TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 1327
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.... the reasonableness as required under section 40A(2) (b) of the Income Tax Act, 1961. 3. That the Ld. Commissioner of Income Tax (Appeal) erred in affirming the decision of Ld. AO for disallowing foreign tour expenses of Rs. 14,83,542/- without appreciating the fact that expenditure was incurred wholly and exclusively for the purpose of business. 4. That the Ld. Commissioner of Income Tax (Appeals) erred in not adjudicating the following three grounds raised before him on the basis that such grounds were not pressed before him, despite of the fact that these grounds were discussed in detail during appellate proceedings: i. Disallowance of depreciation of Rs. 27,45,524/- claimed on addition to fixed assets merely on the basis of baseless allegations that they are not put to use. ii. Disallowance of commission of Rs. 9,00,000/- paid to employee Mrs. Vijaya Bharadwaj merely because no tax at source was deducted. iii. Disallowance of Rs. 1,00,000/- paid to M/s Amby Valley Ltd. for booking accommodation without appreciating the fact that such expenditure was incurred for the purpose of sales promotion." 3. In ITA No.365/Mum/2016, Revenue has filed the appeal on the foll....
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....25% on net sales turnover to M/s. Delite International on monthly basis at actual monthly billing of the assessee. The Commission Agreement specifies that the commission agent is to perform following jobs; 1. Product Awareness to the consumer, 2. Creating consumers Interest in a Product, 3. Providing information relating to product, 4. Liasioning with O/E and Government Undertakings, 5. Sales Backup at the shop floor / plant level and 6. collection of payments & Sales Tax concessional forms. According to CIT(A), assessee could not substantiate the claim with evidences to justify the payment to M/s. Delite International in respect of the entire sales effected by the assessee for which commission was paid. In absence of any proof, the entire sales of assessee were the result of efforts of M/s. Delite International and considering that all sales/marketing expenses were to be borne by assessee company and not by M/s. Delite International. CIT(A) held that disallowance of commission payment amounting to Rs. 1,41,21,044/- made by assessee company to M/s. Delite International deserves to be sustained and accordingly appeal of assessee was dismissed. 4.2 Before us, ld. Author....
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....wed such big deduction in absence of substantiating evidence. Ld. Departmental Representative also drew our attention to page no.57 of the paper book inter alia details of the invoices have not been given and submitted that all the payments were bogus. So, same has rightly been disallowed by authorities below. Accordingly, strongly requested order of CIT(A) be upheld on this point. 4.3 After going through rival submissions and material on record, we find that assessee has paid commission in question to M/s. Delite International wherein Ashok Pandey was a key person and he is also a Director in assessee's company. The professional competency of Ashok Pandey has not been disputed as he has been rendering services to assessee since long. Assessee was having supplies to various companies and commission for the same has been paid earlier years as well. On the analysis of different clauses of agreement, we find that said M/s. Delite International has to render services of product awareness to the consumer, creating consumers interest in a product, providing information relating to product, liasioning with O/E and Government undertakings, sales backup at the shop floor/plant level and co....
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....me is allowed. 5. Next issue is with regard to payment of transport charges made by assessee company to M/s. Delite International. Assessing Officer asked the assessee company to furnish the details. According to Assessing Officer, assessee did not discharge the onus to substantiate the claim with supporting evidences. So, it was disallowed. 5.1 In appeal, assessee has filed copies of bills of M/s. Delite International. There are a total of 12 bills, one for each month of F.Y. 2010-11. CIT(A) did not believe the same because they were of similar nature. According to Revenue authorities, many details like challan No., quantity, rate etc. were not filled up. Further, the number of trips between place of origin and destination was not stated. Moreover, details of octroi, toll tax etc. were not stated. In absence of relevant details, according to CIT(A), assessee failed to establish that trips for which transportation charges had been claimed. According to CIT(A), assessee could not establish that amounts were actually made and that these trips were wholly and exclusively for the business of assessee company. After taking support of provisions of Section 40A(2)(b) of the Act, Revenue....
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....nstance. According to agreement, transporter supposed to assign the job of driving of vehicles only to experienced licensed drivers etc. It was also expressed understanding between parties that the party of second part will be solely responsible for the cost of fuels, lubricants, repairs, maintenance, RTO taxes, other Government taxes and insurance, payments of wages to Drivers & Cleaners etc. Payments were to be made on the basis of usage and final bill as submitted by transporter. It is not in disputed that assessee was manufacturing goods and same were transported to various places, for them transports were necessary. So, assessee has preferred to transport their goods to different destinations through M/s. Delite International. Revenue authorities had tried to invoke the provisions of Section 40A(2)(b) of the Act. They have not brought on record any comparative instances to negate the assessee's claim of assessee and ultimately disallowed the whole expenses, which is not true spirit of the Section 40A(2)(b) of the Act. Revenue authorities have not disputed the fact that possession of transport vehicles was M/s. Delite International and transportation by assessee. They have not ....
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....tive supported the orders of authorities below on the issue and submitted that purchases were made on domestic market, there was no purpose for visiting the abroad for the same. 6.2 After going through rival submissions and material on record, we find that assessee is engaged in the business of manufacturing of expanded Poly. Foam, Assy Floor Mats and Articles of Plastic. Ld. Authorized Representative submitted before us that they wanted to purchase certain machinery from abroad but after visiting above places, assessee management finally decided to purchase the same from domestic market. The management skills and latest technical knowhow acquired by assessee by incurring expenses for foreign travel and benefitted assessee in running its business. Assessee might have reached to its business decision after making detail survey of product and technique. Even if after above foreign travel decision is taken for making purchase from domestic market it cannot be said that foreign travel was not for assessee's business. It is business decision of assessee which should not be disturbed by Revenue authorities without bringing out anything otherwise on the record. Revenue authorities failed....