2014 (2) TMI 122 - HC - Income Tax

Deduction of buyers commission from the sale proceeds Held that - The claim of the assessee accepted relating to the subsequent assessment year 2004-05 - It further pointed out that even for the subsequent assessment year, the bills produced clearly showed the net amount paid after deducting the commission in the bills - There was no ground to disturb the finding of fact given by the Tribunal - Ongoing through the relevant bills as well as the accounts of the assessee, the authorities below came to the conclusion on the genuineness of the payment made to the agent while negotiating the sale and that when the Department had accepted this practice for the subsequent year Decided against Revenue.

Summary

Issues:
1. Whether the Tribunal was right in allowing the 'buyers commission' deduction from the sale proceeds in the absence of any agreement?

Analysis:
The tax case appeal involved a dispute regarding the deduction of 'buyers commission' from the sale proceeds by the assessee for the assessment year 2003-04. The assessee, engaged in the export business, claimed expenses of Rs. 35,26,697 as 'buyers commission' paid to a third party for procuring export orders. The Assessing Officer initially rejected the claim due to the absence of written records regarding the commission payment. However, the Commissioner of Income-tax (Appeals) accepted the claim, noting that the practice of 'buyers commission' was consistent over time, and the commission amount was deducted by the buyer before crediting the net amount to the assessee.

The Commissioner relied on the invoice where the commission due was deducted by the buyer, and the net amount was remitted to the assessee. The Income-tax Appellate Tribunal, in its order, referenced the acceptance of the claim for a subsequent assessment year and found no grounds to reject the assessee's claim. The Tribunal dismissed the Revenue's appeal, emphasizing the lack of additional evidence from the Revenue to dispute the genuineness of the commission payment practice.

The High Court upheld the Tribunal's decision, stating that after reviewing the bills and accounts, the lower authorities correctly determined the genuineness of the commission payment process. The Court highlighted that the Department had accepted this practice for the subsequent year, indicating consistency. Therefore, the Court found no reason to interfere with the Tribunal's order for the assessment year 2003-04. Consequently, the tax case appeal filed by the Revenue was dismissed, with no costs imposed.