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2013 (4) TMI 342 - ITAT MUMBAIDisallowance of commission payment - whether the said payments are allowable u/s. 37(1) - assessee was engaged in the business of manufacturing electrical items supplying material to Railways and BHEL - Held that:- While carrying out its business, assessee-company had availed services of certain persons and made payment to them it cannot be held that expenditure incurred was not for business. Documents referred to by the assessee clearly indicate that assessee was getting orders/payments/ pieces of information from the persons payments have been made. Getting information about the material required by Indian Railways/BHEL was one of the activities of the agents and they were paid for it. Assessee is situated at Mumbai and for procuring orders, if he avails services of agents instead of opening branch offices at different places, it can easily be termed a prudent decision. One cannot forget that advertisement for procuring the orders are not always published in national news papers. When goods are required in smaller quantities, tenders are floated in local news papers only. Assessee-company can have access to such tenders through local agents only. In these circumstances, if agents have been paid commission, it has to be held an allowable expenditure. Thus payments made by the assessee to agents were not against public policy rather same were pure business transactions. Assessee did not make any payment in contravention of law of the land and hence cannot be treated as expenditure incurred against public Policy & the expenditure is allowable as business expenditure - in favour of the assessee.
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