TMI Blog2015 (10) TMI 2817X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Niraj Jain and Shri P.K. Mishra (C.A.) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the revenue against the order dated 30/03/2015 of the learned C.I.T.(A)-4, Jaipur for A.Y. 2010-11. The effective grounds of appeal are as under:- 1. On the facts and in the circumstances of the case, the ld CIT(A) has erred in deleting the addition made by the A.O. on account of commission expenses of ₹ 95,44,810/- claimed by the assessee on sales. 2. On the facts and in the circumstances of the case, the ld CIT(A) has erred in deleting the addition made by the A.O. on account of commission expenses on sales, ignoring that merely furnishing of confirmations, PAN, copy of return and bank statements cannot in all cases tantamount to satisfactory discharge of onus the part of the assessee company, in establishing that services were actually rendered by the brokers. 3. On the facts and in the circumstances of the case the ld CIT(A) has erred in deleting the addition made by the A.O. on account of commission expenses on sales, ignoring that the business use of the expenditure claimed was not proved, and therefore, the expenditure was not allowable U/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were issued at the insistence of the assessee as per its requirement to make adjustment in the P L account to bring down the profit to the desired level of the assessee. The ld Assessing Officer further observed that it was surprising to note that these so called brokers claimed to provide services for the whole year and silently wait for next 6 months or more to receive payment against the service provided. No prudent person would like to do a job and demand remuneration against it after six months or a year. On verification of sale bills, it was noticed by the Assessing Officer that the name of any broker was not appearing on any sale bill for which they said brokers had arranged sales. It was a trade practice to mention the name of broker on the sale bill for the sales which had involvement of any broker to maintain record regarding claim of brokerage. However, absence of any mark regarding brokerage on sale bill, reveals that assessee had made a make believe arrangement to claim commission expenses. It was also noticed that commission had been paid to some ladies, who happens to be the relatives or wives of brokers, therefore, these ladies appeared to be just name lenders. Who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as under:- The Assessing Officer further held that this is against human probabilities and further revenue-enforces the fact of accommodation entries and he found that no services had been rendered by the so claimed brokers to warrant any commission and held that commission debited at ₹ 95,44,810/- has not been incurred for business purposes, accordingly he disallowed commission debited at ₹ 95,44,810/-. 3. Being aggrieved by the order of the Assessing Officer, the assessee the matter before the ld CIT(A), who had deleted the addition by passing a detailed speaking order. The main finding of the ld CIT(A) is reproduced as under:- 5.4 The facts and circumstances discussed above will indicate that in the similar circumstances the claim of the appellant of payment of brokerage and commission on sales as well as on purchases has been allowed by the Hon ble ITAT. In fact in respect of assessment year 2007-08 to 2009-10 when the ld CIT(A) disallowed the claim of brokerage/commission on sales in respect of those brokers who have not executed agreements for such work in the beginning for the F.Y., the Hon ble ITAT even allowed payment of brokerage/commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utset, the ld AR of the assessee has submitted that similar commissions/brokerage were paid from A.Y. 2003-04 to 2009-10 and similar additions were made by the Assessing Officer, which was challenged before the ld CIT(A). The assessee had filed copy of agreement with brokers, copy of confirmations of commission payment, list of brokerage/commission paid with name and address of brokers/commission agent. He further argued that the assessee is in ingots business and running a steel plant. Most of the sales were made through brokers. It is a common practice in this line of business and no sales can be made without the help of brokers. The percentage of brokerage is more or less fixed. He has particularly drawn our attention on paper book volune-1 and volumn-2. The assessee was able to make sale more than 209 crores during the year with the help of commission agent. He further reiterated the arguments made before the ld CIT(A) and relied the case laws referred before him, which is summarized as under:- (1) Aluminium Corporation of India Ltd. Vs. CIT West Bengal (Supreme Court) wherein it has been held that brokers have duly confirmed the commission and service provided via the confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking channels. It is true that the appellant as well as suppliers has not mentioned in bill the name of the brokers through whom sales or purchases have been made. It is a fact that in the line of business, most goods is being sold through brokers, on which, commission is paid. The purchase is also made through brokers, therefore, it requires to paid commission to middle man who make available of goods from the market and also guaranteed the amount is to be recovered and paid. This Bench had decided in the case of M/s Kamdhenu Ispat Limited Vs. ACIT in ITA Nos. 662 to 668/JP/2012 for A.Y. 2003-04 to 2009-10 order dated 21/11/2014 wherein identical and similar additions were made by the learned Assessing Officer and partly confirmed by the learned CIT(A). The modus operandi of both the assessees are same. Both are paying commission on sales as well as on purchases. It is noticed from the order of Kamdhenu Ispat Ltd. (supra) that following parties name were figured in commission payment list, which has been accepted by the learned CIT(A) as genuine and allowed the appeal of M/s Kamdhenu Ispat Ltd. where no second appeal has been filed by the Assessing Officer. Names of brokers as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Sh. Sanjay Gupta 7. Sh. Dharampal Khera 8. Sh. Vikrant Mahajan 8. Ganpati Steel Corp. 9. Garg Steel 10. Sh. Gulshan Gupta 11. Smt. Kirtika Jain 12. Sh. Manchand Goyal 13. Sh. Maman Jain 14. Sh. Naresh Kr. Garg 15. Sh. Neeraj Jain 16. Sh.Neeraj jain Sons HUF 17. Sh. Purshotam Kr. Goyal 18. Sh. Roshan Lal Gupta 19. Sangam Buildway 20. Sangam Iron Steel Co. 21. Sh. Sanjay Gupta 22. Sh. Sanjay Mittal 23. Sh. Sanjay Dang Sons HUF 24. Sh. Sarthak Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consultant cannot supply the goods on commission basis. It has been claimed by the appellant that Shri Ruchiraraj has information about supply and demand of the material. The appellant had made agreement with him. The assessee has filed copy of bill and ledger and payments have been made through account payee cheques to him (page No. 58 of paper book of A.Y. 2008-09), in which, the recipient charged service tax, which proves that he has rendered service for the appellant. It is further found that in the assessee s group, search seizure operation had carried out by the department but no incriminating documents found on account of commission payment. The assessee had shown turnover in A.Y. 2003-04 at ₹ 57.04 crores, in A.Y. 2004-05 ₹ 73.11 crores, in 2005-06 ₹ 99.45 crores, in A.Y. 2006-07 ₹ 117.75 crores, in 2007-08 ₹ 170.02 crores, in A.Y. 2008- 09 ₹ 196.05 crores and in A.Y. 2009-10 ₹ 234.44 crores. The assessee has discharged primary onus cast upon it. There is no material with the Assessing Officer to dispute the evidences such as confirmation, copy of PAN, copy of return, TDS certificate, copy of bank account etc. filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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