TaxTMI 
TaxTMI 
2019 (11) TMI 986
X X X X Extracts X X X X
X X X X Extracts X X X X
.... u/s.131 of the Act and their statements were recorded on oath in the presence of assessee and that the opportunity to cross-examine the said persons was also given to the assessee, but the assessee did not avail such facility. He therefore relying upon the decision in the assessment order for the AY.2011-12, disallowed the claim of commission paid by the assessee. 3.1. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A), who also relied upon the findings of his predecessor for the AY.2011-12 to confirm the disallowance and has restricted the disallowance only to 50% of the commission expenses claimed by the assessee. Further aggrieved by the order of Ld.CIT(A), assessee is in second appeal before us. 4. Ld.Counsel for the assessee submitted that this issue had come up before the Tribunal for the AYs.2011-12, 2012-13 and also in 2014-15 and the Tribunal after discussing the issue at length had deleted the disallowance for the AY.2011- 12, which has been followed by the Tribunal in the AY.2014-15 also. In this regard, Ld.Counsel placed reliance on the order of ITAT and prayed for deletion of the same in this assessment year also. 5. Ld.DR, however, re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the agents. Further commodity wise, date-wise, quantity-wise and agent wise commission workings were filed and placed at pages 16 to 30 of the paper book. Statement of TDS, section-wise, filed before Assessing Officer is placed at page 31 of the paper book. He submitted that copies of the Income tax return acknowledgement and computation of the commission agents filed before Assessing Officer are placed at pages 33 to 59 and pages 89 to 92 of the Paper book respectively. All the evidences thus filed before the Assessing officer prove beyond doubt the genuineness of claim of commission to agents. The assessee had duly complied with all the procedures required, to establish and substantiate his claim. 8.3 Ld. AR contended that in spite of this heavily loaded evidences, and confirmations in favour of the assessee, the Assessing Officer resorted to disallowance simply on presumptions and assumptions. In doing so, the Assessing Officer overlooked the vital facts that: i) Such commission was allowed in earlier years. ii) the salary claim for a turnover of Rs. 24.52 crores is only 18 lakhs that too mostly for the administration staff only. There is minimum claim of salaries for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he agents are in the 20% tax bracket and hence the theory of the evasion / reduction also has no basis. vii). Another glaring instance is that the Assessing Officer in his over enthusiasm to disallow the commission on sales, disallowed even the commission paid by the assessee to the customs clearance agent on the purchases made. S.No.16 page 2 of the asst. order is the payment of Rs. 1,10,000 for Asst. Year 2011-12 to Sridhar clearing service Pvt Ltd. This party is the customs clearing agent at Chennai Port. He renders the service in this regard. The purchases made by the assessee outside India was shipped to India and at the Chennai port the goods were got delivered through the services of this authorized agent. This party charges commission for each shipment. Relevant documents placed at pages 73 to 88 show the service rendered by this party in respect of one shipment. the Agency commission claim is supported by the bill placed at page 78 of the paper book. Details of goods received and cleared are indicated in the relevant invoices placed at page 84 of the paper book. Details of purchases made cleared by this agent and commission paid are placed at page 66 of the paper book. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the revenue authorities have not justified to disallow the claim of commission payment simply/based on the presumptions and assumptions especially when each one of the agents have categorically confirmed the receipt of agency commission. He, therefore, pleaded the bench to delete the addition made on this count. He relied on the following decisions: 1. Sachin B. Desi Vs. ITO, ITAT Kolkata dt. 07/08/2015. 2. Pinkcity Industries Vs. ITO - Rajasthan High Court, D.B. Income Tax Appeal No. 290/2010. 3. Smt. B. Subhadra Vs. ITO, 92 ITD 285 (Hyd. 4. ITO Vs. shyam Sunder Jajodia, 26 SOT 541 (Delhi) 5. CIT Vs. Printers House (P) Ltd., 188 Taxman 70 (Delhi) 6. CIT Vs. Siddartha Trade Links Pvt. Ltd., ITAT Delhi, 08/12/2011. 9. Ld. DR, on the other hand relied on the order of CIT(A). 10. Considered the rival submissions and perused the material on record. We observe that assessee had claimed commission payment as expenditure and paid through banking channel and deducted TDS as per the provisions of I.T. Act. The issue before us is, AO after recording statement of all agents came to conclusion that all the agents are not genuine as they do not have any basic information of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uitous payments to persons known to assessee, but, she could not establish the relationship with the assessee but expressed that it is not clear whether they are relatives, but, they were not strangers either. Further, she held that there is a preponderance of probability to conclude that the payments did not constitute for remuneration for services of agency. At the same time, she allowed a random amount of Rs. 5 lakhs as commission without any basis. 10.5 She failed to consider the other aspects in this case, none of the agents are relatives to the assessee. No businessman will give payment to outsiders on gratuitous basis, particularly, the amount involved are huge. The agents have confirmed that they have received the commission and the other family members or subordinates have assisted them achieve the sales. This aspect cannot be ruled out that no businessman will distribute money on gratuitous basis without taking benefit from such payments. This is also preponderance of probability. Another aspect was also not considered by ld. CIT(A) that there is no proof that the assessee has received back the alleged commission payment from the respective agents. It shows that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 37 refers to the quantum of expenditure, while the word 'exclusively' refers to the motive, objective and purpose of the expenditure. In the instant case, the assessee had established that payment was made through banking channel. All the payees responded to the query of the Assessing Officer and some of them supplied the information about the services rendered by them. The commission had been allowed in the earlier years and in the subsequent years on similar lines. All the payees were assessed to tax. Their PANs had also been disclosed to the Assessing Officer. The objection of the Assessing Officer was that there was no agreement for payment of commission. It was for the assessee to carry out his business. If he had an understanding with certain person, then it might not be very much necessary to enter into an agreement. The assessee as well as the payees were withstanding to their stand. There was no variance in their conduct. As far as the allegation of failure to produce demonstrative evidence against the assessee was concerned, one had to see the nature of business. The assessee was in the business of sale of plastic dana. The agents were required to send c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....luding the addresses of buyers and addresses of the agents as well as details of payment etc. the transactions of payment of commission as well as the aspect of rendering services by the commission agents were fully verifiable. However, neither the Assessing Officer nor the learned CIT (Appeals) made any attempt at their end to make probe into the matter for coming to the conclusion that the transactions were bogus, unfair and fraudulent. In our opinion, in absence of any such material on record and in absence of any inquiry conducted to prove the non-genuineness of the transactions the departmental authorities were not justified in disallowing the claim of the assessee which was fully supported by the documentary evidence on record. 2. Apart from expressing its satisfaction as to the genuineness of the transaction the ITA T has taken into consideration the fact that commission has been paid and allowed in the past and that the commission percentage is negligible. Ms. Bansal contests this position. The total turnover of the assessee was Rs. 68 crores before tax, inter alia of which included Rs. 25.68 crores of export turnover. The turnover we are concerned with is stated to be ....