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2016 (11) TMI 973 - ALLAHABAD HIGH COURT

2016 (11) TMI 973 - ALLAHABAD HIGH COURT - TMI - Business expenses being commission on sales paid disallowed - Held that:- The arguments is that in order to turn down the claim for expenditure the demand of the above quoted Section 40 (1) and (2) of the Income Tax Act should have been met with and reasons should have been supplied. No reason has been supplied for turn down the claim at 15%. - The arguments is also that dis-allowance would have been such expenditure, which is excessive or unr .....

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of hearing to the parties and fixing date in the matter. The matter be decided having regard to the above quoted sections 40 A (1) and (2) of the Income Tax Act within three months from the date of production of a certified copy of this order before the Tribunal. - Income Tax Appeal No. 377 of 2008, Income Tax Appeal No. 42 of 2009 - Dated:- 18-11-2016 - Hon'ble Bharati Sapru And Hon'ble Vinod Kumar Misra, JJ. For the Appellant : S. D. Singh For the Respondent : C. S. C. ORDER Heard Sri .....

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assed by the Tribunal whereby the Tribunal has disallowed the business expenses being commission on sales paid by the appellant @ 15 and confined it to 10 %. The following substantial questions of law have been sought to be answered: (A) Whether, quantum of commission to be paid is justicible when the need to pay such commission and its actual payment stood admitted? (B) Whether, after accepting genuineness for the need to pay and acceptance of the actual payment made towards sales commission, i .....

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on facts is that the appellant had a proprietorship business/shop in the name of Prashant Medical Stores and the business was obviously for the selling of medicines. This shop was situated in the space provided by M/s. Ratan Cancer Hospital. The shop began to run from 16.4.2003. It was the first years of its business. The assessee claims of expenditure at the rate of 15 % but certain claim, which was less than 5% was provided by the assessing officer. Commissioner of the Income Tax Tribunal incr .....

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which are quoted hereunder: Section 40A(1) 40A. (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head "Profits and gains of business or profession". Section 40A(2) (2)(a) Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of this sub-section, and the [Assessing] Offi .....

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or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92 BA if such transaction is at arm's length price as defined in clause (ii) of section 92F (b) The persons referred to in clause (a) are the following, namely:? (i) where the assessee is an individual - any relative of the assessee; (ii) where the assessee is a company, firm, association of persons or Hindu un-divided family - any director of the compa .....

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such director, partner or member [or any other company carrying on business or profession in which the first mentioned company has substantial interest]; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the assessee; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any .....

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