2022 (4) TMI 912 - HC - Income Tax

Disallowance of the commission expenditure - HELD THAT - This Court is of the opinion that whether any agent has rendered any service or not to the appellant is a question of fact. In fact, even in Conimeters Electricals (P) Ltd. 2009 (8) TMI 1236 - DELHI HIGH COURT and Asian Mills Pvt. Ltd 2021 (12) TMI 232 - GUJARAT HIGH COURT the Courts dismissed the appeals filed by the Revenue on the ground that no substantial question of law arose in the said matters as the issue as to whether any agent had rendered any service or not was a question of fact. In the present case, the authorities below have given a concurrent finding of fact that the Appellant had failed to produce any evidence to prove that service had been rendered by Mr. D.N. Pandey to the appellant. The Tribunal in its order has also concluded that merely producing some emails exchanged between Mr. D.N. Pandey and the Appellant/assessee is not sufficient to prove that Mr. Pandey had provided any kind of service. The Profit and Loss Account of Mr. D.N. Pandey for the previous assessment year shows that out of gross receipt of ₹ 1,64,40,356/-, he had incurred expense of ₹ 1,38,05,010/- towards labour, loading unloading charges Last but not the least, the agreement between Mr. D.N. Pandey and the Appellant/assessee does not mention any specific scope of service. Thus no substantial question of law arises for consideration in the present case and the present appeal is dismissed.

Summary

Issues:
Challenge to the Tribunal's order sustaining disallowance of commission expenditure incurred by the Appellant for the Assessment Year 2013-14.

Analysis:
The appeal was filed to challenge the Order passed by the Income Tax Appellate Tribunal regarding the disallowance of commission expenditure. The Appellant argued that the Tribunal's decision was based on suspicion and conjectures, lacking legal merit. The Appellant contended that the Tribunal failed to consider crucial documents, such as emails, supporting the commission expenditure related to Railway contracts. Citing precedents, the Appellant emphasized the need for concrete evidence to support the disallowance. The Appellant also highlighted the principle of consistency, citing a Supreme Court judgment. However, the Court noted that the determination of whether an agent provided services is a factual inquiry. Referring to previous cases, the Court emphasized that the question of whether services were rendered by an agent is a matter of fact, not law. The Court observed that the lower authorities had unanimously found a lack of evidence demonstrating the services rendered by the agent in question. The Court noted that the mere exchange of emails was insufficient to establish the provision of services. Additionally, the Court pointed out discrepancies in the Profit and Loss Account of the agent, highlighting significant expenses without a clear scope of services outlined in the agreement. Ultimately, the Court found no error in the Tribunal's decision, concluding that no substantial legal question arose for consideration. Consequently, the Court dismissed the appeal, upholding the Tribunal's order regarding the disallowance of commission expenditure incurred by the Appellant.