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2015 (4) TMI 268 - HC - Income TaxDisallowance under Section 40A(2)(b) - commission up to 5% aggregating to ₹ 16 lacs to his son, daughter and daughters-in-law - Held that:- Assessing Officer’s finding that the alleged commission was not an expenditure incurred by the appellant wholly and exclusively for the purposes of the business as per the provisions of Section 37 of the Act cannot be faulted. It is an inference which can reasonably and legitimately be drawn. The Assessing Officer accordingly justifiably disallowed the expenditure of ₹ 16 lacs and added the same to the assessed income. He also initiated penalty proceedings under Section 271(1)(c) of the Act.In the present case, it has been held that the appellant had not established that the payments by him to the said persons were by way of commission. The appellant’s case in this regard has been disbelieved. As we mentioned earlier, this was purely an issue of fact and raised no question of law. In the circumstances, the fact that the recipients of the alleged commission in the present case had paid tax at the highest level is irrelevant to the question whether the appellant was entitled to deduct the amounts paid to them as commission. - Decided in favour of the Revenue. Disallowance on account of rent paid - appellant claimed a deduction of a sum of ₹ 10,50,806/- as rent paid to three persons who also fall within the ambit of Section 40A(2)(b) of the Act - Held that:- C.I.T. (Appeals) upheld the disallowance of deduction for the same reasons, namely, that there was no evidence to support/justify the deduction. The view that the payment of TDS on the said amount is irrelevant is correct. he Tribunal observed that the appellant had paid ₹ 14,40,000/-towards rent which was approximately 370% more than the rent paid in the preceding year namely ₹ 3,89,194/-. This is purely a question of appreciation of facts which in the facts of this case cannot be held to be perverse. No question of law arises in respect thereof. - Decided against assessee.
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