DCIT 2(3), MUMBAI V. TAL MANUFACTURING SOLUTIONS LTD, PUNE

ITA 3847/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7810 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Depreciation; Revenue expenditure
• Section: 234B; 115JB; 133(6); 37(1); 37

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R C SHARMA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 3847 / MUM/ 2014 ( / ASSESSMENT YEAR: 2009 - 10 ) DCIT 2(3) R. NO. 552, 5 TH FLOOR, AAYAKARBHAVAN, M. K. ROAD, MUMBAI. / VS. TAL MANUFACTURING SOLUTIONS LTD. PDO BLDG. TATA MOTORS CAMPUS, CHINCHWAD, PUNE, PIN - 411033 & ./ I.T.A. NO . 4083 / MUM/ 2014 ( / ASSESSMENT YEAR: 2009 - 10 ) TAL MANUFACTURING SOLUTIONS LTD. PDO BLDG. TATA MOTORS CAMPUS, CHINCHWAD, PUNE, PIN - 411033 / VS. DCIT 2(3) R. NO. 552, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI. ./ ./ PAN/GIR NO. A ABCT 1342 E ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI V. JUSTIN / RESPONDENTBY : SHRI RAJANVORA & SHRI NIKHIL TIWARI / DATE OF HEARING : 22/12 /201 7 / DATE OF PRONOUNCEMENT : 2 8/12/2017 2 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : 1. THE P RESENT TWO APPEAL S HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 6 , MUMBAI , DATED 17.02.2014 FOR A.Y. 20 09 - 10. 2. SINCE THE ISSUE S RAISED IN THESE TWO APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. AS PER THE FACTS OF THE CASE , THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL ON SEPTEMBER 30, 2009 (AFTER SET OFF OF BROUGHT FORWARD LOSSES OF RS. 15,45,46,350/ - ) AND DECLARED BOOK PROFIT OF RS. 10,80,77,341/ - U/S 115JB OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING NOTICES, THE AO MADE ADDITION OF RS. 1,36,80,472 UNDER THE NORMAL PROVISION OF THE AC T BY MAKING DISALLOWANCE OF CLAIM MADE BY ASSESSEE U/S 35(1)(II), PAYMENT OF BRAND EQUITY SUBSCRIPTION, BUILDING REPA IR AND COMMISSION EXPENSES. 3 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. 4. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE AS WELL AS ASSE SSEE HAVE FILED THEIR RESPECTIVE APPEALS I.T.A. NO . 3847 /MUM/201 4 (AY 20 09 - 10 ) 5 . FIRST OF ALL WE TAKE UP REVENUE S APPEAL IN ITA NO. 3847 MUM/201 4 (AY 2009 - 10 ) . THE GROUNDS OF APPEAL ARE MENTIONED HEREIN BELOW: - 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW EXPENDITURE OF RS. 52,17,597/ - BY HOLDING THAT THE ONLY REQUIREMENT FOR CLAIMING EXPENSES IS THAT IT SHOULD BE INCURRED ON RESEARCH RELATED ACTIVITIES AND SHOULD BE REVENUE IN NATURE WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO FURNISH SUPPORTING DOCUMENTARY EVIDENCES TO ESTABLISH THAT THE EXPENDITURE WERE MADE TOWARDS THE RESEARCH & DEVEL OPMENT ACTIVITIES. 4 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 6 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CI T(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAI SED BY THE REVENUE IN PARA NO. 4.2 TO 4.3 OF ITS ORDER WHICH INCLUDES THE SUBMISSION MADE BY THE ASSESSEE . THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAIN ED IN PARA NO 4.3 OF ITS ORDER AN D THE SAME IS REPRODUCED BELOW: - 4.3 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS OFTHE CASE, DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS FURNISHED NECESSARY DOCUMENTS, WHICH WERE FURNISHED BEFORE THE AO. IT IS SEEN