New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (2) TMI 423 - ITAT JAIPUR

2016 (2) TMI 423 - ITAT JAIPUR - TMI - Disallowance on account of commission paid - justification of payment with services rendered - Held that:- The assessee was specifically asked to justify the service rendered by the group of these nine persons and to submit the evidence in respect of rendering service before the Assessing Officer as well as ld CIT(A) but no details or evidence were submitted before them. Even before us, the assessee was not able to justify the payment in form of commission .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

SHRI LALIET KUMAR, JM For The Assessee by : Shri P.C. Parwal and Shri Rajesh Agarwal (CA For The Revenue : Shri Kailash Mangal (JCIT) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 10/01/2014 of the learned CIT(A)-II, Jaipur for A.Y. 2008-09. The effective grounds of appeal are as under:- 1. Under the facts and circumstances of the case, the CIT(A) has erred in confirming disallowance of ₹ 10,70,000/- on account of commission paid. 2. The above .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 (in short the Act). The ld Assessing Officer observed that the assessee had paid commission at ₹ 33,92,594/-. It was seen that the assessee had paid commission to various persons at various rates which varied from 2.6% to 17.50% which was not found justifiable. It was also found by him that in one instance, the assessee claimed the payment of commission to a party from whom it had made purchases. Further on verification of these expenses it was noticed that the assessee had claimed payme .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the sense that the commission was paid to nine different persons at different rates on one single sale. These circumstances indicated that the payment of the commission was claimed simply in order to reduce the tax incidence. Therefore, he held that payment of commission was not genuine. The ld Assessing Officer gave reasonable opportunity of being heard on this issue. The assessee replied vide letter dated 26/11/2010, which has been reproduced by the Assessing Officer on page 3 and 4 of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ested by the Notary public. The agreement simply mentioned the names only but address of none of the so called recipients of the commission had been mentioned. The assessee had also tried to prove the relation of the recipient of the commission with the buyer but the same clearly showed that it was simply a fabricated one. The assessee had not put forth any documentary evidence which could prove these commission payments as genuine. The assessee had simply claimed these expenses in order to redu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which showed that these or either of these persons never brought any other customer to the assessee. In general trade practice, normally the persons working on the commission basis regularly bring customers to the seller. Had this been a genuine transaction then these persons would have definitely brought some other buyers also to the business premises of the assessee. These all circumstances clearly indicate that the claim of commission payment of ₹ 10,70,000/- was not genuine but an arra .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a single party based in Musket. Appellant submitted that this group of nine persons helped in introducing the customer to the appellant through someone based in Musket. Appellant also submitted that payment was made by cheque after deducting TDS and commission @13.5% was paid to them of their insistence since higher profit margin was there in this deal. During appeal hearing, it was specifically asked as to what services were rendered by the group of these nine persons and to submit evidence in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ngredient for allowing any claim of expense is missing. Payment by cheque and deduction of TDS are only evidence of payment and not of rendering of services and establishing of business purpose of the expense. Since the nine persons sitting in Jaipur have not done anything in export made to Musket party, the claim of expense cannot be treated as business expense. The entire submission of the appellant is on the existence of these parties and payment by cheque. Appellant has not attempted to expl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

is incurred wholly and exclusively for the purpose of business. By not submitting any evidence with regard to the services rendered by these persons, appellant has not established the claim of commission to these parties as wholly and exclusively incurred for the purpose of business. Accordingly, I have no hesitation in holding that the claim of commission in the name of nine persons for one sale is nothing but an attempt to reduce taxable income. Claim of commission in the name of these partie .....

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