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TMI Blog2023 (4) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... o: M/s. Sonali Traders amounting to Rs. 39,21,215/- 3. While in the case of Ravikiran Ceramic Pvt. Ltd. in ITA No. 397/Ahd/2018 the commission disallowed related to the following: (a)Shri Jyoti Electric Trading Company Rs. 48,23,618/-. (b)Parul Traders Rs. 17,50,952/- (c)Falguni Traders Rs. 20,29,229/- Total Rs. 86.03 Lakhs 4. A perusal of the order of the authorities below reveals that the claim of commission expenses was denied for non-justification of the expenses so incurred by the assessee in the absence of any documentary evidences filed by the assessee proving that any services had been provided by the specified persons. The A.O. had noted in both the cases that the commission was paid to closely related persons as specified u/s. 40A(2)(b) of the Act and the assessee had not furnished any evidence to prove any services provided by these persons to justify the claim of commission expenses. Accordingly the claim was denied by the A.O. in the case of both the assessees and upheld by the Ld. CIT(A). 5. Identical grounds have been raised in the case of both the assessees and for the sake of convenience, we are reproducing the grounds raised in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were filed by the assessee which have not been disputed by the revenue nor any rebuttal evidences filed by the revenue nor the commission agents examined by the Revenue. The evidences filed by the assessee therefore could not be simply brushed aside. The burden of proof rested on the Revenue, the assessee having sufficiently discharged the same. In this regard, reliance was placed on the decision of Jurisdictional High Court in the case Swastik Textile Company Pvt. Ltd. vs. CIT reported in (1984) 150 ITR 155 (Guj.) (iii) the agents having returned the commission income to taxes the entire exercise of disallowance was revenue neutral. 7. The ld. D.Rs. entire thrust however was on the contention that no evidence of rendering any service by the agents was filed by the assessee. That further in the case of M/s Mangalya Ceramic, the agent, i.e Sonali Traders as per the agreement had no work at all to do, since it was assigned a job work which already stood allotted to the assesse and the agent had nothing to do with the allotment of the job work. It was also contended that the item being sold in the case of Mangalya Ceramic was a customized item and could not be sold through agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies hereto. (b) Canvass for secure orders and push the sale of the products manufactured by the manufacturers to the best of their ability with the territories of mutual understanding by both parties and finally decided by principal, (c) Procure orders from customers and pass on the same to the. manufacturers from time to time for extrusion and the distributors shall sell the same at the rates and on such terms and conditions which may be notified to them from time to time by the manufacturers; (d) Bear the cost in connection with the establishment and maintenance of the showrooms and ware-houses, if any : (e) Guarantee-to the manufacturers the performance of all contracts in respect of orders procured by them and shall also render such services to the manufacturers for the recovery of the amount due from the customers as may be necessary. (f) Devote their time and attention to the development of the said business and to use their best endeavours to improve and extend the business of the manufactures and to act diligently and faithful. (g) Be true and faithful in all their dealing and will use their best endevaours to advance mutual interest and to promote and increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NT FOR PRODUCTION CUM MARKETING THE PRODUCT Whereas Ravikiran Ceramics Pvt Ltd., AT. Anand, a Private Limited Company of the one part has obtained order to carry out job work of various ceramic items from Sud Chemie India Pvt. Ltd. at Nandesari. And whereas, M/s. Parul Traders, at Anand, a partnership firm party of the second part having qualified and experienced partner to manufacture and market the ceramic items as well as job work ceramic items as per requirement of Sud Chemie India Pvt. Ltd. interested and desired to carryout manufacture as well as job work on behalf of Ravikiran Ceramics Pvt. Ltd. in their plant located at Kanjari. And therefore both the parties decided and agreed to renew this production cum marketing job work agreement with the terms and conditions as follows. 1. That the party of second part carry out entire job work according to earlier terms and conditions at the factory premises of. party of the first part located at Kanjari having registered office at Anand. 2. That the second part will perform entire job work consisting aluminium rings, magnesia big gears etc. with technical aspects like size specification weight, bulk density, strength ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and page no.68 to 80 in the case of Falguni traders reveals that the communication between the assessee and the distributors is with regard to C forms of certain parties not received by the assessee and regarding deposit of certain cheques by the distributors of the assessee in the bank. In the case of Parul Traders though the agreement confines the scope of work of the agent with respect of Sud Chemie only but the correspondence filed before us of Parul Traders with the assessee is with respect to C-form of some other party placed at paper book page no. 51 to 53. Further in the case of Parul Traders certain documents have been placed which are communication of Parul Traders to the assessee mentioning the work orders placed with M/s. Sud Chemie India Pvt. Ltd. for the different months during the year placed at paper book page no. 54 to 56. 17. All the evidences placed before us are communication inter se between the assessee and the agents who at the cost of repetition we may point out are related to the assessee being persons specified u/s. 40A(2)(b) of the Act. There is not a single third party communication or correspondence evidencing any work done by these parties as distribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en disallowed in the past or succeeding years, following the principle of consistency, the settled and accepted position ought not to have been distributed. In this regard, Ld. Counsel for the assessee has filed a chart showing year-wise commission payment in the case of Ravikiran Ceramic as under: Details of sales commission: NAME OF AGENT 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 SHREE JYOTI ELECT TRADING CO 5055542 4879740 4635255 5048942 5341445 3656281 FALGUNI TRADERS 2826058 2862184 2627784 2690409 3143818 2764431 PARUL TRADERS 1042147 915937 870869 738203 705867 574574 19. He further placed the copies of assessment years in Assessment Year 201516, 2017-18 & 2018-19 pointing out that no disallowance of commission was made in these years even in scrutiny assessment. Ld. Counsel has further pointed out that though such disallowance was made an Assessment Year 2014-15 but the same were allowed by the Ld. CIT(A). Copies of the assessment order and the ld. CIT(A) for the said years were placed before us. 20. We have considered the contention of the ld. Counsel for assessee. No doubt the assessee has been paying commission for the past ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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