Affiliate commission, google adsense and freelance

 I've been a full time online marketer since 2007. I've been filing my tax return as "Income from business and profession."

For the last financial year my gross income was 17 lakhs, hence I was subject Tax audit. My main source of income is from Affiliate commission and Google adsense revenue.

I claim expenses for Domain registration, web hosting, software purchase, Advertising (like Google adwords, Yahoo search marketing etc)

I also claim other expenses like, conveyance, assets depreciation, SEO fees, freelance fee, stationery and miscellaneous office expenses like, Broadband Internet, telephone, mobile, power, bank charges

Unfortunately, my Auditor doesn't know anything about online marketing, affiliate commission etc. He's more concerned about FERA and FEMA acts and worried if I'm violating any of those regulations.

I receive my commission through Paypal withdrawal, International wire transfer and Foreign cheque.

I only get commission statement from Affiliate networks (which is in USD)

He also feels that I should make TDS for Adverting expenses (like Adwords), freelance fee, SEO fee etc. I hire freelancers from Foreign counties and from India.

Google is a foreign company which charges adverting cost directly to my credit card which comes into several lakhs in a year.

Unfortunately, there are no proper regulation in Indian IT act for "affiliate marketing business." So could you please tell me how to deal with this type of business.