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2015 (7) TMI 296 - HC - Income TaxDisallowance of expenditure - ITAT held Payment was not illegal expenditure and was a regular business expenditure - assessee was assured of 28% commission for doing liaisoning work to get the contract in favour of M/s Pharma Ventures International Private Limited. In turn, the respondent assessee paid 13% commission to M/s K.P. Steel Products (P) Ltd. for getting the contact and it is in such circumstances, the amount was claimed as revenue expenditure.- Held that:- Undoubtedly, under Section 37 of the Act, with a view to prevent claim of revenue expenditure which is inter alia prohibited by any law, the explanation has come into effect from 01.04.1962. As far as this case is concerned, the payment of the commission by the respondent assessee, who had entered into a contract with the M/s Pharma Ventures International Private Limited, apparently to liaison and, thereby, ending up paying commission to M/s K.P. Steel Products (P) Ltd., by which, the parties, apparently, succeeded in getting a contract awarded in favour of M/s Pharma Ventures International Private Limited. It cannot be found faulted with in the context of the explanation as being one which is prohibited by any law; no law has been bought to our notice also by the learned counsel for the Revenue prohibiting the kind of activities, which the respondent assessee indulged in. The only obstacle in the path of the respondent assessee claiming it as revenue expenditure is the premise that it is illegal. As already noted, we have not been shown any law, under which, the commission paid was prohibited. In the light of this, we would think that the view taken by the Tribunal is justified and we answer the question of law against the appellant. - Decided in favour of assessee.
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