TaxTMI 
TaxTMI 
2016 (10) TMI 888
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....f the claim of commission payable to associates without appreciating the fact that the assessee failed to prove that these expenditures were incurred wholly and exclusively for the purpose of business of the assessee. 3. On the facts and in the circumstances of the case and in law, Ld. CIT(Appeals) erred in deleting the addition of Rs. 1,31,860/- made on account of disallowance of claim of good health expenses without appreciating the fact that the expenditure was not incurred wholly and exclusively for the purpose of business of the assessee on the fact of assessee's case. 2. On the date of hearing, none appeared on behalf of respondentassessee nor any application for adjournment of hearing has been filed. Since there is no appearance on behalf of assessee, we proceed to decide the appeal ex-parte, qua the assessee, on the basis of details available on record. All the grounds are inter-connected and therefore the same are decided together. 2.1. The relevant facts as culled out from the materials on record are as under:- 2.2. Assessee is a company stated to be engaged in the business for providing Industrial Coating and Corrosion Solutions in varied sectors of industries. A....
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....sis of addition. As per the AO, the disallowance/addition was made due to unverifiable nature of the payments (here commission payable) being made. Thus, as per the AO now the evidence of subsequent payment still do not qualify the commission payable amount as a payment made for the business purpose. It is further stated by the AO that during the course of assessment proceedings, the appellant was asked to justify the commission payable to associates of Rs. 22,67,275/-. As per the AO, though sufficient opportunity was provided to the appellant, the AR of the appellant could not substantiate the payables to associates as actually paid in the subsequent year. As per the AO, moreover the details of the payables were also not verifiable. As per the AO, the appellant could not prove the business purpose achieved against such liability created. As per the AO, therefore, the basis of addition was on two counts, i.e. the commission payable of Rs. 22,67,275/- was unverifiable as to who all were the persons to whom such payment was due to be paid. Secondly, the business purpose achieved against such commission payable also could not be substantiated. 7.7 From the above reasons as mentioned....
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....ersons along with which was sent to the AO for remand report. As per the AR copy of bank statement of the appellant company for two months i.e. April and May 2010, which shows commission payments made to these members along with details of payments of outstanding commission made to these members in the subsequent financial year were also produced before the AO at the time of remand report. The AO has gone through the details and mentioned in his remand report that out of Rs. 22,67,133/-, Rs. 16,20,680/- was paid in the subsequent year and balance Rs. 6,46,453/- was remaining unpaid. In this regard, the ARs have submitted that the AO himself admitted that the commission payments were made in the subsequent year. As per the ARs part of the commission which remained unpaid was paid in the subsequent years. As per the ARs appellant company has paid majority of the amount which itself proves its intention to make payments and also confirms the fact that the payments are genuine. As per the ARs they had also requested the Ld. AO to call for confirmations u/s 133 (6) to cross verify the outstanding with the respective third parties. As per the ARs however he has not bothered to do so. As ....
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....ai Patel. As per the AO, the other payment of Rs. 50,000/- is ostensibly been paid for some awareness programme related with health insurance as mention by the AR of the appellant. However both these payments could not be verified by the AR of the appellant. As per the AO, the business purpose achieved and the justification of such expenses could not be proved during the course of the assessment proceedings. On the other hand, the ARs in their submission as filed have submitted that the appellant company is engaged in the business of providing medical related services to members who subscribe to the membership of company. As per the ARs the company appoints associates/ agents who in turn recruit down line associates (sub-agents) and thereby each associate gets a share in the contributions (commission) for recruiting the members. As per the ARs furthermore, the appellant company takes group insurance for its members from general insurance companies like United India and Oriental Insurance Company Ltd. and the members collectively are entitled to benefits of such insurance policies taken. As per the ARs but sometimes due to disputes, etc. the entire claim is not processed by the Insu....