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2015 (12) TMI 1828 - AT - Income TaxAllowability of commission payment - non-discharge the burden of proving that the expenditure laid out were incurred wholly and exclusively for the purpose of business - HELD THAT:- Undisputedly, the assessee company had paid commission through account payee cheque. This will not debar the AO from probing the matter further to examine whether the commission payments are allowable expenditure or not. In this context, it is worth quoting that the decision of the Hon’ble Supreme Court in the case of Laxmi Narayan Madanlal Vs CIT [1972 (9) TMI 4 - SUPREME COURT]. AO is empowered to probe further and reach at a conclusion whether the commission was paid for the services actually rendered and determine whether the expenditure was laid out wholly and exclusively for the purpose of business. In the present case, the AO had called upon the assessee company to furnish evidence in support of the services rendered by the commission agents. In response to this, except highlighting the role of commission agent, no evidence was furnished in support of the services rendered by the commission agent. The AO gave categorical finding that the assessee had failed to substantiate the actual services rendered by the sales agent. Assessee company had chosen not to file any evidence in support of the services rendered by sales agencies either before the learned CIT(A)or before us. Even before us, the learned AR miserably failed to demonstrate before us as to what kind of proof was filed before the lower authorities in support of services rendered by the commission agent. Pursuant to the direction of the Bench to file evidence in support of the services rendered the assessee had chosen to file only correspondence relating to the payment which no way establishes the actual services rendered by the commission agent. Thus, the assessee failed to discharge the burden of proving that the expenditure laid out were incurred wholly and exclusively for the purpose of business. CIT(A) had not examined any evidence to show that the agents have actually rendered their services. The learned CIT(A) had totally misdirected himself by examining the issue from the angle of tax deducted at source and he had failed to examine whether the services are actually rendered by the commission agents or not. Therefore, we are unable to sustain the order of the learned CIT(A) and hold that the commission payments in question are not allowable. The assessee company had miserably failed to demonstrate the actual services rendered by the agents to whom the commission payments were made, despite ample opportunity granted by this Tribunal to furnish evidence in support of service rendered by commission agent. - Decided against assessee.
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