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Issues involved: Disallowance of expenditure on commission u/s 143(3) of the Act.
Summary: The appeal was filed by the assessee against the disallowance of expenditure on commission paid to M/s Lamp Cap (India) Private Limited. The Assessing Officer disallowed the claim stating lack of a legally binding contract. However, it was found that the commission receiving company had rendered necessary services resulting in a significant increase in the assessee's turnover. The Tribunal noted that the commission payment was based on an appointment letter and services rendered by M/s Lamp Cap (India) Private Limited. The Tribunal referred to previous judgments supporting the allowability of commission expenditure without a written agreement. Ultimately, the Tribunal held that the expenditure was justified for the promotion of the assessee's business, leading to the increase in turnover, and allowed the appeal. The Tribunal found that the commission payment was for services rendered by M/s Lamp Cap (India) Private Limited in procuring orders and timely receiving payments, resulting in a substantial increase in the assessee's turnover. Despite the absence of a written agreement, the Tribunal held that disallowance based solely on this factor was unjustified. Referring to previous cases, the Tribunal concluded that the expenditure was incurred for the promotion of the assessee's business and therefore allowable. The Tribunal allowed the appeal, emphasizing that the commission expenditure was incurred for promoting the assessee's business and had led to a significant increase in turnover. The Tribunal's decision was based on the services rendered by M/s Lamp Cap (India) Private Limited in procuring orders and increasing the turnover of the assessee, highlighting the justification for the expenditure incurred.
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