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2018 (12) TMI 1658 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of commission expenses u/s 37(1) - HELD THAT:- While deliberating upon the quantum addition, the Tribunal noted that certain documents were not produced before the AO as well as before the Ld. CIT(A), which were relevant to decide the matter and in that situation, the quantum addition was restored to the file of the ld. AO for fresh adjudication. So far as, the penalty is concerned, it depends upon the outcome of the quantum addition which has been restored to the file of AO therefore, in all fairness, the penalty appeal is also restored to the file of the ld.AO for fresh consideration in accordance with law. Thus, this appeal of the Revenue is allowed for statistical purposes. Disallowance of commission expenses u/s 37(1) - HELD THAT:- The assessee is expected to prove the actual services rendered by these agents for business purposes which have not been established. The assessee is directed to prove the nexus and the commercial expediency for such claim. AO is also directed to ascertain whether the payment of commission is prohibited by law as has been observed by him. AO is further directed to ascertain whether such expenses are legitimate and also whether payment of such commission is against public policy of the government. The assessee is also directed to explain whether such agents are registered with the respective government department/PSUs for which they have been paid commission. Section 37(1) contains the general provisions of allowance. The assessee is directed to produce the necessary evidence in support of its claim because as per section 37(1) explanation-1, any expenditure incurred by the assessee for any purposes, which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purposes of business or profession and shall not be allowable. Thus, the appeal of the Revenue is allowed for statistical purposes.
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