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2017 (11) TMI 1074 - AT - Income TaxDisallowance of commission payment - Held that:- 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 ld 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. We hold that mere nonappearance of the said commission agents in person before the Ld. AO would not make the transaction of payment of commission as ingenuine. Hence, we hold that the Ld. CIT(A) had rightly deleted the disallowance of commission made by the Ld. AO. Accordingly, ground nos. 2 to 4 raised by the Revenue are dismissed. Disallowance of sales promotion expenses - Held that:- The payment to clubs towards usage charges is allowable as deduction. With regard to sales promotion expenses representing purchase of small denomination of assorted gold coins, we hold that the explanation given by the assessee is bona fide and reasonable and the same has been given to various parties for maintaining cordial relationship with the concerned sales executives who contributed for substantial increase in turnover of the assessee. We find that the Ld. CIT(A) had categorically mentioned that the turnover of the assessee had increased from 7 crores to 11 crores during the year which fact remain uncontroverted before us. This goes to prove the services rendered by those persons who are at the realm of affairs of improving the sales of the company and this also proves the business expediency and incurrence of such sales promotion expenses. Admittedly, these gold coins which were purchased were given as gifts to customers of the assessee and hence, becomes allowable deduction thereon. Disallowance of bad debts written off - AO had disallowed the same on the ground that mere making of provision for bad and doubtful debt does not amount to writing off of the debt and further the assessee has not produced any evidence from which it could be established that he has accounted for the sales in computing the income of the previous year in terms of Section 36(2) - Held that:- We find that the assessee submitted that the debt of ₹ 14,90,113/- became bad as back in the year 2005-06. From that year onwards, the assessee has been consistently writing off 10% of the balance as bad debt in his books of accounts every year, so that there is no constraint on the net profit of the business of each year. It was also seen that such bad debts has been consistently allowed by the revenue commencing from assessment year 2005-06 to assessment year 2011-12. Hence, there is no reason for the revenue to take a different stand during this year when same facts and circumstances are permeating. The Ld. CIT(A) had appreciated this fact and by placing reliance on the decision of the Hon'ble Supreme Court in the case of TRF Limited [2010 (2) TMI 211 - SUPREME COURT] and in the case of Madras Industrial Investment Corporation Ltd. [1997 (4) TMI 5 - SUPREME Court] allowed the claim of the assessee. We do not find any justifiable reason to interfere in the order of the Ld. CIT(A).
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