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2015 (10) TMI 81 - ITAT DELHI

2015 (10) TMI 81 - ITAT DELHI - TMI - Disallowance of commission paid to two Managing Directors u/s 36(1) (ii) - revision u/s 263 - Held that:- The Hon'ble High Court has given a direction in respect of examining the scope of Section 36 (i) (ii) of the Act after taking into account various documents. Secondly, the enclosures supplied by the assessee to the Assessing Officer were actually given to the Assessing Officer and there was no proof given by the DR that at no point of time, that the docu .....

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the Act does not give powers to the Commissioner to make enquiry again for the issue which has been decided after verifying all the documents on record by the Assessing Officer. In fact the scope of Section 263 of the Act is in respect of the order passed by the assessing officer which is erroneous in so far as it is prejudicial to the interest of the revenue. In the present case, the Assessing Officer has verified all the documents in fact he has taken into consideration and after verifying the .....

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lhi IV u/s 263 of the Income Tax Act 1961 (hereinafter referred as "the Act"). 2. This matter is remitted back from the Hon'ble High Court, Delhi vide order dated 13.08.2014 (ITA No. 447 of 2013). 3. The assessee is engaged in manufacturing and trading of Projectors, Plasma, School Board, School Pads & other Audio/Visual Products, AMC & renting of Audio/Video Products. The assessee had filed its return under normal provisions. However, the return was taken up for scrutiny a .....

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The Commissioner also observed that assessee had booked majority of expenses against the unit carrying out trading operations and thereby had inflated profits of the manufacturing unit for claiming exemption u/s 80IC of the Act, whereas expenses booked for eligible unit u/s 80IC of the Act were lesser than the amount as against expenses on account of trading activities. 5. The Commissioner in his order observed that the assessment made by the Assessing Officer accepting such commission payment .....

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der u/s 143(3) of the Act may be passed accordingly. 6. On the second issue, the Commissioner, instead of commenting upon or giving a final finding whether aforesaid apportionment was acceptable or not, observed that it was possible that there was an attempt to inflate expenses on trading activity and an attempt might have been made to reduce actual expenses of the exempt unit. The use of the word 'possible' would indicate that there was no finding and adjudication by the Commissioner an .....

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'ble High Court has given clear cut finding in Para 11 that: "11. It is clear from the order passed by the Commissioner under Section 263 that the issue relating to apportionment of common expenditure was specifically gone into and examined by the Assessing Officer, who was fully satisfied with the apportionment made. Thus, it was not a case of "no" enquiry but specific and pointed enquiries by the Assessing Officer. The said finding and apportionment could have been set aside .....

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36 (1) (ii) of the Act. In this regard the assessee has submitted three letters along with ledger accounts of the assessee before the Assessing Officer. The assessee has given the details of commission paid to related parties along with the copy of agreement and common business head manual and the same was enclosed to letter dated 22.06.2009. The assessee further submitted the copy of ledger accounts of commission/brokerage, sale promotion, freight and cartage, rebate and discount alongwith deta .....

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rt of equity share holding as on 13/3/2012 related to various years starting from 31st March 2007 till 13th March 2012 in this particular, Mr. Manish Dham was not acquiring any percentage of equity in the year 2007 whereas Mr. Rajeev Bakshi was having 1.72% of equity in the year 31st March 2007. The same is annexed at page 42 of the paper book submitted by the assessee before this Tribunal. The assessee submitted the entire paper book with the relevant documents to Assessing Officer and after go .....

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ara 6 of the CIT's order. 10. The AR submitted that the commission paid was duly approved by the shareholders of the company, and therefore, Section 36 (1) (ii) was not applicable. The AR further submitted that assessee has been maintaining separate books of account for manufacturing unit receipts and expenditure which was exempt u/s 80IC of the Act and the trading activities. However, there were certain common expenses, which were to be segregated, as common expenses were not unusual, abnor .....

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ed order under Section 263 of the Act. The DR also mentioned that High Court has directed the Tribunal to decide both the issues in respect of applicability of Section 36(1) (ii) of the Act as well as apportionment. The DR further submitted that the AO though made observations by taking into account of the evidence placed before him still, the AO has not applied his mind, therefore submitted dismissal of the appeal. 12. We have perused all the records and taken into account all the submissions m .....

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