Case Law Details
DCIT Vs. M/s. Cox & Kings (I) Ltd. (ITAT Mumbai)
Assessee has a foreign exchange division approved by the RBI and is authorized to buy foreign exchange and travelers cheques from RMCs and others and sell them to persons in need of them. RMCs are also authorized by RBI to buy foreign currency from non residents visiting various places in India. These facts would show that the RMCs are not agents of the assessee but are appointed by RBI. Though, it may be a fact that the assessee buys foreign currency from RMCs depending upon the needs, however, there is no principal agent relationship between the assessee and the RMCs. The RMCs are free to sell foreign currency bought from tourists to assessee, RBI or any other person authorized by the RBI to deal in foreign currency. It is also to be noted that both the RMCs as well as the assessee have shown foreign currency as their stock in trade. The assessee has no relationship with the persons from whom the RMCs purchase foreign currency and the assessee is no way connected to the concerned tourists. Therefore, in our view the transaction between the assessee and the RMCs is on principal to principal basis and there is no principal agent relationship existing between them. Merely because in the financial statement assessee has debited the amount as commission it cannot be treated so without looking at the real nature of the transaction. The AO must bring on record material to establish that there is a principal agent relationship existing between the assessee and the RMCs. No enquiry has been made by the AO with the RMCs to find out the real nature of transactions between them. Further, assessee’s contention that in no other place in India such premium paid has been disallowed requires to be taken note of. It is also relevant to observe, even in respect of premium payment in Goa, except, the impugned assessment year in no other assessment year such dis allowance under section 40(a)(ia) has been made. That being the case, we are inclined to delete the addition made by the AO.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These cross appeals by the assessee and the Department and the cross objection by the assessee arise out of a common order dated 03.08.2015 of CIT(A)-2 Mumbai for A.Y. 2007-08.
2. Assessee has raised nine grounds. Ground Nos. 1 & 2 are against confirmation of dis allowance of Rs. 4,33,921/- under section 14A of the Act.
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