Tribunal Upholds Disallowance of Commission: Sale Value Realization Requirement

The Tribunal dismissed the appeal, affirming the disallowance of the commission as it was contingent upon the realization of sale value, as per the agreement terms. The Tribunal held that the commission should be allowed only when the sale value is realized, rejecting the appellant's argument based on the mercantile system of accounting.

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Issues: Disallowance of commission for not being accrued in the assessment year under consideration.

Analysis:
1. The appellant accrued a commission amount in the books of account for the assessment year 2009-10, but the Assessing Officer disallowed part of it as not accrued during the year.
2. The AO disallowed the commission based on the actual remittance made towards commission during the period, stating that commission becomes due only upon realization of export proceeds.
3. The CIT(A) confirmed the AO's decision, emphasizing that commission payment is linked to receipt of payments from clients, as per the agreement with the selling agent.
4. The appellant argued that the commission expenses were genuine business expenses under the mercantile system of accounting and should be allowed regardless of export proceeds realization.
5. The appellant cited legal precedents to support the claim that accrued liabilities should be considered for deduction under the mercantile system of accounting.
6. The Tribunal noted the agreement terms that commission falls due only upon receipt of payment from clients, and upheld the disallowance based on the agreement's provisions.

Conclusion:
The Tribunal dismissed the appeal, affirming the disallowance of the commission as it was contingent upon the realization of sale value, as per the agreement terms. The Tribunal held that the commission should be allowed only when the sale value is realized, rejecting the appellant's argument based on the mercantile system of accounting.

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