TMI Blog2015 (7) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... me into effect from 01.04.1962. As far as this case is concerned, the payment of the commission by the respondent assessee, who had entered into a contract with the M/s Pharma Ventures International Private Limited, apparently to liaison and, thereby, ending up paying commission to M/s K.P. Steel Products (P) Ltd., by which, the parties, apparently, succeeded in getting a contract awarded in favour of M/s Pharma Ventures International Private Limited. It cannot be found faulted with in the context of the explanation as being one which is prohibited by any law; no law has been bought to our notice also by the learned counsel for the Revenue prohibiting the kind of activities, which the respondent assessee indulged in. The only obstacle in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions of the AR very carefully. According to the appellant, M/s Pharma Ventures approached the appellant company in helping M/s Pharma Ventures in getting the contract from the Ministry of Health. M/s Pharma Ventures vide its letter dated 12/08/2001 appointed M/s Tehri Steels Ltd., the appellant as the authorized liasioning agent to pursue its case in the tender of supplying of cotton bandages floated by Ministry of Health and Family Welfare through Hindustan Latex Ltd. with following terms and conditions:- 1. You shall purchase the above tender documents in our name. 2. Assisting in preparation of bid. 3. Shall attend tender opening. 4. Day to day follow-up on our behalf and intimating us the progress, arranging good share of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Ltd. Appointed M/s K.P. Steels as their authorized liaisoning agent on the same terms and conditions mentioned above except that the commission payable to M/s K.P. Steels was to be 13% of the total value of the order. Finally, Ministry of Health and Family Welfare gave a supply order vide its order dated 26/04/2002 to M/s Pharma Ventures for supplying 78189 packs of cotton bandages @ ₹ 288/- per unit and another order for supply of 55285 unit packs also @ ₹ 288/-. The total value of the first order was ₹ 2,25,18,432/- and the value of the second order was ₹ 1,59,22,080/-. The appellant received commission of ₹ 1,07,63,343/- @ 28% and credited the same by way of journal entry in the commission account The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot be allowed as deduction. There is no merit in the observation made by the A.O. Liasion work cannot be said to be an illegal activity. Illegal activity is one which is prohibited by law. There is no infraction of any law and payments made for liaison work are considered legitimate business expenditure. Coming to the merits of the case, there can be, in my opinion, three possibilities, taking into account the entire facts and circumstances of the case. 3. Thus, in short, the respondent assessee was assured of 28% commission for doing liaisoning work to get the contract in favour of M/s Pharma Ventures International Private Limited. In turn, the respondent assessee paid 13% commission to M/s K.P. Steel Products (P) Ltd. for gettin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of M/s Pharma Ventures International Private Limited. It cannot be found faulted with in the context of the explanation as being one which is prohibited by any law; no law has been bought to our notice also by the learned counsel for the Revenue prohibiting the kind of activities, which the respondent assessee indulged in. The only obstacle in the path of the respondent assessee claiming it as revenue expenditure is the premise that it is illegal. As already noted, we have not been shown any law, under which, the commission paid was prohibited. In the light of this, we would think that the view taken by the Tribunal is justified and we answer the question of law against the appellant. 7. Consequently, the Appeal will stand dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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