THAT THESE EXPENSES HAVE BEEN INCURRED ON IMPROVEMENT OF THE D ESIGNS OF THE EXISTING MACHINERY AND SUCH EXPENSES HAVE BEEN CLAIMED 5 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. UNDER SECTION 35(1)(I) OF THE ACT AS PER THE PROVISIONS OF SECTION 35(1)(I), ANY EXPENSES OF REVENUE NATURE INCUR RED, WHICH ARE ON SCIENTIFIC RESEARCH RELATED TO THE BUSINESS, ARE ALLOWABLE AS DEDUCTION (WITHOUT ANY OTHER CONDITIONS PRESCRIBED). THE ONLY REQUIREMENT IS THAT THE EXPENSES SHOULD BE INCURRED ON RESEARCH RELATED ACTIVITIES AND SHOULD BE REVENUE IN NATURE . IT IS EVIDENT THAT THE EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT ON RESEARCH RELATED ACTIVITIES FOR THE PURPOSE OF THE BUSINESS OF THE APPEL L ANT. THEREFORE THE AC'S CONCLUSIONS ARE NOT CORRECT. SECONDLY, ALTHOUGH THE EXPENSES CLAIMED WERE ONLY RS,52 ,12,597/ - , THE AC HAS MADE A DISALLOWANCE OF A HIGHER AMOUNT OF RS.5217,597/ - . THE AO IS DIRECTED TO VERIFY THE DETAILS OF EXPENDITURE OF RS.52,12,597/ - , AS TO WHETHER THESE ARE REVENUE IN NATURE AND ALLOW SUCH EXPENDITURE TO THE EXTENT THESE ARE REVENUE I N NATURE. FOR THE BALANCE AMOUNT WHICH IS CAPITAL IN NATURE, THE AO SHOULD ALLOW DEPRECIATION ON SUCH EXPENDITURE. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE B Y BOTH THE PARTIES, WE FIND THAT LD. CIT(A) WHIL E DEALING WITH THE ABOVE GROUND HAS CONSIDERED THE FACTS AND SUBMISSIONS AND HAS CATEGORICALLY MENTIONED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS 6 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. FURNISHED NECESSARY DOCUMENTS, WHI CH WERE FURNISHED BEFORE THE AO AND AFTER APPRECIATING THE DOCUMENTS HAD CONCLUDED THAT THE EXPENSES INCURRED BY THE ASSESSEE WERE ON THE IMPROVEMENT OF THE DESIGNS OF THE EXISTING MACHINERY. LD. AR ALSO SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS UNDERTAKEN THE PROJECTS RELATING TO IMPROVING STANDARD MACHINE CATEGORY AND IN THIS RESPECT RELEVANT DOCUMENTS EVIDENCING VARIOUS PHASES OF ACTIVITIES CARRIED IN IMPROVING THE STANDARD MACHINE HAVE BEEN CATEGORIZED WHILE SUBMISSION DATED 2.12.11. IT WAS FURTHER SUBMITTED THAT THE SAID WRITTEN SUBMISSIONS WERE ALSO SUBMITTED BEFORE LD. CIT(A). AFTER APPRECIATING THE SUBMISSIONS MADE BY BOTH THE PARTIES, LD. CIT(A) CONCLUDED THAT THE ASSESSEE HAD EXPENDED RESEARCH RELATED DEVELOPMENTS FOR THE PURPOSE OF BUSINESS. THEREFORE, NECESSARY DIRECTIONS WERE GIVEN TO THE AO FOR VERIFYING THE DETAILS OF THE EXPENDITURE. ON THE CONTRARY LD. DR COULD NOT POINT OUT ANY DEFECT FROM THE DOCUMENTS ANNEXED IN PAPER BOOK. N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM TH E FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED 7 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STAND DISMISSED. I.T.A. NO. 4083 /MUM/201 4 (AY 2009 - 10 ) 7 . NOW WE TAKE UP ASSESSEE S APPEAL IN I.T.A. NO. 4083 /MUM/201 4 (AY 2009 - 10 ) . THE GROUNDS OF APPEAL ARE MENTIONED HEREIN BELOW: - 1. DISALLOWANCE OF RESEARCH AND DEVELOPMENT EXPENDITURE OF RS. 52, 17,597/ - . 1.1 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FACTS OF THE CASE AND ALLOWED DEDUCTION IN RESPECT OF RESEARCH AND DEVELOPMENT EXPENSES UNDER SECTION 35 OF THE ACT. 1.2 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED DEDUCTION IN RESPECT OF RESEARCH AND DEVELOPMENT EXPENSES UNDER SECTION 37(1) OF THE ACT. 2. DISALLOWANCE OF EXPENSES INCURRED ON REPAIRS TO BUILDING OF RS. 66,36,750 8 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. 