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2015 (1) TMI 352 - ITAT DELHITDS u/s 194H - Commission or discount - Marketing expenses inclusive of incentive and discounts disallowed – Held that:- following the decision in Deputy Commissioner of Income-tax Circle-9(1), New Delhi Versus Surendra Buildtech (P.) Ltd. [2011 (5) TMI 512 - ITAT, DELHI] - The expression “commission or brokerage” has been explained in the explanation appended to this section - According to the meaning provided in the explanation, the commission would be considered, if any person received it directly or indirectly on behalf of another person for the services rendered, and such services should not be professional services - admittedly the person to whom discount was granted by the assessee were not acting as an agent for the assessee, rather they are the purchaser of the property - They have not provided any type of services to the assessee - They have just booked the flat through the assessee. In fact, assessee is an agent between the builder and the ultimate purchaser of the flats - The assessee has parted with some part of the commission received from the builder from alluring the purchaser so that it can earn more commission - It is just providing a discount to the purchaser and not paying any commission for any services taken from such customers – the order of the CIT(A) is upheld – Decided against revenue. Commission paid to Shri Gaurav Mukhija disallowed u/s 40A(2)(b) – Held that:- The assessee had opened the office on various locations and for the purpose either the assessee had to manage there or it had to be managed by engaging some other persons - The assessee allowed remuneration to such persons on commission basis, on the basis of their performance by way of bookings - Shri Gaurav Mukhija controlled and managed the Gurgaon office of the company and the commission was allowed to him on the basis of procurement of the pre launched bookings wherein the Gurgaon office was instrumental - Shri Gaurav Mukhija’s mobile number was also flashed in the advertisement issued by the assessee in news papers for general public at large informing the bookings, which clearly showed that Shri Gaurav Mukhija was closely associated as a responsible person and was instrumental in booking the properties by satisfying customers at large – the order of the CIT(A) is upheld – Decided against revenue. Reduction of disallowance to 10% as against 20% on advertisement expenses – Held that:- following the decision in Deputy Commissioner of Income-tax Circle-9(1), New Delhi Versus Surendra Buildtech (P.) Ltd. [2011 (5) TMI 512 - ITAT, DELHI] M/s Surnder Properties is in the existence of the real estate business even before the assessee came into existence. The name of Surnder Mukhija in a way enhanced the business of assessee - there is no evidence available on record to this effect. The assessee has placed on record copy of the asstt. Order passed in the case of Shri Surender Mukhija - Shri Surender Mukhija had incurred a sum towards advertisement and the name of assessee has been appearing in his advertisement - assessee has been fairly compensated, the expenses incurred by both the concerns mutually give benefit to each other mutually - it cannot be termed that assessee has extended undue benefit to third concern by giving its name in the advertisement of the assessee. Otherwise expenses have not been doubted by the AO - the expenses were incurred exclusively for the business purpose and no disallowance deserves to be made – Decided in favour of assessee.
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