Case Laws
Acts
Notifications
Circulars
Classification
Forms
Manuals
Articles
News
D. Forum
Highlights
Notes
π¨ Important Update for Our Users
We are transitioning to our new and improved portal - www.taxtmi.com - for a better experience.
β οΈ This portal will be discontinued on 31-07-2025
If you encounter any issues or problems while using the new portal,
please
let us know via our feedback form
so we can address them promptly.
Home
2019 (9) TMI 767 - AT - Income TaxCommission paid to HUF - meaning and import of the term agent - CIT-A deleted the addition - HELD THAT - Issue is covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the assessment year 2010-11 as held that AO has not correctly understood the meaning and import of the term agent . It is not necessary that an agent receiving Commission payments has to always be a physical go-between between the principal (the Appellant in the instant case) and his/her/its customers being buyers. An agent can carry out the business of prospecting for client-buyers which would mean that many of the intended targets may not transform into buyers or may decide to purchase the items directly from the principal instead of through the agent or even without informing the agent. An advertising agent likewise has only a generic target segment and no customers can be asked of such agent to be specifically identified. A procurement agent on the contrary may have a set of sellers from whom he/she routinely contracts for purchases. AO has not been able to show that the payments have not been made to the purported agents and that these payments are not relatable to the carrying out the business and for other business purposes. The AO has merely leaped to conclusions (in the cases of Categories II III and IV) that the seeming absence of buyers (as ostensibly evidenced by letters addressed to them returning unserved) or the negations or disavowals by such buyers of any knowledge or nexus with the agents or the inability of the Commission agents to list the actual buyers would automatically disentitle the agents of their status and rights to receive Commission payments. In the scheme set in place by the Appellant the buyers directly transacted with her; the agents did not enroll them and therefore in most cases would not know them AO s action in disallowing the impugned expenses have been made on extremely thin and specious grounds that the buyers were not found or did not respond or disclaimed any knowledge of the agents or that the agents were not able to remember the buyers or were not able to furnish detailed particulars about them or for the reason that the Commission agents were HUFs. All of them are reasons that do not show any clear understanding about the reasons for and the manner in which the agents have been employed and engaged by the Appellant. - Decided against revenue
|