TMI Blog2010 (10) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... Regarding Sales Promotion Expenses and Commission Payments - there are no specific instances pointed out and no opportunity has been given to the appellant to rectify the prima facie adverse findings - No material whatsoever was furnished by the learned DR to contradict the findings of the learned CIT (A) - Appeal is rejected - IT Appeal No. 266 (Mum.) of 2008, - - - Dated:- 29-10-2010 - D. Manmohan, T.R. Sood, JJ. S.K. Singh for the Appellant Haresh Upendra for the Respondent ORDER D. Manmohan, Vice President 1. This appeal is filed at the instance of the Revenue and it pertains to the assessment year 2004-05. Several grounds urged by the Revenue are taken-up in seriatim for the sake of convenience. 2. Facts necessary for the purpose of disposal of this appeal are stated in brief. Assessee, a partnership-firm was engaged in the business of trading in Imported Dental Implants, Equipments. One of the partners of the firm i.e., Dr. Shahvir S. Nooreyezdan is a Dentist by profession and he is a major shareholder having controlling interest in M/s. Essen Medical (P.) Ltd. a company registered in Maharashtra. It is not in dispute that assessee purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of such payments, without even asking the assessee to discharge such responsibility. 5. Having regard to the circumstances of the case, in the interest of substantial justice, the learned CIT (A) has taken on record the material furnished before him and called for a remand report from the Assessing Officer. In response to the same the Assessing Officer declined to comment, mainly on the ground that furnishing of information at appellate stage was not acceptable. In other words, the Assessing Officer was of the opinion that the CIT (A) had no authority to admit any additional evidence. It is also necessary to notice here that the remand report (verified from the record placed by the learned DR before us) does not contain any comment with regard to the claim of the assessee that the Assessing Officer has never called upon the assessee-firm to establish the reasonableness of the payments. Taking into consideration of the overall circumstances of the case, the learned CIT (A) observed that admission of additional evidence is the prerogative of the CIT (A), particularly when the assessee claimed that it was never confronted with any specific questions on this issue. In the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. When a finding of the Assessing Officer is challenged before an appellate authority, in the form of statement of facts and grounds of appeal, and more particularly when the learned CIT (A) has called for the remand report the Assessing Officer is under an obligation to place on record proper facts instead of merely challenging the power of CIT (A) to call for remand report on the strength of material filed at the appellate stage, which highlights the attitude of the Assessing Officer who is supposed to follow the path of law. Suffice it to say that on the strength of the voluminous of evidence filed by the assessee at the stage of the first appellate authority we do not find any merit in the contention of the appellant that the provision of section 40A(2)(b) are applicable in the instant case particularly in the absence of giving the assessee a reasonable opportunity of being heard and in the absence of commenting upon the material placed before him during the course of remand proceedings. We therefore, uphold the Order of the learned CIT (A) on this issue. Regarding Travelling Expenses 7. During the year under consideration assessee claimed deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sheet noting dated 5-12-2006 the assessee's representative has appended his signature to this effect and hence, no case was made out to show that the expenditure was incurred wholly and exclusively for the purpose of business. 11. Learned DR strongly relied upon the Order passed by the Assessing Officer. 12. On the other hand, learned Counsel, appearing on behalf of the assessee, submitted that it was not the case of the Revenue that the visit of the partner was a pleasure trip. It was admitted that the partner gained detailed scientific knowledge about the dental equipments. It is not in dispute that such knowledge is needed to enable the firm, through its partner, to effectively impress upon the local doctors about the efficacy of the equipments, in the process of marketing its products. Such being the case, merely because there is no direct gain in the form of increase in turnover etc., expenditure incurred wholly and exclusively for the purpose of business cannot be disallowed. 13. We have heard the rival submissions and perused the record. The impugned expenditure was claimed as deduction under the residual section i.e., section 37(1) of the Act. While explainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses is arbitrary and to highlight the same he has given the break-up of the expenditure and submitted that out of 2,78,000, a sum of 2,69,000 was paid to M/s. Essen Medical (P.) Ltd. on account of share of expenditure incurred on conference and seminars of doctors and dentists at various places at colleges, halls, venues etc., and purchases were always effected at lower rate from M/s. Essen Medical (P.) Ltd. Under these circumstances, sharing of sales promotion expenses is justified and the Assessing Officer has no reason to compare it with the market price. 17. Similarly, 25 per cent of disallowances for want of vouchers is not justified as the expenditure was genuine and reasonable. It was also contended that the assessee paid higher commission on high-end products since it requires lot of efforts to sell high-end products. It was also contended that the commission was paid to known parties and tax was deducted on time. There was no basis for making any addition on mere suspicion. Learned CIT (A) accepted the contention of the assessee and in this regard observed as under: "6.1 From the contents of the assessment order, I find no reference to any actual instance of any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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