TaxTMI 
TaxTMI 
2026 (8) TMI 1030
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....r the Assessment Year 2020-21. 2. Briefly stated, the facts of the case are that, the dispute pertains to the disallowance of commission expenditure amounting to Rs. 37,68,000/-. During the assessment proceedings, the Assessing Officer ("AO") observed that the assessee had claimed commission expenditure of Rs. 37,68,000/- while declaring sales of Rs. 1,41,17,484/-. The assessee is engaged in the business of trading/reselling pharmaceutical and cosmetic products. The AO noted that the sales were effected primarily to various Government hospitals situated in Mumbai and other parts of the State of Maharashtra. According to the AO, the assessee failed to furnish documentary evidence such as agreements, contracts, correspondence, or any other....
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....0/- appeared disproportionately high having regard to the scale of operations and the commission income disclosed. Accordingly, the disallowance made by the AO was confirmed. 4. During the course of hearing before us, the Learned Authorised Representative ("Ld. AR") invited our attention to the Profit and Loss Account placed in the paper book. It was submitted that the assessee had disclosed commission income of Rs. 61,55,857/- and commission expenditure of Rs. 37,68,000/-, both of which formed part of the regular books of account. The details of commission income received during the Financial Year 2019- 20 relevant to Assessment Year 2020-21 are as under: Sr. No. Name of the Party Commission Received (Rs.) 1 Intas Phar....
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....assessee to Government hospitals. The entire premise adopted by the AO proceeded on an erroneous assumption that the commission was paid in relation to Government procurement contracts. In reality, the commission payments were made to agents who procured business from the pharmaceutical companies, enabling the assessee to earn commission income. 6. The Ld. AR further drew our attention to the documentary evidence placed on record, including the details of the income-tax returns filed by the respective commission recipients, wherein the commission received from the assessee had been duly disclosed as taxable income. It was also pointed out that tax had been deducted at source on the impugned payments and the payments had been made through....
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.... deducted at source, proof of payment through banking channels, and copies of the income-tax returns of the recipients showing disclosure of the commission income. These evidences lend substantial corroboration to the genuineness of the transactions. Although deduction of tax at source or payment through banking channels may not, by themselves, conclusively establish the allowability of an expenditure, they nevertheless constitute relevant corroborative evidence when considered in conjunction with the surrounding facts and the overall business arrangement. 10. The Revenue has not brought on record any material to demonstrate that the commission payments were fictitious, that the recipients were non-existent, or that the payments had reve....