ASST CIT 14(2), MUMBAI V. VENUS INTERNATIONAL, MUMBAI

ITA 5010/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3809 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 01-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DYANI
• Keywords: Permanent establishment
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSA IN, JM ITA NO.5010/MUM/2014 (ASSESSMENT YEAR: 2005-06) OFFICE OF THE ASSTT. COMMISSIONER OF INCOME TAX-14(2),EARNEST HOUSE, ROOM NO. 302, 3 RD FLOOR, NARIMAN POINT, MUMBAI 400 021. VS. M/S. VENUS INTERNATIONAL, 26/28, MOHAN NIWAS, 1 ST FLOOR, OLD HANUMAN LANE, KALBADEVI, MUMBAI-02. PAN: AAAFV 5850B APPELLANT .. RESPONDENT APPELLANT BY SHRI R.A. DYANI RESPONDENT BY SHRI NARESH JAIN DATE OF HEARING: 03-05-2016 DATE OF PRONOUNCEMENT:10-08-2016 O R D E R PER SANDEEP GOSAIN,JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LEARNED CIT (A)-25, MUMBAI DATED 02-05 -2014 PASSED IN APPEAL NO.CIT(A)-25/IT-70/14(2)/2013-14 FOR ASSESSM ENT YEAR 2005-06 ON THE FOLLOWING GROUNDS:- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 40(A) (IA) OF RS.1 ,46,19,7721- AS THE ASSESSEE HAS NEITHER DEDUCTED T HE TDS ON PAYMENT OF COMMISSION NOR MADE ANY APPLICATION TO T HE AO TO THAT EFFECT FOR NON-DEDUCTION OF TDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT . LTD. VS CIT 327 ITR 456 (SC) AS THE FACTS OF THIS CASE ARE DIFF ERENT FROM THE PRESENT CASE AND IS NOT RELEVANT TO THE INSTANT CAS E SINCE IN THE CASE OF GE INDIA TECHNOLOGY, THE ISSUE WAS TAXING T HE PAYMENT WHICH CONSTITUTED ROYALTY AND IN THE PRESENT CASE, THE ISSUE IS TAXING THE COMMISSION. ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION U/S 41 (1 ) OF RS.2,06,93,996/- WITHOUT APPRECIATING THE FACT THAT THE ONUS OF PROVING THE GENUINENESS OF THE SAME WAS WITH THE AS SESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WHICH THE ASSESSEE FAILED TO DO SO. 4. FOR THE ABOVE MENTIONED REASON AND ANY OTHER RE ASONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED TH AT THE ORDER OF THE CIT(A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 29.10.2005 DECLARING TOTAL INCOME OF RS.4 1,89,968/-. SUBSEQUENTLY THE RETURN WAS REVISED ON 12.01.2006 D ECLARING TOTAL INCOME OF RS.43,37,321/-. THE RETURN WAS REVISED TO DISALLOW THE EXPENSES OF RS.1,47,353/- U/S 40(A)(IA). THE ABOVE RETURN OF INCOME WAS PROCESSED U/S143(1) ON 10.08.2006 AND 08.03.2006 RE SPECTIVELY. AFTER RECORDING THE SATISFACTION NOTE AND OBTAINING THE N ECESSARY APPROVAL NOTICE U/S 148 WAS ISSUED AND SERVED UPON THE ASSES SEE AND AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE OR DER OF ASSESSMENT DATED 06.03.2013 