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TMI Blog1981 (1) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... in the cashew and sea-foods factories. Unlike the prior accounting years the assessee had paid commission to two persons during the accounting year which had been claimed as a business expenditure. Shri S. Laxmanan had been paid Rs. 24,000 and Shri Rangaswamy Rs. 13,500. Both these persons are nephews of one of the partners. There is no written contract with them. The AAC had recorded that the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of the services of these two persons. He pointed out that the presence of a manager does not mean that these two persons had not done any services. 4. The Department is on appeal before us. Shri Mathews submitted that the products manufactured by the assessee do not require any effort for disposal because they are always in short supply. He further submitted that this was the only year when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden is on the assessee. He has not been directly called for to discharge this burden. Had he done so, perhaps the assessee would have led further evidence. The ITO had not asked that the two persons should be produced for examination. The ITO has not doubted about the actual payments. All that he states is that considering the fact that this was a seller's market there was no need for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments are excessive or unreasonable having regard to the fair market value of the services rendered by them. The ITO merely mentioned s. 40A (2). He did not go into the details because according to him it has to be disallowed under s. 37 itself. The AAC found it was allowable under s. 37. Then it was necessary for him to have gone into the question of application of s. 40A (2). This he has not d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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