2.1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE AO'S ACTION OF TREATING REPAIRS TO LEASED BUILDIN G AS CAPITAL IN NATURE. 2.2 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE FOR REPAIRS TO LEASED BUILDING BY DISREGARDING PROVISIONS OF SECTION 30 / 37 OF THE ACT. 2.3 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE DISALLOWANCE BY COMPLETELY DISREGARDING SUBMISSIONS AND INFORMATION FURNISHED DURING APPELLATE PROCEEDINGS. 3. DISALLOWANCE OF COMMISSION PAID OF RS. 18,48,636 3.1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANC E OF COMMISSION EXPENSES BY DISREGARDING THE SUBMISSIONS MADE WITH REGARD TO GENUINENESS OF TRANSACTION. 3.2 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING COMMISSION 9 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. EXPENSES OF RS. 18,48,636 FOR THE YEA R UNDER CONSIDERATION WITHOUT GIVING COGENT REASON FOR DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION. 4. INTEREST U/S. 234B 4 .1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIIMING LEVY OF INTEREST UNDER SECTION 234B OF THE ACT. 5. INTEREST U/S. 234C 5.1 THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. 5.2 THE LEARNED CIT(A) OUGHT TO HAVE DELETED THE EXCESS INTEREST CHARGED UNDER SECTION 234C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE AFORESAID GROUND OF APPEAL. GROUND NO. 1. 8. THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN NOT ALLOWING DEDUCTION U/S 35 OF THE ACT IN RESPECT OF RESEARCH AND DEVELOPMENT EXPENSES OR IN ALTERNATIVE TO ALLOW EXPENSES U/S 37(1) OF THE ACT. 10 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. 9. SINCE, WE HAVE ALREADY DECIDED IDENTICAL GROUND IN ITA NO. 3847/MUM/14 FOR AY 2009 - 10 FILED BY THE R EVENUE AS GROUND NO. 1. THEREFORE, FOLLOWING OUR OWN DECISION IN THE AFOREMENTIONED APPEAL , WE APPLY THE SAME FINDINGS IN THE PRESENT APPEAL WHICH IS APPLICABLE MUTATIS MUTA NDI. RESULTANTLY THIS GROUND OF APPEAL FILED BY THE ASSESSEE IS DISMISSED. GROUN D NO. 2 10 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE FOR REPAIRS TO LEASED BUILDING BY DISREGARDING PROVISIONS OF SECTION 30/37 OF THE ACT. 11 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS INCURRED EXPENSES TOWARDS REPAIRS ON LEASED PREMISES. THE ASS ESSEE FURTHER CLAIMED THAT THE SAME AS REVENUE IN NATURE AS THE SAME DO NOT GIVING RISE TO ANY ENDURING BENEFIT. LD. AR FURTHER SUBMITTED THAT ALTHOUGH TH E AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT ASSESSEE HAS NOT SUBMITTED ANY DETAILS WHEREAS ON THE CONTRARY, ALL THE REQUIRED DETAILS HAVE 11 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. ALREADY BEEN SUBMITTED BY THE ASSESSEE BEFORE THE AO AS WELL AS LD. CIT(A0 WHICH CLEARLY DEMONSTRATES THAT THE AMO UNT OF EXPENSES INCURRED WAS IN CONNECTION WITH THE NORMAL REPAIRS CARRIED OUT TO ENABLE ASSESSEE TO USE THE LEASED PREMISES FOR THE PURPOSE OF BUSINESS. IT WAS FURTHER ARGUED THAT SINCE THE EXPENSES WERE NOT GIVING RISE TO ANY ENDURING BENEFITS, THEREFORE THE SAME HAVE BEEN DEBITED TO PROFIT AND LOSS ACCOUNT AND CLAIMED AS NORMAL BUSINESS EXPENSE. 