Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1232 - ITAT DELHI

2015 (12) TMI 1232 - ITAT DELHI - [2015] 44 ITR (Trib) 38 (ITAT [Del]) - Disallowance of commission - Held that:- In the absence of proof in support of the services rendered by the commission agent, no commission can be allowed as a deduction. Therefore, we dismiss the appeal filed by the assessee and allow the appeals filed by the Revenue. - Decided against assessee. - ITA No. 1674/Del/2011, ITA Nos. 2545 & 4530/Del/2011 - Dated:- 16-10-2015 - Inturi Rama Rao, AM And Sudhanshu Srivastava, JM Fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

28.02.2011 and 25.07.2011 respectively. The assessee raised the following grounds of appeal in ITA No. 1674/Del/2011: 1. The CIT(A) erred in law and on facts in: a) Confirming disallowance of ₹ 10,76,828/- (5%) while allowing ₹ 2,04,59,739/- (95%) of the total commission of ₹ 2,15,36,567/- paid by accepting not only the services received and the agents. b) Confirming the said addition on ad-hoc estimated basis without pointing out any deficiency in the information and evidence .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case are that the assessee is a company incorporated under the provision of Companies Act, 1956. It is engaged in the business of manufacturing and selling of off-set printing machines both in domestic market as well as in foreign market. The assessee-company filed the return of income for the assessment year 2007-08 on 31.10.2007, declaring total income of ₹ 22,20,87,977/-. Against the said return of income, the assessment was completed at a total income of ₹ 24,61,85,400/-. While d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assessing Officer had called upon the assessee company to furnish the following details with regard to the commission payment: i. The confirmation from the parties to whom the commission was paid. ii. To explain the role of commission agents and services provided by them. iii. Copy of agreement between the assessee and commission agents. iv. Whether similar percentage of commission was given for similar service to the commission agents. v. Whether the commission is for the purpose of business o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s preferred by the assessee company before the CIT(A) who vide order dated 28th February, 2011 set aside the issue relating to the disallowance made under Section 14A of the Act to the file of the Assessing Officer and in respect of the commission payment, 5% of the commission paid was disallowed vide para nos. 17.1 to 18, which read as under: "17.1 The AO categorically mentioned that to keep the issue alive, the commission payment was disallowed. The observations of the AO are as under: &q .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ny evidence in support of services rendered by the commission agents. The addition made on this account was confirmed by CIT(A)-XIX, New Delhi, vide order dated 20.08.2007 in Appeal No. 119/2006-07. The Hon'ble ITAT and Hon'ble High Court allowed the expenses on account of money paid to the commission agents. However, the department has decided to go on SLP against the order of Hon'ble High Court. In A.Y. 2005-06 & 2006-07, the matter has been decided by the Ld. CIT(A)-XIX, New D .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The facts being the same, following the appellate orders for 2005-06 & 2006-07, the disallowance is restricted to 5% of the commission expenditure of ₹ 2,15,36,567/- claimed by the assessee." 4. Against the above order, the assessee company as well as the Revenue is before us with the present appeals. The assessee company challenged the orders of CIT(A) confirming the disallowance of 5% of commission paid whereas the Revenue has filed the appeals challenging the direction of CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een dismissed vide order dated 29th January, 2010. He further submitted that full details of the commission paid have been filed before the Assessing Officer and therefore no disallowance is called for. 6. On the other hand, the learned Sr. DR submitted that the assessee company had not placed any evidence on record in support of the services rendered in consideration of which commission was paid. The mere fact that the amount was paid by account payee cheque and the TDS made does not ipso facto .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on through account payee cheques and TDS has been made thereon. The assessee company also filed copies of agreement between the assessee company and the commission agents in some cases. In our considered opinion, this fact alone does not enable the assessee to claim deduction. The Hon'ble Supreme Court in the case of Laxmi Narain Mandanlal Vs. CIT, 86 ITR 439, held as follows: "The mere existence at an agreement between the assessee and its selling agents or payment of certain amount as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urther and reache at a conclusion whether the commission was paid for the services actually rendered and determine whether the expenditure was laid out wholly and exclusively for the purpose of business. In the present case, the Assessing Officer had called upon the assessee company to furnish evidence in support of the services rendered by the commission agents. In response to this, vide its letter dated 23rd December, 2009, except highlighting the role of commission agent, no evidence was furn .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ase of CIT Vs. Imperial Chemical Industries (India) Pvt. Ltd. (1969) 74 ITR 17 has unequivocally held that the urden of proving that a particular expenditure had been laid out or incurred wholly and exclusively for the purpose of business entirely lies on the assessee. The discharge of the burden has to be effective and meaningful and not to cover up by merely book entries and paper work. In view thereof, we see no infirmity in the order of the lower authorities in making this disallowance, whic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nciple of res judicata do not apply to income tax proceedings. Each and every assessment is separate and independent and the Hon'ble High Court of Delhi in the assessee's own case confirmed the order of Tribunal deleting the addition of commission payment in the following words: "There is no evidence on record to show that the commission was paid to any near relative, family member or sister concern. There is no iota of evidence to show that the payment of commission represented onl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

their end to make probe into the matter for coming to the conclusion that the transactions were bogus, unfair and fraudulent. In our opinion, in the absence of any such material on record and in absence of any inquiry conducted to prove the non-genuineness of the transactions the departmental authorities were not justified in disallowing the claim of the assesee which was fully supported by the documentary evidence on record." 9. From the above, it is clear that the Hon'ble High Court .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

39;ble Delhi High Court is totally misplaced. A coordinate bench of Tribunal of Delhi High Court in the case of Kanu Kitchen Kulture (P.) Ltd. Vs. DCIT, (2013) 28 ITR (T) 49 (Delhi-Trib.), held that whether the assessee failed to demonstrate the services rendered by the commission agent, the commission was disallowed. The relevant paragraphs of the judgment are reproduced below: "22. Thus the assessee has utterly failed to demonstrate the nature and extent of service rendered by the agent a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

merit inasmuch as the learned Departmental representative has rightly pleaded that each and every year of assessment is separate and independent unit and principles of res judicata do not apply. The assessment for the assessment year 2009-10 is under section 143(1) and for the assessment year 2010-11 there is no mention of the commission at all. Therefore, we are unable to give credence to the facts whose record is not before us and not referred to before the lower authorities." 10. Similar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version