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2020 (6) TMI 647 - AT - Income TaxIngenuine Commission expenses - whether the commission payments made by the assessee to the above agents are genuine and are allowable expenditure u/s 37(1) - HELD THAT:- Payment of commission was a normal trade practice in the line of business, and every business man pays commission to procure business. Assessee in order to prove its case has provided documents viz. copy of agreement entered into by the assessee and the agents, which inter alia provide the appointment and scope of the work of the assessee. Capacities of the agents to act as agents of the assessee and the business they have performed for the assessee have not been doubted. The commissions were paid in relation to the business procured by agents from various locations as indicated in the details furnished by the agents. Such commission payments were in the form of account payee cheques, and in order to evidence the genuineness of transactions of commission received by the agents, these agents have provided a summary of commission received from various companies including that of the assessee. They have also filed copies of form no.26AS showing details of TDS against the receipt of commissions, therefore, a live link between the business of the assessee and payments made to the agents have been established. These independent evidences produced by the assessee would prove that services were rendered by the agents, which have not been disputed by the Revenue. Revenue authorities doubted the payment of commissions merely on the facts that agents are related to the assessee, and that commission expenses were claimed to reduce the tax liability of the assessee company, which allegation was not supported by any independent finding. The agents have included the receipts in their return of income and that there was no evidence to show that the money has come back to assessee so as to allege that the transactions are bogus to avoid tax by reducing the profit. In the assessee’s case, relevant conditions laid out in section 37(1) have been fulfilled. Therefore, the commission expenses paid was in the nature of business expense which requires to be allowed as deduction. - Decided in favour of assessee.
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