TaxTMI 
TaxTMI 
2018 (10) TMI 1177
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....to confirming the order of Ld. AO by disallowing of Rs. 4,80,240/- in respect of commission paid on purchases, resultantly addition of Rs. 4,80,240/- need to be deleted. 2. Under the facts & circumstances of the case and in law, the Ld. CIT (Appeal) erred to confirming the order of Ld AO by disallowing of Rs. 4,32,187/- in respect of commission paid on sales, resultantly addition of Rs. 4,32,187/- need to be deleted." 2. In ground No. 1, the assessee has challenged the sustenance of disallowance of Rs. 4,80,240/- in respect of commission paid on purchases during the year and in ground No. 2, the assessee has challenged the sustenance of disallowance of commission of Rs. 4,32,187 paid on sales affected during the year. 3. The ....
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.... shifting of the assessee and the other persons from Jhunjhunu to Bangalore and related language issues. It was accordingly held by the AO that in absence of examination of these persons, such type of questions remained unexplained and the assessee has deliberately and intentionally not produced them for examination. It was held by the AO that the assessee has failed to satisfy that these payments were genuine and reasonable for its business. It was further held by the AO that these expenses were credited to the recipient on the last day of accounting year i.e. 31.03.2012 and not actually paid to them. Accordingly, commission on purchase and commission on sales were disallowed treating them as unreasonable and excessive and added to the ret....
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....nuine and allowable. The A.O. can invoke section 40A when the expense is otherwise allowable under Section 30 to 37 and for disallowance of excessive or unreasonable portion the Section 40(A) can be invoked. Similar contentions were raised in respect of commission to Smt. Annu Gupta amounting to Rs. 4,32,191. It was submitted that most of sales were made Mrs Annu Gupta as she was having active involvement in business. She has contributed in sale of 2788.33 MT. out of total sales made of 2860.74 MT. She was paid commission @ Rs. 155/- per MT for services rendered by her. As per agreed terms, commission was credited in the account of Mrs. Annu Gupta at the end of the year after deduction of TDS @ 10%. Mrs. Annu Gupta is regular income tax pay....
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....ant also not produced Shri Sanjay Gupta and Smt. Annu Gupta before the Assessing Officer to examine the issue of commission. The A/R of the appellant taken the argument that the commission paid to Shri Sanjay Gupta in the A.Y. 2013-14 accepted by the Assessing Officer. This argument had no value because the A/R of the appellant failed to file any evidence which established that what type of service rendered by him and he also not submitted the details that how Mr. Sanjay Gupta's service benefited to firm. The facts of the each year are different it is also worthwhile that these expenses were credited to the recipient on the last day of account year i.e. 31.03.2012 and not actually paid. Therefore considering the above observation I....
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....iod April, 2011 to 31st March, 2012 and on perusal of the ledger, it is noted that on 31st March, 2012, the assessee has passed a journal entry where interest on borrowings amounting to Rs. 3,08,033/- and commission on purchases amounting to Rs. 4,80,240/- has been credited to the account of Shri Sanjay Gupta. Further, it is observed that there is opening balance of Rs. 24,75,021/- and deposit of Rs. 1 lacs and payment of Rs. 54,746/-. Further, there are entries regarding TDS deducted on interest and on the commission on purchases and then, with closing balance of Rs. 3,29,721/-. We, therefore, note that the assessee has provided for the commission on purchases on the last year of the financial year and there are no withdrawals commensurate....
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....hdrawn at any point in time. In effect, it seems that he is an active partner in the business of the assessee's concern. However, we may add that what we have examined are the fact pertaining to financial year 2011-12 relevant to impunged assessment year, however, whether the same facts are found repeated year on year basis, it will conclusively led to belief that Shri Sanjay Gupta is not employed with the assessee concern as any other employee who is being paid remuneration in the form of commission, rather he is a partner in the assessee's concern and it is their mutual understanding/decision among the partners not to withdraw the share of profit from the assessee's concern rather the same remained invested in the assessee's concern. No d....