New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2017 (3) TMI 395 - ALLAHABAD HIGH COURT

2017 (3) TMI 395 - ALLAHABAD HIGH COURT - TMI - Allowable expenditure under section 37(1) - commission payment - ITAT disallowed claim - Held that:- We may observe that in view what has been held in the case of DCIT Vs. Super Tannery (India) Ltd. (2004 (8) TMI 43 - ALLAHABAD High Court) it cannot be said that such an expenditure if found to have been actually incurred is not allowable. The finding of the Tribunal to the contrary is clearly unsustainable. - Tribunal also appears to have chos .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ahmad as if it (Tribunal) were examining the case of that person whereas in the instant appeal it was only required to see if the expenditure claimed to have been borne by the assessee was genuine. If the answer on this issue were in favour of the assessee, then it would be of little consequence (in these proceedings) how Sheikh Shafat Ahmad has dealt with the money received by him from the assessee. We set aside and the matter is remitted to the Tribunal to decide the appeal afresh after affor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ot;Whether the ITAT was correct to hold that the commission of ₹ 33,69,903/- paid to Sheikh Safat Ahmad Proprietor M/s S & S Traders, Srinagar (J & K) for rendering services to the appellant, as per agreement is not allowable expenditure under section 37(1) of the Income Tax Act?" The facts of the case as noted by the Tribunal are that the assessee is engaged in the business of maufacture of Firefighting Vehicles, and supply of the same amongst others to Ministry of Defence, I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rough him to the Director of Fire & Emergency Services, Jammu & Kashmir, Srinagar. In reply the assessee claimed it had supplied certain firefighting vehicles to the Jammu & Kashmir Firefighting department against award of tender in respect which the said Sheikh Safat Ahmad had provided liasoning and other services to the assessee. It further appears in the course of assessment proceedings the Assessing Officer had required the petitioner to produce Sheikh Shafat Ahmad but that the s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad/Proprietor/Partner/ Employee of M/s S & S Traders has been attending on behalf of/aged of M/S BHUL." However, it is admitted case between the parties that the said letter dated 29 September, 2007 was never supplied to the assessee and that he was not confronted with it. In appeal, before the CIT(Appeals), the assessee raised the issue of being denied opportunity to rebut the document relied upon by the Assessing Officer in the shape of the letter between the Director General of Fire .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

him to such payments. The assessee and also Sheikh Shafat Ahmad stated that the payments had been made through bank and that tax has also been deducted at source on such payments. The correctness of this fact is not disputed by the revenue. Sheikh Shafat also stated that he had amongst others provided service to the assessee in the nature of tender enquiry, submission of tender, follow-up tenders, procurement of orders, release of payment and after sale services. However, he could not produce ce .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

had not rendered any services to the appellant.....". Hence. he deleted the disallowance of ₹ 33,69,903/-. In further appeal by the department, the Tribunal has reversed the orders of the CIT(Appeals) and upheld the disallowance made by the Assessing Officer. We have heard Sri Rakesh Ranjan Agarwal, Senior Advocate assisted by Sri Suyash Agarwal, learned counsel for the assessee and Sri Gaurav Mahajan, learned counsel for the department and have also perused the record. From the orde .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee is based on his own assumption and presumption. According to the Tribunal the assessee did not discharge the burden cast on it to establish that the expenditure claimed was for purpose of business. Having said that the Tribunal itself proceeded to reverse the order of the CIT (Appeals) by reasoning that the expenditure was not allowable because the assesee having made supplies to a government department could claim such expenditure if it had incurred it on an agent of commensurate capacity of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urt reported in DCIT Vs. Super Tannery (India) Ltd. (2005) 274 ITR 338 (Allahabad) wherein it was held as under: "The court takes judicial notice of the fact that nowadays it is very difficult to get back lawful amount from the Government and other departments without incurring unavoidable expenses. A part from it, a lot of harassment is also caused. As a prudent businessman, the assessee had engaged a commission agent and had incurred a sum of ₹ 2,37,000, which is approximately 10 pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cer has neither the expertise of running a business nor has any specialisation to sit in judgment over the assessee as to whether such an expenditure was incurred for commercial expediency or not. A part from it, there is no provision to disallow a part of such expenditure on the ground of excessiveness when the expenditure has been found to be genuine." Also, applying the above ratio, this court has again in CIT Vs. M/s Motilal Duli Chand (ITA NO. 97 of 2002) decided on 10.3.2015 dismissed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nal finding on the issue involved in this matter. However, the Tribunal has failed to consider the evidence but has recorded its findings based on its personal notions and view all extraneous and not-desirable to be considered while deciding issue of genuineness and allowability of particular payments made by the assesse in the peculiar circumstances of his business. Such an approach cannot be approved. We may observe that in view what has been held in the case of DCIT Vs. Super Tannery (India) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

terial evidence in the shape of agreement for sale of firefighting vehicles, payments made through banking channel, TDS having been made by the assessee, Sheikh Safat Ahmad had been assessed to tax (though upon return filed late) and his statement made by him before the Assessing Officer in the remand report proceedings and other evidence exist on record. They alongwith such other evidence as exists on record were required to be examined and weighed by the Tribunal before it could record its fin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version