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Issues involved: Appeal against Tribunal's judgment disallowing commission paid to sole selling agent.
Summary: The Revenue appealed against the Tribunal's judgment disallowing the commission paid to the sole selling agent by the assessee company. The Assessing Officer disallowed the entire claim of Rs.1.27 crores, stating that the selling agent had not rendered any service. The CIT(Appeals) allowed a substantial portion of the claim, restricting the disallowance to Rs.7.50 lakhs for sales made directly to eight parties. The Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal, leading to the current appeals before the High Court. The Assessing Officer believed that the selling agent did not provide any service based on various factors, such as failure to follow agreement terms, direct purchases by parties, and unauthorized negotiation of prices. The CIT(Appeals) disallowed Rs.7.50 lakhs out of the total claim, representing sales made directly to eight parties. However, the Tribunal reversed the decision adverse to the assessee, considering past acceptance of the arrangement and the interaction between the assessee and customers. The High Court found that the selling agent, appointed as the sole selling agent by the assessee, had a significant role in promoting sales and supporting customers across various sectors and locations. The Tribunal's decision to accept the entire commission paid to the selling agent was upheld, noting the complex setup between the parties and the agent's responsibilities. The Court concluded that the Tribunal's order required no interference, dismissing both Tax Appeals. The Tribunal's decision was supported by various legal precedents, and the Court found no need to delve into detailed references to these judgments. Overall, the High Court upheld the Tribunal's decision, affirming the allowability of the commission paid to the sole selling agent.
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