The Dy. Commissioner of Income Tax, Gandhinagar Circle, Gandhinagar V. Gujarat Gas Trading Company Ltd., Ahmedabad

ITA 1998/AHD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2021 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 25-03-2020
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Revised return; TDS; Set aside
• Section: 195; 13; 22

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , D BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS MADHUMITA ROY , JUDICIAL MEMBER ./ ITA NO. 1998/AHD/2017 / ASSTT. YEAR: 2004 - 2005 & ./ ITA NO. 2022/AHD/2017 / ASSTT. YEAR: 2005 - 2006 D.C.I.T., GANDHINAGAR CIRCLE , GANDHINAGAR . VS. GUJARAT G AS TRADING COMPANY LTD., 2 , SHANTISADAN SOCIETY, NR. PARIMAL GARDEN, ELLIS BRIDGE , AHMEDABAD - 380006. PAN : AAACK7745B (APPLICANT) ( RESPON D ENT ) REVENUE BY : SHRI VINOD TANWANI , SR. D .R ASSESSEE BY : SHRI S.N. SOPARKAR, SR. ADVOCATE WITH SHRI PARIN SHAH, A.R / DATE OF HEARING : 22 / 07 / 2020 / DATE OF PRONOUNCEMENT: 31 / 08 /2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL S HAVE BEEN FILED AT THE INSTANCE OF THE REVENUE A GAINST THE ORDER S OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR , OF EVEN DATED 26/04/2016 ( IN SHORT LD. CIT (A) ) ARISING IN THE MATTER OF ASSESSMENT ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 2 ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2004 - 05 & 2005 - 06 . 2. FIRST WE TAKE ITA NO.1998/AHD/2017 FOR A.Y. 2004 - 05. THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD.CIT(A) HAS ERRED IN LAW & ON FACTS IN A/LOWING THE COMMISSION EXPENSES OF RS,4,65,12,087/ - . 2. THE ID.CIT(A) HAS FAILED TO APPRECIATE THAT THE PAYMENTS HAVE BEEN MADE TO THE ASSESSEE'S HOLDING COMPANY AND NO EVIDENCE HAS BEEN SUBMITTED TO SHOW THAT SUCH PAYMENTS WERE A T ARM'S LENGTH OR WERE FOR BUSINESS EXPEDIENCY. 3. THE ID.CIT(A) HAS FAILED TO APPRECIATE THAT NO WORTHWHILE EVIDENCE WAS SUBMITTED WHICH COULD SUBSTANTIATE THE BUSINESS EXPENSES AND PAYMENT OF SUCH HIGH COMMISSION AND GUARANTEE COMMISSION TO ITS HOLDING COM PANY ON YEAR TO YEAR BASIS. 4. THE ID.CIT(A) HAS FAILED TO APPRECIATE THAT SUCH PAYMENT WAS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS BUT WAS A RUSE TO REMIT HUGE AMOUNT OF MONEY TO ITS PARENT COMPANY WITHOUT PAYMENT OF DUE TAXES IN INDIA. 5. THAT THE ID.CIT(A ) HAS FAILED TO APPRECIATE THAT ALL THE NEGOTIATIONS WERE HELD IN INDIA FOR INDIAN GAS FIELDS/ SO THERE WAS A P.E. AND/ON A BUSINESS CONNECTION IN INDIA AND THEREFORE THE INCOME OF THE FOREIGN COMPANY WAS CHARGEABLE TO TAX IN INDIA AND ACCORDI NGLY TDS WAS REQUIRED TO BE MADE IN TERMS OF SEC. 195 ON SUCH PAYMENTS. 6. THE APPELLA NT PRAYS FOR LEAVE, TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. T HE INTERCONNECTED ISSUE RAISED BY THE REVENUE IN GROUND NUMBERS 1 TO 3 IS THAT THE LEARNED CIT (A) ERRED IN ALLOWING THE DEDUCTION OF THE COMMISSION EXPENSES OF RS. 4 , 65 , 12 , 087/ - PAID TO ITS HOLDING COMPANY. 