Tribunal partially allows Revenue's appeal on commission payments and creditor confirmation.

The Tribunal partly allowed the Revenue's appeal, upholding the CIT(A)'s decisions on the deletion of Rs. 7,98,797/- and Rs. 12,29,404/- due to unverified commission payments and non-confirmation of creditors, respectively. However, the Tribunal reversed the CIT(A)'s relief of Rs. 3.76 lakhs on commission on sales under Section 40(a)(ia) and remanded the matter for further consideration of the remuneration disallowance.

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Issues Involved:
1. Deletion of addition of Rs. 7,98,797/- out of payments of commission to petty persons.
2. Relief of Rs. 3,76,000/- out of commission on sales and Rs. 21,35,000/- on account of remuneration without TDS deduction.
3. Deletion of addition of Rs. 12,29,404/- due to non-confirmation of creditors.

Detailed Analysis:

1. Deletion of Addition of Rs. 7,98,797/- Out of Payments of Commission to Petty Persons:
The Revenue contested the deletion of the addition of Rs. 7,98,797/- made by the Assessing Officer (AO) due to unverified commission payments. The CIT(A) deleted this addition, reasoning that disallowing the same expenditure twice (once under Section 40(a)(ia) and again for non-verifiability) is not permissible. The CIT(A) noted that the assessee had provided confirmations, affidavits, and proof of identity for the commission agents. The AO had accepted similar confirmations from 17 agents but rejected 12 without further inquiry. The Tribunal found no infirmity in the CIT(A)'s order, agreeing that the AO's rejection of the 12 agents' confirmations without inquiry was unjustified. Therefore, the Tribunal upheld the CIT(A)'s decision and rejected the Revenue's ground on this issue.

2. Relief of Rs. 3,76,000/- Out of Commission on Sales and Rs. 21,35,000/- on Account of Remuneration Without TDS Deduction:
The Revenue raised two issues under this ground, both related to disallowances under Section 40(a)(ia) of the Act.

Commission on Sales:
The CIT(A) allowed relief of Rs. 3.76 lakhs on the basis that the commission was not unpaid/payable as of 31/03/2009, following the Special Bench decision in Merilyn Shipping & Transports vs. Addl. CIT and the Allahabad High Court judgment in CIT vs. Vector Shipping Services Pvt. Ltd. The Tribunal, however, noted that the Special Bench decision had been suspended by the Andhra Pradesh High Court and that other High Courts (Gujarat and Calcutta) had held that Section 40(a)(ia) applies to amounts payable at any time during the year. The Tribunal concluded that the CIT(A)'s reliance on the Special Bench decision was misplaced and reversed the CIT(A)'s order, restoring the AO's disallowance.

Remuneration:
The CIT(A) deleted the disallowance of Rs. 21.35 lakhs, finding that the payments were salaries to marketing staff, not requiring TDS under Section 192 as their incomes were below the taxable limit. The AO had not specified under which section TDS was required and had failed to demonstrate that the payments were contractual under Section 194C. The Tribunal upheld the CIT(A)'s decision, agreeing that the AO's disallowance was based on conjecture without material evidence. Thus, this part of the ground was decided in favor of the assessee.

3. Deletion of Addition of Rs. 12,29,404/- Due to Non-Confirmation of Creditors:
The AO had disallowed Rs. 12,29,404/- due to non-receipt of a reply from the creditor, M/s Balaji Furnishers. The CIT(A) found that the assessee had provided confirmed ledger accounts, invoices, and evidence of corresponding sales to hospitals. The AO had not conducted proper inquiries or brought adverse material on record. The Tribunal agreed with the CIT(A), noting that the AO had not shown that the liability had ceased to exist or that the creditor was bogus. The Tribunal found no infirmity in the CIT(A)'s order and rejected the Revenue's ground on this issue.

Conclusion:
The Tribunal partly allowed the Revenue's appeal, upholding the CIT(A)'s decisions on the deletion of Rs. 7,98,797/- and Rs. 12,29,404/-, but reversing the CIT(A)'s relief of Rs. 3.76 lakhs under Section 40(a)(ia) regarding the commission on sales. The Tribunal restored the matter to the CIT(A) for adjudication on the merits of the remuneration disallowance.

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