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TMI Blog2013 (3) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of commission paid was excessive and there was no commercial consideration or business expediency for the payment of such an excessive commission? ii) Whether on the facts and in the circumstances of the case, there was any evidence before the Tribunal to come to the conclusion that the amount of commission amounting to Rs.36,078/- paid to Sri Habib Akhtar was excessive and that there was no commercial consideration or business expediency for the payment of such commission? iii)Whether on the facts and in the circumstances of the case, the Tribunal was right in applying the provisions of Sec.40-A(2) of the Income-tax Act, 1961 in disallowing the commission paid to the extent of Rs.30,078/- as against Rs.36,078/- paid by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3000/- and the balance commission amounting to Rs.33,078/- was disallowed. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who vide order dated 17.3.1982 did not accept the plea of the assessee and confirmed the disallowance on this ground. Still feeling aggrieved the assessee presented a second appeal before the Income-tax Appellate Tribunal, Delhi Bench, which vide order dated 1st July, 1983 partly allowed the appeal and enhanced the commission to Rs.6,000/- from Rs.3,000/- as allowed by the Assessing Officer. The balance amount of Rs.30,078/- remained disallowed. We have heard the learned counsel for the parties. Learned counsel for the applicant submitted that Sri Habib Akhatar had expertise in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the opinion as to whether the payment of commission so made was excessive or unreasonable having regard to the fair market value of the services for which the payment was made or the legitimate needs of the business of the assessee or the benefit derived by or accruing to the assessee therefrom and to the extent of the expenditure being excessive or unreasonable the same was to be disallowed. 5. This takes us to the statement of Habib Akhtar, which is at page 6 of the paper book filed by the assessee. In the year under consideration, he was aged about 21 having born on 9.8.1955. He passed his Matriculation Examination in 1975. In the year under consideration, he was studying as he passed his Intermediate Examination in 1977. He claims in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not on the turnover of the new factory but of the entire production of the assessee, though he had not rendered any services in the old factory. Besides, Habib Akhtar, several other persons have been paid commission for working along with Habib Akhtar. We, therefore, keeping in view the facts and circumstances of the case and the material on record consider that the payment of commission of Rs.36,078/- by the assessee to Habib Akhtar was highly excessive and unreasonable having regard to the fair market value of the services for which the payment was made for the legitimate business need of the assessee or the benefit derived by or accruing to it therefrom. At the same time, the extent of the expenditure held to be excessive or unreasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the finding recorded by the Tribunal we are of the considered opinion, that the Tribunal was justified in holding that the payment of commission was excessive as there was no commercial consideration or business expediency for payment of such excessive amount. Moreover, the findings recorded by the Tribunal are based on relevant material and evidence on record. Learned counsel for the applicant has relied upon a Division Bench decision of this Court in the case of Abbas Wazir(P) Ltd. vs. Commissioner of Income-tax, (2004)265 ITR 77 and submitted that the reasonableness of an expenditure has to be considered from the view point of a prudent businessman. In the aforesaid case this Court has held that whenever a claim is made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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