9911796707
TMI Blog2015 (10) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... - by way of filing its return. The said return was picked up for scrutiny after issuance of notice u/s 143(2) etc. The AO observed that the net profit rate of the assessee in the year under consideration was 13.18% as per the books of accounts and details furnished before him. On considering the same, he inquired into the payments of the associates which had been debited to the extent of Rs. 1,71,27,850/- in the P&L A/c of the assessee. In justification of the said expenses, the assessee as per page 2 of the assessment order is found to have stated that the assessee was dealing in multi-level marketing of educational web packages and this was the first year of the assessee company. The company it was stated was incorporated on 8th June 2001 with Registrar of Companies, Delhi and started the online operations and registration w.e.f. 25.6.2001. The income received it was stated was from sale of online education and other programs. The earning from these has been disclosed at Rs. 2.62,80,06,337/- and other income of Rs. 5,10,119/- totaling to Rs. 2,67,90,186/- on which net profit had been disclosed at Rs. 35,32,2S2/- which gave the N.P. rate of 13.18%. 3. The record further shows tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disallowed at Rs. 9,10,500/- and added to the income of the assessee." Addition of Rs. 9,10,500/- 4. Aggrieved by this, the assessee came in appeal before the First Appellate Authority. Reiterating the submissions advanced before the AO, it was submitted that only the persons who continue to renew their status remain connected and the persons who had not renewed their status as associates do not remain in touch with the assessee company. Accordingly it pleaded that it is difficult for the assessee to obtain their latest addresses. It was again re-iterated that the commission it was stated is automatically generated in the account of the assessee on the event of sale on which tax had been deducted and payment was made by account payee cheque. Reliance was also placed on the confirmations received from 8 out of the 10 persons referred to by the AO. The CIT(A) confronted these details to the AO who filed a Remand Report considering which the addition was deleted. 5. Aggrieved by this action, the Revenue is in appeal before the Tribunal. The Ld. Sr. DR inviting attention to the assessment order and the impugned order submitted that before the AO the evidence was not filed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the impugned order at page 8 shows that the major commission payment out of these 8 people has been paid to Sri Padma Sinha, Sri Nirmal Singh, Sri Daljit Singh Sandhu in whose case PAN details were made available and in the case of the remaining 5 people the confirmations alongwith their telephone numbers and address details were provided. Apart from that it is seen that the admitted fact consistently on record is that the commission has been paid to the persons after deduction of tax at source by way of account payee cheque. 8. Accordingly in view of these material facts and evidences on record which remain unrebutted and where no infirmity in the confirmations filed has been pointed out, we find no good reason to interfere with the finding arrived at in the impugned order. Being satisfied by the reasoning and finding, Ground No.-1 of the Revenue is dismissed. 9. The facts relatable to the second ground agitated by the Revenue are set out at page 4 and 5 of the assessment order. A perusal of the same shows that the commission of Rs. 32,90,502/- was paid to Mr. Vipin Malhan, the husband of the Direction Anu Malhan. The said commission comprised of Rs. 29,53,002/- out of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid @ 10% of the total receipts and in case the sale of 2000 web packages was not completed within six months, the entitlement to commission was only @ 8%. The commission it was stated was to be paid by the company on a monthly basis after deduction of tax at source. It was stated that Sh.Vipin Malhan was paid, the commission of Rs. 29,53,002/- on the total receipts from the sale of web packages and the further payment of Rs. 3,37,500/- over and above the commission was calculated on sales and this payment was made as a channel partner being the associate of the company. The payment it was stated was paid in terms of the Agreement. In support of the said claim, reconciliation of the payment of commission was filed which also included its maintenance charges. The assessee further supported its claim by way of following submissions :- "From the statement it would be seen that the total registration charges received by the company relating to the account year under consideration amounted to Rs. 2,39,69,500/-. The company has also received annual maintenance charges of Rs. 20,81,703/- which is an essential ingredient of the sale of the web package. Besides company had also recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Malhan @ 10% Rs.29,35,002/- Add:- Commission paid as an associate of the company On down line sales Rs.3,37,500/- Rs.32,90,502/- The detailed list showing commission paid to Sh. Vipin Malhan as an associated member has been also filed on record. The AR thus submitted that the observation of the assessing officer that Vipin Malhan being the marketing consultant is not entitled to the commission as an associate member is not correct. It is also wrong on the part of the assessing officer to observe that this commission has been not devised or mentioned in the agreement for the payment of commission as an associate member. This observation of the assessing officer is not correct and is a mere hypothetical observation. The commission to Sh. Vipin Malhan is paid as an associate member as per marketing policy of the company. This commission is certainly paid to Vipin Malhan not under the agreement but the same is paid on account of in built mechanism in the scheme of the sale of web package as a channel partner. 13. These submissions, facts and evidences were confronted to the AO and considering the Remand Report filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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