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2012 (6) TMI 62 - AT - Income TaxKick back money - reassessment - Deduction u/s 37 disallowed on the ground that as per Volcker Committee report, the payments made to this company were “illegal payments in the nature of kick-backs, which were ultimately received by the Iraqi authorities” and “as the amounts paid by the assessee are illegal and prohibited by the law of the land, the same cannot be allowed as expenses under the Income Tax Act, 1961 - held that:- The assessee has made payment for commission and has been rendered services in consideration of the same. As a matter of fact, it is not even revenue’s case that no services have been rendered at all. The fact that services have been rendered by a party other than the agent to whom commission is paid is wholly immaterial so far as deductibility in the hands of the assessee is concerned. As for the position that the payment was highly excessive vis-à-vis the local costs, even if that be so, that aspect of the matter does not affect the deductibility in the hands of the assessee either. The assessee is concerned with commercial expediency of the said payment and not with what are the actual costs incurred in rendering the services for which the payment is made. As we have seen earlier in this order, from the extracts of the Volker Committee report itself, it was absolutely necessary for the assessee to make the impugned payments and, in any event, the commercial expediency of these payments has not even been called into question by the Assessing Officer. The case of the revenue is confined to invoking the Explanation to Section 37(1). - Decided in favor of assessee.
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