Disallowance of Commission Expenditure

[RAVI SONI]

M/A XYZ & Co. is a seller and M/S DEF & Co. is a purchaser and Mr. A is acting as a middleman / commission agent on behalf of M/S XYZ & Co. ,during scrutiny proceedings the A O disallowed expenditure on commission on the basis that the purchaser party deny to recognize any middleman / commission agent during the course of transaction of purchase of goods from M/S XYZ & Co.

However when notices was send to Mr. A he confirmed to A O that he acted as a commission agent, still the A O disallowed all the commission expenditure just because M/S DEF & Co. i. e. the purchaser party issued a negative reply that no commission agent was involved.

In this regard I want to know that on what basis I can get relief from CIT Appeal.

[DR.MARIAPPAN GOVINDARAJAN]

Please send the copy of the order of AO to my email id [email protected] for giving further advice.

[Ashok Patil]

Submit the documentary evidences that Mr. A has offered the income earned i.e. commission to tax in his return of income.

AI Summary

Disallowance of commission expenditure can be challenged by producing the agent's income declaration and supporting documents. Assessing officer disallowed commission expenditure because the purchaser denied any intermediary, though the agent admitted receipt; relief on appeal requires producing the assessment order and documentary evidence that the agent declared the commission income, thereby demonstrating the genuineness and taxability of the commission to rebut the purchaser's denial.