TMI Blog2014 (6) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the commission was 90% in the first year and reduced to some extent in the latter years ipso facto is not a consideration for the AO to have concluded that, it necessarily had to be reduced to 60% for the fourth year, i.e., 2006-07 - no support in terms of the contract or expressed provision of law or rules has been cited in support of the AO’s determination in this regard - TDS payments were made in respect of the dealership commission parted or shared by the assessee, as is evident from the records – Decided in favour of Assessee. - ITA 242/2014, CM APPL.9613 & 9614/2014 - - - Dated:- 30-5-2014 - S. Ravindra Bhat And V. Kameswar Rao,JJ. For the Appellant : Mr. Ajay Vohra with Ms. Kavita Jha and Mr. Vaibhav Kulkarni, Advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to 60% and thus disallowed Rs.89,98,913/-. The assessee s appeal challenging this addition succeeded. The revenue preferred an appeal. The ITAT in its order dated 30-11-2009 (in ITA 2866/Del/09) allowed the appeal, reasoning that the revenue s argument that commission payable during the initial years, after setting up of business might have been warranted, whereas for the AY 2006-07 a decline in such commission could be justified. The matter was remitted for reconsideration to the AO to decide the matter afresh. 4. The assessee had applied under Section 254 (2) seeking rectification of the ITAT s order dated 30.11.2009, which was eventually allowed on 14.1.2011. The Revenue filed a Writ Petition - W.P.(C) 106/2012 which was considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure had not been found to be capital or personal in nature or bogus; that the remuneration paid by the assessee to its dealers and its percentage to the commission received, g.p./n.p. rate for the preceding 3 years indicating that over the years the assessee had paid lesser percentage of remuneration vis a vis receipt of commission; that the AO was not justified to restrict the amount of remuneration paid from 70.09% to 60% ; that the assessee had deducted the TDS shown to the dealers and the required details of these dealers had been provided to the AO and the AO had disallowed part of the remuneration without making any inquires. 9. However, we find substance in the submission of the department that in the initial years, in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission. Emphasizing that since the assessee and its dealers were party to a written agreement, the business on this condition, argues the Revenue, is significant. Learned counsel also submitted that AO itself possesses the jurisdiction to determine reasonableness of the extent of commission, in the sense that commercial expediency under Section 37 (1) is to be read along with power conferred under Section 40A (2), which requires the factoring of fair market value of similar deductions/expenses. 7. This Court has considered the submissions. Whether the parties were required to reduce the rates of commission for each year in to writing, in the opinion of the Court, is not an aspect which could have been gone into by the AO. The way parties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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