2002 (7) TMI 412 - AT - Income Tax

Summary

Issues:
1. Disallowance of commission paid by the assessee.
2. Disallowance on account of personal use of telephone, postage, telex, car expenses, and car depreciation.

Analysis:

Issue 1: Disallowance of Commission Paid by the Assessee
The appeal was against the CIT(A)'s order regarding the disallowance of commission paid by the assessee for the assessment year 1993-94. The AO allowed the deduction of commission for three parties but disallowed part of the commission paid to the first party, stating it was excessive. The CIT(A) set aside the issue for reconsideration by the AO. The assessee argued that the payee was not an interested party, so the provisions of section 40-A(2) did not apply. The tribunal found that the payment was not excessive considering the interest earned by the assessee and allowed the appeal, directing the AO to delete the addition on account of commission.

Issue 2: Disallowance on Account of Personal Use of Resources
Grounds of Appeal 4 to 6 related to the disallowance of expenses for personal use of telephone, postage, telex, car expenses, and car depreciation. The AO's disallowance was upheld by the CIT(A), leading to the appeal. The assessee contended that as a company, personal use of resources like telephone and vehicles was not applicable. The tribunal, citing previous decisions, agreed with the assessee, holding that the addition sustained by the CIT(A) was not justified and therefore deleted the disallowance.

In conclusion, the tribunal allowed the appeal filed by the assessee, overturning the disallowance of commission and expenses related to personal use of resources.