2013 (1) TMI 761 - HC - Income Tax

Disallowance of commission expenses - disallowance of depreciation on tangible assets - Held that - it was not open to the department to determine the expenditure the assessee - As per the decision of CIT, Andhra Pradesh Vs. Dhanrajgirji Raja Narasinghirji 91 ITR 544 - books of accounts were maintained by the assessee - merely because in the subsequent year more expenses are incurred by the assessee disallowance was not justified - decided in favor of assessee Held that - As per the tax appeal No. 509 of 2012 - no question of law for onsideration arises and the same is dismissed

Summary

Issues involved:
1. Deletion of addition made on account of disallowance of commission expenses.
2. Disallowance of depreciation on tangible assets.

Analysis:
1. The first issue in this case revolves around the deletion of the addition made on account of disallowance of commission expenses. The Assessing Officer disallowed commission expenses amounting to &8377;1.24 crores, citing a significant increase from the previous year. The Commissioner of Income Tax (Appeals) upheld this disallowance, despite arguments against it. However, the Tribunal, after a detailed hearing, ruled in favor of the assessee. The Tribunal emphasized that it is not within the department's purview to dictate the expenses an assessee should incur. It referenced a previous Supreme Court decision to support its stance. The Tribunal also considered the maintenance of the assessee's books of accounts and found no fault, concluding that the comparison with the previous year did not justify the disallowance.

2. Moving on to the second issue, the matter of disallowance of depreciation on tangible assets was also raised. However, this issue had already been addressed in a previous tax appeal (No. 509 of 2012) where the Court found no fault in the Tribunal's approach. Consequently, the Court in the present case did not entertain this issue, as it did not identify any legal question warranting consideration. As a result, the tax appeal was dismissed, affirming the Tribunal's decision.

In conclusion, the High Court dismissed the appeal challenging the Tribunal's order. The Court found no substantial question of law or illegality that would justify interference with the Tribunal's decision on the deletion of commission expenses and disallowance of depreciation on tangible assets. The judgment underscores the importance of factual analysis and application of relevant legal principles in tax matters, ultimately upholding the Tribunal's decision in favor of the assessee.