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2015 (12) TMI 375 - AT - Income TaxAddition on account of bogus purchases - CIT(A) deleted the addition - Held that:- No reason to interfere with the decision of the learned Commissioner (Appeals) on this issue. As can be seen, the learned Commissioner (Appeals), on verifying the books of account of the assessee for the relevant assessment year has given a factual finding that the actual purchases made by the assessee during the year under consideration from Samarth Enterprises, was to the tune of ₹ 11,238. The Department has failed to bring any material before us to disturb the aforesaid factual finding of the learned Commissioner (Appeals). - Decided against revenue. Disallowance of commission paid to directors - allegation that commission was paid to avoid dividend distribution tax - CIT(A) deleted the addition - Held that:- the assessee during the year not only has paid dividend to the directors but has also paid commission @ 3% of the profits. It is also not disputed by the learned Departmental Representative that the assessee is continuously following the practice of payment of dividend as well as commission to the directors from past several years. It is also not disputed that the dividend payment to directors over the years has increased substantially and for the impugned assessment year, as noted by the learned Commissioner (Appeals), the assessee has declared dividend of approximately 55% of the profits. It is also not denied that the assessee has paid dividend distribution tax on the dividend declared. That being the case, there being a quantum jump in the dividend paid to the shareholders, it is difficult to believe that the assessee would have adopted a mechanism to avoid payment of dividend distribution tax on 3% of the profit by treating it as commission payment to the directors. More so, when it is a fact on record that such commission payment to directors is continuing for past several years and department has never questioned such commission payment. As rightly held by the learned Commissioner (Appeals), there being no nexus between the two payments i.e., commission and dividend to the directors, the disallowance made could not have been sustained. Accordingly, we uphold the order of the learned Commissioner (Appeals) - Decided against revenue.
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