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2018 (11) TMI 1843 - AT - Income TaxDisallowance of claim of payment of commission - Denial of claim of payment of commission on sales - assessee has claimed that during the course of business, he has paid commission to a number of parties for the purpose of business - non- appearance of the said commission agents in person - HELD THAT:- As decided in MADHUSUDAN RUNGTA & SONS (HUF) AND VICE-VERSA [2017 (11) TMI 1074 - ITAT KOLKATA] said commission agents even though did not respond to the summons issued by the Ld. AO by making their personal appearance, but had furnished the requisite details to the Ld. AO and had also given confirmation that they had indeed included the subject mentioned commission in their returns and paid taxes thereon. All these facts clearly proved the services rendered by the commission to the assessee achieving the payment of commission. There could be more than one justifiable reason for commission agents for not appearing before the Ld. AO in response to the summons issued thereon. AO is empowered under the law to take necessary action against these commission agents for non-compliance to the summons issued to Section 131 - Statute provides for relevant remedial measures thereon - AO without resorting to such measures, cannot proceed to disbelieve the claim of commission paid by the assessee when the same are supported by various documents and confirmed by the said parties. In the instant case, the primary onus has been duly discharged by the assessee proving the claim of commission payments made by the assessee. There is absolutely no reason for the AO to doubt the veracity of the said transactions. Admittedly none of the commission agents were relatives of the assessee or interested parties with the assessee so as to allege some mala fide on the part of the assessee. Hence, in our considered opinion, there is no case made out by the ld AO to treat the commission transactions as ingenuine transactions in these facts and circumstances. Disallowance of sales promotion, telephone expenses and motor car and travelling expenses - Assessee vehemently contends that no disallowance can be made on the ground that there is an element of personal use of telephone and motor car in the case of a Limited Company as there cannot be any personal use - HELD THAT:- After hearing the submission, we confirm the disallowance was made on an estimate basis of sales promotion expenses. We find that the Assessing Officer has disallowed the expenditure on an ad-hoc basis simply because there is a rise in the quantum of expenditure as compared to the expenditure incurred in earlier years. He estimated the expenditure at 60% and 40% of the claim and the balance was disallowed. This, in our view is arbitrary and without any basis. TDS u/s 194C - disallowance u/s 40(a)(ia) - HELD THAT:- We find that the ld. CIT(A) has specifically held that in case of conversion charges, the assessee had deducted income tax at source @2% of such contractual payments and deposited the TDS in the Government A/c. On facts he held that there is no valuation of Section 194C of the Act and hence and no disallowance can be made u/s 40(a)(ia) of the Act
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