TaxTMI 
TaxTMI 
2016 (1) TMI 785
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....e Assessee disclosing taxable income of Rs. 26,57,330/- while claimaing deduction towards payment of commission. It was taken up for scrutiny and during finalization, under Section 143 (3) of The Income Tax Act, 1961, (hereinafter will be referred to as "the Act") the claim for commission was disallowed to the extent of Rs. 65,27,747/-, which are allegedly paid to: (i) M/s. Auto India Group - Rs. 47,38,406/-; (ii) TCS & Co., - Rs. 12,57,380/-; (iii) M/s. O.P.Steels Limited - Rs. 5,31,961/-. 2.1. While processing the claim, the Assessing Officer, on enquiry, found that the business concerns belonging to Auto India Group were not traceable and in the absence of details, such as, details of services rendered, identification of persons, who re....
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....siness or profession has been prescribed under Section 29 of the Act. For computing assessable income from business that provides for certain statutory deductions, which are provided under Sections 30 to 43C of the Act. The provisions of Sections 44 to 44D of the Act provide for computation of profits and deduction of expenditures in certain cases. Section 37 of the Act provides for the deduction of all expenditures, wholly and exclusively laid out or expended for the purpose of business, where such expenditure is not expressly covered by any other specific provisions of the Act. The guidelines for deduction of an expenditure has been furnished in the decision of the Kerala High Court reported in the case of Ram Bahadur Thakur Ltd. v. CIT (....
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....CS & Company, and (c) O.P.Steels Limited. In respect of these claims, while confirming the disallowance ordered by the Assessing Officer, the Commissioner of Income Tax held that the primary onus of proving a transaction squarely lies on the person claiming the same and as the Assessee has not discharged the primary onus of proving the transaction, the Assessing Officer was right in disallowing the deduction claimed. On the contrary, the Income Tax Appellate Tribunal, considering the following facts and circumstances, upheld the claim of the Assessee: (a) commission has been paid to corporate entities; (b) commission has been paid through Banking Channel; (c) PANs have been furnished. 6.1. The Tribunal was of the view that the materi....
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....it could not be said that such a conclusion was unreasonable or perverse or based on no evidence." 7.1. Yet another contention of the assessee is with reference to the finding regarding the reasonableness of the expenditure. Contending that, in applying the test of commercial expediency, for determining whether an expenditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the Revenue, the decision reported in CIT, Bombay v. Walchand and Company Private Limited, 65 ITR 381 is relied upon by the Assessee / respondent. 8. Per contra, the learned counsel appearing for the Revenue / appellant would submit that the Income Ta....
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....r the commission said to have been paid to the selling agents or any part thereof is properly deductible under Section 37 of the Act." 10. The learned counsel for the Revenue / appellant further pointed out that, on an earlier occasion, the very same Assessee / respondent admitted that the claim for payment of commission made was bogus and in the light of the prior conduct of the assessee, the present transaction has to be scrutinised. 10.1. No doubt, the prior conduct of the assessee with regard to the admission made is not praise-worthy; however, when there are documents produced in respect of the claim made, in this case, prior conduct cannot be the ground to disallow the claim of the assessee. 10.2. It is not a case where there is t....
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....is also necessary to point out the effectiveness of the PAN, in helping the Income Tax Authorities to identify the PAN Holder as well as to track the financial transactions. 11.1. PAN, or Permanent Account Number, is a unique 10-digit alphanumeric identity allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes. It also serves as an identity proof. PAN is mandatory for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above specified limits, buy mutual funds and more. 11.2. The primary objective of PAN is to use a universal identification key to track financial transactions that might have a taxable component to prevent tax eva....