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TMI Blog2015 (9) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... reas the assessee company has entrusted sales, sales promotion, marketing on contract of M/s. Aquarius Engineers Pvt. Ltd. for commission of 7.5%. 3. The Ld. CIT(A) has erred in deleting the disallowance of sales commission paid to M/s. Aquarius Engineers Pvt. Ltd. u/s. 40A(2) a related company were directors are common. The AO restricted the commission of 5% as held in the case of Nund & Samonta Co. Ltd. Vs. CIT (SC) 78 ITR 268. 4. The appellant craves lead to add, amend or alter any of the grounds of appeal either before or at the time of hearing." 3. Ground No.1 is general in nature, needs no separate adjudication. Ground No.2 relates to disallowance of advertisement and sale promotion expenses amounting to Rs. 22,42,303/-. Whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction equipment exhibition is a must for all construction equipment manufacturers to show their presence, display of new products, developments and it is the place to meet a lot suppliers/ manufacturers of raw material, customers etc. After considering the facts and submissions, Ld. CIT(A) observed that the Assessing Officer has not doubted the genuineness of these expenses. The Assessing Officer has also not observed that these expenses are not incurred wholly and necessarily for the purposes of the business. The Ld. CIT(A) was convinced that the genuineness of the expenses have been established and the expenses have been incurred wholly and exclusively for the purposes of business of the assessee and accordingly, directed the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany and do not have any employees for marketing/ sales & technicians for after sales services nor assessee is having any marketing/sales office anywhere in the country. It was further explained that one of the group company i.e. M/s. Aquarius Engineers Pvt. Ltd. (AEPL) is looking after marketing/sales and after sales service of the products of the assessee. AEPL has all India network and have marketing/sales & service offices spread over the country. The commission has been paid for work done by the AEPL to the assessee. The Assessing Officer did not accept this submission made by the assessee. The Assessing Officer was of the opinion that out of the total commission of 7.5%, 2.5% needs to be disallowed u/s. 40A(2) of the Act and added b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remarks made by the Assessing Officer in his assessment order at page 3 which reads "M/s. PMI (assessee) is paying commission to M/s. AEPL since A.Y. 2004-05 till A.Y. 2009-10". Counsel also brought to the notice of the Bench the assessment order for A.Y. 2012-13. We find that even in the subsequent assessment years, no disallowance has been made on account of commission payment to AEPL. This action of the Assessing Officer clearly breaches the rule of consistency as laid down by the Hon'ble Supreme Court in the case of Radhasoami Satsang Vs. CIT reported in 193 ITR 321. On this very reason, the addition can be deleted. Let us consider this addition from other angle. The addition has been made u/s. 40A(2) of the Act. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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