2010 (4) TMI 1149 - AT - Income Tax

Summary

Issues involved: Disallowance of commission expenses u/s 133A of the Act.

The Appellate Tribunal ITAT MUMBAI, in the case, dealt with a Miscellaneous Application filed by the assessee seeking rectification of mistakes in the Tribunal order. The main issue was the disallowance of commission expenses amounting to Rs. 1,71,49,967 claimed by the assessee in the business of stevedoring. The commission was paid to a sister concern, and the revenue authorities disallowed the deduction due to lack of evidence on the nature of services rendered by the sister concern. The assessee contended that the commission amount was already taxed in the hands of the sister concerns, and disallowing it in the assessee's hands would lead to double taxation. The Tribunal, after considering the submissions, upheld the disallowance stating that the onus was on the assessee to establish the nature of services rendered by the sister concern, which was not done adequately. The Tribunal found no merit in the application and dismissed it on April 30, 2010.

In the application, the assessee raised several points challenging the Tribunal's order. Firstly, it was argued that disallowing the commission in the assessee's hands would result in double taxation since it was already taxed in the hands of the sister concerns. Secondly, it was contended that the authorities did not examine the services rendered by the sister concerns before disallowing the deduction. Thirdly, the statement of the Chief Accountant/Finance Manager of the assessee, which formed the basis of disallowance, was retracted later, indicating a mistake in the order. Additionally, the Tribunal failed to consider the retracted statement and the contention that proper staff was employed by the sister concerns for services. Lastly, it was highlighted that commission payments to some sister concerns were allowed in earlier assessment years, which had become final. However, the Tribunal found these arguments insufficient to allow the deduction and upheld the disallowance of the commission expenses.

The Tribunal's decision was based on the failure of the assessee to provide sufficient evidence regarding the nature of services rendered by the sister concern for which the commission was paid. Despite the arguments presented in the Miscellaneous Application, the Tribunal held that the circumstances and contentions raised were not substantial enough to support the deduction claimed by the assessee. Therefore, the Tribunal dismissed the application, affirming the disallowance of the commission expenses.