WAS PASSED BY DCIT U/S 143(3) R.W. S.147 OF THE I.T. ACT,1961 THEREBY MAKING DISALLOWANCE U/S 40(A)(IA) AND MAKING ADDITIONS U/S 40(A)(IA) OF THE I.T. ACT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARR IED THE MATTER IN APPEAL BEFORE THE LEARNED CIT (A) AND THE LEARNE D CIT (A) AFTER HEARING BOTH THE PARTIES AND PERUSAL OF THE RECORD, HAD PAR TLY ALLOWED THE APPEAL ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 3 OF THE ASSESSEE. BEING AGGRIEVED BY THIS ORDER OF T HE CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US ON THE AFOREMENTIONED GR OUNDS. GROUND NOS.1&2 SINCE THE GROUND NOS.1 &2 RAISED BY THE REVENUE REL ATING TO DEDUCTION OF TDS ON PAYMENT OF COMMISSION ARE INTER-CONNECTED AN D INTER-RELATED THEREFORE WE THOUGHT IT FIT TO DISPOSE OFF THE SAME THROUGH THE PRESENT COMMON ORDER. 3. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES ON THIS GROUND AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES . THE AFORE MENTIONED GROUNDS HAVE BEEN DEALT BY CIT(A) IN PARA NO.5.3 OF ITS ORDER AN D THE SAME IS REPRODUCED BELOW. 5.3 I HAVE PERUSED THE ASSESSMENT ORDER, SUBMISSIO NS OF APPELLANT, AND THE FACTS AND CIRCUMSTANCE OF THE CA SE. I FIND THAT THE AO HAS PRINCIPALLY RELIED UPON THE DECISION OF HON' BLE HIGH COURT OF KARNATAKA IN THE CASE OF SAMSUNG ELECTRONICS CO. LT D. 345 ITR 494 PRONOUNCED ON 24.09.2009, WHEREIN IT WAS HELD F OLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TR ANSMISSION CORPORATION OF A.P. LTD. 239 ITR 587 THAT THE QUEST ION OF THE NATURE INVOLVING EXERCISE OF DETERMINING THE LIABILITY OF THE NON-RESIDENT ASSESSEE CAN BE ANSWERED ONLY BY GOING THROUGH THE PROCEDURE ENVISAGED U/S 195(2) ON MAKING AN APPLICATION TO AO IN THIS REGARD. THE APPELLANT HAS HOWEVER CONTENDED THE SAID DECISI ONS WERE NOT DIRECTLY ON THE SUBJECT CASE OF THE APPELLANT, AS T HESE WERE ON THE ROYALTY ISSUE AND NOT ON FOREIGN COMMISSION AS IN P RESENT CASE OF APPELLANT. FURTHER, THE APPELLANT HAS CONTENDED THAT THE SAID DECISIONS HAVE BEEN OVER-RULED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD. VS. CI T 327 ITR 456 (SC) PRONOUNCED ON 09.09.2010, WHEREIN IT WAS HELD THAT TAX IS REQUIRED TO BE DEDUCTED AT SOURCE ONLY WHEN THE SUM PAYABLE TO NON-RESIDENT IS CHARGEABLE TO TAX. I HAVE PERUSED T HE SAID ORDER IN CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD. (SUPRA ) AND FIND THAT ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 4 THE HON'BLE SUPREME COURT HAS DISTINGUISHED THE CAS E OF TRANSMISSION CORPORATION (SUPRA) OBSERVING THAT IN THE SAID CASE, A NON-RESIDENT HAD ENTERED INTO A COMPOSITE CONTRACT WHEREIN IT