Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2012 (3) TMI 59

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... a)(ia) and it amounts to double addition. The AO, however, disallowed the commission payment because the assessee failed to give evidence of rendering services. No evidence was brought on record for services being rendered. The AO further stated that the TDS was not deducted at the rate prescribed under the Income-tax Act. - disallowance confirmed. Incentive paid to workers - genuiness of expenses - while going through the details filed by the assessee in the Paper Book in respect of these expenses and taking into consideration the smallness of the amount involved that too for welfare of labourers and taking a lenient view of the matter, the addition of Rs.53,200/- made by the AO and sustained by ld. CIT(A) is deleted. - ITA No.1481/Ahd/2009 - - - Dated:- 6-1-2012 - S/Shri D.K.Tyagi, A. Mohan Alankamony, JJ. Appellant by :- Shri K. N. Bhatt , AR Respondent by:- Shri Vinod Tanwani , Sr.DR O R D E R Per D. K. Tyagi, Judicial Member. This is an appeal filed by the assessee against the order of ld. CIT(A) dated 13.03.2009 for Asst. Year 2005-06. The assessee has raised following grounds in its appeal:- (1) In view of the facts and circumstances of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ties. The AO asked the assessee to produce evidence for obtaining orders from both the companies and also produce evidence on material transferred to the parties. The AO pointed out that the sales bill did not mention name of M/s Rohit Traders, as commission agent. The AO asked the assessee to furnish evidence from both these parties whether M/s Rohit Traders was indeed acting as commission agent or not. The AO disallowed the commission payment for the following reasons :- (i) No evidence was given in support of obtaining orders from both the companies. (ii) No evidence was given in support of material transferred and liaisoning work carried out with both these parties. (iii) The bills raised by the assessee company on Essar Steel Ltd. and Hindalco Industries Ltd. did not bear the name of the commission agent. (iv) No evidence was furnished from Essar Steel Ltd. and Hindalco Industries Ltd. confirming that M/s Rohit Traders was indeed commission agent acting between them. (v) Although the assessee has produced a copy of contract for commission on its own letterhead signed by M/s Rohit Traders. This agreement does not show the involvement of Essar Steel Ltd. and Hindalco .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lant has failed to bring on record any correspondence in this regard. The appellant has also failed to explain as to why only one credit note was raised by the assessee company on 31.03.2005 in respect of Essar Steel Ltd. and Hindalco Industries Ltd. The appellant has failed to explain as to why credit notes were not raised at the end of the every sale. The appellant has failed to explain why M/s Rohit Traders has failed to raise debit note at the end of the every sale. The appellant has also failed to explain why the claim of commission @2% is on sales much lower than the total sales to these two companies. The sales Hindalco Industries Ltd. is of Rs.103.04 crores but the commission is only of Rs.88.36 lacs. The sales to Essar Steel Ltd. are Rs.97.09 lacs but commission is claimed only on Rs.86.74 lacs. In view of the above reasons, the AO is right in disallowing the commission as the appellant has failed to prove the genuineness of the commission payment. Hence the disallowance made by the AO is correct and this ground of appeal is dismissed. Against this order of the ld. CIT(A), the assessee is in second appeal. 5. The ld. counsel of the assessee reiterated the submission .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ntract. M/s Rohit Traders was to get 2% of the basic amount of sales made by assessee as per this agreement. The contention of the assessee that in pursuance of this agreement expenses incurred by M/s Rohit Traders on behalf of the assessee were also reimbursed by the assessee, thus showing that services for earning this commission were rendered by M/s Rohit Traders, has not been controverted by the Revenue at the time of hearing before us. We further find that ld. CIT(A) s observation that 2% commission was not paid by the assessee to M/s Rohit Traders on total sales made to M/s Essar Steel Ltd. and M/s Hindalco Industries Ltd. is not correct as the commission was paid on net sales made to these parties excluding excise duty etc. Therefore, this cannot be the reason for disallowing the expenditure on commission. Since in this case commission has been paid by the assessee in pursuance of contract signed between the assessee and M/s Rohit Traders and services were rendered, we feel it was not a fit case in which a meager sum of Rs.3,50,229/- incurred by assessee for payment of commission should have been disallowed and the disallowance so made is hereby deleted. 8. Ground No.2 of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... payment of certain amounts as commission, assuming there was such payment, does not bind the Income-tax Officer to hold that the payment was made exclusively and wholly for the purpose of the assessee s business. Although there might be such an agreement in existence and the payments might have been made, it is still open to the Income-tax Officer to consider the relevant facts and determine for himself whether the commission said to have been paid to the selling agents or any part thereof is properly deductible under section 37 of the Act. Swadesh Cotton Mills Co. Ltd. vs. CIT (1967) 63 ITR 57 (SC) followed. In view of above, the disallowance made by the AO is confirmed and this ground of appeal is dismissed. Against this order of ld. CIT(A) assessee is in second appeal before us. 10.. Heard both the parties, perused the record and we find that the assessee has paid commission to Shri Bankimchandra Tripathi amounting to Rs.1,13,296/-. The AO has disallowed this commission holding that assessee has failed to give evidence of services rendered by Shri Bankimchandra Tripathi to assessee. The ld. CIT(A) has also confirmed this addition because before him also no evidence was pro .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... instead of Rs.1,000/- and to the workers, the assessee had stated that it is a clerical mistake. 13. The ld. CIT(A) dismissed this ground of assessee by observing as under :- 6.3 I have considered the submission made by the appellant and the observation of the AO. I do not agree with the appellant that there is a clerical mistake. The appellant has paid Rs,1,000/- to 13 parties but the voucher says 10 workers have been paid at the rate of Rs.1,3000/-. This clearly shows that the entire claim is non-genuine. Similarly, the assessee has failed to show the genuineness of these payments when the vouchers say that it is commission and the assessee says it has incentive. Further, it is very fact that these are pointed out a doubt of genuineness. I agree with the AO and the disallowance made by him is confirmed. Therefore, this ground of appeal is dismissed. Aggrieved, the assessee is appeal before us. 14, After hearing both the parties and perusing the record, we find that the assessee during the year under appeal has incurred an expenditure of Rs.53,200/- which is incentive paid to various labourers. The AO has disallowed these expenses on the ground that assessee has not file .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates