AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 395
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....he commission of Rs. 33,69,903/- paid to Sheikh Safat Ahmad Proprietor M/s S & S Traders, Srinagar (J & K) for rendering services to the appellant, as per agreement is not allowable expenditure under section 37(1) of the Income Tax Act?" The facts of the case as noted by the Tribunal are that the assessee is engaged in the business of maufacture of Firefighting Vehicles, and supply of the same amongst others to Ministry of Defence, Indian Air Force, Ordinance Factory, Indian Oil Corporation, Gas Authority of India Limited and other Government and non-Government Organisations, etc. During the course of assessment proceedings of the assessment year 2005-06, the Assessing Officer put the assessee to notice in respect of business expenditure....
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....ssee raised the issue of being denied opportunity to rebut the document relied upon by the Assessing Officer in the shape of the letter between the Director General of Fire and Emergency Services, Jammu & Kashmir, Srinagar. Also, upon submissions made by the assessee in appeal, the CIT (Appeals) called for remand report from the Assessing Officer. Then, before the Assessing Authority, in the course of the preparation of the remand report, Sheikh Shafat Ahmad appeared and was examined by the Assessing Officer. Various questions were put to him specifically in respect of payments made and received by him from the assessee and the work that he had done to entitle him to such payments. The assessee and also Sheikh Shafat Ahmad stated that the p....
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....Sheikh Safat Ahmad did not appear before the Assessing Officer in the first instance and that he did not produce any documentary evidence to establish the nature and value of services performed by the assessee when he appeared before that authority in the remand report stage. The Tribunal while allowing the appeal of the department has held that the findings of the CIT(Appeals) accepting the claim of the assessee is based on his own assumption and presumption. According to the Tribunal the assessee did not discharge the burden cast on it to establish that the expenditure claimed was for purpose of business. Having said that the Tribunal itself proceeded to reverse the order of the CIT (Appeals) by reasoning that the expenditure was no....
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....has not been laid out for the purpose of business. Moreover, the nature of expenditure has to be seen from the view point of the assessee and the Assessing Officer has neither the expertise of running a business nor has any specialisation to sit in judgment over the assessee as to whether such an expenditure was incurred for commercial expediency or not. A part from it, there is no provision to disallow a part of such expenditure on the ground of excessiveness when the expenditure has been found to be genuine." Also, applying the above ratio, this court has again in CIT Vs. M/s Motilal Duli Chand (ITA NO. 97 of 2002) decided on 10.3.2015 dismissed the departmental appeal in a case where such an expenditure had been allowed by the Tribuna....
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....ts made through banking channel, TDS having been made by the assessee, Sheikh Safat Ahmad had been assessed to tax (though upon return filed late) and his statement made by him before the Assessing Officer in the remand report proceedings and other evidence exist on record. They alongwith such other evidence as exists on record were required to be examined and weighed by the Tribunal before it could record its finding on the allowability of the commission claimed by the assessee. The Tribunal also appears to have chosen to read certain parts of the statement given by the Sheikh Safat Ahmad in isolation and not in entirety of the facts and circumstances of the case. In so far as the finding of such payment having been made for the busines....