TaxTMI 
TaxTMI 
2012 (3) TMI 59
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....tances of the case, the ld. CIT(A) erred in confirming the disallowance of incentive of Rs.53,200/- paid to various workers and hence your appellant prays that the same be allowed as claimed by the appellant. (4) In view of the facts and circumstances, the ld. CIT(A) has erred in directing the addition of Rs.68275/- u/s 40(a)(ia) though the appellant himself disallowed it in computation of income and hence your appellant prays that this direction be quashed. 2. Ground No.1 relates to disallowance of commission of Rs.3,50,229/- paid to M/s Rohit Traders. The facts of the case are that the assessee company is engaged in the manufacturing of refractory items. The assessee filed its return of income for Asst. Year 2005-06 on 25.10.2005 by showing total income of Rs.3,15,697/-. The return was processed u/s 143(1) of the IT Act, 27.03.2006 by accepting returned income. The case was selected for scrutiny and a notice u/s 143(2) of the IT Act dated 26.10.2006 was issued which was served upon the assessee through RPAD on 30.10.2006. During the year under consideration the assessee had shown turnover of Rs.2,15,14,514/- and the gross profit is shown at the ratio of 22.60% as against th....
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....he assessee company credited commission in the account of M/s Rohit Traders at the end of the other sale. (viii) The sales made to Essar Steel Ltd. of Rs.97,09,122.19 and Hindalco Industries Ltd. of Rs.1,03,04,723.00 and if the commission rate is taken at 2% then the same does not match with the claim made by the assessee company. The assessee company has claimed 2% commission on sales of Rs.86.74 lacs to Essar Steel Ltd. and Rs.88.36 lacs to Hindalco Industries Ltd. which further shows that there is no co-relation between the claim and the payment. 3. The assessee carried the matter in appeal before the first appellate authority wherein it was submitted most of the submissions made before the AO during the course of assessment proceedings and also filed copy of debit note raised by M/s Rohit Traders in respect of both the companies are dated 31.03.2005. The assessee argued that the contract agreement could not contain the name of the party to whom the sales are made because the agent was supposed to procure sales from unknown parties also. 4. The ld. CIT(A) after considering the observations of AO and the submissions of the assessee dismissed the ground raised by the asse....
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....upposed to procure sales from unknown parties also. It was further argued that in pursuance of the contract between the assessee and M/s Rohit Traders, M/s Rohit Traders incurred some expenses on behalf of the assessee which were also reimbursed, which shows that services were rendered by M/s Rohit Traders to the assessee. As far as the finding of the ld. CIT(A) is concerned that 2% commission has not been paid to M/s Rohit Traders on total sales made to Essar Steel Ltd. and Hindalco Industries Ltd. by the assessee it was contended that commission has been paid on net sales excluding the amount of excise etc., therefore, it cannot be a ground for disallowing the expenses of Rs.3,50,229/-, concluding his argument that the orders of lower authorities be set aside and the addition be deleted. 6. On the other hand, the ld. DR supported the orders of lower authorities and submitted that the assessee failed to produce any material in support of agent obtaining orders from the parties. They had failed to furnish any evidence in support of material transferred and liaisoning work carried out by these parties. The assessee failed to explain why M/s Rohit Traders had failed to raise debit....
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....of payment vouchers copy of bank statement, DD through which payment was made and TDS certificate evidencing the payment. The assessee further argued that since the TDS payment was made late, proportionate disallowance has already been made u/s 40(a)(ia) and it amounts to double addition. The AO, however, disallowed the commission payment because the assessee failed to give evidence of rendering services. No evidence was brought on record for services being rendered. The AO further stated that the TDS was not deducted at the rate prescribed under the Income-tax Act. 9. In appeal before ld. CIT(A) the assessee reiterated the submissions made before the AO. The ld. CIT(A) considering the submissions of assessee and the observation of the AO, confirmed the action of AO by observing as under :- "5.3 I have considered the submissions made by the appellant and the observation of the AO. Neither during the assessment proceedings nor during the appellate proceeding the appellant could produce proof of services having been rendered. It is a settled position of law that even when the services rendered are not proved the commission cannot be allowed. In this regard, reliance is placed o....
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....ed this payment as incentive to the labourers. The assessee filed the details of the same. According to the AO the payments seemed to have been made to the labourers for efficient and timely completion of work and it was in the nature of over time incentive. However, the vouchers filed by the assessee showed that the payments of Rs.3,000/- was commission claimed to have been paid to the sister concern, namely M/s Rohit Traders. Similarly, it consisted of amounts of rs.1,000/- paid to Shri Dineshbhai, Rs.800/- to Shri Mansukhbhai and amount of Rs.1,2000/- paid to Shri Ravjibhai. All these were nothing but commission payment and not incentive. The assessee also did not give nature of work done by these persons. The sister concern of the assessee, M/s Rohit Traders has claimed payment of Rs.13,000/- as having been paid to 13 labourers as Rs.1,000/- per labourer. This claim was at variance with the vouchers prepared by M/s Rohit Traders dated 26.06.2004 which showed that M/s Rohit Traders had claimed 10% commission @ Rs.1,3000/- per person. This shows that the claim of the assessee was totally wrong. The AO has further given various examples of vouchers which are not inconsonance with ....