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2022 (9) TMI 774 - Income Tax
Allowable business expenditure - whether the commission paid by the assessee to various agents was allowable as deduction u/s 37? - commercial expediency - due discharge of onus by the Assessee - HELD THAT:- The commercial expediency, the nature of business activity done by the assessee, are all to be taken into consideration while examining the nature of payment which has been effected.
The assessee in no uncertain terms has stated that apart from facilitating procuring of raw material, the agents also facilitated in securing speedy payment to the assessee. This factor has not been taken note of by the Tribunal, which, in our opinion, is a very vital factor to decide the sustainability of the claim of the assessee. Tribunal was of the view that most of the companies with which the assessee had business transactions were all Government of India concerns. However, the Tribunal has failed to note that the AO has noted the names of all the 13 customers with whom the assessee had transactions and many of them are private limited companies and are not government entities.
When the payments made by the assessee were for the purpose of procuring the business and to get the supplied items to be ensured that they have delivered to the customers and arrangement for speedy payment, the payment is in the nature of commission. That apart, for the earlier and subsequent assessment years the payments were never disallowed by the AO. Appeal of assessee allowed.