4. THE FACTS NECESS ARY FOR DISPOSING OFF THE PRESENT APPEAL ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF DISTRIBUTION AND TRANSMISSION OF NATURAL GAS. THE ASSESSEE WHILE FILING ITS INCOME TAX RETURN HAS ADDED CERTAIN EXPENSES IN ITS COMPUTATION OF INCOME AS DETAILED UNDER: COMMISSION ON PERFORMANCE GUARANTEE RS. 1,45,04,757/ - PURCHASE COMMISSION RS. 3,18,96,000/ - ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 3 4.1 HOWEVER THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS VIDE LETTER DATED 11 TH AUGUST 2006 CONTENDED THAT THE AFORESAID EXPENSES WERE INCURRED IN CONNECTION WITH THE BUSINESS AS PER THE AGREEMENT WITH BG ENERGY HOLDING CO LTD. THEREFORE, THE ASSESSEE REQUESTED THE AO TO ALLOW THE DEDUCTION OF SUCH EXPENSES WHICH WERE ADDED TO THE CO MPUTATION OF INCOME INADVERTENTLY. THE ASSESSEE IN SUPPORT OF HIS CONTENTION ALSO FILED THE DETAILS OF THE PURCHASE EXPENSES ALONG WITH THE COPY OF AGREEMENT. 5. HOWEVER, THE AO FOUND THAT THE ACTUAL AMOUNT OF PURCHASE COMMISSION STANDS AT 3,20,07,330/ - BUT THE ASSESSEE HAS ADDED IN ITS COMPUTATION OF INCOME ONLY 3,18,96,000/ - LEAVING A DIFFERENCE OF 1,11,330/ - WHICH WAS NOT ADDED BY THE ASSESSEE IN THE CO MPUTATION OF INCOME. THUS THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5.1 THE AO FURTHER FOUND THAT THE ASSESSEE HAS NOT FURNISHED THE NECESSARY DETAILS ABOUT THE QUANTIFICATION OF THE AMOUNT OF COMMISSION AS DISCUSSED ABOVE. THUS THE AO IN THE ABSENCE OF REQUISITE DETAILS OF THE COMMISSION EXPENSES REJECTED THE PLEA/CLAIM OF THE ASSE SSEE MADE VIDE LETTER DATED 11 TH AUGUST 2006. 6. ON APPEAL, THE LEARNED CIT (A) CONFIRMED THE ORDER OF THE AO BY HOLDING THAT SUCH DEDUCTION CANNOT BE ALLOWED IN THE ABSENCE OF REQUISITE EVIDENCES. THE LEARNED CIT (A) ALSO OBSERVED THAT CLAIM FOR THE DED UCTION OF THE AFORESAID COMMISSION WAS MADE BY THE ASSESSEE WITHOUT FILING THE REVISED RETURN OF INCOME BUT MERELY ON THE LETTER FILED BEFORE THE AO. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE ITAT WHICH RESTORED THE ISSUE TO THE FILE OF THE AO VIDE O RDER DATED 31 ST JULY 2015 WITH THE DIRECTION AS DETAILED UNDER: ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 4 WE FIND THAT THE CONTENTION OF THE ASSESSEE IS THAT THE EXPENDITURE WAS REQUIRED TO BE INCURRED UNDER A CONTRACT, THEREFORE BEING A CONTRACTUAL LIABILITY, THE ASSESSEE WAS REQUIRED TO MAKE THE PAYMENT OF COMMISSION AS PER THE TERMS OF THE AGREEMENT. THE LIABILITY OF THE EXPENDITURE IS NOT DISPUTED AND THE EXPENDITURE HAS BEEN DISALLOWED ON THE BASIS THAT DETAILS WERE NOT AVAILABLE BEFORE THE AUTHORITIES BELOW. UNDER THE THESE FACTS OF T HE CASE AND TAKING A NOTE OF THE FACT THAT THE ASSESSEE HAS PRODUCED COPIES OF VARIOUS AGREEMENTS RELATING TO THE PAYMENT OF COMMISSION WERE REQUIRED TO BE PAID BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE AO SHOULD VERIFY THE EVIDENCES PLACED B EFORE HIM ABOUT THE QUANTUM OF COMMISSION PAID