2009 (4) TMI 964 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT(A)-XII, New Delhi for A.Y. 2005-06.

First Issue - Disallowance of commission on sales:
The assessee appealed against the disallowance of commission on sales paid to companies stockiest for sales to Kendriya Bhandar and CSD canteens. The AR argued that the payments were reimbursement of expenses and not against public policy. Citing a precedent, it was contended that unless proven otherwise, disallowance of such commission is not justified. The DR supported the lower authorities' orders. The Tribunal found that the commission was legitimate and not against public policy, as the revenue failed to provide evidence to the contrary. Relying on the precedent, the Tribunal directed the AO to allow the commission claimed by the assessee.

Second Issue - Addition of employees' PF contribution:
The second ground concerned the addition of employees' PF contribution deposited beyond the due date. Referring to a Tribunal decision in a similar case, it was noted that both employer and employee contributions were allowed as deductions if paid before the last date of filing the return u/s 139(1) of the IT Act. The Tribunal followed the precedent and reversed the lower authorities' decision, directing the AO to delete the addition of employees' PF contribution made before the due date for filing the return. The appeal of the assessee was allowed in this regard.

Conclusion:
The Tribunal allowed the appeal of the assessee in both issues, directing the AO to allow the commission claimed and delete the addition of employees' PF contribution made before the due date for filing the return.