ACIT Vs Lucky Exports (ITAT Delhi)
Commission to Foreign Agents Not “FTS”, Legal & Professional Fees Outside India Not Taxable – ITAT Delhi Upholds CIT(A) Relief to Lucky Exports
Delhi Tribunal dismissed Revenue’s appeals against CIT(A)’s deletion of large disallowances on commission, professional fees & interest in the case of M/s Lucky Exports for AYs 2011-12 & 2012-13.
Assessee, engaged in export projects, filed returns declaring income of ₹17.55 crore (AY 2011-12). AO completed assessment at ₹23.36 crore by disallowing:
Commission expenses: ₹2.51 crore paid to M/s Synergy Petro Products Pvt. Ltd. (domestic), ₹2.21 crore paid to foreign agents (M/s Blesba Trade & Societe Amar Consulting), Legal & professional charges: ₹36.13 lakh & Interest: ₹33.24 lakh on loans/advances to sister concerns.
For AY 2012-13, similar additions were made – commission of ₹8.18 crore & interest disallowance of ₹1.75 crore.
Commission Payments – Held Genuine
CIT(A), after examining agreements, correspondence, confirmations, invoices & AO’s remand report, held that commission to Synergy Petro Products Pvt. Ltd. was genuine. Payments were made in instalments linked to contract progress & TDS was duly deducted. Tribunal agreed that absence of physical presence in Benin does not negate services, as influence & contacts abroad sufficed for securing contracts.
