TMI Blog2016 (3) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... diture in previous years, we are of the view that ld. CIT(A) has rightly deleted the impugned addition disallowing commission and we find that the same has been incurred wholly and exclusively for the purpose of business and assessee has produced sufficient proof regarding services rendered by these parties. - Decided in favour of assessee Disallowance on account of prior period expenses - Held that:- Looking to the course of business of assessee wherein assessee is having various branches and details of expenses are to be sent to the head office then there remains the possibility that some invoices which pertain to prior period have been received by the head office of the assessee during the year under appeal. As the genuineness of the expenditure has not been doubted we find no reason to interfere with the order of ld. CIT(A) who has rightly deleted the addition made on account of disallowance of prior period expenses by Assessing Officer.- Decided in favour of assessee Disallowanceon account of late payment of employees contribution - amount deposited before the due date of filing return of income - Held that:- The contribution to PF/ESIC both by employees or employers' co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was called for by the Assessing Officer about the genuineness of commission expenditure of ₹ 51,56,882/- and various details and explanation were submitted by the assessee. However, it partly satisfied the Assessing Officer and so he assessed the income by making addition of ₹ 51,40,632/- disallowing commission payment, addition on account of interest of ₹ 15,694/- and disallowance of depreciation of ₹ 7,626/-. 4. Aggrieved, assessee went in appeal before ld. CIT(A) who deleted the addition on account of disallowance of commission of ₹ 51,40,632/- and dismissed the grounds relating to addition on account of interest income being not pressed by the assessee and sustained the disallowance of depreciation of ₹ 7,626/-. 5. Aggrieved, revenue is now in appeal before the Tribunal against the action of ld. CIT(A) deleting the addition of ₹ 51,40,632/- on account of commission expenditure which were not incurred wholly and exclusively for the purpose of business. 6. Ld. DR supported the order of Assessing Officer. 7. On the other hand ld. AR relied on the order of ld. CIT(A) and submitted that during the course of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [279 ITR 51 (Ker) (iii) Bhargav Refrigeration Industries Pvt. Ltd. Vs. ITO [28 TTJ 587], ITAT, Delhi Bench (iv) ITO Vs. Maddi Laxmaiah Co. (P) Ltd. [31 ITJ 71 (Hyd] The AO has emphasized that the mere payment by itself does not qualify for deduction in computing the income unless, the necessity for such payment was also shown as for the purpose of business. No recourse to section 40(A) (2) (b) of the I.. T. Act, 1961 has been taken for related parties. On the other hand, the appellant has filed different case laws and distinguished the decision of Swadeshi Cotton Mills Co. Ltd. reported at [63ITR 57 (SC)] and instead relied on the decision of Anupam Synthetics reported at [104 TTJ 119 (Del.)]. The appellant has filed confirmations from the parties, TDS details, full addresses with PA No. and submitted that the commission payment is a usual practice and without the payment of such commission, the conducting of business is not expedient. Therefore, it is claimed that the expenditure incurred is genuine through banking channel and the same has been done as it was necessity of its business. The fact remains that the AO has not proved that this was non-genuine expenditure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nr. City Gold Multiplex, Ashram Road, Ahmedabad-380009 AJBPS 1381E 217462 22464 194998 4 Jigna S Shah 121,Manekbaug Society, Nehru Nagar, Ahmedabad ANKPS 7883E 399932 41192 358740 5 Sanidh B. Shah 6, 1 Floor, National Chambers, Nr. City Gold Multiplex, Ashram Road, Ahmedabad 380009 AJBPS 2294N 195000 20085 174915 6 Jagumani Dash Plot No. 90, Lane No. 3, Jagannath Vihar, Baramunda, Bhubaneshwar -751003 AIEPD 5322Q 262047 26991 235056 7 Spectrum Enterprise S. No. 1A, 4, Ganesh Park (Anand Park), Chinchwadgaon, Pune411 033 ACLPI 1316K 214140 22056 192084 8 Venkata Yamuna Impex Plot No. 80, Kacyam Gardner, B/h. Sainikpuri, Secund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng all possible details including confirmations and TDS and successfully established that the genuine expenditure has been expended for the business purposes. On the other hand, the AO could not gather the positive evidences for the department and taken decision based on presumptions and not on the facts on record. The ground of appeal is accordingly allowed. 