TaxTMI 
TaxTMI 
2018 (4) TMI 315
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.... confirming the addition made by the A.O. under section 40A(2)(b) of the Act on account of commission paid to two sons of the assessee. The payment of commission of Rs. 6,00,000/- was essential for the existence of the business and business exigencies. The addition under section 40A(2)(b) was unwarranted and it be deleted. 2. On the facts and circumstances of the case and in law Ld. CIT was also not justified in rejecting the alternative submission based on the amendment to 2nd proviso to S. 40(a)(i-a) interpreted as having retrospective operation w.e.f 2005-06. In view of Hon'ble Supreme Court judgment in Hindustan Coca Cola (2007) 293 ITR 226 the provision i.e 2nd proviso to S. 40(a)(i-a) is presumed to be in existence since ....
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..... 6,00,806/-. 5. The grounds raised by assessee in this appeal also revolves around the said major addition of Rs. 6,00,806/-. The facts relating to addition at Rs. 6,00,806/- includes that the assessee made payments of commission to his two sons namely, Shri Dheeraj N. Lasaria and Shri Neeraj N. Lasaria of Rs. 3,50,000/- and Rs. 2,50,000/- respectively for business purpose of assessee. The relevant findings of the order Commissioner of Income Tax (Appeals) on this issue is extracted as under: "5.3 I have considered carefully the facts of the case and submissions of the appellant on the issue. The AO after carrying out details investigation has disallowed commission payment of Rs. 6,00,806/- which was paid to his two sons as und....
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....rgument of the assessee is not found acceptable as these provisions are applied in case of the payer assessee where the amount under question has been reflected in the return of the payee and due taxes have been paid. In the instant case it is clear from the discussion made by the AO that Shri Dheeraj Lasaria has not filed any return and thus has not offered any income and in the case of Neeraj Lasaria also it is not substantiated with proof that such income was offered in the return. Moreover, the appellant's case pertains to A.Y.2001-02 and hence the above amended provisions are not applicable in his case. Thus, considering the facts of the case the appeal on ground No. 1 to 4 is dismissed." 6. From the above, it is the case of assesse....
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....e submitted that applicability of section 40A(2)(b) of the Act in this case is premature as the Assessing Officer failed to discharge his onus about establishing the excessiveness or unreasonableness of payments/ commission by assessee to Shri Dheeraj Lasaria and Neeraj Lasaria. It is the case of assessee that the commissioner of Income Tax (Appeals) erred in rejecting alternative submission with regard to applicability of the amended provisions of section 40(a)(ia) of the Act which operates retrospectively w.e.f assessment year 2005-06 onwards. As such, the year under consideration is prior to this amendment. Further, the applicability of decision rendered by Jurisidictional High Court in the case of Indo Saudi Services (Travel) Pvt. Ltd, ....