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ACIT, Circle-1 (1) , Panaji Goa. Versus M/s. Putzmeister India Pvt. Ltd.

2015 (9) TMI 1044 - ITAT PANAJI

Disallowance of advertisement and sale promotion expenses - CIT(A) deleted the disallowance - Held that:- The undisputed fact is that the Assessing Officer has not disputed the genuineness of the expenses. It is also not a case where the expenses have not been incurred wholly and exclusively for the purposes of business. When the twin conditions having been fulfilled i.e. genuineness of the expenses and wholly and exclusively incurred for the purposes of the business, we decline to interfere wit .....

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However, we find that not even a single comparable case has been brought on record to justify this act of the Assessing Officer. Without bringing any comparable case, in our considered opinion, no disallowance can be made u/s. 40A(2) of the Act. Considering the disallowance from all the possible angles, we do not find any reason to interfere with the findings of the Ld. CIT(A) - Decided against revenue. - ITA No. 79/PNJ/2014 - Dated:- 10-6-2015 - SHRI GEORGE MATHAN AND SHRI N.K. BILLAIYA, JJ. .....

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mpany 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 e .....

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the assessee has debited only an amount of ₹ 25,894/-. The assessee was asked to justify its claim. The assessee filed a detailed reply stating that amounts were spent for participation in exhibitions of EXCON-09 and CONSTRO-09. In support, the assessee filed an agreement made between the assessee and M/s. AEPL. The Assessing Officer was of the opinion that when the assessee is spending an amount of ₹ 2.02 Crores as commission exclusively for sales and sales promotion, then why asse .....

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ssee on mutually agreeable basis on case to case basis. It was explained that only because of this clause, the assessee has borne expenditure of ₹ 22,42,303/-, which was a commercial decision. It was strongly contended that participation in construction 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 consi .....

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g Officer to delete the addition of ₹ 22,42,303/-. 4. Aggrieved by this, Revenue is before us. 5. Learned DR supported the assessment order. Counsel for the assessee reiterated what has been stated before the Ld. CIT(A). 6. We have carefully perused the orders of the authorities below. The undisputed fact is that the Assessing Officer has not disputed the genuineness of the expenses. It is also not a case where the expenses have not been incurred wholly and exclusively for the purposes of .....

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ion to AEPL. The Assessing Officer further observed that the assessee has incurred ₹ 3.08 Crores for Staff cost & Welfare and Manufacturing, Selling & Administrative cost. The Assessing Officer found that the assessee had paid ₹ 2.02 Crores as commission alone. The assessee was asked to explain the genuineness of the claim as the payment have been made to an associated concern in the light of the provisions of sec. 40A(2) of the Act. It was explained that the assessee is pure .....

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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 back to the returned income of the assessee. Accordingly, disallowance of ₹ 67,59,579/- was made u/s. 40A(2) of the Act. Aggrieved, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) has considered .....

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s of the commission payment. The AEPL has disclosed the receipt of commission as its income. Assessee and the related party both are under the same tax bracket. After considering the facts and submissions, Ld. CIT(A) was of the opinion that the Assessing Officer was not justified in restricting the sales commission to 5% in place of 7.5% and accordingly, directed the Assessing Officer to delete the addition of ₹ 67,59,579/-. 8. Aggrieved by this, Revenue is before us. 9. Learned DR relied .....

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