AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 492
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....ces of the case. 2. The learned CIT[A] is not justified in upholding the disallowance of Rs. 35,38,382/- being the Sales Commission paid under the facts and in the circumstances of the appellant's case. 2.1 The learned CIT[A] is not justified in holding that the appellant had not given the details of the specific work done by the 6 individuals to whom the commission was paid and further holding with regard to the commission payment made to three ladies that "it is not easy to conceive that these ladies could have been involved in the extracting process of making sales of industrial pumps to manufacturing units" and thereafter, holding that the onus was on the appellant to explain what specific work/ sale had been done by "these three especially", which findings ought to be vacated under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A] is not justified in upholding the disallowance of Rs. 3,19,130/- being the amount of Gratuity paid towards settlement of dispute under the facts and in the circumstances of the appellant's case. 4. The learned CIT[A] is not justified in sustaining the addition of Rs. 1,80....
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.... 6. Before the ld. CIT(A), assessee submitted the deduction details and details of the parties involved in the affairs of the company. Assessee also contended that tax has been deducted on payments and income is shown by these parties. The ld. CIT(A) noted that it is incumbent upon the assessee to give the details of specific work done by these individuals and to explain what sales has been made by these parties against which this commission was made. He also noted that out of 6 individuals, 3 are ladies including the wife and daughter-in-law of the director. He further noted that looking at the nature of the business of the assessee, it is not easy to conceive that these ladies could have been involved in the exacting process of making sales of industrial pumps. He noted that assessee has failed to give specific details of work done and accordingly he confirmed the disallowance. 7. The ld. AR before us submitted that in the subsequent year i.e., AY 2016-17 in the 143(3) assessment order, on identical issue, the ld. AO has disallowed only 10% of the commission income and in the present case he has disallowed the expenses completely. He further stated that during the course of as....
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....of the company. 10. Sales commission though is not related to the sales performed by the company, it is shown that these persons are associated with the company and are rendering services for the company. It is not that these persons do not have technical or administrative knowledge of the company. All these persons are though relatives of the directors of the company, but that does not mean that these persons have not rendered any services to the company. All these parties have disclosed this income in their return of income and tax deducted at source is also shown by the company. Though it is true that merely tax deduction at source on the payment as well as offering of the income in the hands of the recipient cannot be substantive evidence of performance of the services, however, in this case, looking at the experience and the educational qualification as well as the tenure with the company shows that the expenses are not unreasonable but are wholly and exclusively incurred for the purposes of the business of the assessee company. It is not always necessary that sales commission can be paid only for the purposes of performance of the sales. It can also be paid on the sales of....
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....e gratuity, but it is the amount which is actually payable to the employees which is in dispute. It was submitted that out of the total sum due as on 31st of March 2014, a part of Rs. 131,460 has been paid to 3 employees in subsequent financial year after settlement of the dispute and therefore the balance amount of Rs. 319,130/- is outstanding amount payable to the employees as on that date. It was further stated that it is not a gratuity as stated in the financial statement. The learned CIT - A confirmed the disallowance holding that since the assessee has not complied with the provisions of the Income Tax Act under section 36(1)(v) of the Act the addition was correctly made. 13. The learned authorised representative repeated the contentions raised before the learned lower authorities whereas the learned departmental representative supported the orders of the learned lower authorities. 14. We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that assessee has made a provision of the above sum of Rs. 319,130/- which is disclosed in schedule No. 26 of the annual accounts. The identical amount is also shown as incre....