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2021 (8) TMI 841 - AT - Income TaxDisallowance of commission paid to liaison - functioning of the business set up of that of the assessee in dealing with Indian Railways whose offices are located on various places in India - HELD THAT:- With respect to the facts that what was the need for the liaison representatives to work on behalf of the assessee company and secondly, what actual works they have performed generally for the business of the assessee company. All these details have been specifically examined and mentioned by the Ld. CIT(Appeals) in his order. Practical scenario in functioning of the business set up of that of the assessee in dealing with Indian Railways whose offices are located on various places in India and due to difficulties of conversation for not having knowledge of local language etc., these factors were also taken into consideration by the Ld. CIT(Appeals). We therefore, cannot doubt the involvement of the liaison representatives in the business of the assessee and neither the Assessing Officer has brought on record any evidences/materials to suggest otherwise. AO has neither doubted the payments nor has doubted the parties to whom the payments were made. AO has also agreed on the services rendered by these liaison representatives for the assessee company. AO has not given any cogent reasoning or finding for the ad-hoc disallowance at the rate of 7.5 % in respect of the commission paid to these liaison representatives. These ad-hoc disallowances are not only unsustainable in the case of limited company but also in the case of any assessee for that matter. Since Quasi-Judicial Authorities are required to substantiate every addition made with proper reasoning and that reason should come out from the orders of the authorities itself. The thinking process must clearly get reflected in the order based on examination of facts and evidences. In this case, such exercise is missing by the Assessing Officer which was rightly observed by the Ld. CIT(Appeals). There cannot be any additions sustained which are primarily founded on platform of doubt only. - Decided against revenue.
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