIONER OF INCOME TAX(A) IN ASSESSEES OWN CASE FOR AY 2003-04 VIDE ITS ORDER D ATED 30.03.2013 (SUPRA). WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR A NY OTHER VALID REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, ALL GROUNDS OF THE REVENUE BEING DEVOID OF MERITS ARE DISMISSED. SOLE GROUND NO. 1 OF THE ASSESSEE 25. APROPOS GROUND NO.1 OF THE ASSESSEE, THE ASSESS EES REPRESENTATIVE SUBMITTED THAT WHEN A MAJOR PART OF THE EXPENDITURE INCURRED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE COMMISSIONER OF INCOME TAX (A), THEN ANOTHER MINOR PART OF THE CLAIMED EXPENDITURE CANNOT BE DIS ALLOWED. THE AR PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD. VS C.I.T. ( 2010) 327 ITR 456 (SC) AND JUDGMENT OF SPECIAL BENCH OF ITAT, MUMBAI IN T HE CASE OF MAHINDRA & MAHINDRA LTD. VS DCIT (2009) 313 ITR AT (263) (MUMBAI) (SB) . THE AR POINTED OUT THAT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD. (SUPRA) THE HONBLE APE X COURT HAS HELD THAT ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 26 MERE REMITTANCE TO NON-RESIDENT DUTY TO DEDUCT TAX AT SOURCE DOES NOT ARISE UNLESS REMITTANCE CONTAINS WHOLLY OR PARTLY TAXABLE INCOME. IN THE CASE OF MAHINDRA & MAHINDRA LTD.(SUPRA) ITAT MUMBAI (SB) IN TERPRETING THE PROVISIONS OF SECTION 9(1)(VI) EXPLANATION 2 HELD T HAT IN CASE OF REMITTANCE OR REIMBURSEMENT EXPENSES WHERE NO ELEMENT OF INCOM E TAXABLE OF INDIA IS FOUND, THEN THE SAME IS NOT TAXABLE IN INDIA AND QU ESTION OF TAX DEDUCTION AT SOURCE DOES NOT ARISE. 26. THE AR HAS DRAWN OUR ATTENTION TOWARDS PAPER BO OK FILED BY THE ASSESSED CONTAINING 143 PAGES AND SUBMITTED THAT WH EN A MAJOR PART OF EXPENSES HAS BEEN ALLOWED BY THE COMMISSIONER OF IN COME TAX(A), THEN THE REMAINING SMALL AMOUNT CANNOT BE DISALLOWED WITHOUT AY BASIS. THE AR SUBMITTED THAT THE ENTIRE EXPENSES CLAIMED BY THE A SSESSEE WERE PERTAINING TO USA, OFFICE EXPENSES WHICH WERE REIMBURSED TO M/S GLOBAL RELIANCE INC. AND THERE WAS NO ELEMENT OF INCOME TAXABLE IN INDIA . THEREFORE, THE DUTY TO DEDUCT TDS CANNOT BE FASTENED ON THE ASSESSEE AND E NTIRE CLAIM OF THE ASSESSEE DESERVES TO BE ALLOWED. 27. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT WI THOUT PREJUDICE TO THE SUBMISSION MADE IN SUPPORT OF REVENUES APPEAL, IT IS ALSO CONTENDED THAT IF THE COMMISSIONER OF INCOME TAX(A) HAS ALLOWED MAJOR PART OF THE EXPENSES CLAIMED BY THE ASSESSEE CONSIDERING THE SAME AS REI MBURSEMENT OF USA, ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 27 OFFICE EXPENSES, THEN REMAINING PART OF CLAIM MAY BE DISALLOWED IN ABSENCE OF ANY DETAILS OR EVIDENCE REGARDING THE EXPENDITUR E LIKE CAR EXPENSES, DONATION, MEMBERSHIP FEE, NEWSPAPERS AND PERIODICAL S AND LEGAL AND PROFESSIONAL FEES NOT RELATED TO THE SALES. 28. THE DR POINTED OUT THAT THE ONUS IS ON THE ASSE SSEE TO PROVE AND ESTABLISH HIS CLAIM RELATED TO THE EXPENSES INCURRE D ONLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U/S 37(1) OF THE ACT. THE DR VEHEMENTLY CONTENDED THAT WHEN THE ASSESSEE IS UNABLE TO SUBSTANTIATE HI S CLAIM FOR A PART EXPENDITURE AND NO DETAILS OR EVIDENCE HAD BEEN FIL ED REGARDING THE SAME, THEN SUCH CLAIM DESERVES TO BE DISALLOWED AND THE A UTHORITIES BELOW RIGHTLY DISALLOWED A PART OF EXPENSES FOR WHICH THE ASSESSE E COULD NOT DISCHARGE HIS ONUS TO PROVE. 29. