TMI Blog2017 (6) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 2-6-2017 - Dr. Virendra Kumar Mathur, J. Judgment 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee and dismissed the appeal of the department. However, being aggrieved by the disallowance of the expenses which were paid to the commission agent and other expenses, the appellant assessee preferred this appeal. 2. This court while admitting the matter framed the following questions of law:- i) Whether the ld. ITAT was justified in law in disallowing the commission expenses to the extent of ₹ 16,71,310/- being wholly and exclusively for the purpose of business and being paid by Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upply orders to RCM. The Commission agents have not insisted that commission was paid to execute the supply the orders of RCM. The sales have not increased as a result of commission payment. The so called services which have been rendered by the recipient of the commission is not reasonable with reference to the payments made to them. The AO also relied upon following decisions to hold that commission payment is not allowable in case the services have not been rendered by the presence to whom such commission has been paid. 1. Vishnu Agencies (P) Ltd. vs. CIT, 117 ITR 754 2.ITO vs. Maddi Laxmiah Co (P) Ltd. 69 CTR (Tribunal) 109 (Hyd.) Accordingly the AO made the addition of ₹ 26,98,130. 4. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied that he worked as supervisor to take care of production, packaging and dispatch of Namkin manufactured at factory premises of M/s Pinkcity Industries i.e. the appellant. This clearly shows that there were glaring inconsistency in the reply furnished in response to notice issued u/s 133(6) and in the statement given in response to summons issued u/s 131 of I.T. Act regarding nature of work done by Sh. Sandeep Dheer. A person who will work for promotion and distribution is not expected to be supervisor in the factory to take care of production, packaging and dispatch of Namkin manufacture. Further, Sh. Sandeep Dheer was having no such experience. Further, no evidence of any nature regarding services provided by Sh. Sandeep Dheer in vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having any other income except jewellery trading then in question no. 8 she replied that she could not recollect that what work was done by her in the year 2005-06 and in question no.9 she has stated that some work related to Namkin was done by her. In reply to question no. (5 of 7) [ITA-290/2010] 12 she has stated that she used to go VKI area to work in a Namkin Factory on two wheeler with her husband and it took only 15 minutes to reach the factory at VKI area from her house at Gopalji ka rasta, Jaipur. further, she could also not tell the name of any employee with whom she worked in the factory. She could also not tell any identification mark of the VKI area where she has claimed to have worked. Considering these inconsistencies and unbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as arranging packaging and dispatch of such Namkin. However, he has admitted that he does not know about manufacturing process of Namkin. He could also not tell the number of persons/labourers working in the factory and he could not tell the name of any labour to whom he has given instruction as supervisor. He could also not tell even the name of any adjacent/neighboring units as well as plot number of the factory. This all shows that genuinely he has never done such work for the appellant firm in consideration thereof a commission payment of ₹ 2,11,412/- has been claimed. Moreover, no evidence of any nature regarding genuine services provided could be furnished either in the assessment proceedings or in the appellate proceedings for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the appellant firm and they have specified commission rate as well as amount of commission. All these persons were assessed to tax, filed their income-tax return in which such commission. All these persons were assessed to tax, filed their income-tax return in which such commission receipt has been disclosed and payment to them was made by account payee cheque after deducting due TDS thereupon. Further, it is also not the case that like others such commission was connected with sales made to M/s Fashion Suiting Pvt. Ltd. which was already shown at reduced taes compared with other parties and under these circumstances in my considered view the aforesaid commission to these four persons aggregating at ₹ 10,09,044/- was a genuine c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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