TaxTMI 
TaxTMI 
2022 (3) TMI 130
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....tly, the revenue filed Misc. Application No. 15/Ind/20 and 16/Ind/20 respectively for Assessment Year 2009-10 and 2010-11, pointing out that the case falls within Clause No. 10(c) of the Circular No. 3/2018 dated 11.07.2018 as a result of which the dismissal be recalled and appeals be restored for decision on merits. The Misc. Applications are found in order, admitted and the appeals are re-fixed for hearing. We proceed to decide the same on merits. 3. The issue involved is common in both appeals. Hence both appeals were heard together and are being disposed of by this common order, taking Assessment Year 2009-10 as the lead year. 4. The Revenue has raised following ground in Assessment Year 2009-10: "1. Whether on the facts and in the circumstances of the case and in the law, whether the Ld. CIT(A) is justified in deleting disallowance made by the AO on account of payment of commission of Rs. 44,34,403/- for obtaining supply order from government agencies without considering the fact that assessee had shown commission expenditure to only increase expenditure for reducing the actual profit of the assessee & it is not allowable as per Income-tax Act." 5. Brief facts are such th....
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....to whom the commission on the supplies made to respective Department is to be paid by the assessee." 4.6 It is worthwhile to mention that the case has been reopened for the payment made to various consignment agents for obtaining supply order from various government departments. It is settled law that no middle-men or agent is allowed and permitted to do liasioning for obtaining government contracts. In fact there is an established procedure of bidding by which the government contracts are obtained by the bidders. Since there is no requirement of middle men in the whole process of obtaining contract/making supplies to the government department the expenses incurred cannot be claimed to be genuine hence disallowed. 4.7. Therefore, in view of above discussion and discussion made in order rejecting objection dated 04.07.2016 the so called commission payment of Rs. 44,34,403/is disallowed being non-genuine and added back to the income of the assessee. Penalty proceedings u/s. 271(1)(c) is also hereby initiated on this issue for furnishing of inaccurate particular and concealment of income." 8. The Ld. CIT(A) has deleted the disallowance vide Para No. 4.3.1 to 4.3.8 of his order, b....
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.... Nestor Pharmaceuticals (P) Ltd. (2000) 33 DTR (Del) etc. The only, prohibition is on gaining Government contracts through illegal gratification or commission payment to Government or its representation as that is against the public policy and that is disallowable under explanation to section 37(2) of IT Act. But in present case neither there is any allegation of such payment nor there is any proof of the same. 4.3.5 There is also no bar on payment of commission to relatives if services are rendered by them as held in Computer Graphics Ltd. (2006) 235 ITR 84(Mad) and Microtex Separators Ltd. (2007) 293 ITR 451(Kar). 4.3.6 After the appellant filed details of services rendered by, commission agents, copy of their ledger accounts, copy of bills, details of cheque payments to such agents, the onus shifted on A.O to disprove such facts. But A.O. did not conduct any enquiries and no evidence was gathered to disprove the evidences produced by appellant. The commission paid to various representatives before the various Govt. Departments in connection with pre supplies information and post supplies services to all the Department of the Government who are the regular agents of the appel....
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....d by the appellant to the Customer in favor of the Agents. (5) After completing the formalities as per the directions of the Customers the terms and conditions are opened on a stipulated date and after discussions the order is confirmed by the customer. These orders are collected by the Agents and sent to the appellant. (6) The appellant after obtaining the orders manufactures the required goods and dispatches the same for delivery. Agents represent the appellant for various post tender services required to be rendered by the supplier. The Agents renders all the services in connection with these post supply services on behalf of the appellant. (7) After receiving the payment form the Respective Customer the appellant use to compensate the Agents by paying commission for their services in connection with such supply. Thus for all types of pre supply and post supply services are being rendered by these persons. The appellant has already submitted the sample copies of the authorization letters issued of various Customers for your kind perusal and consideration. 4.3.8 Considering all the factors mentioned above the claim of commission expenses of Rs. 44,34,403/- are held as e....
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....e. The assessee has given PAN mentioning the bill. The commission has been paid for collecting the requirement from the Government offices located at Indore, Khargone, Mandla, Balaghat, Chhindwara and Dewas. The assessee is engaged in manufacture of submersible pumps and during the year the assessee has supplied the product of the assessee to Public Health Engineering Department, Govt. of M.P. and many other Government departments. Therefore, the assessee has to identify various places, thereafter for getting the orders the assessee has to make installation of submersible pumps at the various sites identified by Public Health Department and liasioning charges have been paid by the commission account. Thus, the assessee has made payment for the services rendered. Moreover, the assessee has explained the nature of services rendered. Therefore, we are of the view that the learned CIT(A) is justified in allowing the claim. The same kind of commission was allowed in four earlier assessment years 2005-06 to 2008-09 and it was allowed in scrutiny assessments for the assessment years 2005-06 and 2006-07. Therefore, rule of consistency is followed by the learned CIT(A). We are of the view t....