12 . AFTER HAVING HEARD THE ARGUMENTS FOR BOTH THE PARTIES AND PERUSAL OF THE ORDER PASSED BY THE REVENUE AUTHORITIES, WE ARE OF THE VIEW THAT THE EXPENSES INCU RRED BY THE ASSESSEE ARE ALLOWABLE U/S 30 OF THE ACT. THE PROVISIONS OF SECTION 30, THE REPAIR EXPENSES INCURRED BY THE ASSESSEE AS A TENENT ARE ALLOWABLE AS DEDUCTION UNDER THE SAID PROVISION. HOWEVER THE REVENUE AUTHORITIES DISALLOWED THE SAME BY HOLDING THAT ONLY CURRENT REPAIRS ARE ALLOWABLE AS DEDU CTION U/S 30 OF THE ACT. I T IS RELEVANT TO MENTION AT THIS STAGE THAT THE REPAIRS EXPENSES INCURRED AS TENANT ARE ALLOWABLE WHETHER CURRENT REPAIRS OR NOT AS THE REQUIREMENT OF CURRENT REPAIRS IS APPLIC ABLE TO THOSE ASSESSEE WHO OWNED THE PREMISES. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE ENTERED INTO LEASE AGREEMENT OF TATA MOTORS WHEREIN THE PLOT OF LAND ALONG WITH BUILDING WAS 12 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. LEASED OUT TO THE ASSESSEE FOR A PERIOD OF 60 MONTHS. THOSE EX PENSES INCURRED BY THE ASSESSEE PERTAIN TO THE CURRENT YEAR I.E. DURING THE SUBSTANCES OF AGREEMENT. THE ASSESSEE HAS ALREADY PLACED ON RECORD THE DETAILS OF EXPENSES INCURRED ON REPAIRS. IN THIS RESPECT, WE WISH TO PLACE RELIANCE ON THE FOLLOWING JUDICIAL PRECEDENTS IN THE CASE OF CIT V RS. HEDE CONSULTANCY LTD. 258 I TR 380 (BOMBAY HIGH COURT) WHEREIN IT WAS HELD THAT EXPENDITURE INCURRED BY THE ASSESSEE ON REPAIRS AND RENOVATION OF PREMISES TAKEN O N LEASE WAS REVENUE EXPENDITURE AND ALLOWABLE U/S 30 OF THE ACT. IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE JUDGMENT PASSED BY HONBLE BOMBAY HIGH COURT , WE SET ASIDE THE ORDER OF LD. CIT(A) AND HOLD THAT THE EXPENDITURE FOR THE CURRENT REPAIR INCURRED BY THE ASSESSEE ARE ALLOWABLE U/S 30 OF TH E ACT. RESULTANTLY, THIS GROUND IS ALLOWED. GROUND NO. 3. 13 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF COMMISSION EXPENSES PAID BY THE ASSESSEE. 13 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. 14 . LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS PAID COMMISSION OF RS. 42,59,211 / - IN CONNECTION WITH THE BUSIN ESS CARRIED OUT BY THE ASSESSEE . IT WAS FURTHER SUBMITTED THAT A SUM OF RS. 18 ,48,636 / - PAID AS COMMISSION WAS DISALLOWED BY THE AO AND UPHELD BY LD. CIT(A). LD. AR SUBMITTED THAT THE ASSESSEE HAD PAID COMMISSION IN ACCORDANCE WITH THE AGREEME NT ENTERED INTO WITH THE PARTY AS THE SAID COMMISSION CHARGES HAVE BEEN PAID BASED ON THE ORDERS WHI CH WERE RECEIVED BY THE ASSESSEE THROUGH THE EFFORTS OF SAID COMMISSION AGENTS. IT WAS ALSO SUBMITTED THAT SINCE T HE COMMISSION AGENT HAD RENDERED SERVICES FOR WHICH THEY RAISED INVOICES AND THEREAFTER THE COMPANY HAS PAID SUCH COMMISSION AFTER DEDUCTION O F APPLICABLE WITHHOLDING TAX AND ISSUED TDS CERTIFICATE. IT WAS ALSO SUBMITTED THAT ALL PAYMENTS OF COMMISSION WERE MADE THROUGH BANKS. 1 5 . WE HA VE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS T HE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABO VE GROUNDS RAISED BY THE ASSESSEE . THE OPERATIVE PORTION OF THE ORDER OF LD. 14 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. CIT(A) I S CONTAINED IN PARA NO. 7. 