2017 (12) TMI 1156 - AT - Income Tax

Commission payment upheld by Tribunal based on confirmed receipt and evidence, dismissing Revenue's appeal.

The Tribunal upheld the deletion of the disallowance of commission paid by the assessee. The parties receiving the commission confirmed its receipt, ... Deduction of commission paid to the various brokers - Held that:- As rightly submitted by the assessee, the said parties in reply to enquiry made by the Assessing Officer had confirmed the receipt of commission from the assessee and there was nothing found in the enquiry made by the Assessing Officer to draw adverse inference against the assessee in the matter of allowability of the assessee’s claim for deduction on account of commission paid. AO in the remand report initially submitted to the CIT(Appeals) as well as the ld. D.R. at the time of hearing before me have doubted the genuineness of the claim of the assessee for commission payment on the ground that supporting bills raised on the assessee for commission were not produced by the concerned parties. It is, however, observed from the remand reports submitted by the Assessing Officer to the ld. CIT(Appeals) subsequently, the relevant portion of which is reproduced in the impugned order of the ld. CIT(Appeals), that some of the parties did furnish the copies of bills for commission raised on the assessee, which, in my opinion, was sufficient to establish the services rendered by them to the assessee in order to justify the payment of commission. Having regard to all these facts of the case, find myself in agreement with the ld. CIT(Appeals) that the disallowance of commission made by the Assessing Officer was not justified and the same was liable to be deleted. - Decided against revenue. Issues:Challenge to disallowance of commission paid by the assessee.Detailed Analysis:1. The Revenue challenged the deletion of disallowance of commission paid by the assessee to various brokers. The Assessing Officer disallowed the claim for deduction of commission paid by the assessee amounting to Rs. 34,78,933. The ld. CIT(Appeals) deleted the disallowance after considering submissions from both parties.2. The assessee, a partnership firm engaged in the business of purchase and sale of DEPB License, filed its return declaring total income of Rs. 1,58,403. The disallowed amount of commission paid was debited in the Profit & Loss Account. The Assessing Officer completed the assessment disallowing the claim for deduction of commission paid.3. The assessee contended before the ld. CIT(Appeals) that the commission payments were genuine and supported by audited accounts, TDS ledger, and bank statements. The ld. CIT(Appeals) directed the Assessing Officer to verify the claims. The Assessing Officer submitted remand reports confirming the commission payments, leading to the deletion of the disallowance by the ld. CIT(Appeals).4. The ld. CIT(Appeals) noted that the recipients confirmed receiving commission, and discrepancies regarding two parties were explained satisfactorily by the appellant. The ld. CIT(Appeals) found no justification for the disallowance and deleted the amount.5. The Revenue contended that the genuineness of commission payments was not proven by the assessee as the nature of services rendered was not adequately evidenced. The ld. CIT(Appeals) overlooked this aspect while allowing the claim for commission.6. The assessee argued that commission payments were necessary for dealing in DEPB License and all parties confirmed receiving the commission. The ld. CIT(Appeals) rightly deleted the disallowance as there was no adverse evidence against the assessee.7. The Tribunal upheld the ld. CIT(Appeals)'s decision, noting that parties confirmed receiving commission and some provided bills for the same. The Tribunal found no justification for the disallowance and dismissed the Revenue's appeal.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the deletion of the disallowance of commission paid by the assessee based on the confirmation and evidence provided by the parties receiving the commission.