TMI Blog2003 (2) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer on account of commission payment to 03 parties. 3. The assessee is dealing in purchase and sale of electric poles. The electric poles are purchased from Electricity Board and again they are supplied to various electricity boards in different parts of the country. During the assessment proceedings it was noted by the Assessing Officer that assessee has paid commission to 03 parties namely M/s Ganga Agencies @ 6 per cent, M/s Hindustan Sales Corporation @ 2.5 per cent and M/s Power Trading Company @ 4.5 per cent and 5 per cent against sale of Rs. 84,97,756 made through these three commission agents. The total commission was shown at Rs. 4,27,580. The assessee was required to file the detail of commission and confirmation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o realization of payment. The commission was paid as per agreed terms between the assessee and party. It was also noted by CIT(A) that some parties were residing far away from the premises of the assessee as they were located in Lucknow and Kanpur etc. It was also noted by CIT (A) that none of the commission agent was related to the assessee, therefore, provision of section 40( a )(2) were also not applicable on the facts of present case. 4. Lastly placing reliance on the decision of Bombay Bench in case of VIP Industries v. Asstt. CIT 103 Taxman 63 ( sic ). CIT(A) held that commission deduction on account of commission is allowable. However, the CIT(A) restricted the commission payment at 5 per cent against 6 per cent paid to M/s G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no substance in the ground of the department. We noted there is no dispute that the services were rendered by the respective commission agent. Payments on account of commission were made through account payee cheques against their bills. None of the party was related to the assessee directly or indirectly. The commission was paid on agreed terms; various formalities were to be completed for obtaining orders and than supplying the material and then perusing for payment. Party wise details and other factors have been discussed by CIT(A) in details in his order. After ascertaining the factual position CIT(A) came to conclusion that the commission was paid on account of services rendered by the respective parties. Commission paid to two parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,860 and in immediately preceding year the freight and cartage at Rs. 42,852. The Assessing Officer while observing in his orders that the claim of the assessee on account of freight and cartage charges are on excessive side, therefore, he made an ad hoc disallowance of Rs. 1,00,000. Assessee preferred appeal before CIT(A) and after considering the arguments and details filed before him which were filed before Assessing Officer, CIT(A) observed that the disallowance of Rs. 1,00,000 is on higher side, therefore, disallowance was restricted to Rs. 15,000. Now the department and assessee both are in appeal against sustaining the addition and reducing the disallowance made by Assessing Officer. 9. After hearing rival submissions and perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA No. 1809. 12. Ground Nos. 1 to 5 in appeal of the assessee have already been disposed of hereby us while disposing the appeal of the department. Ground Nos. 6, 7 8 are against upholding the disallowance of Rs. 19,231 on account of conveyance and maintenance of car, Rs. 6,250 on account of car depreciation and of Rs. 5,000 on account of telephone expenses for personal use by the Directors. At the time of hearing the counsel of the assessee said all these disallowances made by Assessing Officer and confirmed by CIT(A) are allowable in view of the decisions of the various Benches in Dy. CIT v. Haryana Oxygen Ltd. [2001] 76 ITD 32 (Delhi), 79 ITD 466 ( sic. ), Asstt. CIT v. Perfect Project Ltd. [2002] 253 ITR 16 (Cal.) (AT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f better commercial expediency. Moreover they can be allowed as per rule 6B. Therefore, we restore the matter to the file of Assessing Officer to examine the issue afresh in view of our observation above. We order accordingly. 16. Remaining ground Nos. 11, 12 13 are against upholding the disallowance of Rs. 5,000 on account of misc. expenses Rs. 4,000 on account of staff welfare expenses and Rs. 2,100 on account of subscription paid by the assessee. 17. The disallowances on account of misc. expenses and on account of staff welfare, were made by the Assessing Officer on ad hoc basis CIT(A) further allowed some relief again on ad hoc basis. These are petty disallowances and we are not inclined to interfere in the finding of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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