2 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 7.3 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF APPELLANT AS WELL AS THE FACTS OF THE CASE. IT IS SEEN THAT THE CONCERNED THREE PARTIES, TO WHOM NOTICES UNDER SECTION 13 3(6) WERE ISSUED BY THE AO DID NOT RESPOND TO CONFIRM THAT ANY COMMISSION HAS BEEN RECEIVED BY THEM. THUS, EVEN THE IDENTITY OF THESE PARTIES HAS NOT BEEN ESTABLISHED. IN THE FACE OF THIS FACT, ALL THE OTHER ARGUMENTS OF THE APPELLANT DO NOT SURVIVE. HENCE , IN MY OPINION, THE AO HAS CORRECTLY DISALLOWED THE COMMISSION PAID TO THE THREE PARTIES AT RS.18,48,6361 - . THE DISALLOWANCE IS THEREFORE UPHELD. AFTER HAVING HEARD THE COUNSELS FOR BOTH THE PARTIES AND PERUSAL OF THE ORDER PASSED BY REVENUE AUTHORITIE S , WE FIND THAT THE AO DISALLOWED THE CLAIM OF THE ASSESSEE IN LIGHT OF THE FACT THAT THE PARTIES TO WHOM THE ASSESSEE HAS PAID COMMISSION HAS NOT BEEN PRODUCED FOR VERIFICATION. IN THIS RESPECT, THE NOTICE WAS ISSUED BY THE AO U/S 133(6) OF THE ACT. HOWEVER , WE ARE OF THE CONSIDERED VIEW THAT NON - FURNISHING OF INFORMATION BY THE THIRD PARTY CANNOT BE SOLE CRITERIA FOR DISALLOWANC E WHEN THE ASSESSEE HAS PROVED BY 15 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. WAY OF EVIDENCE THAT THE SAID EXPENSES HAVE BEEN INCURRED IN THE NORMAL COURSE O F BUSINESS. AS PER THE PROVISIONS OF SECTION 37(1) OF THE I.T. ACT, IT IS MANDATE OF LAW THAT DEDUCTION UNDER THESE PROVISIONS CAN BE CLAIMED IF THE SAME IS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS PAID THE COMMISSION BASED ON THE ORDER BEING RECEIVED THROUGH SUCH COMMISSION AGENT. IT WAS ALSO SUBMITTED THAT THE COMMISSION WAS PAID IN ACCORDANCE WITH THE AGREEMENT ENTERED INTO WITH THE PARTIES, WHICH IS BINDING ON THE COMPANY. THE LD. AR ALSO DRAWN OUR ATTENTION TO THE PAPER BOOK WHICH CONTAINS AGREEMENT, SAMPLE INVOICE, BANK STATEMENTS, ETC. WHEREAS ON THE CONTRARY, NO EVIDENCE HAS BEEN BROUGHT ON THE RECORD BY THE AO TO REBUT THE SAME. IT IS ALSO IMPORTANT TO MENT ION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE SALES INCOME OF THE ASSESSEE HAVE NOT QUESTIONED /REJECTED BY THE AO. WE HAVE GONE THROUGH THE JUDGMENT CITED BY THE ASSESSEE CIT VRS. NIKUNJ EXIM ENTERPRISES LTD. 372 ITR 619 (BOM) WHEREIN IT HAS BE EN HELD THAT MERE NON - RECEIPT OF REPLY TO THE NOTICE ISSUED U/S 133(6) OF THE ACT SHOULD NOT BE A BASIS FOR MAKING DISALLOWANCE. 16 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. THEREFORE , KEEPING IN VIEW OUR ABOVE DISCUSSION AND JUDICIAL PRECEDENCE , WE FIND THAT ASSESSEE HAS PLACED CONVINCING DOCUMEN TARY EVIDENCES WHICH HAVE NOT BEEN REBUTTED BY THE AO. HENCE, THE EXPENDITURE FOR COMMISSION INCURRED BY ASSESSEE IS HEREBY ALLOWED AS DEDUCTION U/S 37(1) OF THE ACT. RESULTANTLY, THIS GROUND IS ALLOWED. GROUND NO. 4 & 5 16 . THESE GROUNDS ARE GENERAL IN NATURE, THUS REQUIRE NO SPECIFIC ADJUDICATION. 17 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO. 3847/MUM/2014 IS DISMISSED AND APPEAL FILED BY THE ASSESSEE IN ITA NO. 4083/MUM/2014 IS PARTLY A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DEC , 201 7 SD/ - SD/ - ( R.C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / J UDICIAL MEMBER MUMBAI ; DATED : 28 . 12 .201 7 SR. PS. DHANANJAY 17 ITA NO. 3847 & 4083 /MUM/2014 TAL MANUFACTURING SOLUTIONS LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I L E / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMB AI