TMI Blog2016 (11) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of commission fee paid - Held that:- Complete documentary evidences have been brought on record by the assessee evidencing the payment and availment of services rendered by the payee. In our view, the Tribunal has rightly allowed the claim of the assessee. No different decision can be taken in the year before us. The payee remains the same; all the facts and circumstances also remain the same. Thus, respectfully following the order of the Tribunal for A.Y. 2007-08, we allow the payment of commission - I.T.A. No.5069/Mum/2014 - - - Dated:- 21-9-2016 - SHRI C.N.PRASAD (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) For The Appellant : Mr Mrugakshi K Joshi For The Respondent : Arju Garodia ORDER Per ASHWANI TANEJA, AM This appeal has been filed by the assessee against the order of Commissioner of Income-tax (Appeals)[hereinafter called CIT(A)] dt 08-05-2014 passed against the assessment order u/s 143(3) dt 28-12-2011 for A.Y. 2009-10 on the following grounds: On the facts and circumstances of the case and in law: 1. Adhoc Disallowance The learned CIT(A) erred in confirming the adhoc disallowance @ 5% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of business, although the same explanation was given during the assessment proceedings as that, which was given before the Hon'ble ITAT, who after satisfaction deleted the addition in Assessment year 2007-08. 2. Ground 1: In this ground, the assessee challenged the action of Ld. CIT(A) in confirming the disallowance @5% of the total expenditure. 3. The brief background is that the Assessing Officer had made an adhoc disallowance of ₹ 1,75,267 being 10% of the total expenditure as personal expenditure on the ground that the expenses were made without supporting evidences. The assessee contended before the CIT(A) that expenses were incurred solely for the purpose of business, and there was no personal use involved. The Ld. CIT(A) reduced the disallowance to 5%. 4. Before us, the Ld. Counsel drew our attention on the decision of the Tribunal in assessee s own case for A.Y. 2010-11 in ITA No. 347/Mum/2015 dt 11-06-2015. We have gone through the orders of lower authorities and decision of the Tribunal. It is noted that in A.Y. 2010-11, the Tribunal has further reduced the disallowance from 5% to 2% with the following observations:- 2.1 I have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned assessment year and may not be quoted for further reference. This ground of the assessee is partly allowed. 5. During the course of hearing before us, both the parties fairly agreed that the decision taken by the Tribunal for A.Y. 2010-11 can be applied in this year. Under these circumstances, the disallowance is restricted to 2% against 5% sustained by the Ld. CIT(A). Thus, assessee gets part relief accordingly. 6. Ground 2: This ground is regarding disallowance u/s 14A. It has been contended during the course of hearing that for A.Y. 2010-11, the Tribunal has reduced the disallowance to ₹ 1 lakh in place of ₹ 3,41,763 as was sustained by the Ld.CIT(A) in the said order. Both the parties fairly agreed that the order of the Tribunal may be followed in this year also. It is noted that the Tribunal had made following observations: 3.1. I have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices were rendered by the consultant. Thus, merely because the assessee could not get the real benefit out of it, it cannot be said that the expenses were not incurred for the purposes of business of the assessee. Rendering of services and receipt of actual benefit are two different ends. What is important for allowability of an expense as business expense is that the assessee must receive service from the service provider and it should be meant for the purpose of business of the assessee. Both of these conditions are undisputedly fulfilled here. Thus, in our view, the disallowance has been wrongly made by the Assessing Officer and the same is, therefore, directed to be deleted. 11. Ground 4: In this ground, the assessee has challenged the action of lower authorities in disallowing commission fee paid to M/s Northpoint Training Research Pvt Ltd. 12. During the course of hearing, the assessee brought to our notice that the Tribunal had in assessee s own case for A.Y. 2007-08 allowed the commission paid to the same party. The Ld. DR did not bring any distinction in facts or law, in the present year and A.Y. 2007-08. We have gone through the orders of the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y furnished with air-conditioners, furniture, fixtures, audio-visual, conferences rooms, sport facilities, club house and other equipments. The said premises were constructed for the purposes of running a Training and Research Centre. However, as the members of the AOP were unable to obtain the clients and run the entire institution, they hired the services of M/s North Point Training and Research Pvt. Ltd. as per terms of the conducting agreement entered between the parties. An agreement was entered on 15-6-2004, copy of the agreement is placed in the paper book at pages 49 to 57. It was also explained that the assessee AOP has paid similar commission for earlier two years and assessment had been completed under Section 143(3). No such disallowance was made for those two years. Accordingly, it was submitted that in view of the consistency also, the disallowance made by the Assessing Officer, which is confirmed by the CIT(A), is not justified. 6. On the other hand, learned DR strongly placed reliance on the order of the Assessing Officer as well as the CIT(A). 7. After considering the orders of the authorities below, I found that the assessee deserves to succeed in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the receipts in their profit and loss account and due tax has been paid. Therefore, I feel that disallowance made by the AO, which is confirmed by the CIT(A), is not justified. The Assessing Officer has accepted the claim of the assessee for immediately two years. The same services are rendered, therefore, for this reason also, disallowance is not justified. 8. It is also a matter of fact that there is huge loss shown by the assessee in earlier two years, which has been accepted by the department also. If those losses are brought forward then during the year under consideration also, there is a loss. It shows that the assessee is not showing any expenses on account of commission fee for reducing the tax liability. 9. In view of the aforesaid facts and circumstances of the case, I delete the disallowance. 13. In the year before us, the Ld. CIT(A) refused to follow the order of the Tribunal for A.Y. 2007-08 on the ground that the Tribunal had allowed relief on the ground that huge loss was shown by the assessee in earlier two years and, therefore, there was no motive to evade taxes and that is how the Tribunal was pleased to allow the relief. We find that the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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