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2018 (8) TMI 1127 - AT - Income TaxGenuineness of commission expenses - AO concluded that no such agent services were required by the Government departments and did not find any genuineness in alleged commission expenses and disallowed the same, adding it back to the income of the assessee. - CIT(A) allowed partial relief only. Held that:- The alleged commission expenditure has been paid by the assessee to promote its products by way of marketing and educating the farmers for the benefits of using fertilizer and pesticides so that these farmers come to the office locations of MARKFED and MPSAIDCL which are scattered across various parts of the state of Madhya Pradesh and to buy these products. The basic purpose of making such payment is to promote the sale of these two nodal agencies which in turn will make the sale to the farmers. As the demand from the farmers increases then the MARKFED/ MPSAIDCL purchases more goods from the assessee firm. There is a corresponding increase in the sales vis-à-vis the commission expenses, so much so that the turnover has increased to ₹ 6.98 crores (approx) as against ₹ 2.38 crores (approx) in the preceeding year and the fact is also worth noting that salary expenditure has not increased in the proportion of increase in sales and the credit for this increase in sales directly goes to the efforts put in by the commission agents to advertise and educate the farmers which in turn have created the demand of the products sold on consignment basis by the assessee to these two nodal agencies. Entire claim of commission expenses allowed - Decided in favor of assessee.
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