AND ALSO THE NATURE OF SERVICES RECEIVED BY THE ASSESSEE. THUS, GROUNDS RAISED IN THIS APPEAL ARE RESTORED TO THE FILE OF AO FOR VERIFICATION AND THE APPEAL OF THE ASSESSEE FOR AY 2004 - 05 IS TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES 7.1 THE ASSESSEE IN THE SET - ASIDE PROCEEDINGS FILED THE NECESSARY DETAILS IN SUPPORT OF HIS CLAIM FOR THE AMOUNT OF IMPUGNED COMMISSION EXPENSES. THE ASSESSEE WITHOUT PREJUDICE TO THE ABOVE ALSO SUBMITTED THAT IMPUGNED AMOUN T OF COMMISSION EXPENSES PAID TO BG ENERGY HOLDING COMPANY WAS ALLOWED BY THE LEARNED CIT (A) FOR THE ASSESSMENT YEAR 2007 - 08 TO 2012 - 13. 7.2 HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE IMPUGNED AMOUNT OF COMMISSION HAS BEEN DISALLOWED CONSISTENTLY IN THE OTHER ASSESSMENT YEARS IN THE CASE OF THE ASSESSEE. FURTHERMORE, THE ORDERS OF THE LEARNED CIT (A) FOR THE ASSESSMENT YEAR 2007 - 08 TO 2012 - 13 HAVE BEEN CHALLENGED BEFORE THE ITAT WHICH IS PENDING FOR THE ADJUDICATION. AC CORDINGLY, THE AO CONFIRMED ITS EARLIER ASSESSMENT ORDER DATED 19 TH DECEMBER 2006. 8. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO DELETED THE ADDITION MADE BY THE AO FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE OWN CASE OF THE ASSE SSEE PERTAINING TO THE ASSESSMENT YEAR 2011 - 12. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE REVENUE IS IN APPEAL BEFORE US. ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 5 9. THE LEARNED DR BEFORE US REITERATED THE FINDINGS OF THE AO AND RELIED ON HIS ORDER. 10. ON THE OTHER HAND THE L EARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 155 AND SUBMITTED THAT ALL THE NECESSARY DETAILS FOR THE QUANTIFICATION OF THE AMOUNT OF IMPUGNED COMMISSION WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND NO DEFECT IN SUCH SUBMISSION WA S POINTED OUT. THE LEARNED AR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT (A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS THE 2 ND ROUND OF LITIGATION. THE ITAT IN THE 1 ST ROUND OF LITIGATION HAS RESTORED THE MATTER TO THE AO VIDE ORDER DATED 31 ST JULY 2015 WITH THE DIRECTION AS DISCUSSED AFORESAID. ON PERUSAL OF THE DIRECTION OF THE ITAT WE NOTE THAT THE AO WAS TO CARRY OUT THE VERIFICATION OF THE FOLLOWING: WE FIND TH AT THE CONTENTION OF THE ASSESSEE IS THAT THE EXPENDITURE WAS REQUIRED TO BE INCURRED UNDER A CONTRACT, THEREFORE BEING A CONTRACTUAL LIABILITY, THE ASSESSEE WAS REQUIRED TO MAKE THE PAYMENT OF COMMISSION AS PER THE TERMS OF THE AGREEMENT. THE LIABILITY OF THE EXPENDITURE IS NOT DISPUTED AND THE EXPENDITURE HAS BEEN DISALLOWED ON THE BASIS THAT THE DETAILS WERE NOT AVAILABLE BEFORE THE AUTHORITIES BELOW. UNDER THESE FACTS OF THE CASE AND TAKING A NOTE OF THE FACT THAT THE ASSESSEE HAS PRODUCED COPIES OF VAR IOUS AGREEMENTS RELATING TO THE PAYMENT OF COMMISSION WERE REQUIRED TO BE PAID BY THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE AO SHOULD VERIFY THE EVIDENCES PLACED BEFORE HIM ABOUT