TaxTMI 
TaxTMI 
2020 (5) TMI 397
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in confirming the total income assessed by the Ld. AO at Rs. 86,13,540/- as against the total income declared by the assessee in its income tax return at Rs. 39,38,920/-. 2. The Hon. CIT(A)-4, Pune erred in confirming the disallowance made by the Ld. AO regarding the commission expenses paid by the assessee to its Group companies to the extent of Rs. 46,74,617/- u/s.37 of the Income Tax Act, 1961. 3. The assessee requests for admission of additional evidences if any required for justifying its case. 4. The appellant craves to leave, to add, alter, amend or delete any of the above grounds of appeal at or before the time of hearing." 2. In this case, facts are that huge commission expenses were paid by the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n this office had issued summons in the name of the companies, who appeared for the summons also need to be seen. In IMT Technologies Pvt Ltd, and Ranadey Tech Pvt Ltd, Dr Vasanti Purohit attended. In Ranadey Micronutrients Pvt Ltd, Mrs S H Nair appeared. Mrs Nair stated in her statement recorded u/s 131 stated that she receives salary from Rohanna Agri Ltd. In RTPL, Dr V S Purohit appeared. Dr V.S Purohit stated in her statement recorded u/s.131 stated that she receives salary from RTPL in her statement but in reality she received the salary from Rohanna Agri Ltd. during F.Y.2012-13 which is evident from the form 3CD of the assessee company. 15.15 The corporate address and address on the ITR of Ranadey Mircro Fertilizers Pvt. Ltd.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce In the same district will increase the marketing outreach. The bank statement for RTPL doesn't show any of the debits to Mr Velankar from whom a land and a shed were taken on hire. Further the balance sheet doesn't show the rental expenses of those two lands and one site office." 4.1 Further, the Assessing Officer also observed as follows: "The question here arises whether there is effective taxation is there or not. If the expenses are shifted to related companies and they are paying tax at the same rate and there is no loss to the exchequer, the positive view is adopted. But the present case doesn't fall in that category. The expenses are shifted to the related concern which have either loss or very less total i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n: I have perused the assessment order and the submissions made by the appellant as above carefully. I find that AO has disallowed the expenses of Rs. 46,74,617/- as commission paid to Associate companies and admissible as expenditure u/s.37 by interpreting the expenditure to be unjustifiable and not allowable u/s.37 and rightly so. Section 37 states that it must not be expenditure with a view to avoid tax liability without any genuine purpose or reason in good faith. The AO has rightly observed that the primary activities of group companies are different than that of the marketing activities for which commission is paid by appellant to group companies. Further, the land/premises used by the group companies have no nexus with the m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e has been allowed by the respective learned Assessing Officers. Since each assessment year is separate in itself, facts needs to be verified. Hence, in the absence of any plausible reasons, I am not inclined to interfere with the findings of the AO. Ground No.2 raised by the appellant is accordingly dismissed. 6. We have perused the case records and heard the rival contentions. We have also analyzed the facts and circumstances in this case. We have also considered the judicial pronouncements relied on by the assessee. As per the facts on record, the Assessing Officer observed that these payments of commission is not justifiable and it is nothing but inflation of expenses by the assessee company in order to reduce its tax liability. The ....