TMI Blog2017 (2) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has also not filed any evidence in support of use of foreign currency taken by the persons during foreign travel and in such a situation , personal expenses on foreign travels by the persons travelled, cannot be denied. - Decided against assessee Disallowance of commission expenses - Held that:- The assessee has neither furnished any evidence in support of services rendered by the persons to whom commission is paid, nor any evidence in support of professional competence of those persons. It was the onus of the assessee to submit the evidences which could justify that any such services were rendered by those persons and justify such high percentage of commission paid to those persons. The assessee has failed to discharge this onus. We have already discussed in earlier para that in the circumstances where no evidence in respect of services rendered by the parties is furnished, the ratio of the decision of the Hon’ble Supreme Court in the case of Hero Cycles Private Limited (2015 (11) TMI 1314 - SUPREME COURT OF INDIA) is not applicable. - Decided against assessee Addition against household withdrawals - Held that:- Commissioner of Income-tax (Appeals) has already a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year under consideration, the assessee was engaged in import of items of handicrafts, carpets etc. and sale of those products in Indian Market under proprietary concern, namely, M/s Fame Impex and Job Work in the name of another person proprietary concern, namely, M/s R.A. Plasto Chem. The assessee also earned share of profit from a partnership firm, namely, M/s Finsa Impex. The assessee filed return of income on 29/09/2010 declaring income of ₹ 10,17,900/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short the Act ) was issued and complied with. In the assessment completed under section 143(3) of the Act on 12/03/2013, the Assessing Officer made various disallowances towards legal and professional expenses, travelling expenses, commission expenses etc. and addition for low household withdrawals. The learned Commissioner of Income-tax (Appeals) allowed part relief to the assessee. Aggrieved with the order of the learned Commissioner of Income-tax (Appeals), the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. In ground No. 1, the assessee has challenged sustaining of additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC) wherein the Hon ble Court agreed with the view taken by the Hon ble Delhi High Court in the case of CIT Vs. M/s. Dalmia Cements (P) Ltd (2002) 121 taxmann 706 (Delhi). 3.3 The learned Senior Departmental Representative, on the other hand, relied on the findings of the lower authorities and submitted that no evidence in support of services rendered by Sh. Rajkumar Jain was submitted by the assessee and, therefore, the expenses incurred by the assessee were not wholly and exclusively for the purpose of the business, and disallowance of ₹ 4 lakhs has been correctly sustained by the learned Commissioner of Income-tax (Appeals). 3.4 We have heard the rival submissions and perused the relevant material on record. It is evident from pages 114 to 115 of the paper book that before the learned Commissioner of Income-tax (Appeals), the assessee submitted that the assessee was handling all business matters single-handedly and he realized that he could be benefited from the immense business experience of Sh. Rajkumar Jain, who was 70-yearold and had always been in business throughout his life and was a successful business man and belongs to a successful business family. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. 3.6 We find that facts of the above case are different from the case in hand. In the case of Hero Cycles Private Limited (supra), the assessee advanced money to its subsidiary company without charging any interest and simultaneously the assessee borrowed money from banks and paid interest thereon. The issue involved in that case was whether the money borrowed on which interest was paid was not for business purpose and no deduction could be allowed. In view of the facts, the Hon ble Apex Court held that advance given to subsidiary company was for business expediency. Whereas in the instant case, the assessee has neither submitted any evidence in support of proof of services rendered, nor any evidence in support of professional competency or experience of Sh. Rajkumar Jain in the field of coordination for getting refunds from the custom Department. 3.7 In view of above discussion, we are of the considered opinion that the disallowance sustained by the learned Commissioner of Income-tax (Appeals) out of legal and professional expenses is reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively for the purpose of business, and therefore the disallowance sustained by the learned Commissioner of Income-tax (Appeals) should be deleted. 4.3 The learned Senior Departmental Representative, on the other hand, submitted that the learned Commissioner of Income-tax (Appeals) has already allowed relief of 1/3rd disallowance made by the Assessing Officer and, therefore, no further relief on this account, might be allowed to the assessee. 4.4 We have heard the rival submissions of the parties and perused the relevant material on record including the pages of the paper book referred by the learned Authorized Representative of the assessee. We find that in the paper book, the assessee submitted details of expenses incurred towards foreign travel, which includes expenses on fare, insurance, Visa, credit card, hotel bills, purchase of foreign currency etc. and copy of vouchers issued by the parties. The assessee has also submitted detail of the import during the year from overseas parties. 4.5 From the evidence filed by the assessee, it cannot be established that the expenses incurred, were wholly and exclusively for the purpose of business. The assessee has not file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essive. In respect of commission paid to other parties, the Assessing Officer mentioned that the confirmations were stereotyped saying commission towards coordination and support services in respect of custom duty refunds during the financial year 2009- 10. The Assessing Officer further relied in the case of Jayshree Tea and Industries Ltd. Vs. Commissioner of Income Tax (Cal.) reported in 272 ITR 193 and CIT Vs. Premier Breweries Ltd.(Kar.) 279 ITR 51, wherein it is held that the mere fact that payment has been made under a contract agreement is not conclusive that the expenditure is incurred wholly and exclusively for the purpose of business and burden of proof of the same was on the assessee. The Assessing Officer observed that grant of custom or income tax refund is automatic and as per rules and in accordance with law and any such payment made was not allowable being illegal relying on the decision of Madras High Court in the case of CIT Vs. India Cement Ltd. reported in 241 ITR 62. In view of above, the Assessing Officer disallowed the entire commission of ₹ 12,82,840/-. The learned Commissioner of Income-tax (Appeals) allowed part relief to the assessee and sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le expenditure having regard to the circumstances of the case, the learned Authorized Representative relied on the decision of the Hon ble Supreme Court in the case of Hero Cycles (Pvt.) Ltd. (supra). 5.5 On the other hand, the learned Senior Departmental Representative relied on the finding of the lower authorities. 5.6 We have heard the rival submissions and perused the relevant material on record including the pages of the paper book referred by the learned Authorized Representative. We find that the assessee has submitted evidence in support of deduction of tax at source on the commission payment. But in our opinion, mere deduction of tax at source is not sufficient for establishing that the expenses incurred were wholly and exclusively for the purpose of the business. The assessee has neither furnished any evidence in support of services rendered by the persons to whom commission is paid, nor any evidence in support of professional competence of those persons. It was the onus of the assessee to submit the evidences which could justify that any such services were rendered by those persons and justify such high percentage of commission paid to those persons. The assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,50,000/-. As a result, ground no.5 is partly allowed. 6.2 Before us, the learned Authorized Representative referred to the drawing account available on pages 86 to 87 of the paper book and copy of return and computation of income of wife of the assessee, Mrs. Shveta Aggarwal for assessment year 2010-11, which is available on pages 88 to 89 of the paper book and submitted that the assessee was having sufficient source to meet the household expenses. 6.3 On the other hand, the learned Sr. Departmental Representative relied on the finding of the lower authorities. 6.4 We have heard the rival submissions and perused the relevant material on record. We find that the learned Commissioner of Income-tax (Appeals) has already analyzed the drawing Ledger account of the assessee and found that withdrawal from M/s. Fame Impax have been incurred through cheque which was utilized towards school fees, electricity, water charges, medical claim, telephone bills etc. and only cash withdrawal of ₹ 15,000/-has been made from this account. In respect of income of wife of the assessee, no evidence had been produced either before us or the lower authorities to substantiate that in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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