WAS CLEAR EVEN TO THE PAYER THAT PAYMENTS REQUIRED TO B E MADE BY HIM TO THE NON-RESIDENT INCLUDED AN ELEMENT OF INCOME W HICH WAS EXIGIBLE TO TAX IN INDIA, AND THE ONLY ISSUE RAISED IN THAT CASE WAS WHETHER TOS WAS APPLICABLE ONLY TO PURE INCOME PAYM ENTS AND NOT TO COMPOSITE PAYMENTS WHICH HAD AN ELEMENT OF INCOM E EMBEDDED OR INCORPORATED IN THEM. THEREFORE, IT WAS HELD IN SAID CASE THAT THE TAX WAS TO BE DEDUCTED ON GROSS AMOUNT IF SUCH PAYM ENT INCLUDED IN IT AN AMOUNT WHICH WAS EXIGIBLE TO TAX IN INDIA. IT WAS HELD THAT IF THE PAYER WANTED TO DEDUCT TAX AT SOURCE NOT ON GRO SS AMOUNT OUT ON THE LESSER AMOUNT, THEN IT WAS NECESSARY FOR HIM TO MAKE AN APPLICATION U/S 195(2) BEFORE THE AO. IN THIS CONTE XT, THE HON'BLE SUPREME COURT DISTINGUISHED THE CASE OF TRANSMISSIO N CORPORATION (SUPRA), AND OBSERVED THAT THE OBSERVATION IN THAT CASE HAD BEEN COMPLETELY, WITH RESPECT, MISUNDERSTOOD BY THE KARN ATAKA HIGH COURT TO MEAN THAT IT IS NOT OPEN FOR THE PAYER TO CONTEND THAT IF THE AMOUNT PAID BY HIM TO THE NON-RESIDENT IS NOT AT AL L 'CHARGEABLE TO TAX IN INDIA', THEN NO TAX AT SOURCE IS REQUIRED TO BE DEDUCTED FROM SUCH PAYMENT. THE HON 'BLE SUPREME COURT OBSERVED T HAT THIS INTERPRETATION OF THE HIGH COURT COMPLETELY LOST SI GHT OF THE PLAIN WORDS OF SEC. 195(1) WHICH IN CLEAR TERMS LAID DOWN THAT TAX AT SOURCE IS DEDUCTIBLE ONLY FROM 'SUMS CHARGEABLE' UN DER THE PROVISIONS OF LT. ACT, I.E. CHARGEABLE U/S 4, 5 AND 9 OF THE ACT. THEREFORE, THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) WAS SET ASIDE BY HON'BLE SUPREME COURT. IN AFORESAID CASE OF GE INDIA TECHNOLOGY CENTRE PVT . LTD. (SUPRA, THE HON'BLE SUPREME COURT HELD THAT THE MOST IMPORT ANT EXPRESSION 'IN SEC. 195(1) CONSISTS OF WORD 'CHARGEABLE UNDER THE PROVISIONS OF THE ACT', AND THE PAYER IS BOUND TO DEDUCT TAX A T SOURCE ONLY IF THE SUM PAID IS ASSESSABLE IN INDIA. THE HON'BLE SU PREME COURT FURTHER HELD THAT SEC. 195(2) PRE-SUPPOSES THAT THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT TO THE NON-RESID ENT IS IN NO DOUBT THAT TAX IS PAYABLE IN RESPECT OF SOME PART O F THE AMOUNT TO BE REMITTED BUT IS NOT SURE AS TO WHAT SHOULD BE TH E PORTION SO TAXABLE OR THE AMOUNT OF TAX TO BE DEDUCTED. IN SUC H A SITUATION HE IS REQUIRED TO MAKE AN APPLICATION TO ITO (TOS) FOR DETERMINING THE AMOUNT. IT IS ONLY WHEN THESE CONDITIONS ARE SATISF IED THAT THE QUESTION OF MAKING AN ORDER U/S 195(2) ARISES. THE HON'BLE SUPREME COURT ALSO HELD THAT WHERE A PERSON RESPONS IBLE FOR DEDUCTION IS FAIRLY CERTAIN, THEN HE CAN MAKE HIS O WN DETERMINATION AS TO WHETHER THE TAX WAS DEDUCTIBLE AT SOURCE AND IF SO, WHAT