9911796707
TMI Blog2012 (3) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted at an income of Rs,.1,07,31,740/- including part disallowance of deduction u/s 80IB on interest and sales tax incentive and disallowance of commission u/s 40A(2) of Rs.14,00,520/-, vide order dated 29.12.2009 passed u/s 143(3) of the Income Tax Act, 1961 (in short the Act). On appeal, the ld. CIT(A) while confirming the above disallowances partly allowed the appeal on other issues. 3. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 4. Ground No.1 is against the sustenance of disallowance of deduction u/s 80IB of the Act on interest and Sales tax incentive. 5. The brief facts of the above issue are that during the course of assessment proceedings, the AO noted that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(3), in ITA No. 136/Mum/2009 (Asst Year 2005-06) dated 14.12.2011, wherein the Tribunal on the similar facts and circumstances of the case has held vide para 6 of its order as under : "6. We have considered the rival arguments made by both the sides, pursued the orders of the Assessing Officer and the CIT(A) and the paper book fi led on behalf of the assessee. We find the Hon'ble Gauhati High Court in the case of Meghalaya Steels Ltd. (supra) after considering the decision of Hon'ble Supreme Court in the case of Liberty India (supra) has held that Central Excise Duty has a direct nexus with the manufacturing activity and similarly the refund of the Central Excise duty also had a direct nexus with the manufacturing activity. The issue of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enial of deduction u/s 80IB on interest received and hence the Tribunal has rejected the said ground raised by the assessee. Respectfully following the same view and keeping in view the rule of consistency, we reject the claim of the assessee with regard to the denial of deduction u/s 80IB of the Act on the amount of interest of Rs.43,653/-. The ground taken by the assessee is, therefore, partly allowed. 11. Ground No.2 is against the sustenance of disallowance of addition of Rs.14,00,520/-, u/s 40A(2)(b) of the Act. 12. The brief facts of the above issue are that during the course of assessment proceedings, the AO noted that the assessee has paid commission on sales amounting to Rs.53,41,251/- (59,45,907/- minus 6,04,656/- (Cenvat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's submissions. The AO after comparing with the commission paid on sales to other partiesdisal lowed the payment of commission in excess of 2.5% i.e. Rs.14,00,520/- and added the same to the income of the assessee. On appeal, the ld. CIT(A) while holding that simply because the services rendered by the said company were more than those provided by other agent would not justify the enhancement of the percentage of commission to M/s SCCPL, confirmed the disallowance made by the AO. 13. At the time of hearing, the ld. Representative of the assessee submits that this issue is also covered by the order of the Tribunal in the assessee's own case (supra) wherein the Tribunal has considered 3% as commission is reasonable as against 2.5% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Co. Pvt. Ltd. at 3.75% of the turnover as against 2.5% in the preceding year. There is no dispute to the fact that M/s Shatul Commercial Co. Pvt. Ltd. is a related party. It is the case of the Revenue that when the rate of commission ranges from 1.5% to 3% in case of un-related parties, higher commission has been given to the related party @ 3.75% which is excessive. Since the related party was given commission @ 2.5% in the preceding assessment year, therefore, the A.O. allowed the commission up to 2.5% of the turnover effected through the related party and disallowed an amount of Rs. 1157549/- u/s 40A(2) of the Act. We find the ld. CIT(A) upheld the action of the A.O. on the ground that another commission agent M/s Shanti Udyog which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion etc. and giving services on al l India basis still such huge increase in the rate of commission appears to be in higher side. Considering the total ity of the facts of the case and considering the fact that the commission to un-related parties varies from 1.5 to 3%, therefore, payment of commission @ 3% to the related party as against 2.5% allowed by the A.O., in our opinion, is reasonable and will meet the ends of justice. We hold and direct accordingly. The ground raised by the assessee is accordingly party allowed." 16. In the absence of any distinguishing feature brought on record by the parties and keeping in view that the assessee has failed to file a copy of the agreement even at this stage, we respectfully following the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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