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2012 (12) TMI 277 - ITAT, INDOREDisallowance of commission – Held that:- No TDS has been deducted on the commission payment and assessee was unable to substantiate the extra services rendered by Kapil Sarin, in addition to the services for which he was paid salary, disallowance of commission was justified Regarding payment of salary is concerned – Held that:- Shri Kapil Sarin is a qualified and experienced person, who worked for 8 years with leading Pharma company and he was independently handling sales and marketing operations of the assessee in the Western Region from Pune - no justification for disallowance of salary of Rs. 45,000/- paid to Shri Kapil Sarin. Disallowance of payment of sales tax incentive – Held that:- Assessing Officer has not disputed the duties and responsibility of all the three. Each of the person possessed the required qualification and work experience for the functions performed by them, which was commensurate with the compensation so paid. The sales incentive so paid was confirming part of their over all compensation as employees. Nowhere the Assessing Officer has alleged that payment to them was in excess of the fair market value of the services so rendered by them - Assessing Officer to restrict the disallowance of incentive to the extent of 25%. Disallowance of depreciation - assessee has purchased assets for new Branch Office opened at Pune, which started functioning in the next assessment year 2004-05 and that assessee had not shown any sales through Pune Office – Held that:- New office at Pune was purchased on 19.9.2002 and a regular pharmacists joined the Pune Office w.e.f. 17.1.2003 i.e. during the year under consideration - Merely because the actual operation started in the next assessment year, the fact that preparatory steps for starting business operation was duly undertaken during the year under consideration. There is no valid reason for disallowance of depreciation on the assets - Assessing Officer is directed to delete the disallowance of depreciation With regard to disallowance of depreciation of car, repairs and maintenance of vehicles and plea of personal use, AO directed to restrict the disallowance to 1/10th on the plea of personal use. Regarding Diwali expenses – Held that:- Assessee has produced vouchers for purchase of Raymond’s’ shop. The CIT(A) has confirmed the disallowance on the plea that the assessee has not given the names of the persons to whom such gifts have been distributed - no justification on the part of the lower authorities for decline of genuine claim of expenditure, which is essentially incurred for the purpose of business - These are the customary expenses, which in the present scenario is normally incurred to boost the business and to have a healthy relations with the employees
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