SHOULD BE THE AMOUNT THEREOF. I FIND THAT THE APPELLANT, BY RELYING UPON THE CBDT CIRCULAR NO. 786 DATED 07.12.2000, AND ALSO BASED ON ITS ASSESSMENT OF EARLIER YEARS ON SIMILAR FACTS, SEEMS TO BE FAIRLY CERTAIN THAT NO TAX WAS TO BE DEDUCTED ON COMMISSION PAYABLE TO THE NON-RESIDE NT PARTY I.E. PD SINNAR. THE SAID CIRCULAR STATED THAT DEDUCTION OF TAX UNDER ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 5 SECTION 195 WOULD ARISE IF THE PAYMENT OF COMMISSIO N TO THE NON- RESIDENT AGENT IS CHARGEABLE TO TAX IN INDIA, IN TH E SAID CIRCULAR, ATTENTION WAS ALSO DRAWN TO EARLIER CIRCULAR NO.23 DATED 23.07.L969 WHEREIN THE TAXABILITY OF FOREIGN AGENTS OF INDIAN EXPORTERS' WAS CONSIDERED, AND IT WAS CLARIFIED THEN THAT WHERE TH E NON-RESIDENT AGENT OPERATES OUTSIDE THE COUNTRY, NO PART OF HIS INCOME ARISES IN INDIA; AND FURTHER SINCE THE PAYMENT IS USUALLY REM ITTED DIRECTLY ABROAD, IT CANNOT BE HELD TO HAVE BEEN RECEIVED BY OR ON BEHALF OF AGENT IN INDIA. SUCH PAYMENTS WERE THEREFORE HELD T O BE NOT TAXABLE IN INDIA. THE APPELLANT, AS STATED IN WRITT EN SUBMISSIONS, SEEMS TO BELIEVE THAT THE SAID PARTY OPERATED THEIR BUSINESS ACTIVITY OUTSIDE INDIA; COMMISSION WAS TO BE PAID IN RELATIO N TO THE SERVICES PROVIDED OUTSIDE INDIA, COMMISSION WAS TO BE REMITT ED TO THEM DIRECTLY OUTSIDE INDIA, AND THE SAID PARTY DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. ON SUCH A BELIEF, THE APPELLANT DID NOT MAKE ANY APPLICATION U/S 195(2) TO THE AO, WHICH CANNOT BE SUFFICIENT GROUND TO ASSUME THAT THE APPELLANT WAS RESPONSIBLE TO DEDUCT TAX AT SOURCE U/S 195( 1) OF THE ACT. IN FAC T, THE AO HAS NOT GONE INTO THE QUESTION OF DEDUCTIBILITY OF TAX AT S OURCE ON SUCH PAYMENTS ON MERITS, SO AS TO INVOKE THE PROVISIONS OF SEC. 195( 1); RATHER THE SAID PROVISIONS HAVE BEEN INVOKED MERELY FOR THE APPELLANT NOT MAKING APPLICATION U/S 195(2). IN THE SE CIRCUMSTANCES, THE ACTION OF AO CANNOT BE SUSTAINED RELYING UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CE INDIA TECHNOLOGY CENTRE PVT. LTD. (SUPRA), SINCE NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE APPELLANT'S BELI EF THAT TAX WAS NOT REQUIRED TO BE DEDUCTED ON PAYMENT TO SAID NON- RESIDENT WAS UNFOUNDED. IN VIEW OF THE ABOVE, THE ADDITION MADE OF RS.1,46, 19,722/- U/S 40(A)(IA) IS NOT SUSTAINABLE, HENCE DELETED. THEREF ORE, THE GORUNDS OF APPEAL ARE ALLOWED. AFTER ANALYZING THE AFORE MENTIONED ORDER OF CIT AN D HEARING THE PARTIES. WE ARE OF THE OPINION THAT THE REVENUE HAS RAISED T HE AFORE MENTIONED GROUND ONLY ON THE BASIS THAT THE ASSESSEE HAS NEIT HER DEDUCTED THE TDS ON PAYMENT OF COMMISSION NOR MADE