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTI ES AND CAREFULLY PERUSED THE RECORD INTER ALIA DECISIONS AND JUDGMEN TS RELIED BY BOTH THE PARTIES. AT THE OUTSET, WE FIND IT APPROPRIATE TO CONSIDER THE RATIO OF THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF GE IN DIA TECHNOLOGY CENTRE (SUPRA) WHEREIN IT HAS BEEN HELD THAT MERE REMITTAN CE TO NON-RESIDENT, OUT OF DEDUCT TAX AT SOURCE DOES NOT ARISE UNLESS REMITTAN CE CONTAINS WHOLLY OR PARTLY TAXABLE INCOME. IN THE CASE IN HAND, COMMIS SIONER OF INCOME TAX(A) HAS GIVEN BENEFIT TO THE ASSESSEE BY ACCEPTING THE CLAIM OF THE ASSESSEE THAT A ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 28 MAJOR AMOUNT OF EXPENDITURE REIMBURSED TO M/S GLOBA L RELIANCE INC. WAS ACCEPTABLE AND ASSESSEE GOT RELIEF IN THIS REGARD. ITAT MUMBAI SPECIAL BENCH IN THE CASE OF MAHINDRA & MAHINDRA (SUPRA) HA S HELD THE SAME LEGAL PROPOSITION THAT REIMBURSEMENT OF EXPENSES WHERE NO ELEMENT OF INCOME TAXABLE IN INDIA IS FOUND, THEN QUESTION OF TDS BY THE PAYER DOES NOT ARISE. 30. THE COMMISSIONER OF INCOME TAX(A) PARTLY ALLO WED APPEAL OF THE ASSESSEE GRANTING RELIEF AND DELETING THE ADDITION OF RS.4,07,92,581 BUT A PART OF CLAIMED EXPENDITURE AMOUNTING TO RS.25,85,419 WA S CONFIRMED AND UPHELD WITH FOLLOWING OBSERVATIONS AND FINDINGS:- PERUSAL OF THE ABOVE SHOWS THAT NO DETAILS OR EVIDENCES HAVE BEEN FILED REGARDING THE REMAINING EXPENSES OF 151.07247 (-) 12521828 = 2585419/-. I N THE ABSENCE OF ANY DETAILS OR EVIDENCES REGARDING THE EXPENDITURE OF RS. 2585419/- THE ABOVE EXPENSES ARE BEING DISALLOWED. MOREOVER IT IS ALSO SEEN THAT THE EXPEN SES CLAIMED FOR WHICH NO EVIDENCES WERE FILED LIKE CAR EXPENSES, DONATIONS, MEMBERSHIP FEES, NEWSPAPER AND PERIODICALS LEGAL AND PROFESSIONAL FEES ARE ALSO NO T RELATING TO THE SALES AND THEREFORE, THEY CAN NOT B E ALLOWED AS BUSINESS EXPENDITURE UNDER THE PROVISIONS OF SEC TION 37(1). IN VIEW OF THE FINDINGS ABOVE THE EXPENDITUR E OF RS. 2585419/- IS BEING DISALLOWED. THE EXPENDITURE OF R S. 43378000/- (-) 2585419/- = 40792581/- IS ALLOWED. T HESE GROUNDS OF APPEAL ARE PARTLY ALLOWED.' 31. IN THE PRESENT CASE, THE COMMISSIONER OF INCOME TAX(A) HAS GIVEN BENEFIT TO THE ASSESSEE AFTER DETAILED EXAMINATION OF THE CLAIM OF THE ASSESSEE BUT A MINOR PART OF THE CLAIM HAS BEEN DIS ALLOWED IN ABSENCE OF ANY ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 29 DETAILS OR EVIDENCE REGARDING THE EXPENDITURE OF RS .25,85,419 AND THE SAME HAS BEEN DISALLOWED BY THE COMMISSIONER OF INCOME T AX(A) PARTLY CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER. FROM THE DETAILED PAPER BOOK SPREAD OVER 143 PAGES WE ARE UNABLE TO S EE ANY COGENT OR RELEVANT DETAILS OR EVIDENCE WHICH COULD SUBSTANTIA TE OR ESTABLISH THE CLAIM OF THE ASSESSEE RELATED TO THE PART DISALLOWANCE MA DE BY THE COMMISSIONER OF INCOME TAX(A). 32. THUS, WE ARE UNABLE TO SEE ANY AMBIGUITY, P ERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) PERTAINING TO PART DISALLOWANCE CONFIRMED AN D UPHELD BY THE COMMISSIONER OF INCOME TAX(A) AND WE DECLINE TO TAK E A DIFFERENT VIEW IN THIS REGARD. ACCORDINGLY, SOLE REMAINING GROUND OF THE ASSESSEE IS DISMISSED BY HOLDING THAT THE ASSESSEE MISERABLY FAILED TO SU BSTANTIATE ITS CLAIM OF RS.25,85,419/- WITH COGENT AND RELIABLE EVIDENCE AN D THE ASSESSEE COULD NOT DISCHARGE ITS ONUS IN THIS REGARD. THEREFORE, THE IMPUGNED ORDER IS ALSO UPHELD IN REGARD TO CONFIRMATION OF PART DISALLOWAN CE AND SOLE REMAINING GROUND OF THE ASSESSEE IS DISMISSED. 33. IN THE RESULT, THE APPEALS OF THE REVENUE AS WE LL AS OF THE ASSESSEE ARE DISMISSED AS DISCUSSED ABOVE. ITA NO. 1750 & 2611/DEL/2011 ASSTT.YEAR: 2005-06 30 ORDER PRONOUNCED IN OPEN COURT ON 14.03.2014. SD/- SD/- (J. S. REDDY) (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH MARCH, 2014 GS COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR BY ORDER ASSTT.REGISTRAR