TMI Blog2018 (4) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... awal (HUF), we find these payments are made to these parties for the first time and the deduction is claimed u/s.37 of the Act. Therefore, there is need for discharge of onus by the assessee with reference to the nature of services rendered by them to the company. Therefore, for want of discharge of onus by the assessee, we find this portion of the issue needs to be remanded to the file of the AO. Assessee shall be granted reasonable opportunity of being heard to the assessee in accordance with the set principles of natural justice. - Appeal of the assessee is allowed for statistical purposes. - ITA No.2538/PUN/2016 - - - Dated:- 21-3-2018 - MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM For The Appellant : None For The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company and accordingly, there was no reason to disallow the commission paid to them. The above grounds give rise to the issues that relate to the correctness of disallowance of commission paid to Shri Laxminiwas V. Agrawal, the (Director) of the company and also to Shri Ramesh Chandak (HUF) and Shri Ravindra Agrawal (HUF), the commission agents. AO disallowed the said commission in the fresh assessment made u/s.143(3) r.w.s. 263 of the Act for failure of the assessee in substantiating with evidences regarding the allowability of the payment of commission. In the First Appellate Proceedings, Ld. CIT(A) confirmed the same. 3. Background facts of this case include that the assessee is a company engaged in the business of inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO/CIT(A). Same is the case with regard to the commission payments made to Shri Ramesh Chandak (HUF) and Shri Ravindra Agrawal (HUF), the commission agents. On considering the above submissions of the assessee, AO proceeded to disallow the commission as per the discussion given in Para 6 and 7 of the assessment order. For the sake of completeness of this order, we proceed to extract the said paras as follows : 6. The submissions of the assessee has duly been considered. The fact of the case relied upon are distinguishable from the facts of instant case, as in the case refereed above, the payment of commission was made to Managing Director, who was an employee and commission was paid to him towards services rendered by him in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of above facts, the commission paid to Ramesh Chandak HUF and Ravindra Agrawal HUF is disallowed at ₹ 1,92,992/- and 4,57,510/- respectively. . . . . . . . . 5. Assessee could not improve his case before the First Appellate Authority. Eventually, the CIT(A) confirmed the disallowances and proceeded to dismiss the appeal of the assessee. 6. It is the case of the assessee before the CIT(A) that the commission paid to Shri Laxminiwas V. Agrawal is an allowable expenditure in view of the Board resolution of the company. According to the assessee, the relationship between the assessee and Mr. Laxminiwas V. Agrawal is not that of the employee or employer relationship. Therefore, the commission received by Shri Laxmini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is any letter for adjournment of the case nor the assessee presented himself before us. Considering the facts of the case and with the assistance of Ld. DR for the Revenue, we proceed to adjudicate the appeal in the following manner. 8. During the hearing before us, Ld. DR for the Revenue submitted that this is a case where the disallowance of claims of commission made to the Director/commission agents was made for want of evidences in support of the claim of rendering of services by Shri Laxminiwas V. Agrawal and two others. The onus is on the assessee to prove rendering of services by the Director as well as the commission agents. On considering the same, we find the appeal can be adjudicated with the help of Ld. DR for the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in the case of CIT Vs. Indo-Saudi Services (Travel) Pvt. Ltd. 310 ITR 306 (Bom.). Of course, AO shall note that this judgment is delivered in the context of the invoking of the provisions of section 40A(2) of the Act. In the said case, it is held that the incentive commission need to be allowed in the hands of the payer, when the payee pays tax at higher tax rate. Accordingly, this part of the ground is allowed as above. 11. Regarding the commission payments made to the commission agents, i.e. Shri Ramesh Chandak (HUF) and Shri Ravindra Agrawal (HUF), we find these payments are made to these parties for the first time and the deduction is claimed u/s.37 of the Act. Therefore, there is need for discharge of onus by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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