ANY APPLICATION T O THE AO TO THAT EFFECT FOR NONPAYMENT OF TDS. ALTHOUGH LD. DR APPEA RING ON BEHALF OF REVENUE RELIED UPON THE JUDGMENT IN THE CASE OF SA MSUNG ELECTRONICS CO. LTD. 345 ITR 494 AND RELIED UPON THE ORDERS OF AO. HOWEVER AFTER PERUSAL OF ALL THE JUDICIAL PRONOUNCEMENTS RENDERED BY BOTH THE PARTIES AS ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 6 WELL AS ORDERS PASSED BY REVENUE AUTHORITIES, WE FO UND THAT THE HONBLE SUPREME COURT HAS ALREADY OVER-RULED AND SET ASIDE THE DECISION RENDERED BY HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) WHILE PASSING JUDGMEN T IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT. LTD. VS. CIT 327 ITR 456 (SC) PRONOUNCED ON 09.09.2010, HONBLE SUPREME COURT HAS HELD THAT THE MOST IMPORTANT EXPRESSION IN SECTION 195(1) CONSISTS OF WORD CHAR GEABLE UNDER THE PROVISIONS OF THE ACT, AND THE PAYER IS BOUND TO D EDUCT TAX AT SOURCE ONLY IF THE SUM PAID IS ASSESSABLE IN INDIA. THE HONBLE SUPREME COURT HELD THAT SECTION 195(2) PRE-SUPPOSES THAT THE PERSON RE SPONSIBLE FOR MAKING THE PAYMENT TO THE NON-RESIDENT IS IN NO DOUBT THAT TAX IS PAYABLE IN RESPECT OF SOME PART OF THE AMOUNT TO BE REMITTED B UT IS NOT SURE AS TO WHAT SHOULD BE THE PORTION SO TAXABLE OR THE AMOUNT OF TAX TO BE DEDUCTED. IN SUCH A SITUATION HE IS REQUIRED TO MA KE AN APPLICATION TO ITO (TDS) FOR DETERMINING THE AMOUNT. BUT IN THE PRESEN T CASE THE APPLICABILITY OF SECTION 195(2) WOULD ONLY ARISE IN CASE THE ASSE SSEE IS DOUBTFUL OR IS NOT SURE AS TO WHAT SHOULD BE THE PORTION SO TAXABL E OR THE AMOUNT OF TAX TO BE DEDUCTED AND IN CASE WHERE A PERSON RESPONSIB LE FOR DEDUCTION IS FAIRLY CERTAIN THEN IN THAT EVENTUALITY HE CAN MAKE HIS OWN DETERMINATION AS TO WHETHER THE TAX WAS DEDUCTIBLE AT SOURCE AND IF SO, WHAT SHOULD BE THE AMOUNT THEREOF. CONSIDERING THE FACTS OF THE PRESENT CASE THE APPL ICABILITY OF SECTION 195(2)OF THE I.T. ACT IS NOT MADE OUT. THEREFORE, T HERE WAS NO REQUIREMENT FOR THE ASSESSEE TO MAKE APPLICATION TO THE AO FOR NON DEDUCTION OF TDS. ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 7 SINCE ALL THOSE FACTS HAVE ALREADY BEEN CONSIDERED BY CIT(A) WHILE PASSING IMPUGNED ORDER. NO NEW CIRCUMSTANCES HAVE BEEN BROUGHT ON RECORD BE FORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE LEARNED CIT (A). MOREOVER, THERE IS NO REASON FOR US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED CIT (A). THEREFORE, WE ARE OF THE CO NSIDERED VIEW THAT THE FINDINGS RECODED BY THE LEARNED CIT (A) ARE JUDICIO US AND ARE WELL REASONED. ACCORDINGLY, WE UPHOLD THE SAME. RESULTAN TLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. GROUND