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2019 (5) TMI 1501 - ITAT DELHIDisallowance of expenditure on account of payment of commission - allowable business expenditure - CIT – A has deleted disallowance - HELD THAT:- Evidences in form of emails exchanged between customers and certain specific employees of recipient of commission in which various customers have communicated for placing purchase orders, for resolving supply and payment issues by referring to earlier meeting and communication with such persons. Such evidences were also produced before learned assessing officer however those were ignored. Assessee also submitted name of employees and supported it with copies of salary slips of various employees of recipient of commission. Further telephone number mentioned in various purchase orders were also matched with telephone number of commission recipient. CIT A referred to various evidences furnished by assessee to support that services have in fact been rendered by these parties to assessee for which payment of commission has been made. CIT – A held that commission agent has contacted customers on behalf of appellant by using advertisement material etc. Such services were being provided since financial year 2007 – 08 and learned assessing officer has accepted these payments Payment of commission made to M/s Action Udyog CIT – A noted that that these party is actually acted as a trader which purchased shoes from appellant and for which payment made to appellant by it. Such items were sold by this entity to customers at same price for which it was paid fixed profit at rate of 8% of turnover in terms of agreement dated 1/4/2009 - evidences placed by assessee for commission paid to A S Marketing have been considered by assessing officer for making disallowance with respect to payment of commission to this party. Therefore it is submitted that it is not a payment of commission to commission agent but sale of goods at fixed percentage of profit. CIT – A has deleted disallowance after considering facts of case placed before him by assessee as well as reasons recorded by assessing Officer in making disallowances. Learned CIT – A further made certain enquiries and based on which he deleted disallowance. Therefore we do not find any infirmity in order of learned CIT – A in deleting disallowance -Decided in favour of assessee Disallowance u/s 14A - HELD THAT:- Provisions of section 14 A applies as soon as assessee earns an exempt income. It is an altogether a different aspect that whether assessee has incurred any expenditure or not, which is required to be tested subsequently, but provisions of section 14 A triggers as and when assessee earns exempt income. As it is a fact that disallowance cannot exceed exempt income, therefore without going into merits of fact whether assessing officer has recorded satisfaction or not, we direct learned assessing officer to restrict disallowance u/s 14 A of income tax act to extent of INR 1 759/– only. To his proposition, AR also agreed. - Decided partly in favour of assessee in part.
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