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TMI Blog2022 (6) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that assessee is making the sales to public sector Organizations. The contract is awarded by the Public sector Organizations through tender. As the entire receipts of assessee's business are from Public sector Organizations, there is no justification of making any commission payment to, anybody for procurement of orders etc. (b) It was noted that assessee is making payment to its commission agents for the services such as handling of explosives, safe transportation of explosives, liaison with other agencies, etc for which handing charges, transportation charges and magazine rent have been separately paid to these parties only. On the perusal of the agreement, it was noted that a commission 5% of the basic cost is being given to the commission agents. All the services provided by these agents can be grouped in transporting charges, handling charges & magazine rent. Payment of commission is over & above the handling charges, transportation charges and magazine rent Therefore, payment of commission is not for the purposes specified by the assessee during the course of proceeding as payment for those specific services have already been made under the subheads of transporting c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gazine as per provisions of Explosives Act, handling various formalities, raising invoices, filing of sales Tax/service tax returns, maintaining records and other related activities. It was contended that all these specific services rendered by the agents are compensated by "service charges" which is termed as "commission" at a certain percentage of sales handled by the agents. It was also pointed out that the appellant company has been following the same system in earlier years and payments to agents were allowed in the preceding assessment year. It was further stated that in the course of assessment proceedings copies of agreements, ledger extracts, bank statements showing payments made, details of TDS etc., were furnished to the Assessing Officer. Confirmations of services rendered and amounts were also provided. 7.2.4 It is also noted that neither at assessment stage nor during remand proceedings has the Assessing Officer doubted the amounts paid or the transaction itself. His objection appears to be based on a belief that making sales to PSUs cannot involve payment of any "commission" for executing the sales. Further, he has conjectured that since the appellant was separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer, have also not been contested by the Assessing Officer in the remand report and, therefore, there cannot be any doubt on their authenticity. In the facts and circumstances, there is no merit in holding the impugned payments as not related to business purpose. Accordingly, disallowance of Rs. 1,03,09,115/- is deleted. These grounds of appeal are allowed." 3.2.4 Since the facts and circumstances are the same for the assessment year, except for the amount involved, following the decision of Ld. Predecessor for assessment year 2010-11 above, the A.O. is directed to delete the disallowance of Rs. 1,03,03,601/- claimed by the appellant as commission expenses. These grounds of appeal is allowed." 5. Aggrieved by the order of the CIT(A), the Revenue has raised this before the Tribunal. The learned Departmental Representative relied on the grounds raised. 6. The learned AR has filed a paper book comprising of 120 pages enclosing therein the order of the Tribunal in assessee's own case for assessment year 2010-2011 and 2013-2014 (dismissed due to low tax effect), the submissions made before the lower authorities, the audited financial statements and returns of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 795 by observing as under:- "6.4 The reply of the assessee is given a careful thought but the same is not acceptable as assessee merely produced the ledger copies of above parties in its books which are nothing but self created and no third party confirmation is produced during the course of assessment proceedings. In the absence of any conformation from above parties, it is difficult to conclude that transactions involved in their name and expenses claimed in their name are genuine and are for he purpose of business. No separate disallowance is being made for commission payment as the same has already been included in disallowance in para 5 above. However for other expenses/creditors, the disallowance is being made accordingly. 6.5 In view of the above discussion, the sundry creditors amounting to Rs. 1,36,65,795/- are disallowed and added back to the total income of the assessee. The penalty proceedings u/s. 271(1)(c) are being initiated separately." 10. Aggrieved, the assessee raised this issue before the first appellate authority. Before the first appellate authority, the assessee had filed certain additional evidences and the same was forwarded to the A.O. for his report ..... X X X X Extracts X X X X X X X X Extracts X X X X
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