NO.3 THE SAID GROUND RELATES TO DELETING THE ADDITION U/ S 41(1) OF RS.2,06,93,996/- ON THE GROUND THAT THE ONUS OF PRO VING THE GENUINENESS OF THE SAME WAS WITH THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, WHICH THE ASSESSEE FAIL TO DO SO. CIT( A) HAS DECIDED THE SAID ISSUE IN PARA NO.6.1 OF ITS ORDER WHICH IS REP RODUCED HEREIN BELOW FOR THE SAKE OF REFERENCE: THE AO OBSERVED THAT THE ASSESSEE SHOWED FOREIGN C OMMISSION PAYABLE AT RS.2,06,93,996/- OF EARLIER YEARS. ON BE ING ASKED TO EXPLAIN AS TO WHY THE SAID OUTSTANDING COMMISSION S HOULD NOT BE ADDED TO ITS TOTAL INCOME CONSIDERING IT AS CEASED LIABILITY, THE ASSESSEE DID NOT REPLY TO THE SAME. THE ASSESSEE HA D NOT PRODUCED ANY EVIDENCE IN SUPPORT OF FOREIGN COMMISS ION OUTSTANDING AND IT WAS ALSO NOT CLEAR WHETHER SERVI CES WERE RENDERED BY FOREIGN PARTIES OR ACCORDING TO AO, THE COMMISSION WAS OUTSTANDING FOR LAST SO MANY YEARS. IT SHOWED T HAT COMMISSION WAS TO BE PAID; THEREFORE, THE ENTIRE FOREIGN COMMI SSION PAYABLE WAS TREATED NON GENUINE. AS THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS AND COULD NOT PROVE THE GENUINENESS OF THE SAME, ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 8 THEREFORE, THE OUTSTANDING LIABILITY OF RS.2,06,93, 996/- WAS TREATED AS NOT GENUINE AND ADDED TO ASSESSEES TOTAL INCOME . LD. CIT(A) HAS ALSO CONSIDERED THE WRITTEN SUBMISSI ONS FILED BY ASSESSEE ON 30.04.14 AND WHICH ARE REPRODUCED IN PARA NO.6.2 OF THE CIT(A) AND FROM THE TABLE MENTIONED IN THE SAID PARA WHICH REV EALS THAT THERE WAS RUNNING ACCOUNT WHICH WAS BEING MAINTAINED BY OUTST ANDING CREDITORS AS ON 31.03.2005 WHICH INCLUDED FOREIGN COMMISSION PAY ABLE AND IN ADDITION IT HAS BEEN SUBMITTED THAT THE ASSESSEE HAS ALREADY BEEN SHOWING THIS LIABILITY IN ITS BALANCE SHEET . LD. AR FURTHER SUB MITTED THAT THE ASSESSEE HAS NOT WRITTEN OFF THE FOREIGN COMMISSION PAYABLE FROM ITS BOOKS OF ACCOUNT NOR DID THE OTHER PARTY NAMELY PD SINAR WRI TE IT OFF AND THERE WAS CONSTANT COMMUNICATION BETWEEN THE ASSESSEE AND PD SINAR ON THE PAYMENT ISSUES. LD. CIT(A) AFTER CONSIDERING WRITTEN SUBMISSIONS FI LED BY ASSESSEE HAD DECIDED THE SAID ISSUE IN PARA NO. 6.3 OF ITS O RDER AND THE SAME IS REPRODUCED HERE IN BELOW FOR THE SAKE OF REFERENCE: 6.3 I HAVE PERUSED THE FACTS AND APPELLANT'S SUBMI SSIONS VERY CAREFULLY. THE APPELLANT HAS CONTENDED THAT THE SAI D ADDITION AS CEASED LIABILITY U/S 41 (1) IS MADE WITHOUT APPRECI ATING AND CORRECTLY INTERPRETING THE EVIDENCE FILED AND WITHOUT GIVING SUFFICIENT TIME. I FIND FROM THE DETAILS OF OUTSTANDING LIABILITY OF F OREIGN COMMISSION