TaxTMI 
TaxTMI 
2019 (5) TMI 1501
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....tified in deleting disallowance of commission payment of Rs. 70.10.500/- to M/s A. S. Marketing by self serving and incorrect and unverifiable additional evidence without granting any opportunity of being heard to AO with reference to these additional evidences in violation to Rs. 46A(3) of Income Tax Rules, 1962 (Rules) r.w.s. 250(4) of Act? 3. Whether on facts and circumstances of case and in law Ld. CIT(A) is justified in deleting disallowance of commission payment of Rs. 1,12,64,515/- to M/s Action Udyog by holding that payment to M/s Action Udyog was not commission payments but sharing of profit without even considering terms and conditions of agreement dated 01.04.2009 between assessee and M/s Action Udyog even after relying on same in order? 4. Whether in facts and circumstances of case and in law Ld. CIT(A) is justified in deleting disallowance under section I4A of Act read with rule 8D of Rules ignoring a fact that assessee had earned tax exempt income under Act during year under consideration? 5. Whether on facts and circumstances of case and in law. Id CIT (A) is justified in relying on decision of Hon'ble Delhi High Court in case of Holcim Pvt. Ltd. 133 ITR 470/4 ....
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....sessee also submitted confirmation to prove genuineness of payment. Therefore assessee submitted that payment of commission to various parties made by assessee is wholly and exclusively incurred by assessee for purposes of business. Assessee also submitted that it has paid commission to various parties through proper cheques/ accounts and they exist and are genuine. Assessee also submitted purchase orders pertaining to 13 companies and highlighted portion to indicate that there is some reference to either name of employee of agent, email or cell phone number to prove existence of agent as acknowledged by customer. learned AO examined claim of assessee and rejected same for following reasons:- a. Those customers did not acknowledge existence of agents and their involvement in any part of negotiation or purchase and sale. In fact in one of customers it was found that AS Marketing is only providing services from 2011 and there was no agent involved with respect to ITC during financial year 2009 - 10. b. No confirmation were provided by assessee except some purchase order wherein some names, emails and telephone numbers are mentioned without adducing any proof as to who or what t....
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....ment of learned assessing officer that assessee has earned dividend income of INR 1 95658/- was a factual error. Assessee also submitted that it has not even treated amount of INR 1579/- as exempt income but has offered for taxation and paid tax thereon. learned CIT - A also examined computation of total income and profit and loss account produced before him which confirmed statement made by assessee before him. Learned CIT - A deleted addition as dividend income of INR 1579 was only earned by assessee and further other investments are made in sister concern, therefore according to him no disallowance is sustainable under section 14 A of income tax act. Therefore revenue aggrieved with order of learned CIT - A has preferred an appeal before us. 07. Adverting to ground number 1 - 3 of appeal which is related to disallowance of commission expenditure deleted by CIT - A, learned departmental representative referred to facts stated by learned assessing officer in assessment order. He reiterated reasons recorded by learned AO for making disallowance and submitted that learned CIT - A has deleted disallowance without verifying facts in a proper perspective. He submitted that learned CIT....
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....r 2017 - 18 wherein similar commission amount has been disallowed by assessing officer for some years, however, same has been allowed by learned CIT - A for assessment year 2010 - 11, 2011 - 12, 2012 - 13. Subsequently all these disallowances have not been contested by revenue. He further submitted that merely for assessment year 2010 - 11 these appeals have been filed and in all other AYS disallowance deleted by learned CIT - A has been accepted by revenue. He also submitted that commission paid to A S marketing is also accepted as allowable by the ld AO as stated in the chart. Therefore for reason of consistency and having accepted decision in one assessment year, learned AO should not have agitated this issue. 09. We have carefully considered rival contention and perused orders of lower authorities. During year assessee has achieved turnover of INR 1 001398163/- and has made a total payment of commission of INR 1 8414515/-. Out of which commission in dispute is a commission paid to AS marketing of INR 7 150000/- and of Rs. 11264515 to Action Udyog. Claim of assessee before AO was that it has engaged agents for obtaining purchase order, their employees were given reference card....
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....ith telephone number of commission recipient. In para number 6.2.5 of order, ld CIT A referred to various evidences furnished by assessee to support that services have in fact been rendered by these parties to assessee for which payment of commission has been made. He further referred to query letter issued by learned assessing officer u/s 133 (6) of act dated 12/3/2013 to various buyers and noted that that questions at serial number 2 and 3 found by assessing officer in those query letters are leading questions such as (i) whether buyers are aware of any letter appointing agent on behalf of assessee and further (ii) whether such order was placed to enter or was any negotiation in order, whether an agent was involved in any negotiation of purchases. He further noted that proprietor of recipient of commission and his employees were representing appellant before customers for last several years prior to disallowance and after disallowance. Therefore he noted that it is clear that customers had undoubtedly interacted with commission agent over years without necessarily being aware of their actual legal relationship with appellant and by treating them as representative of appellant. He....
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....ther noted by him that commission recipient has shown sales of INR 356,700,000 on which profit of INR 71,200,000 have been shown which includes a taxable income of INR 51,500,000. He further noted that this party is not at all related party to assessee and therefore he deleted disallowance with respect to above payment. 11. Further before us, assessee has submitted a detailed chart which shows history of payment of commission from assessment year 2008 - 09 till 2018 - 19. On basis of chart, it was found that assessee is paying commission to A S Marketing since assessment year 2008 - 09. For that year assessee claimed a commission payment of INR 4 044960/- to that party and same has been allowed as deduction by learned assessing officer. Further for assessment year 2009 - 10, commission of INR 5 602240/- was paid by assessee which was also allowed by learned assessing officer without any dispute. Further from assessment year 2010 - 11 assessee also started paying commission to M/s Action Udyog which continued up to assessment year 2012 - 13. For all these years learned assessing officer disallowed claim of assessee, however learned CIT - A has deleted disallowance, learned departme....