Coordination charges paid by assessee were clearly allowable as deduction
Coordination charges paid by assessee were clearly allowable as deduction
Assessee was a del credre agent of HPCL. It agreed with Ganco SS (India) (GSSIL) to act as a coordinating agency and paid coordination charges at Rs.1.10 crores to GSSIL and claimed the expenses in its return of income. AO disallowed it as there was no written agreement between the assessee and GSSIL, and no corroborative evidence. CIT(A) allowed the claim. ITAT held that coordination charges paid by assessee were clearly allowable as deduction.-501302
1. The assessee was a del credre agent of Haldia Petro Chemicals Ltd. (HPCL). The assessee and HPCL entered into an agreement from time to time and as per terms and conditions of the agreement, assessee was obliged to organize, advertise, promote and market the product of HPCL and also realization of all bills of HPCL from parties. The assessee with the object of increasing in business and secured timely realization of sale bills of HPCL, agreed with GSSIL to act as a coordinating agency of the assessee company and to undertake more or less the same responsibility those were assigned to the assessee company by HPCL. The assessee in term of the services rendered by GSSIL from year to year paid coordination charges to them and during the relevant FY 2008-09 relevant to this AY 2009-10 paid coordination charges at Rs.1.10 cr. and claimed the expenses in its return of income. The AO while framing assessment disallowed the entire sum of Rs.1.10 cr. paid by the assessee company to GSSIL only on the reason that there was no written agreement between the assessee and GSSIL regarding arrangement between them for supervising and lifting work though all the arrangements were made on verbal communication. As assessee could not produce any corroborative evidence of such services rendered, AO made disallowance.
2. CIT(A) allowed the claim of assessee after taking remand report from the AO.
3. On appeal, the ITAT held as under:
“We find that the AO has been confronted with all the additional evidence by the CIT(A) in term of the Rules and he has submitted a remand report vide no. Appeal No. 35/CIT(A)-1/WQ-2(1)/11-12 . We find that AO in his remand report dated 31.12.2012 has alleged that the disallowance for payment by assessee to GSSIS and debited in the accounts as coordination charges was made by the AO and reasserted the position in the remand report also. We find that the AO in his remand report neither referred to nor dealt with the evidence produced by assessee before CIT(A), which in turn, were referred to him the facts are emerging from the case records.
In view of the above facts and circumstances, we are of the view that the coordination charges paid by the assessee are clearly allowable as deduction and assessee has rightly claimed the same and CIT(A) has rightly allowed the claim of the assessee. We confirm the action of CIT(A) and this issue of revenue's appeal is dismissed.”
Case Reference - Income-tax Officer, Wd-2(1), Kolkata. Vs. M/s. Rajami Barter Pvt. Ltd.
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA
[Before Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM]
I.T.A No.876/Kol/2013
Assessment Year: 2009-10