THE QUANTUM OF COMMISSION PAID AND ALSO THE NATURE OF SERVICES REC EIVED BY THE ASSESSEE. THUS, GROUNDS RAISED IN THIS APPEAL ARE RESTORED TO THE FILE OF AO FOR VERIFICATION AND THE APPEAL OF THE ASSESSEE FOR AY 2004 - 05 IS TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES 11.1 ADMITTEDLY, IN THE SET - ASIDE PROCEEDINGS THE SCOPE BEFORE THE CONCERNED AUTHORITY FOR RESOLVING THE DISPUTE IS LIMITED TO THE EXTENT OF THE DIRECTION PROVIDED BY THE HIGHER AUTHORITY UNTIL AND UNLESS IT WAS DIRECTED TO MAKE THE FRESH/DE NOVO ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 6 ASSESSMENT. AS SUCH THE CONCERNED AUTHORITY IN THE SET - ASIDE PROCEEDINGS CANNOT TRAVEL BEYOND THE DIRECTION PROVIDED BY THE HIGHER AUTHORITY. IF IT DOES SO, HE WILL CERTAINLY EXCEED HIS JURISDICTION WHICH IS UNWANTED. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF SAHELI SYNTHETICS PVT. LTD VS. CIT REPORTED IN 302 ITR126 WHEREIN IT WAS HELD AS UNDER: SIMILARLY EVEN WHERE AN ASSESSMENT IS SET ASIDE SIMPLICITER, WITHOUT ANY ENHANCEMENT PROPOSAL, IT IS ALWAYS IN T HE CONTEXT OF THE APPEAL AGAINST AN ORDER OF ASSESSMENT AND CANNOT BE READ TO MEAN THAT THE APPELLATE AUTHORITY GRANTED POWERS TO THE ASSESSING OFFICER IN RELATION TO ITEMS OF ASSESSMENT WHICH WERE NEVER FORMING PART OF THE APPEAL BEFORE THE APPELLATE AUTH ORITY. AT THE COST OF REPETITION IT IS REQUIRED TO BE NOTED THAT PROCESSING A NEW SOURCE OF INCOME WHICH WAS ON THE RECORD BEFORE THE ASSESSING OFFICER BUT IS NOT FORMING PART OF SUBJECT - MATTER OF APPEAL BEFORE THE APPELLATE AUTHORITY CAN BE UNDERTAKEN BY THE APPELLATE AUTHORITY ONLY IN THE COURSE OF ENHANCEMENT OF THE ASSESSMENT AND, THEREFORE, ANY SET ASIDE, WHICH DOES NOT INVOLVE A PROPOSAL FOR ENHANCEMENT, CANNOT BE USED FOR THE PURPOSE OF EXPANDING THE SCOPE OF THE POWERS AVAILABLE TO THE ASSESSING OFF ICER WHILE MAKING A FRESH ASSESSMENT PURSUANT TO A SET ASIDE. 11.2 WE ALSO FIND SUPPORT AND GUIDANCE FROM THE JUDGEMENT OF H ON BLE GUJARAT HIGH COURT IN THE CASE OF THE CIT VERSUS SERVER ELECTRICITY COMPANY LTD REPORTED IN 337 ITR 271 WHEREIN IT WAS HELD AS UNDER: THE GUJARAT HIGH COURT, IN THE CASE OF SAHELI SYNTHETICS (P.) LTD. V. CIT [2008] 302 ITR 126 , HELD THAT THE SET ASIDE OF ASSESSMENT MADE BY THE APPELLATE AUTHORITY WAS ALWAYS IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE APPELLATE AUTHORITY FOR MAKING A FRESH ASSESSMENT. BUT, THE MOST MATERIAL PART OF THE PROVISION [OF SECTION 251] WAS THE OPENING PORTION WHICH STIPULAT ES 'IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT'. IN OTHER WORDS, THE ENTIRE GAMUT OF POWERS WHICH ARE AVAILABLE TO THE APPELLATE AUTHORITY IS GOVERNED WITHIN THE FOUR CORNERS OF THE SUBJECT MATTER OF THE APPEAL. THE SUBJECT MATTER OF THE APPEAL IS THE ASS ESSMENT OF INCOME WHICH FORMS PART OF THE ORDER OF ASSESSMENT IN LIGHT OF THE RETURN OF INCOME FILED BY AN ASSESSEE. