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2019 (2) TMI 1648 - AT - Income TaxCommission paid to agents for obtaining orders from Govt. Agencies - Whether payments of Govt. Agencies is prohibited by law and hence, not an allowable deduction u/s.37(1)? - HELD THAT:- The payments to these parties are made through the A/c payee cheque on tax was deducted at source. The assessee has also furnished the nature of services rendered by them, copy of letter generating enquiry, copy of letter from giving technical bid, making a copy to the representative, joint inspection report and other evidences to substantiate about rendering services which established that these parties have rendered services to the assessee in procuring order and rendering other services. CIT(A) also referred and relied upon the decision of M/s Acro Electro Technologies Pvt. Ltd. [2013 (4) TMI 342 - ITAT MUMBAI] wherein the assessee in that case was engaged in the business of manufacturing of electrical item and supplied material to Indian Railway and BHEL. Their office was situated in Mumbai. They engaged services of certain agents in other cities. The agents were helping the assessee-company about placing order and collecting bills. The commission was paid to the agents through banking channels, all such agents were access to tax. Tribunal held that commission expenses were incurred wholly and exclusively for the purpose of business. Payments were made by assessee to agents were not against public policy; rather it was a pure business transaction. In the present case, no commission payment is made to the official of PSU/BHEL, rather the payments were made to the agents, and the agents were working for assessee. Therefore, the ratio of law laid down in M/s Acro Electro Technologies Pvt. Ltd. (supra) is squarely applicable on the facts of present case. CIT(A) also observed that the similar issue on similar fact was decided by his predecessor for A.Y. 2010-11 and by following the principle of consistency, it was held that the payment made to Denetto International & Bhalla & Associate cannot be disallowed. - Decided in favour of assessee.
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