TaxTMI 
TaxTMI 
2016 (1) TMI 1490
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....d u/s 143(3) of the Act dated 26.03.2014 of ACIT, Circle 4(1), Indore [hereinafter referred to as the AO]. 2. The Revenue has taken following grounds of appeal :- (i) Whether on the facts and circumstances of the case, the ld. CIT(A)-II, Indore, is right in deleting the addition made by the AO on account of commission expenses. (ii) Whether the ld. CIT(A) is justified in deleting the disallowance on account of commission expenses when assessee is unable to prove the services rendered for which such commission payment is being made. (iii) Whether the ld. CIT(A) is justified in deleting the disallowance on account of commission when the business of the assessee is spread all over the M.P. but the maximum of commi....
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....t the assessee has adopted modus operandi for reducing the profit by way of booking commission. Further, such incorrect and invariably payment of commission is also against the policy of Government of India. The AO further observed that most of the agents were based at Indore, therefore, they could not have catered to 32 districts of the State. The assessee has also claimed before the AO that such payment of commission was allowed by the AO in the assessment for financial year 2010-11. However, the AO was not satisfied with the assessee and observed that the assessee has inflated debit side of the profit by booking fictitious expenses under the head "commission". Therefore, the commission expenses of Rs. 1,64,08,950/- was disallowed. 4. ....
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....wn that affidavits cannot be rejected in law unless such deponents have either been cross-examined or called upon to produce documentary evidence in support of the affidavit sworn by them. The assessee has also relied on the decision of the Jurisdictional M.P. High Court in the case of CIT vs. Pure Pharma (P) Limited, 270 ITR 382 (MP), wherein commission was found paid on supplies made to Government and its agencies and all the payments were made to various parties by account payee cheques/demand drafts, the identity of each of the agents was established and the expenditure was found incurred for business purposes. It was held that such expenses were allowable and consequently the addition was deleted. In the instant case also, the agents h....
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....25.02.2014, wherein they have detailed the various formalities and services required to be handled by the assessee or representatives/agents. Considering all these facts and relying on the decision of Hon'ble M.P. High Court in the case of CIT vs. Pure Pharma (P) Limited, 270 ITR 382 (MP) and on totality of facts, the ld. CIT(A) concluded that the commission expenses have been genuinely and reasonably claimed as such. Therefore, the AO was directed to delete the addition of Rs. 1,64,08,950/-. 7. Aggrieved by the order, the Revenue has filed this appeal before the Tribunal. 8. The ld. Sr. Departmental Representative submitted that the assessee is supplying agricultural equipments to the farmers through nodal agencies of Madhya Prad....
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....heir letters. The Ld. Counsel for the assessee further placed reliance in the case of CIT vs. Pure Pharma, (2005) 144 Taxman 364 (MP) of Jurisdictional High Court, wherein the requirement of Agents/ Representatives in the case of business of Government supplies and payment of commission therein has been approved by the Hon'ble Jurisdictional High Court. Further, Government Agencies have confirmed the involvement of the Representatives and TDS of payment of commission was made through cheques and confirmation was filed with the agents with their tax returns, their affidavits and PAN details etc. Therefore, the genuineness of expenses as well as identity has been established. Hence, the ld. CIT(A) was correct in deleting the disallowances....
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....e or representatives of the agents. Therefore, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition on account of commission payments debited to the profit and loss account. This view is also supported by the decision of the Jurisdictional High Court as relied upon by the ld. Authorized Representative of the assessee, the Hon'ble High Court in the case of CIT vs. Pure Pharma, (2005) 144 Taxman 364 (MP) in para 3 & 4 held as under :- "3, A few facts material for deciding the said appeal, in short, may be mentioned as under : The Respondent/assessee company is engaged in manufacturing and sale of pharmaceutical formulations. During the previous financial year, the assessee had paid ....