TMI Blog2018 (3) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... ared to that in the earlier year. Since the services rendered by the commission agents had been proved conclusively in the instant case, the reliance placed on the decision in the case of Vishnu Agencies (P) Ltd vs CIT (1978 (8) TMI 66 - CALCUTTA High Court) does not come to the rescue of the revenue, as in that case, the services rendered were not proved by the assessee. Hence the same is factually distinguishable. The fact of rendering of services by these commission agents to the assessee has been proved beyond doubt and accordingly the assessee is squarely eligible for deduction of commission expenditure u/s 37. - Decided in favour of assessee. - I.T.A No. 2229/Kol/2016 And C.O. No. 93/Kol/2016 - - - Dated:- 21-3-2018 - Shri Aby. T. Varkey, JM And Shri M.Balaganesh, AM For The Appellant : Shri S.M. Surana, Advocate For The Respondent : Shri Arindam Bhattacharjee, Addl. CIT ORDER Per Bench : 1. This appeal by the Revenue and the Cross Objection by the assessee directed against the order passed by the Learned Commissioner of Income Tax (Appeals) 10, Kolkata (in short the ld CITA) in Appeal No. 23/CIT(A)-10/Cir-35/2013-14/Kol dated 01.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the entire details of machinery hire charges paid to M/s Philips Electronics India Ltd together with the details of bill date, bill amount, tax deducted at source and date of remittance of TDS to account of central government. The ld CITA also observed that the assessee had produced all the copies of debit notes relating to the payments made to the parties such as Philips India and Amit Kr Ghose and the same are available in the assessment records. He appreciated the contentions of the assessee by observing that the ld AO has not specifically pointed out as to which bill was not submitted for the impugned figure of ₹ 3,51,932/- disallowed by him. He held that when all the payments are made through banking channels, there is no reason to disbelieve a small portion of the payments when they are properly vouched . Accordingly, he deleted the addition made in the sum of ₹ 3,51,932/-. Aggrieved, the revenue is in appeal before us on the following ground:- i ) On the facts and circumstances of the case, the Ld . CIT ( A ) erred in deleting the addition of Rs . 3,51,932 /- made by the AO on account of an machinery hire charges by holding that the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case. 3.1. The brief facts of this issue is that the ld AO observed that the assessee had debited an amount of ₹ 97,02,694.86 in the profit and loss account under the head Commission Payment and was asked to produce all relevant documents of the said expenses. The assessee submitted the following table along with the bills and ledger account :- 3.2. The ld AO further issued a questionnaire dated 28.1.2013 raising the following queries :- a ) Ledger and TDS certificate of commission paid . b ) Party wise purchase for which you have paid the commission . c ) Whether there is any agreement between the assessee and the commission agent ? If yes, the copies thereof to be produced . d ) Whether such types of commission has been claimed in earlier years by employing the same commission agent ? If yes, details to be furnished . e ) Whether the parties from whom the purchase have been procured by the commission agent, are new parties introduced for the first time during the relevant period i . e for the FY 2009 - 10 or they are old parties from whom purchase have been made by the assessee in earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion had not been conclusively proved by these three parties. The statements recorded from these parties were shown to the AR of the assessee and was asked to explain to prove the genuineness of the payments of commission by the assessee in the light of the statements shown to him. The ld AO observed that deduction of tax at source on commission payments is not sacrosanct to prove the genuineness of commission expenditure. Accordingly the ld AO disallowed the entire commission expenditure of ₹ 97,26,495 in the assessment. 3.4. The assessee pleaded before the ld CITA that all the commission agents are income tax assessees and had duly reflected the commission received from the assessee as their income and paid taxes thereon. It is not the case that those commission agents had only commission income in their returns and it is also not the case that they had received commission only from the assessee herein. The assessee furnished evidences in this regard to prove the genuinity of the transactions before the ld CITA. 3.5. The ld CITA examined the assessment records and also the statements recorded by the ld AO from the aforesaid three commission agents. The ld CITA observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO on account of payment of commission paid by the assessee which is bogus . 3.6. We have heard the rival submissions and perused the materials available on record including the paper book of the assessee filed in this regard comprising of details of commission paid (enclosed in page 36 of the paper book) ; bills raised by commission agents for commission together with TDS certificates (enclosed in pages 37 to 45 of PB) ; copy of audited balance sheet and profit and loss account together with the IT Acknowledgement Return copy of the commission agents M/s Mittal Iron Foundry Ltd and M/s Tijiya Steels pvt Ltd for the Asst Year 2010-11 (enclosed in pages 46 to 102 of PB) ; copy of bank statement of assessee showing the payment made to these commission agents ( enclosed in pages 103 to 119 of PB) and comparative statement of net profit earned which is highest during the year (enclosed in page 120 of PB) . We also find that the details of sundry creditors exceeding purchase value of ₹ 10 lacs and above were furnished by the assessee before the ld AO. In the said details, the names and addresses of various sundry creditors where purchase value is more than ₹ 10 lac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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