9. We find from going through the order of ld. CIT(A) that assessee has submitted complete details of party-wise commission paid, as well as TDS deducted thereon, along with confirmation from the parties, full particulars with PAN and copies of liaison agreement with various parties. It is a general accepted fact that in pharma business commission expenses are incurred for boosting up sales and it is a usual practice. We further find that assessee gross turnover is also increased to 15.17 crores from ₹ 10.66 crores in the immediate preceding financial year and profit has also doubled reaching ₹ 20.74 lacks in the year under appeal from ₹ 11.06 lacs. We therefore are of the view that looking to the nature of business of assessee various details and documentary evidences produced before the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils from assessee assessment was framed on 11.3.2013 assessing the income of assessee at ₹ 61,26,790/- after making following additions :- 1) Disallowance of commission distribution charges Rs.42,32,375/- 2) Disallowance of prior period expenses ₹ 2,76,912/- 3) Disallowance u/s 36(1)(va) ₹ 13,601/- 13. Aggrieved, assessee went in appeal before CIT(A) who deleted the additions made by the Assessing Officer. 14. Aggrieved, Revenue is now in appeal before the Tribunal. 15. Ground no.1 of the appeal relates to deletion of disallowance of commission and distribution expenses. After considering the rival contentions and perusing the material on record, we would like to mention that we have already dealt with similar ground for Asst. Year 2009-10 in ITA No.1162/Ahd/2013 above and have dismissed the ground of Revenue vide para no.8 9 above holding that the commission expenditure claimed by the assessee was genuine. The issue being similar, we apply the ratio of our above decision to this ground also and accordingly we uphold the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2009-10, the appellant has paid more income tax in A. Y. 2009-10. In view of ratio laid down by Hon'ble Bombay High Court decision in the case of CIT vs. Nagri Mills reported in 33 ITR 681 (Bom), Gauhati High Court in the case of CIT Vs. Nathmal Tolaram [88 ITR 234 (Gauhati)] and Calcutta High Court in the case of Sutna Stone Lime Co. Ltd. Vs. CIT [192 ITR 478 (Kol), the disallowance made by the AO is directed to be deleted and the ground of appeal is accordingly allowed. 20. From going through the above observations made by ld. CIT(A) as well as going through the facts of the case that these expenses were claimed in the preceding years and the same has not been controverted by the Revenue and looking to the course of business of assessee wherein assessee is having various branches and details of expenses are to be sent to the head office then there remains the possibility that some invoices which pertain to prior period have been received by the head office of the assessee during the year under appeal. As the genuineness of the expenditure has not been doubted we find no reason to interfere with the order of ld. CIT(A) who has rightly deleted the addition made on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same benefit is now available w.e.f, 01/04/2004 by the amendment by Finance Act, 2003. it has been held that the first proviso to section 43S was curative in nature and, hence, retrospective in operation with effect from 1-4-1988. It is important to note once again that by the Finance-Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-a-vis contributions to welfare funds of employee(s) on the other. This is one more reason to hold that the Finance Act, 2003, is retrospective in operation. Moreover, the judgment in Allied Motors (P) Ltd.'s case supra) is delivered by a Bench of three judges, which is binding on the Court. Accordingly, the Finance Act, 2003., to the extent indicated above, is curative in nature and, hence, it is retrospective and would operate with effect from 1-4-1988 when the first proviso came to be inserted. Respectfully following the judgment of Hon'ble Supreme Court and as things stand today, the contribution to PF/ESIC both by employees or employers' contribution towards employees' PF/ESIC are allowable u/s. 43B ..... 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