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2016 (10) TMI 1387 - AT - Income TaxDisallowance of commission expenses - Whether allowable business expenditure? - HELD THAT:- All the agents have confirmed that they have rendered the services and also received the commission. All the commission agents are being assessed to income tax and they have deposited tax liability after claiming normal business expenditure for earning such business income. Such income has been disclosed by the agent and identity of the commission agent is proved. We find that the agents have rendered the services, motivated the agriculturists, compilation of their requirements, submission of return relating to land records, prepare the file from Jan Panchayat office, arranging delivery of goods by Marketing Federation sites, supply of pipe, installation of pipes to the agriculturists and maintenance of pipes for the prescribed period. Therefore, the assessee has made these services. The Market Federation did not require any middleman for giving order to the company but when the notice was issued to Market Federation, they have explained why the services of middleman is required. Therefore, this has been explained by the Marketing Federation itself. Therefore, CIT(A) has allowed the claim. Moreover, the assessee has also claimed that it has earned more revenue after deputing the middleman commission agent. Therefore, it may be allowed. Therefore, we are of the view that the learned CIT(A) is justified in his action and our interference is not required at all. Decided against revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in Kamal Kumar Jagdish Prasad [2016 (6) TMI 1474 - ITAT INDORE] no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. The question of law is answered in favour of the assessee. Thus we set aside the orders of the authorities below with the direction to the Assessing Officer to consider the above High Court judgments cited above and decide the issue in view thereof, after affording a reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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