PAYABLE SUBMITTED BY THE APPELLANT THAT THE AMOUNTS PERTAINING TO PRIOR TO 01.04.2004 (I.E. THE BEGINNING OF RELEVANT . FINANCIAL YEAR 2004-05) WAS IN RESPECT OF FOREIGN EXP. COMM. - SRI LANKA (RS.L2,09,802/-), SOUTH AFRICA (RS.20,12,161/-), AN D MOROCCO (RS.28,81,363/-), AGGREGATING TO RS.61,03,3261- ONL Y. THIS SHOWS THAT A SUBSTANTIAL PORTION OF THE OUTSTANDING AMOUN T OF RS.2,06,93,9961- WAS OUT OF THE PROVISION MADE FOR F. Y. 2004-05 UNDER CONSIDERATION, AND THEREFORE, THE AO'S CONTEN TION THAT THE WHOLE COMMISSION WAS OUTSTANDING FOR LAST SO MANY Y EARS DOES NOT SEEM TO BE CORRECT. ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 9 THE APPELLANT HAS ALSO SUBMITTED THE REASONS OF WIT HHOLDING THE PAYMENTS TO THE SAID PARTY PO SINAR, WHO WAS A COMM ISSION AGENT ASSISTING THE APPELLANT IN PROCURING EXPORT O RDERS. FOLLOW-UP FOR EXPORT REALIZATION OF PAYMENTS, AND THE SAID CO MMISSION WAS TO BE PAID ONLY. AFTER THE PAYMENT FROM RESPECTIVE BUY ERS WAS MADE AND ANY ISSUES WERE SETTLED, I FIND THE CONTENTION OF APPELLANT IS NOT OUT OF CONTEXT AS IT IS NOT UNCOMMON TO WITHHOLD PA YMENTS TO COMMISSION AGENTS PENDING SETTLEMENT OF DUES FROM C ORRESPONDING BUYERS. IT ALSO SEEMS TO BE AN UNDISPUTED FACT THAT THE SAID COMMISSION PAYABLE BY APPELLANT IS NOT WAIVED OR UN ILATERALLY WRITTEN OFF BY THE RECEIVER OF COMMISSION, AND ALSO THE PAYMENT OF SAID AMOUNT WAS NOT TIME BARRED IN RELEVANT ASSESSM ENT YEAR. THEREFORE, IT CANNOT BE CONSIDERED AS. CEASED LIABI LITY U/S 41(1) OF THE ACT. THE APPELLANT'S RELIANCE-ON VARIOUS CASE L AWS REFERRED IN THE WRITTEN SUBMISSIONS ALSO DOES NOT SEEM TO BE OU T OF CONTEXT. I FURTHER FIND THAT THE AO HAS NOT BROUGHT SUFFICIE NT FACTS ON RECORD TO TREAT THE SAID LIABILITY AS NON-GENUINE. THE ASS ESSMENT ORDER SPEAKS OF THE APPELLANT HAVING BEEN ASKED TO EXPLAI N AS TO WHY THE OUTSTANDING COMMISSION OF RS.2,06,93,996/- SHOULD N OT BE ADDED TO ITS TOTAL INCOME CONSIDERING IT AS CEASED LIABILITY . THE NON- SUBMISSION OF REPLY TO THE SAME CANNOT BE ENOUGH TO CONSTRUE THAT NO SERVICES MIGHT HAVE BEEN RENDERED BY SAID PARTY, AND HENCE THE TREATMENT OF SAID LIABILITY AS NON-GENUINE IS NOT F ULLY SUBSTANTIATED IN THE ASSESSMENT ORDER AND HENCE THE ADDITIONS ON THI S GROUND CANNOT BE SUSTAINED. THE APPELLANT HAS SUBMITTED THE AMOUNTS OF FOREIGN COMMISSION PAYABLE ASSESSMENT YEAR- WISE, SHOWING OUTSTANDING COMMISSION OF LARGE AMOUNTS PAYABLE TILL A. Y. 2010-11, EVEN T HOUGH NO EXPORT SALES WERE MADE SINCE A. Y. 2009-10 ONWARDS. STILL I FIND THAT THE SAID FACTS ARE NOT RELEVANT IN MAKING ADDITIONS IN A. Y. 2005-06 UNDER CONSIDERATION, WHEN THE EXPORT