TaxTMI 
TaxTMI 
2025 (9) TMI 1553
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....isallowance of commission expenses incurred by the assessee. Both the appeals were heard together and hence they are being disposed of by this common order, for the sake of convenience. 2. The assessee is engaged in the business of manufacture and sale of textile processing machineries like fabric mercerizing machine, bleaching range, washing range etc. 3. We shall first discuss the facts relating to AY 2015-16. During the course of assessment proceedings relating to AY 2015-16, the AO noticed that the assessee has incurred commission expenses of Rs. 1,04,42,539/- and the same was incurred in respect of sales made through 24 agents. In order to verify the genuineness of commission expenses, the AO asked the assessee to furnish purchas....
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....re the Ld CIT(A), the assessee furnished certain documents showing correspondence between the assessee and one of the commission agent named R K Varandani. Accordingly, the Ld CIT(A) directed the AO to allow commission expenses relating to the above said agent and confirmed the remaining amount of disallowance. 7. We shall now discuss the facts relating to AY 2016-17. In this year, the assessee had claimed commission expenses of Rs. 69,65,000/-. The AO noticed that the commission paid to five agents, viz., M/s Prime Enterprises, M/s Kannan Associates, M/s R K Varandani, M/s R S Enterprises and M/s Labquat Partner had been disallowed in AY 2015-16. Following the assessment order passed in AY 2015-16, the AO disallowed the commission expen....
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....of those documents. Further, the AO did not make any enquiry with any of the agents. Instead, he has chosen to make enquiries with the sales parties, who were, in no way, concerned with the agents. He submitted that it is quite possible that the sales parties have considered the agents as employees of the assessee. Accordingly, he submitted that the AO should not have drawn adverse inference by making enquires with sales parties, who were not concerned with the commission expenses. 10. The Ld D.R, on the contrary, supported the orders passed by Ld CIT(A). 11. Having heard rival contentions, we are of the view that there is merit in the contentions of Ld A.R. First of all, we notice that the assessee has furnished all the documents rel....
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....We notice that the assessee has been incurring commission expenses year after year, which shows that the assessee was dependent upon the agents for promoting sales. It is a business strategy adopted by a business man, whose wisdom cannot be questioned by the tax officials. Under these set of facts, we are of the view that the commission expenses have been disallowed by the AO in both the years without conducting proper enquiries and also without establishing that they were not incurred for the purposes of business. 14. We noticed earlier that the Ld CIT(A) has granted partial relief to the assessee and it shows that the first appellate authority is accepting that they have been incurred for the purposes of business only. We noticed that ....