2010 (10) TMI 1236

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.... 2 On the facts and in the circumstances of the case and in law, the learned CIT(A), Surat ought to have upheld the order of the AO. 3 It is, therefore, prayed that the order of the learned CIT(A) may be set aside and that of the AO restored. 2. At the outset, none appeared on behalf of the assessee, despite service of notice when the appeal was called for hearing. Considering the issue involved, the Bench decided to dispose of the appeal after hearing the ld. DR. 3. Adverting first to the ground no.1 in the appeal, facts, in brief, as per relevant orders are that return declaring income of Rs. 23,63,100/- filed on 31-10-2004 by the assessee, manufacturing industrial dyes, chemicals and intermediates, after being process....

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....m for deduction of commission. 4 On appeal, the learned CIT(A) allowed the claim in the following terms:- "I have considered the details and find that the AO has passed the order without considering the submissions made by the appellant. In the case of one of the parties to whom commission was paid at the rate of 2% of the sales, complete details were furnished by the appellant during the assessment proceedings. Even then the AO disallowed the 100% of such payment. Section 37(1) talks about the expenditure incurred 'wholly & exclusively' for the purpose of business. However, it does not mean 'necessarily' and it is for the businessman to decide whether any expenditure should be incurred or not during the course o....

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....ies to whom the commission had been paid except in the case of Shri Mehul D Naik nor submitted any evidence of services rendered by any of the recipient of commission. Even then, the CIT(A) concluded that the expenditure having been incurred wholly and exclusively for the purpose of business, is allowable. In order that payments made as commission to persons appointed as selling agents are allowable as deduction, the assessee has to establish that i) the amounts sought to be deducted have been expended by the assessee in fact and ii) the payments have been made for services rendered to the assessee. If there is nothing to show that the agents had rendered any services at all to the assessee, payments can not be deducted u/s 37 of the Act.[M....