Commission expense disallowance challenged over dealer after-sales and storage services; addition deleted as payments evidenced by TDS and banking

Disallowance of commission expenses was contested on grounds that the assessee furnished details showing dealers rendered after-sales services, monitored customer creditworthiness, and provided storage subject to statutory constraints; these services established a legitimate business purpose and benefit. The assessing officer made additions without undertaking verification or cross-checking, despite payments routed through TDS and banking channels. The appellate authority deleted the addition on evidentiary sufficiency, and the ITAT upheld deletion, resulting in decision against the revenue.

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Issues: Whether the deletion of the Assessing Officer's disallowance of sales commission expenses of Rs. 1,88,37,071/- is sustainable where the assessee furnished party-wise breakup, vendor ledgers, and TDS/banking evidence during assessment proceedings.

Analysis: The appeal concerns admissibility of commission payments claimed as business expenditure. The assessee furnished party-wise details including name, address, PAN, amounts paid, and TDS particulars, together with vendor ledgers and party-wise sales records during assessment proceedings. The assessing authority disallowed the commission without conducting independent verification or cross-checks of the furnished material. The industry practice and commercial context of the goods (dealer-oriented distribution, storage, transportation and after-sales services) was relied upon to explain the nature and business purpose of the payments. Documentary evidence included payments routed through banking channels and TDS deductions which linked the payments to identifiable payees and transactions. The appellate authority examined these materials and found the disallowance to be made without due verification and opportunity; on that basis the addition was deleted.

Conclusion: Deletion of the disallowance of sales commission expenses is sustained. The evidence furnished (party-wise breakup, ledgers, TDS and banking entries, and commercial context) sufficed to establish business purpose and payment traceability and the Assessing Officer's disallowance is not justified.

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