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Issues involved: Addition of commission and partial disallowance of expenditure under various heads.
Addition of Commission: The appeal was against the addition of Rs. 2 lacs out of commission received from BSNL on sale of mobile sim cards. The assessee claimed to have passed on about 80% of the commission to retail customers as cash discount. The Assessing Officer disallowed Rs. 2 lacs of the commission paid as it was noted that the commission was passed on via cash sale vouchers, which were not fully verifiable. The CIT (Appeals) upheld the disallowance. However, the assessee provided evidence showing that the commission was not paid in cash but was adjusted by reducing the value of the products. The ITAT found merit in the claim and restricted the disallowance to Rs. 50,000, partly allowing ground No.1 raised by the assessee. Partial Disallowance of Expenditure: The Assessing Officer had disallowed a portion of expenses under various heads for personal use, such as car running, insurance, depreciation, telephone, advertisement, entertainment, and staff welfare. The ITAT ruled that while personal use could not be ruled out entirely, the disallowance for personal use was restricted to 1/10th of the total expenditure for car-related expenses and Rs. 10,000 for entertainment expenses. The disallowance made out of staff welfare expenses was reversed. The appeal on this issue was partly allowed. In conclusion, the ITAT Chandigarh partially allowed the appeal of the assessee concerning the addition of commission and the partial disallowance of expenditure under various heads on account of personal use.
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