2017 (12) TMI 857

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....32/- & Rs. 3,29,461/- paid to Suryajyothi Spinning Mills Limited on PET & PSF products of Reliance Industries & Rs. 9,00670/- paid to Hanumandas Karwa HUF on PSF products of Reliance Industries) despite Appellant having established not just the genuineness but also the commercial expediency of the expenditure incurred. 2. That out of disallowed commission expenditure of Rs. 23,42,263/- a sum of Rs. 11,12,132/- pertains to Commission paid to Suryajyothi Spinning Mills Limited on PET products of Reliance Industries and the learned CIT (Appeals) erred in confirming the disallowance on basis of reply of few customers who had just stated that they have not engaged an Agent and no purchases were made from any middlemen. 3. That ....

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....Hanuman Das Karwa, HUF acted as sub-agent in sales to M/s. Surya Jyothi Spinning Mills Ltd. AO recorded statement from Mr. Hanuman Das Karwa and found that no services are rendered. As far as M/s. Surya Jyothi Spinning Mills Ltd., is concerned, AO partly allowed the commission i.e., on those parties who confirmed the role of sub-agent and denied the expenditure to an extent of Rs. 23,42,263/-. 3. Ld.CIT(A) examined the issue and confirmed the order of AO after elaborately discussing the issues, under the heads commercial expediency, genuineness and finally concluded as under: "06.6. In view of the foregoing discussion, it is held that there is a preponderance of probability to conclude that the payments did not constitute remune....

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....ns. For any claim of expenditure, it is necessary to prove that the expenditure is wholly and exclusively for the purposes of business. Looking in that context, the receipt of commission from Reliance Industries on direct sales made by that company to M/s. Sri Sarvaraya Sugars Ltd, do indicate that assessee has acted as agent of that company. Role of M/s. Surya Jyothi Spinning Mills Ltd., a public limited company as sub-agent also cannot be denied as the some parties confirmed and AO himself has allowed expenditure of commission payments to M/s. Surya Jyothi Spinning Mills Ltd on those sales. Since the AO accepted the existence of sub-agent of M/s. Surya Jyothi Spinning Mills Ltd., the payment to them on direct sales cannot be denied, as as....