TaxTMI 
TaxTMI 
2020 (1) TMI 76
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....ax Act, 1961 ("the Act‟). 2. That the Id. CIT(A) has erred on facts & circumstances and in law in upholding the addition of Rs. 49,89,000/- on account of disallowance of commission paid the appellant during AY 2012-13. 3. That the Id. CIT(A) has erred on facts & circumstances in law in confirming the said disallowance of bonafide business expenditure of commission incurred during the regular course of business deductible under section 37 of the Act. 4. Without Prejudice, the CIT(A) has erred confirming the addition that was made without confronting or affording adequate opportunity to the appellant to rebut the same, in gross violation pf principles of natural justice. 4.1. That the CIT (A) has erred in facts and in law in upholding the action of Assessing officer, where he, in the absence of any evidence to establish contrary to the claim of appellant, disregarded the evidences produced during assessment to prove the genuineness of transaction that interalia included the confirmation from the commission receiver." 3. The brief facts of the case show that the assessee is a company carrying on the business of trading and commission agenci....
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....With respect to the non applicability of the service tax it was submitted that as maize being agricultural produce, service tax is not leviable on the same. With respect to the payment in the month of March, it was submitted that payment for the aggregate commission has been made in the month of March as per the mutual understanding and availability of funds. It was further stated that such an understanding could be a purely a commercial decision between two contracting parties. 6. The learned assessing officer rejected the explanation of the assessee. He found that assessee has made payment of commission for export of 6652 metric ton of yellow maize which is INR 674/- per metric ton and works out to 6.32% of the sale value. Other commodities which have been sold by the assessee are Sugar and soya on which the assessee has paid commission at the rate of INR 120/- per metric ton of 0.42 percentage of the sale value which clearly means that the rate of commission on sale of maize is excessive and unreasonable as compared to the commission of sale of other commodities sold by the assessee. He further compared the commission paid on sale of maize and tabulated them at page No. 3 of ....
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.... commission paid on export of maize to Bangladesh. He further referred to the copy of the account of the recipient of the commission Mr. Mahesh Agarwal along with his bills. With respect to the allegation that assessee has suffered losses in this transaction, he submitted that the appellant has earned average gross profit ratio of 8.02% on transaction on export of maize through Vidhyashree Buildcon private limited. With respect to the allegation of the excessive and unreasonableness of commission paid on export of sugar and soya been, he stated that appellant is primarily engaged in trading of sugar and soya been. The maize purchased by the appellant during the year was exported to only single country Bangladesh to that party and these were the only transactions of export entered through commission agent and no other transaction of export either through commission agent or otherwise were undertaken during the year. Therefore, he submitted that commission on export of maize cannot be compared to the export of different commodities. With respect to the discrepancy in the amount of commission as recorded in the audited financial statement and the Ledger account, he submitted that tota....
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....r. In response to that, he submitted that the payment of commission in March was purely commercial decision reached between the parties based on mutual understanding and availability of funds in the hands of the appellant. The transactions were recorded in the books when the appellant agreed to make payment to the recipient. The aforesaid was a commercial decision between the parties which cannot be dictated by the revenue. He further referred to a comparative gross profit chart on export of made therein it is stated that assessee has not incurred any losses in any of the transaction but has earned gross profit in all the four transactions. He further referred to the page number 53 - 54 of the paper book where the confirmations of the recipient of the brokerage are placed. He further referred to the page number 80 of the paper book to show that the tax was deducted at source on such payment. The page number 81 was also referred to with respect to the payment by the banking channel to the recipient of the income. At page number 91 - 96 of the paper book, he referred to the return of income and the profit and loss account of the recipient of the income to show that it has been record....
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.... commission to the above party for securing export orders, the assessee could have placed before us that which are the parties introduced by the agent to the assessee, how the rates are agreed upon, with whom negotiations took place etc. Merely placing the confirmation of the recipient of the income does not show that services have been rendered by the commission agent. The payment by cheques, copies of the invoices, bank statement of the commission agent, details of tax deduction at source on such payment are all will be in order but unless the rendition of the services by the commission agent is proved, same cannot be allowed as deductible expenditure. Further, the audited balance sheet of the broker which has been downloaded by assessee from public domain placed at page Nos. 92 to 104 of the paper book also does not inspire us to appreciate it that Vidhyasherre Buildcon Pvt. Ltd has a capability of securing export orders of maize, which assessee has never exported earlier on commission basis. The company has only revenue from operation is the commission income received from the assessee. Its shareholders are one Mrs. Vaishali Jain and two companies who does not have any exposure....