TMI Blog2014 (5) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... s – there certificates the word mentioned is discount and not commission - thus, the matter is remitted back to the AO for re-adjudication on the basis of nature of services rendered by the recipients may allow the same if found to have been incurred by the assessee wholly and exclusively for the purpose of business and also to examine as to whether the discount claimed on export realization certificate was claimed by the assessee as reduction from turnover or whether the assessee had claimed it as a separate item of expenditure and if on examination it is found that discount – The AO should also examine as to what on the basis of examination of vouchers etc. and on the basis of nature of expenses can arrive at the appropriate decision - Decided in favour of Assessee. Addition of arrears of salary paid to the Directors of the company – Held that:- From the copy of resolution it has been found that the increase in salary was with retrospective effect and some part of it related to earlier year but the liability to pay with retrospective effect happened due to resolution passed on 18.1.2002 - the payment of the salary cannot be said to belong to earlier years – the amount has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh adjudication. 3. During assessment year 2007-08 there is again addition on account of issue of commission paid to sales agents amounting to Rs.20,51,634/- which was added back by the Assessing Officer on the same basis as in assessment year 2002-03. The Ld CIT(A) also confirmed the addition on the same basis as in assessment year 2002- 03. The second addition of Rs.1,75,523/- is on account of disallowance of claim of misc. sales expenses which were disallowed by Assessing Officer as the assessee could not establish the genuineness of the expenditure. Both these appeals were heard together and therefore for the sake of convenience a common order is being passed. 4. First of all we take up the issue of disallowance of sales commission paid to various sales agents of the company. The sales commission were paid to various parties as detailed below:- A.Y.2002-03 A.Y.2007-08 1. Alphaites Consultants. 647477/- 1205980/- 2. Omni Sales Agency. 439964/- 394193 3. Commission paid to foreign parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs. No further proof of commission payment has admittedly been filed during the proceedings u/s 143(3) r.w.s. 254 of the Act on the ground that the same was not asked by the Assessing Officer. On careful perusal I find that in the original assessment order the Assessing Officer rejected the appellant s claim on the ground that the assessee did not mention the name of the person or other details for commission amounting to Rs.305344/-. Hon'ble Tribunal has set aside the issue of commission payment, including the commission payments to other parties, with specific directions to furnish complete details of the payment, address of the recipients etc. to substantiate the claim. Hence the onus was on the appellant to file complete details and documents with regard to these payments. In the absence of complete details and documents, the Assessing Officer was justified in making disallowance on account of commission payment and the same is therefore upheld. 7. The second addition made by the Assessing Officer on account of disallowance of payment of arrears of directors salary was confirmed by the Ld CIT(A) by holding as under:- I have car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company intimated the said parties for sending the confirmations. In his remand report also, the Assessing Officer has emphasized that the requisite information was not given by any of the parties. On the other hand, the appellant s contention is that replies to the n9tice u/s 133(6) were filed by M/s Omni Sales Agencies and M/s Alphaities Consultants by speed post and M/s Aarex Pharmachem, Pvt. Ltd. filed reply by hand. 9. The second addition in assessment year 2007-08 was upheld by ld CIT(A) as under:- Briefly stated facts of the case are that the assessee company has claimed Rs.1,75,523/- as misc. selling expenses. The Assessing Officer disallowed the same on the ground that despite opportunities, the assessee company could not establish the genuineness of the expenditure and claim. During the proceedings before me it was submitted that the Assessing Officer has never asked to prove the genuineness of the said expenditure. The above expenses have been incurred on following accounts:- Documentation expenses Export Sales General 50,640/- Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the fact of discount on each certificate was mentioned. 12. Regarding second addition in assessment year 2002-03 the Ld AR submitted that payments to directors were made on the basis of duly passed Board s resolution and the directors had included the amounts in their respective income tax returns and in this respect invited our attention to paper book page 42, 45 47 where copies of Form No.16 A relating to directors were placed. 13. As regards the disallowance of sales expenses in assessment year 2007-08 the Ld AR offered to go back to the Assessing Officer again for getting the verification of expenses done. 14. We have heard the rival submissions of both the parties and have gone through the material available on record. The first issue involving payment of commission to sales agents in assessment year 2002-03 consist of two parts. The first being payment made to sales agents directly and second is amount depicted on export realization certificates claimed to have been paid as commission. Regarding first part though the payments on account of receipt of commission has been confirmed by recipients yet they could not establish as to why commission was paid i.e. f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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