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID DECISION, IT WAS APPARENT THAT THE ASSESSING OFFICER WAS REQUIRED TO MAKE A FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE COMMISSIONER (APPEALS) AND COULD NOT HAVE TRAVELLED BEYOND THE SAME. [PARA 8] 11.3 NOW COMING TO THE CASE ON HAND IN THE LIGHT OF THE ABOVE DISCUSSION, WE FIND THAT THE AO WAS DIRECTED TO VERIFY THE QUANTUM OF THE COMMISSION EXPENSES. BUT HE HAS NOT DONE SO DESPITE HAVING ALL THE DETAILS FURNISHED BY THE ASSESSEE IN CONNECTION WITH THE QUANTUM OF COMMISSION EXPENSES. THESE DETAILS CAN BE VERIFIED FROM THE SUBMISSION OF THE ASSESSEE BEFO RE THE LD. CIT - A WHICH ARE REPRODUCED AS UNDER: DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, ASSESSEE HAS SUBMITTED AGREEMENT ENTERED INTO WITH BRITISH GAS (INDIA) PVT. LTD., (BGIPL) AND BG ENERGY HOLDING LTD. (BGEHL), ARTICLE 14 OF THE GAS SALES CONTRACT DATED 30 MAY 2001, ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 7 CONTAINING PRICING FORMULA AND OTHER RELEVANT WORKING/DETAILS FOR CLAIM OF COMMISSION EXPENSES. THE THEN A.O HAS DISALLOWED THE SAME VIDE ORDER DATED 19 - 12 - 06. ASSESSEE HAS PREFERRED APPEAL BEFORE HON BLE CIT(A) VIDE ORDER XX XXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX X 3 THE AMOUNT CHARGED AS COMMISSION IS EQUAL TO : 3% OF THE ANNUAL - COSTS OF .GAS PURCHASES BY GTCL UNDER THE GAS SALE CONTRACTS AT THE FLOOR PRICE THERE UNDER . : 1% OF THE ANNUAL COST BF GAS PURCHASES BY GTCL UNDER THE GAS SALE CONTRACTS AT THE CEILING PRICE THERE UNDER; 2% OF THE ANNUAL COST OF GAS PURCHASES BY GTCL UNDER THE GAS 'SALE CONTRACTS AT PRICE BETWEEN THE FLOOR PRICE AND CEILING PRICE THERE GTCL .HAS TO PAY CO MMISSION TO BGEH FOR SUPPORT IN PURCHASING NATURAL GAS. FOR THE LONG TERM CONTRACT FROM LAKSHMI FIELD. AT THIS JUNCTURE, IT .IS IMPORTANT TO NOTE THAT GAS IS A NATURAL COMMODITY AND THE AVAILABILITY OF THE SAME IS VERY LIMITED. GTCL DUE TO THIS AGREEMENT W AS IN A CAPACITY TO ENTER INTO A LONG TERM I.E. ALMOST 22 YEARS' CONTRACT FOR SUPPLY OF GAS. IN GAS DISTRIBUTION INDUSTRY, SUCH LONG - TERM SUPPLY IS CONSIDERED VITAL - FACTOR RATHER THAN THE PRICE AS THE GAS DISTRIBUTOR HAVE COMMITMENTS/TO MEET FOR SUPPLY OF GAS TO ITS BUYERS. DUE TO THIS CONTRACT IRREGULARITY OF GAS SUPPLY RISK.& RISK OF GAS PRICE FLUCTUATION COULD BE MITIGATED. WITH REFERENCE TO THE TRANSACTION OF GUARANTEE COMMISSION BGEH WAS REQUIRED TO GIVE GUARANTEE FOR PERFORMANCE OF THE CONTRACT. BGEH HAS GIVEN SUCH A GUARANTEE TO CAIRN ENERGY AND IN CONSIDERATION OF BGEH ENTERING INTO A GUARANTEE AGREEMENT WITH/THE CAIRN ENERGY, GTCL PAYS BGEH AN ANNUAL FEE, EQUAL TO ONE PERCENT OF THE ANNUAL; SUM GUARANTEED. 11.4 UNDENIABLY, THE AO HAS NOT POINTED OU T ANY DEFECT IN THE CONTENTIONS OF THE ASSESSEE AS WELL AS THE DOCUMENTS FILED BY IT. THUS IT CAN BE TRANSPIRED THAT THE AO HAS ACCEPTED THE QUANTUM OF THE COMMISSION EXPENSES AS CLAIMED BY THE ASSESSEE. SIMILARLY, IT WAS ALSO DIRECTED BY THE ITAT TO VERI FY THE NATURE OF SERVICES OBTAINED BY THE ASSESSE E FROM THE COMPANY NAMELY BG ENERGY HOLDING LIMITED WHICH WERE DISCERNABLE FROM THE COPIES OF THE AGREEMENTS. BUT THE AO HAS NOT MADE ANY COMMENT ON SUCH SERVICES WHICH IMPLIES THAT HE HAS ACCEPTED ALL THE C ONTENTIONS OF THE ASSESSEE. 