TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 1828
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....appreciating that the payments were made for liasoning which was more of general in nature and the assessee had failed to prove the actual work carried out by the parties. 3. The CIT(A)erred in not appreciating that the payments were made for coordination for pre-tender process, tender process and assisting for meetings etc. and the assessee had failed to prove the actual work carried out by the parties. 4. The CIT(A) erred in not appreciating that merely filing the agreements does not amount to actual rendering of service to necessitates as to expand such a huge commission. 5. The CIT(A) erred in not appreciating that the principles of res-judicata do not have application to income tax proceedings and the CIT(A) was influenced by the order of the AO pertaining to a different assessment year in contrast to the observation made in the assessment order of the relevant assessment year. 6. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the AO be restored. 7. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hear....
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....issions and perused the material on record. The issue in appeal is about the allowability of commission payment of Rs. 2,93,08,446/-. Undisputedly, the assessee company had paid commission through account payee cheque. This will not debar the AO from probing the matter further to examine whether the commission payments are allowable expenditure or not. In this context, it is worth quoting that the decision of the Hon'ble Supreme Court in the case of Laxmi Narayan Madanlal Vs CIT 86 ITR 439, wherein it was held as follows; "The mere existence of an agreement between the assessee and its selling agents or payment of certain amount as commission, assuming there was such payments, does not bind Income Tax Officer to hold that the payments was made exclusively and wholly for the purpose of assessee's payments might have been made. It is still open to the ITO to consider the relevant facts and determine for himself whether the commission set to have been paid to the selling agents or any part thereof is properly deductible u/s 37 of the Act". 9. Thus, the AO is empowered to probe further and reach at a conclusion whether the commission was paid for the services actually rendered and d....
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....by the commission agent are for the requirements of the project transacted by the assessee-company to its customers. The agreements are vague and general in nature. The assessee-company could not discharge its onus by substantiating its claim by furnishing complete details. Further, it could not be to establish as to how the expenditure claimed were identical t business and relatable to the income earned or for the purposes of business. In view of this, it is difficult to agree with the assessee's version. The entire amount of commission expenditure claimed totaling to Rs. 2,93,08,446/- is disallowed holding that it is not an allowable expenditure u/s 37 of the IT Act". 10. The above observation remained uncontroverted and the assessee company had chosen not to file any evidence in support of the services rendered by sales agencies either before the learned CIT(A)or before us. Even before us, the learned AR miserably failed to demonstrate before us as to what kind of proof was filed before the lower authorities in support of services rendered by the commission agent. Pursuant to the direction of the Bench to file evidence in support of the services rendered the assessee had chosen....
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....hi High Court in the case of Schneider Electric (Ind.) Ltd Vs CIT (21008) 304 ITR 360 (Del.) held that in the absence of material on record suggesting that the commission agents had procured the sale orders, no commission should be allowed. The relevant para of the judgment is reproduced below; "13. We agree with the Tribunal that there is absolutely no material on record to suggest that M/s Ram Agencies had procured any sale orders for the assessee. The production of a few bills or payment having been made by account payee cheques cannot by itself show that M/s Ram Agencies had procured sale orders for the assessee. Apart from an internal note, there is no evidence of any correspondence or any personal; meetings etc. between the assessee and M/s Ram Agencies to suggest that the was any relationship on the basis of which M/s Ram Agencies procured some orders for the assessee for which it was entitled to receive commission. Moreover, we find that the understanding between the parties was an oral understanding and it appears to be doubtful that such an oral understanding can be arrived at without any long standing relationship having been established between the assessee and ....