2017 (8) TMI 31 - HC - Income Tax

Disallowance of consultancy charges paid to Jeevan suraksa Medicare Services Ltd - whether the expenditure was not incurred wholly and exclusively for the purpose of business - Held that - Commissioner granted additional opportunity to the assessee to produce documents and called for remand report from the Assessing Officer. After considering such additional materials, the Commissioner reversed the decision of the Assessing Officer on the ground that the expenditure was not in doubt and that the same was also made for the purpose of business. How the assessee should arrange his business would not be the concern of the department. This view of the Commissioner of Income Tax (Appeals) was confirmed by the Tribunal. No reason to interfere whether the certain expenditure is made for the purpose of business is essentially a question of fact. Commissioner (Appeals) and Tribunal have been concurrently come to certain findings.No question of law arises. Addition by way of commission to different agents - Held that - Commissioner (Appeals) noted that the commission was paid to large number of persons and the assessee could produce enough evidence to establish majority of his payments. It was this view of the Commissioner of Income Tax (Appeals) which was confirmed by the Tribunal. Once again this question is purely one of facts. No question of law arises. Revenue appeal dismissed.

Summary

Issues:
1. Disallowance of consultancy charges paid to Jeevan Suraksa Medicare Services Ltd.
2. Disallowance of commission payable to associates.
3. Disallowance of a small amount of expenditure.

Issue 1: Disallowance of Consultancy Charges
The Department appealed against the ITAT judgment regarding the disallowance of consultancy charges paid to Jeevan Suraksa Medicare Services Ltd. The Assessing Officer questioned if the expenditure was incurred wholly and exclusively for the business. The Commissioner granted the assessee an opportunity to produce documents, and after reviewing the additional materials, concluded that the expenditure was genuine and for business purposes. The High Court noted that determining if an expenditure is for business purposes is a question of fact. The decisions of the Commissioner and Tribunal were based on factual findings, and no legal question arose. Hence, the appeal was dismissed.

Issue 2: Disallowance of Commission
The second issue involved the disallowance of commission payments to associates. The Assessing Officer doubted the actual payment of commission due to insufficient evidence. However, the Commissioner found that the majority of payments were supported by evidence and upheld by the Tribunal. The High Court reiterated that this issue was a question of fact, and since the Commissioner's decision was based on factual evidence, there was no legal question to consider. Therefore, the appeal on this issue was also dismissed.

Issue 3: Small Amount Expenditure Disallowance
The final issue concerned a small expenditure amount of ?1,31,860. The High Court decided not to interfere with this matter, indicating that the amount was insignificant in the context of the case. Consequently, the Tax Appeal was dismissed in its entirety.

In conclusion, the High Court upheld the decisions of the Commissioner and ITAT regarding the disallowance of consultancy charges and commission payments, emphasizing that these were factual issues without any legal questions. The Court also declined to intervene in the matter of a small expenditure amount, resulting in the dismissal of the Tax Appeal.