TaxTMI 
TaxTMI 
2012 (8) TMI 451
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....ce expenses Rs.1,67,482/- iv) As regards disallownace out of telephone expenses Rs.1,50,690/-. 2. We have heard the learned Counsel and the learned DR in detail and perused the paper book placed on record. 3. Ground No.1. Disallowance of commission paid against the exports - Rs.46,65,963/-. 4. Briefly stated, AO in the assessment order noted that assessee's turn over and net profit has gone down drasticaly and the net profit has come down to 4.35% as compared to net profit at 11.02% in assessment year 2004-05. He asked for explanation, which assessee has given that the fall in the net margin, are due to the delay in realization of goods, fluctuation in foreign exchange, payment of commission at higher rate etc., Assessee also produced a....
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....losed. You will observe therein that the agents have guaranteed payments from their respective customers. e) The rate of commission has been decided at the time of shipment of the goods itself and it reflected in the corresponding shipping bill. No additional amount is paid subsequently. Copies of the shipping bills are enclosed for your reference. f) Further a statement showing agent-wise commission paid against respective invoices is also enclosed for your records. g) Also note that the agents to whom the commission is paid are independent entities having no personal relations with the aprtners of the firm. The rate of commission is fixed on arms length basis considering solely the functions to be performed by the agents. From the abo....
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....e agent to whom the alleged commission have been paid viz. speedy recovery from buyer located overseas, introducing new buyer, introducing new products in overseas market. The said commission of Rs.66,65,963/- claimed to have been paid to various agents in pursuance of an agreement entered into between appellant & its agents is in the form of letter only. The appellant has filed the said copy before the A.O and as well as before me, which restricts the maximum commission to 6% of the invoice value. The turnover of the appellant has gone down from Rs.54,22,56,312/- to Rs.33,06,17,021/-, similarly net profit of the appellant has gone down to Rs.1,49,63,560/- from Rs.5,96,45,095/- comparing the results of the year under consideration against ....
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....saction with M/s Rajneesh Traders, the commission was partly paid at 5% on one particular product paid at 6%, whereas rest of the commissions were paid, as reflected in the statement was less than 5%. With reference to Satguru International, it was engaged for the first time this year and on a sales turnover of Rs.5,86,362/-, commission was paid at 1 to 3%. In the case of Societe Fair Deal, only the commission was paid at 5 to 6% because of the specific circumstances, but all the invoices of export do contain the rate of commission paid and there is no need for disallowing the amount, as was done by AO. The learned Counsel also referred to the orders in earlier years, where no disallowance was made on commission paid and assessee's claims w....
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....of commission paid to a particular party, he could have been examined the individual invoice. Just because assessee profits have come down during the year, we are of the opinion that AO has no basis to disallow the commission on adhoc basis. Since the agents to whom the commission was paid are independent entities, having no personal relation with the firm or its Partners, and as the invoices indicate that the rate of commission fixed at the time of shipment itself, we do not see any reason to disallow any amount of commission paid. So long as expenditure is for the purpose of business, AO has no power to disallow amount, unless it is proved that the commission paid is not bonafide nor for the purpose of business. No such allegation was ma....