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2020 (3) TMI 170 - AT - Income TaxGenuineness of expenditure - payment of “referral commission” - Expenditure wholly and exclusively for the purpose of business of the assessee - HELD THAT:- This is not client referral by M/s. Divine Alloys and Power Company Limited but is the commission referral by M/s. Elecon Engineering. The assessee has been unable to produce any communication between M/s. Divine Alloys and Power Company Limited and the assessee, specifying the details of the transaction that the said M/s. Divine Alloys and Power Company Limited has done with M/s. Elecon Engineering which has led to the increased turnover. The submissions as made by the assessee before the CIT(A) clearly shows that the turnover has increased on account of the assessee’s own activity of getting the business from M/s. Elecon Engineering. It is not understandable as to why on the basis of the advice of M/s. Elecon Engineering, M/s. Divine Alloys and Power Company Limited had to be brought into the picture for the payment of “referral commission”. Nor has any evidence been brought to show what is the reference done by M/s. Divine Alloys and Power Company Limited and the quantum of turnover on account of such reference. The statement of the assessee before the learned CIT(A) itself shows that M/s. Divine Alloys and Power Company Limited has not done anything, nor provided any services in respect of the transactions with M/s. Elecon Engineering. If the so-called client referral as made by the assessee in respect of M/s. Divine Alloys and Power Company Limited was effective, why was it that the assessee had only one year transaction with M/s. Elecon Engineering? Once the reference is made and the products of the assessee are of the top notch quality, the turnover should have been climbing instead of falling back to earlier levels. This clearly shows that the assessee has been unable to prove the purpose of the payment to M/s. Divine Alloys and Power Company Limited much less that it was wholly and exclusively for the purpose of the assessee’s business. The assessee has not been able to place any agreement before any of the authorities below nor has it produced before us. The assessee states that the consolidated bill was produced by the assessee whereas M/s. Divine Alloys and Power Company Limited had produced five bills but even that has not been produced before the Tribunal nor it has been proved that the expenditure has been incurred wholly and exclusively for the purpose of business of the assessee. Facts clearly shows that the assessee has failed to substantiate much less proved the reason for the payment of the so-called “referral commission” to M/s. Divine Alloys and Power Company Limited. Appeal of the Revenue stands allowed.
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