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Bhura Mal Raj Mal Surana Versus Assistant Commissioner of Income Tax, Jaipur & Anr.

2017 (1) TMI 176 - RAJASTHAN HIGH COURT

Payment of commission disallowed - non genuine payment - Held that:- Some of the persons who are known to Mr. P.C. Kothari, he is one of the person but not relative but in that view of the facts on record, we are of the opinion that finding of both the authorities are just and proper. The expenses which are incurred are doubtful payment made only with a view to get rid of hassles of higher tax slab. - In our opinion, the transaction is not based on expenses which are disallowed but it is not .....

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gment and order of the Tribunal whereby Tribunal has dismissed the appeal preferred by the assessee. He has confirmed the order of CIT(A). 2. The facts of the case are that during the year under consideration the assessee had claimed payment of commission to the following persons. S.N. Name of the person Amount 1 Shri P.C. Kothari ₹ 21.000/- 2 Smt. Asha Dhadda Rs.29,800/- 3 Smt. Sushila Jain Rs.48.000/- 4 Smt. Sushma Jain Rs.8,500/- 5 Smt. Vimla Kothari Rs.12.000/- Total ₹ 1,19,300 2 .....

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n'ble ITAT was legally correct in its conclusion that factum of rendering service is not proved, despite evidence on record that all the parties had duly confirmed on oath in statements record by A.O. that they had in fact introduced the customers to whom sales were made and further payment of commission to them was made through Account payee cheques and they were existing Income Tax assessee? 2. Whether in the facts and circumstances of the case, the Hon'ble ITAT was legally correct in .....

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re effected? 4. Whether in the facts and circumstances of the case, the findings arrived at by Hon'ble ITAT are perverse and contrary to evidence available on record on the basis of which no reasonable person could have come to the conclusion arrived at by the Tribunal? 4. Counsel for the appellant has contended that payment of ₹ 5,00,000/- was made out of which only ₹ 1,19,300/- was legal for the persons namely Mr. P.C. Kothari ₹ 21,000/-, Smt. Asha Dhadda ₹ 29,800/- .....

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al expediency and in order to indirectly facilitate the carrying on the business the authorities were bound to look into the point of view of businessman and cannot substitute their point of view. 6. To substantiate submissions Mr. Jain relied upon the decision of Supreme Court in S.A. Builders Ltd. vs. Commissioner of Income Tax (Appeal) & Anr. reported in (2007) 288 ITR 1 (SC) wherein it has been held as under:- It has been consistently held in decisions relating to Section 37 that the exp .....

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and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency. 6.1 In case of Additional Commissioner of Income Tax vs. Rajasthan Spinning and Weaving Mills Ltd. reported in 274 ITR 465, it has been held as under:- It is well-settled that expression 'wholly and exclusively' does not de .....

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eduction. 6.2 Decision of Madras High Court in Commissioner of Income Tax vs. Madras Refineries Ltd. reported in 266 ITR 170 holding as under:- The concept of business is not static. It has evolved over a period of time to include within its fold the concrete expression of care and concern for the society at large and the people of the locality in which the business is located in particular. Being known as a good corporate citizen brings goodwill of the local community, as also with the regulato .....

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a polluting industry. 6.3 Decision of Rajasthan High Court in Commissioner of Income Tax vs. Rajasthan Spinning and Weaving Mills Ltd. reported in (2006) 281 ITR 408 (Raj.) wherein it has been held as under:- It is well-settled that expression 'wholly and exclusively' does not denote 'necessarily'. The word 'wholly' refers to quantum of expenditure. The word 'exclusively' refers to motive, objective or purpose with which the particular expense has been incurred. O .....

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under:- The reasonableness of the expenditure could be gone into only for the purpose of determining whether, in fact, the amount was spent. Once it is established that there was a nexus between the expenditure and the purpose of the business, the Revenue cannot justifiably claim to put itself in the armchair of a businessman or in the position of the board of directors and assume the said role to decide how much is a reasonable expenditure having regard to the circumstances of the case. 7. To .....

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e ignored material evidence or acted on no evidence; (ii) the Courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the Courts have wrongly cast the burden of proof. When we refer to 'decision based on no evidence', it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding." 7.1 He relied upon the decision of the .....

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tters on considerations of policy or expediency. The requirement of recording of reasons by such authorities is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimises arbitrariness in the decision-making process. Another reason which makes it imperative for the quasi-judicial authorities to give reasons is that their orders are not only subject to the right of the aggrieved persons to .....

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