TaxTMI 
TaxTMI 
2015 (10) TMI 813
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....on and other programs filed a return of income of Rs. 33,37,780/- by way of filing its return. The said return was picked up for scrutiny after issuance of notice u/s 143(2) etc. The AO observed that the net profit rate of the assessee in the year under consideration was 13.18% as per the books of accounts and details furnished before him. On considering the same, he inquired into the payments of the associates which had been debited to the extent of Rs. 1,71,27,850/- in the P&L A/c of the assessee. In justification of the said expenses, the assessee as per page 2 of the assessment order is found to have stated that the assessee was dealing in multi-level marketing of educational web packages and this was the first year of the assessee company. The company it was stated was incorporated on 8th June 2001 with Registrar of Companies, Delhi and started the online operations and registration w.e.f. 25.6.2001. The income received it was stated was from sale of online education and other programs. The earning from these has been disclosed at Rs. 2.62,80,06,337/- and other income of Rs. 5,10,119/- totaling to Rs. 2,67,90,186/- on which net profit had been disclosed at Rs. 35,32,2S2/- whic....
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....o Rajyanti to whom the commission paid is Rs. 40,000/- who is stated to be a regular associate; which resulted in reduction the tax incidence. Accordingly, so-called commission is disallowed at Rs. 9,10,500/- and added to the income of the assessee." Addition of Rs. 9,10,500/- 4. Aggrieved by this, the assessee came in appeal before the First Appellate Authority. Reiterating the submissions advanced before the AO, it was submitted that only the persons who continue to renew their status remain connected and the persons who had not renewed their status as associates do not remain in touch with the assessee company. Accordingly it pleaded that it is difficult for the assessee to obtain their latest addresses. It was again re-iterated that the commission it was stated is automatically generated in the account of the assessee on the event of sale on which tax had been deducted and payment was made by account payee cheque. Reliance was also placed on the confirmations received from 8 out of the 10 persons referred to by the AO. The CIT(A) confronted these details to the AO who filed a Remand Report considering which the addition was deleted. 5. Aggrieved by this action, t....
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.... atleast some shortcoming in the nature of evidences filed and consideration should have been pointed out so as to justify such a demand. A matter cannot be remanded for the mere asking. A perusal of the impugned order at page 8 shows that the major commission payment out of these 8 people has been paid to Sri Padma Sinha, Sri Nirmal Singh, Sri Daljit Singh Sandhu in whose case PAN details were made available and in the case of the remaining 5 people the confirmations alongwith their telephone numbers and address details were provided. Apart from that it is seen that the admitted fact consistently on record is that the commission has been paid to the persons after deduction of tax at source by way of account payee cheque. 8. Accordingly in view of these material facts and evidences on record which remain unrebutted and where no infirmity in the confirmations filed has been pointed out, we find no good reason to interfere with the finding arrived at in the impugned order. Being satisfied by the reasoning and finding, Ground No.-1 of the Revenue is dismissed. 9. The facts relatable to the second ground agitated by the Revenue are set out at page 4 and 5 of the assessment order.....
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....ages upto 21.01.2002 and @ 5,500/- per package thereafter. The payment of commission to Sh.Vipin Malhan, it was stated was based on this agreement as upto the sale of 2000 web packages, commission was to be paid @ 10% of the total receipts and in case the sale of 2000 web packages was not completed within six months, the entitlement to commission was only @ 8%. The commission it was stated was to be paid by the company on a monthly basis after deduction of tax at source. It was stated that Sh.Vipin Malhan was paid, the commission of Rs. 29,53,002/- on the total receipts from the sale of web packages and the further payment of Rs. 3,37,500/- over and above the commission was calculated on sales and this payment was made as a channel partner being the associate of the company. The payment it was stated was paid in terms of the Agreement. In support of the said claim, reconciliation of the payment of commission was filed which also included its maintenance charges. The assessee further supported its claim by way of following submissions :- "From the statement it would be seen that the total registration charges received by the company relating to the account year under consid....
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.... Rs. 39,75,357/- Total Receipts Rs.3,00,26,560/- Less:- Other receipts on which commission not payable Rs.4,96,540/- Net receipts for the period 20.06.01 to 31.03.02 Rs.2,95,30,020/- Commission paid to Sh. Vipin Malhan @ 10% Rs.29,35,002/- Add:- Commission paid as an associate of the company On down line sales Rs.3,37,500/- Rs.32,90,502/- The detailed list showing commission paid to Sh. Vipin Malhan as an associated member has been also filed on record. The AR thus submitted that the observation of the assessing officer that Vipin Malhan being the marketing consultant is not entitled to the commission as an associate member is not correct. It is also wrong on the part of the assessing officer to observe that this commission has been not devised or mentioned in the agreement for the payment of commission as an associate member. This observation of the assessing officer is not correct and is a mere hypothetical observation. The commission to Sh. Vipin Malhan is paid as an associate member as per marketing policy of the c....