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Ground no. 2 of the assessee and ground 1 of the revenue for AY 2002-03.

16. The assessing officer made addition of Rs. 97,48,138/- on account of disallowance made dismissing the claim of the assessee regarding payment of commission on sale. During first appellate proceedings, the CIT(A) granted part relief to the assessee and upheld part disallowance of Rs. 38,35,079/-. Therefore, in ground no. 1 , revenue is challenging first appellate order which granted part ITA no. 543,544/Del/2010 Sara Services & Engs. Pvt. Ltd. v. CIT of the relief to the assessee and the assessee in ground no. 2 has challenged the upholding of part disallowance made by the CIT(A), thus, we are adjudicating these grounds together for the sake convenience and brevity in our order.

16. The Id AR has further submitted a chart providing details of commission debited to accounts and paid to agents. Thereafter it was argued that the total disallowance made in the impugned assessment order is of Rs.97,48,138 which also includes a ITA no. 543,544/Del/2010 Sara Services & Engs. Pvt. Ltd. v. CIT disallowance of US$ 79,812 (converted into INR 3,835,079) on account of ASSF dealt with by us in para 1 supra.

"3. The question suggested by the Revenue is as follows:

" Whether on the facts and in the circumstances of the case the Tribunal was justified in law to dismiss the appeal of the revenue by confirming the order of the CIT(A) on account of disallowing the commission payments in view of Explanation to Section 37(1) of the said Act."

4.Against the order of the Assessing Officer, the assessee preferred an appeal before the CIT(A), who in his order allowing the appeal, held as follows :

42. In the present case, we note that the AO has made disallowance of entire commission and disputed the identity of the recipients by observing that the agents to whom commission has been claimed to be paid by the assessee remains unverifiable. The AO also alleged that the assessee has failed to establish with any reliable evidence that the parties to whom alleged commission was paid had rendered any such services so as to receive the commission and in absence of evidence in support of claim of commission entire amount of commission paid was disallowed. From the first appellate order of the CIT(A) we observe that the CIT(A) granted part relief of the assessee regarding commission paid for affecting export sales to various countries. However, the CIT(A) uphold part disallowance and addition on account of ASSF by observing that the assessee has not been able to co-relate the sales of earlier years which such fees as it is seem that the assessee has claimed that no sales have been made to Iraq during the year as per affidavit of the Managing Director. As we have already observed and discussed above the CIT(A) dismiss the claim of the assessee on wrong promise and by making factually incorrect and perverse observations as in the affidavit of Shri V.K.Dhawan, Managing Director available at assessee's paper book page no. 76, as reproduced above, on behalf of the assessee it has been stated that during the financial year relevant to AY 2002-03 the company has Exported Oil Drilling Equipment to Economic and Finance Department, Ministry of Oil, Bagdad, Republic of Iraq after Government of India and Reserve Bank of India approvals and the impugned amount of ITA no. 543,544/Del/2010 Sara Services & Engs. Pvt. Ltd. v. CIT commission was paid towards ASSF to AL Wasel & Babel General Company in the account of Ministry of Oil, Iraq Drilling Company which was paid through wire transfer from the assessee's account with Punjab National Bank, Dehradun.