2012 (11) TMI 1204 - AT - Income Tax

Summary

Issues involved: Appeal against order of Commissioner of Income-tax (Appeals) Aurangabad u/s 143(3) of the Income-tax Act, 1961 for assessment year 2006-07.

First Issue - Addition of Commission Expenditure:
The Assessing Officer disallowed &8377; 5,64,352/- out of commission expenditure paid to a sister concern, invoking sec. 40A(2)(b) of the Act. However, the CIT(A) deleted the addition based on business expediency and non-evasion of tax, citing relevant case laws. The Tribunal affirmed the CIT(A)'s decision, emphasizing substantial sales through the sister concern and absence of tax evasion, thus dismissing the Revenue's appeal on this ground.

Second Issue - Disallowance u/s 40(a)(ia) of the Act:
The Assessing Officer disallowed expenses under sec. 40(a)(ia) of the Act. The CIT(A) allowed the claim based on a retrospective amendment by Finance Act, 2010, which waived disallowance if TDS was paid before the due date of filing return. The Tribunal upheld this decision, following a similar precedent, and dismissed the Revenue's appeal on this ground as well.

In conclusion, the appeal of the Revenue was dismissed by the Appellate Tribunal ITAT Pune, with both issues favoring the assessee based on business justifications and retrospective amendments to tax laws.