BUSINESS OF TH E APPELLANT WAS VERY MUCH ALIVE, AND LARGE AMOUNTS OF COMMISSION WA S BEING PAID TO THE SAID PARTY YEAR AFTER YEAR. THE APPELLANT'S WITHOUT PREJUDICE GROUND OF APPEAL THAT THE AO ERRED IN DUPLICATING/ OVERLAPPING THE ADDITION MADE TWICE, I.E. ONCE U/S 40(A)(IA) AND AGAIN U/S,41(1) IS ALSO NOT DEVOI D OF MERIT, THOUGH THE ADDITION MADE U/S 40( A)(IA) IS ALREADY DELETED HEREINABOVE. IN VIEW OF AFORESAID DISCUSSIONS, I DELETE THE ADDI TION MADE U/S 41 (1) OF RS.2,06,93,996/- AND THEREFORE, THE GROUNDS OF APPEAL ARE ALLOWED. AFTER PERUSAL OF THE AFORE MENTIONED ORDER WE ARE O F THE CONSIDERED VIEW THAT LD. CIT(A) HAS TAKEN INTO CONSIDERATION THAT A SUBSTANTIAL PORTION OF ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 10 THE OUTSTANDING AMOUNT WAS OUT OF PROVISION MADE FO R A.Y. 2004-05 UNDER CONSIDERATION, AND THEREFORE THE LD. CIT(A) HAS RIG HTLY HELD THAT THE AOS CONTENTION THAT THE WHOLE COMMISSION WAS OUTSTANDIN G FOR LAST SO MANY YEARS WAS NOT CORRECT. LD. CIT(A) HAS ALSO CONSIDER ED THAT THE SAID COMMISSION PAYABLE BY ASSESSEE WAS NOT BEEN WAIVED OR UNILATERALLY WRITTEN OFF BY THE RECEIVER OF COMMISSION AND ALSO THE PAYMENT OF SAID AMOUNT WAS NOT TIME BARRED IN RELEVANT ASSESSMENT Y EAR. CONSIDERING ALL THE FACTS AND LEGAL PROPOSITIONS, T HE CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT THE NON SUBMISS ION OF REPLY TO THE SAME CANNOT BE ENOUGH TO CONSTRUE THAT NO SERVICES MIGHT HAVE BEEN RENDERED BY THE ASSESSEE AND HENCE THE TREATMENT OF SAID LIABILITY AS NON- GENUINE WAS NOT FULLY SUBSTANTIATED IN THE ASSESSME NT ORDER AND HENCE THE ADDITIONS OF THIS GROUND WAS RIGHTLY DELETED BY CIT(A). NO NEW CIRCUMSTANCE HAS BEEN BROUGHT ON RECORD BEFORE US B Y THE LEARNED DR IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE LEARNED CIT (A) ON THE BASIS OF THE REMAND REPORT. MOREOVER, THERE IS NO REASON FOR US TO DEVIATE FROM THE FINDINGS RECORDED BY THE LEARNED C IT (A). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS RECODE D BY THE LEARNED CIT (A) ARE JUDICIOUS AND ARE WELL REASONED. ACCORDINGL Y, WE UPHOLD THE SAME. RESULTANTLY, THIS GROUND RAISED BY THE REVENU E STANDS DISMISSED. GROUND NO.4 &5 OF THE REVENUES APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SPECIFIC ADJUDICATION. ITA NO.5010/MUM/2014(A.Y.2005-06) ACIT VS. M/S. VENUS INTERNATIONAL 11 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10-08-2016. SD/- SD/- ( JASON P. BOAZ ) ( SANDEEP GOSAI N ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 10/8/2016 ASHWINI / ASHWINI / ASHWINI / ASHWINI /PS PSPS PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//