TMI Blog2012 (9) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... ee receives fund to finance its project - Assessee paid him certain sum which is compensatory in nature for providing fund & shown as commission expense - TDS has been deducted & also shown as income in return of recipient - Held that:- As the recipient confirmed the receipt, on which TDS deducted & shown as income in his return. Therefore it is genuine business expenditure of the assessee though wrongly claimed by assessee as commission expenditure. Decided in favor of assessee. - I.T.A. No. 878/Del/2011 - - - Dated:- 6-7-2012 - SHRI I.C. SUDHIR, AND SHRI T.S. KAPOOR, JJ. Appellant by : Shri Naresh Nagpaul, FCA. Respondent by : Dr. BRR Kumar, Sr. DR. ORDER PER TS KAPOOR, AM: This is an appeal filed by the assessee against the order of Ld CIT(A) dated 17.12.2010. The grounds raised by the assessee are as under:- 1. The order of Ld DCIT/CIT(A) is bad in law and is not based on the facts of the case. 2. Ld CIT(A) has erred in arriving at the conclusion that TTPL has not rendered any services. 3. Ld CIT(A) has erred in arriving at the conclusion that no documentary evidence has been produced substantiating the claim of services rendered by TTPL. 4. Ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% was deducted. Since the independent confirmations from the above parties regarding receipt of commission and services rendered by them for alleged commission could not be received, the Assessing Officer gave final notice vide letter dated 4.11.2009 directing the assessee to produce principal officers of the firm/company so that those could be examined. The assessee vide letter dated 12.11.2009 submitted the following in respect of three parties:- 1. M/s Sun Beam Pharmaceuticals: This is a proprietorship firm and the proprietor operate his business from home and he generally remains in the field. His wife is also working and children remains in the school during day and this is the reason why the premises remains locked. 2. M/s Tuticorin Trexim Pvt. Ltd: This is a Calcutta based Private Ltd. company The company has changed its name from Tuticorin Trexim Pvt. Ltd. to M/s Makes Worth Projects and Developers Pvt. Ltd. in May, 2009. This might have been the reason for non delivery of the notices sent to it. 3. Smt. Sangeeta Chodhary: Mrs. Sangeeta Choudhary has filed her reply that she did not provide any service i.e. true. The assessee needed funds for execution of some order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change of name. vi) Copy of account duly certified by payee of the payment was also filed. vii) Income has been shown by the party by filing its Income Tax Return. viii) Payment is for the purpose of business. 7. The Ld AR further contended that all these documents were provided to Ld DCIT. He has not considered any of these points while issuing remand report and he just insisted for personal appearance of the party to whom commission was paid. He did not even issue another notice to the party. In this respect Ld AR also submitted that DCIT could have used coercive powers available to him to make independent enquiry from the party to whom commission was paid. Reliance was placed in the case of CIT v. Genesis Commet (P) Ltd. 163 Taxman 483 (Del.). wherein Hon'ble High Court had held that merely on the basis of non presence of the customers the claim of the assessee cannot be rejected. Reliance was also placed in the case of Mather Platt (India) Ltd. 168 ITR 493 (Cal.) in which the Hon'ble Court had held that merely because a person is not found at an address after four years, it cannot be held that he is non existent. 8. Commission of Rs.3,21,000/-: The Ld AR submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed various details/documents in support of his arguments. 11. The Ld CIT(A) held that TTPL was dealing in share trading and there was substantial loss of Rs.4,29,00,000/- during the year under consideration. The expenses debited in the P L Account were routine in nature and none of them appears to be directly related to earning of commission income. The Ld CIT(A) further stated that commission payment worked out to be 4.5.% of total invoice value and which according to him was on the higher side. 12. In respect of payment of commission to Smt. Sangeeta Choudhary, the Ld CIT(A) held that Smt. Sangeeta Choudhary has not rendered any services and therefore commission to her is held to be unjustified. He further held that Smt. Sangeeta Choudhary has not given any loan to the appellant on interest and hence the question of payment of any interest does not arise at all and therefore the payment of so-called interest/commission to Smt. Sangeeta Choudhary is held to be appropriation of income and thus it is not compensatory in nature. 13. Aggrieved, the assessee is in appeal before us. 14. The Ld AR argued that Assessing Officer had not issued second notice to the payees of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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