11.5 FROM THE ABOVE IT IS REVEALED THAT THE ASSESSEE IN THE SET - ASIDE PROCEEDINGS HAS DULY COMPLIED WITH THE DIRECTION OF THE ITAT AS DISCUSSED ABOVE AND THE AO HAS NOT POINTED OUT ANY INFIRMITY IN THE SUBMISSION OF THE ASSESSEE. THUS IN THE PRESENT ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 8 FACTS AND C IRCUMSTANCES, THE AO HAS NO POWER TO MAKE THE DISALLOWANCE OF THE COMMISSION EXPENSES AS CLAIMED BY THE ASSESSEE FOR ANY OTHER REASON I.E. NON DEDUCTION OF TDS WHICH IS BEYOND HIS POWER IN THE GIVEN FACTS AND CIRCUMSTANCES. 11.6 BEFORE PARTING WE ALSO NO TE THAT THE ITAT IN ITS ORDER HAS GIVEN VERY CLEAR - CUT FINDING THAT THE EXPENDITURE WAS REQUIRED TO BE INCURRED UNDER CONTRACT. THUS THERE WAS NO ISSUE WHETHER SUCH EXPENSES WAS AT ARM LENGTH OR WERE INCURRED FOR THE BUSINESS EXPEDIENCY. AS SUCH THE GROUND S RAISED BY THE REVENUE ARE NOT ARISING FROM THE DISPUTE ON HAND. 11.7 IT IS ALSO PERTINENT TO NOTE THAT THE REVENUE HAS ACCEPTED THE IDENTICAL EXPENSES INCURRED BY THE ASSESSEE IN THE OTHER ASSESSMENT YEARS, MORE PARTICULARLY IN THE ASSESSMENT YEARS 200 7 - 08 TO 2012 - 13. AS SUCH THESE ASSESSMENT YEARS, THE DISALLOWANCE WAS MADE ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER SECTION 195 OF THE ACT. THUS IT CAN BE INFERRED THAT THE QUESTION OF ARM LENGTH AND BUSINESS EXPEDIENCY DOES NOT ARISE IN THE GIVEN FACTS AN D CIRCUMSTANCES. ACCORDINGLY WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY THE REVENUE. HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. THE 2 ND ISSUE RAISED BY THE REVENUE IN GROUND NO. 4 AND 5 IS THAT THE LEARNED CIT (A) ERRE D IN ALLOWING THE DEDUCTION FOR THE PAYMENT OF COMMISSION EXPENSES OF RS. 4,65,12,087/ - THOUGH THERE WAS NO DEDUCTION OF TDS UNDER SECTION 195 OF THE ACT. 13. AT THE OUTSET WE NOTE THAT IT IS THE SET - ASIDE PROCEEDINGS BEFORE US A GAINST THE DIRECTION BY T HE ITAT VIDE ORDER DATED 31 ST JULY 2015 AS ELABORATED AFORESAID . ON PERUSAL OF THE DIRECTION OF THE ITAT AS DISCUSSED ABOVE, WE FIND THAT THERE WAS NO ISSUE QUA THE NON - DEDUCTION OF TDS ON THE PAYMENT OF COMMISSION EXPENSES UNDER THE PROVISIONS OF SECTION 195 OF THE ACT. ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 9 14. ADMITTEDLY, THE ASSESSEE BEFORE THE AO IN THE SET - ASIDE PROCEEDINGS HAS MADE ALTERNATE SUBMISSION THAT IT HAS BEEN ALLOWED DEDUCTION OF THE IMPUGNED COMMISSION EXPENSES BY THE LEARNED CIT (A) FOR THE ASSESSMENT YEARS 2007 - 08 TO 2012 - 1 3. AS SUCH THE ISSUE IN THE ASSESSMENT YEARS WAS IN RELATION TO NON - DEDUCTION OF TDS UNDER SECTION 195 OF THE ACT. THE RELEVANT SUBMISSION OF THE ASSESSEE BEFORE THE AO IN THE SET - ASIDE PROCEEDINGS STANDS AS UNDER: WITHOUT PREJUDICE TO