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2014 (5) TMI 544 - AT - Income TaxAddition made under the agency commission as business expenses – excessive - Held that:- There was no formal written agreement between the assessee and the agent, but commission has been paid on regular basis to the agent in earlier as well as subsequent assessment years - Mere existence of an agreement cannot decide the allowability of commission payment it is the presence of surrounding circumstances and basic facts that decide the issue in conclusive manner – non-existence of written agreement cannot be sole base for disallowance of commission payment, if other evidences prove the fact of incurring of such expenditure wholly and exclusively. Following ACIT-18(2), Mumbai Versus M/s. Anand Enterprises [2011 (1) TMI 1270 - ITAT MUMBAI] - The fact that the assessee did pay commission to its foreign agent has been acknowledged by the AO as is apparent from his decision in restricting the deduction to 2. 88% of the turnover - Once the commission is accepted to have been paid, there is no logic in disallowing such expenditure by holding that it was excessive - It is for the assessee to determine the way in which it has to carry on its business - commission paid by the assessee to its agent is an allowable expenditure - The Circular of the RBI is on record and that the absence of the said circular was one of the reasons for disallowance – the order of the FAA is set aside – Decided in favour of Assessee.
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