TMI Blog2018 (5) TMI 1724X X X X Extracts X X X X X X X X Extracts X X X X ..... or payable U/s 40(a)(ia) of the Act has been finally settled in case of M/s Palam Gas Service vs. CIT [2017 (5) TMI 242 - SUPREME COURT] has relied upon by the ld. DR therefore, to that extent, we do not find any error or illegality in the order of the ld. CIT(A). Now before the Tribunal the assessee has raised a fresh plea and placed reliance on various decisions, therefore the issue being purely legal in nature, the same is set aside to the record of the ld. CIT(A) to adjudicate as per the provisions of law - Decided in favour of assessee for statistical purpose. - ITA No. 665/JP/2016 - - - Dated:- 28-5-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri P.C. Parwal (C.A.) For The Revenue : S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing by him, for which the assessee has shown commission expenses of ₹ 17,69,238/- paid to 8 parties. The AO accepted the payment of commission to Shri Trilok Jhalani and Shri Aditya Jain to whom the commission is paid @ 2% of the sales amount. However in respect of the remaining 6 persons, namely Mr. Gautam Mehta, Gautam Mehta (HUF), Vishnu Prakash Agarwal, Madhu Jain, Kavita Agarwal and Sunit Kumar Garg (HUF) the Commission was paid for sales made to a single party, i.e. M/s Creative Beads, USA. Accordingly, the AO issue summons u/s 131 of the Act to these persons and recorded the statement u/s 131 of the Act. After recording the statement the AO observed that these 6 persons belong to 2-3 families and the nature of service w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the payment of commission cannot be disallowed or restricted as the case same is not falling in the category of Section 40A(2)(b) of the Act. Thus, the commission expenditure cannot be disallowed on the basis of reasonability of the expenses. In support of his contention he has relied upon the decision of Hon ble Supreme court in case of J.K. Wollen Manufacturing vs. CIT 72 ITR 612. He has also relied upon the decision of the Hon ble Calcutta High Court in case of CIT vs. Rajarani Export Pvt. Ltd. 361 ITR 152. 4. On the other hand, the ld. DR has relied upon the order of the ld. CIT(A) and submitted that it is a case of bogus claim to avoid the tax as the group of 6 persons claimed to have arranged the sales of the assessee only to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 175694 For sales to M/s Creative Beads (USA) 7. Aditya Jain 268327 For sales to M/s Golden Stone (USA) 8. Sunil Kumar Garg HUF 281581 For sales to M/s Creative Beads (USA) Total 17,69,238/- Out of these 8 persons the AO accepted the commission paid to Shri Trilok Jhalani and Aditya Jain to whom the assessee paid the commission @ 2%. As it is clear from the details that the remaining 6 persons were paid commission for sales to only one party i.e. M/s Creative Beads, USA. The AO recorded the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. 6. Ground No. 2 is regarding disallowance made u/s 40(a)(ia) of the Income Tax Act. The assessee made a payment of ₹ 60,000/- towards lift maintenance expenses on which tax is not deducted at source. The AO disallowed the said expenses by invoking the provisions of Section 40(a)(ia) of the IT Act. On appeal, the ld. CIT(A) has confirmed the disallowance made by the AO. 7. Before us, the ld. AR of the assessee has submitted that as per the amended provisions by Finance Act, 2014 w.e.f. 01.04.2015 the disallowance is restricted to 30% of the sum paid or payable to a resident. Thus, he has contended that that the said amendment was brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paid or payable U/s 40(a)(ia) of the Act has been finally settled by the Hon ble Supreme Court in case of M/s Palam Gas Service vs. CIT 394 ITR 300 has relied upon by the ld. DR therefore, to that extent, we do not find any error or illegality in the order of the ld. CIT(A). Now before the Tribunal the assessee has raised a fresh plea and placed reliance on various decisions, therefore the issue being purely legal in nature, the same is set aside to the record of the ld. CIT(A) to adjudicate as per the provisions of law and after giving an opportunity to the Assessing officer as well as the assessee. In the result, the appeal of the assessee is partly allowed for statistical purpose. Order pronounced in the open court on 28/05/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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