OUR CLAIM & CONTENT IONS, AS STATED ABOVE, WE HAD SUBMITTED THAT COMMISSION EXPENSES BE ALLOWED AT THE TIME OF ACTUAL PAYMENT. IN THIS CONNECTION, WE HAVE TO STATE THAT ASSESSEE HAS MADE PAYMENT TO ABOVE COMMISSION ON 20 - 06 - 07 I.E DURING F.Y.2007 - 08 (A.Y. 2008 - 09) HENCE IF YO U INTEND TO DISALLOW THE SAME FOR THE YEAR UNDER CONSIDERATION I.E FOR F.Y. 2003 - 04 (A.Y. 2004 - 05) THEN WE REQUEST YOU TO ALLOW THE SAME FOR F.Y. 2007 - 08 (A.Y. 2008 - 09) I.E AT THE TIME WHEN ACTUAL PAYMENT WAS MADE. FURTHER WE DRAW YOUR ATTENTION TO THE FACT THAT FOR F.Y. 2007 - 08 (A.Y. 2008 - 09) TO F.Y.2012 - 13 (A.Y. 2013 - 14) THE THEN AO HAS DISALLOWED THE CLAIM OF COMMISSION EXPENSES FOR F.Y. 2007 - 08 (A.Y. 2008 - 09) TO F.Y. 2011 - 12 14 . 1 BUT, THE AO REJECTED THE ALTERNATE CONTENTION BY OBSERVING THAT THE IS SUE IS PENDING BEFORE THE ITAT. THE RELEVANT FINDING OF THE AO IS REPRODUCED AS UNDER: THOUGH THE ASSESSEE CLAIMED THAT THE HON BLE CIT(A) HAS ALLOWED SUCH CLAIM FOR AY 2008 - 09 TO 2012 - 13, THE DEPARTMENT HAS NOT ACCEPTED THE SAME AND THE MANNER IS PENDIN G BEFORE THE HON BLE ITAT FORUM. IN VIEW OF THE FACT THAT THE ISSUE HAS NOT ATTAINED THE STAGE OF FINALITY & STILL UNDER DISPUTE, ASSESSEE S CLAIM FOR COMMISSION EXPENSES CANNOT BE ACCEPTED AT THIS STAGE. 14 . 2 FURTHERMORE, WE FIND THAT THE LEARNED CIT (A ) HAS DELETED THE ADDITION MADE BY THE AO AFTER HAVING RELIANCE ON THE ORDER OF HIS PREDECESSOR FOR THE ASSESSMENT YEAR 2011 - 12 WHEREIN THE ISSUE WAS RELATED TO THE TDS. 14.3 THUS FROM THE ABOVE, WE FIND THAT AUTHORITIES BELOW HAVE NOT ADJUDICATED THE IS SUE IN TERMS OF THE DIRECTIONS ISSUED BY THE ITAT WHICH WAS BINDING UPON THEM. THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE RAISED BY THE REVENUE FOR NON - DEDUCTION OF TDS DOES NOT REQUIRE ANY SEPARATE ADJUDICATION. THUS WE DISMISS THE SAME AS INFRUCTUOUS. 14.4 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO S . 1998 &2022 / AHD/2017 ASSTT. YEARS 2004 - 05 & 2005 - 06 10 COMING TO THE ITA NO. 2022 /AHD/2017 FOR A.Y. 2005 - 06 , AN APPEAL BY THE REVENUE 15. AT THE TIME OF HEARING BOTH THE LEARNED AR AND THE DR SUBMITTED THAT THE ISSUE RAISED BY THE REVENUE IS IDENTICAL TO THE ISSUES RAISED IN ITA NO. 1998 /AHD/2017 FOR A.Y. 2004 - 05 AND FURTHER AGREED THAT WHATEVER WILL BE THE OUTCOME OF THIS APPEAL (ITA NO. 1998 /AHD/2017 ) WOULD BE APPLIED IN THE CASE ON HAND. AS THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APP EAL IS IDENTICAL TO THE ISSUES RAISED IN ITA NO. 1998 /AHD/2017 , WE DO NOT WANT ANY REASON TO DEVIATE FROM THE VIEW TAKEN IN THE ITA NO. 1998 /AHD/2017 . HENCE, BOTH THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 15.1 IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 16. IN THE COMBINED RESULT BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE COURT ON 31 /08 / 2020 AT AHMEDABAD. - SD - - SD - (MS MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 31 / 08 /2020 MANISH