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2017 (2) TMI 336 - ALLAHABAD HIGH COURTRevision u/s 263 - issue of paying of commission to the sales agency was not examined earlier by the Assessing Officer - Held that:- Tribunal came to conclusion that assessee was in no way in control of the selling agent. Further the tribunal also examined the documents relating to the approval granted by the Government of India, Ministry of Law, Justice & Company Affairs issued under Section 294 AA of the Companies Act, as this approval was required to be taken by the companies, which had to be taken paid up capital of more than ₹ 50 lakhs. This too reflected the genuineness of the commission which was granted by the assessee, who is selling agent. It is on the basis of above material that the tribunal has come to conclusion that the learned CIT had made an error in revising the order under Section 263 of the Income Tax Act, as the material on record did not reflect in any manner that any activity of the assessee had resulted in causing prejudice to the revenue, nor were there any circumstances to contemplate the taking of any action under Section 263 of the Income Tax Act by the department. The tribunal, therefore, came to conclusion that the commission paid to the selling agent was based on sound and genuine business consideration and therefore, the allowances have rightly been allowed by the A.O. The disallowance made by the CIT was therefore, deleted by the Tribunal. Having heard the counsel for the both the sides and after examining the law on this issue, we are of the opinion that in the facts and circumstances of this case it is abundantly clear that the provisions of Section 263 of the Income Tax Act were not attracted in the present case for reasons that no income had escaped taxation and no prejudice or loss had been caused to the revenue. - Decided in favour of assessee
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