9911796707
TMI Blog2001 (12) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. and Sh. R.L. Malhan Finance Saving Funds, Phagwara. During the assessment year under consideration, the assessee had paid commission to the following commission agents :- 1.Smt. Tripta Sethi Rs. 18,900 2.Smt. Anita Sethi Rs. 15,500 3.Smt. Sunita Sethi Rs. 9,500 4.Smt. Anita Sahni Rs. 18,500 5.Miss Suman Rs. 6,500 6.Sh. Parveen Kumar Rs. 5,500 7.Smt. Kavita Sethi Rs. 6,000 Total Rs. 80,400 The payment made to Smt. Kavita Sethi was held to be genuine and finally the amount of Rs. 67,900 paid to other commission agents was held to be non-genuine because these commission agents were in one way of the other connected with the partners of M/s Fine Art Industries, Phagwara. According to the Assessing Officer, the amount of commission paid to commission agents was deposited in their bank accounts and from the bank accounts, it was deposited with the firm M/s. Fine Art Industries, Phagwara. The assessee filed the affidavits on behalf of all the commission agents and they were also produced personally for examination before the Assessing Officer. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the commission was being paid to them year after year and accepted by the same Assessing Officer in the hands of the assessee as also in the hands of the commission agents. It was also submitted before the CIT(A) that the assessee had filed the affidavits of the commission agents and produced them before the Assessing Officer for examination and hence the assessee has fully discharged his onus. It was also submitted that the Assessing Officer was not justified in treating the payment of commission as non-genuine and making the addition in the hands of the assessee, particularly, when the Assessing Officer had assessed the same amount in the hands of the commission agents. It was also pointed out to the CIT(A) that the amount, in question, has also been added in the hands of the firm M/s. Fine Art Industries and thus the same income has been assessed in these hands. 5. After perusing the records as well as the statements of commission agents, the learned CIT(A) came to the conclusion that the Assessing Officer was not justified in making the disallowance of Rs. 67,900 on account of commission payment. The relevant observations of the CIT(A) are reproduced hereunder : "4.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessee has duly discharged his onus and the identity of the creditors was also established. It is also relevant to point out that the Assessing Officer has not denied this fact that in assessee s line of business, the commission was being paid to the commission agents. Furthermore, the Assessing Officer himself has accepted this fact that the commission has been paid to some of the commission agents. It is also an admitted fact that in the preceding year the Assessing Officer himself has accepted the commission payment. The learned CIT(A) found that the assessee was not related with M/s. Fine Art Industries, Phagwara in which the commission agents have deposited a part of their funds. In my opinion, the learned CIT(A) has correctly observed that in view of the affidavits filed by the commission agents and the statements recorded by the Assessing Officer, there was no justification in holding that the assessee s claim for payment of commission was not genuine. Thus, keeping in view the submissions of the learned counsel for the assessee and the observations made hereinabove, I am of the opinion that the order of the CIT(A) deserves to be confirmed in this issue. Accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed explanation was filed before the Assessing Officer as well as before the learned CIT(A). However, both the authorities below have not correctly appreciated, the explanation given by the assessee. He vehemently argued that both the authorities below have not passed a speaking order, which is apparent from their respective orders. Shri P.N. Arora, Advocate, the learned counsel for the assessee, drew my attention to the copy of written submissions dated 16-3-1993 submitted before the CIT(A), Jalandhar, wherein the assessee had submitted that it was brought to the notice of the Assessing Officer that the expenses, in question, were not entertainment expenses but the same were draw expenses. These expenses were incurred at the time of draw of auction group. Accordingly, it was submitted that these expenses were clearly outside the ambit of section 37(2A) of the Act. Reliance was placed on the following decisions : (1) CIT v. Gaekwar Mills Ltd. [1992] 193 ITR 734 (Guj.). (2) CIT v. Patel Bros. Co. Ltd. [1977] 106 ITR 424 (Guj.). (3) CIT v. Kaira District Co-operative Milk Producers Union Ltd. [1991] 192 ITR 608 (Guj.). (4) CIT v. Eskaps (I) (P.) Ltd. [1991 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 37(3) of the Act read with Rule 6B of the Income-tax Rules, 1962. When the matter was taken to the CIT(A), it was submitted on behalf of the assessee that for the purpose to oblige the customers, the assessee used to give presentation articles for the sales promotion. The assessee also filed the complete names and addresses of the persons to whom the presentation articles were given. It was also submitted that rule 6B would not applicable as the expenditure was not in the nature of advertisement. However, the learned CIT(A) did not accept the explanation of the assessee and consequently, he upheld the addition. 13. After hearing both the parties, I find that the amount of Rs. 55,100 was incurred towards the cost of presentation articles. The Assessing Officer as well as the CIT(A) was of the view that rule 6B was applicable since the cost of each article exceeded Rs. 50. It is apparent from the record that the assessee has presented hand bags, tea sets etc. to its members/customers, for maintaining business relations. In my opinion, these presentation articles did not come within the definition of publicity or advertisement in any manner. It is true that adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Rs. 50 has to be ipso facto disallowed. Before the Assessing Officer, though a specific contention was raised by the assessee that the articles presented to their clients were of sandalwood or ivory pieces which were meant only as a measure of business promotion and not for any advertisement of their products but the learned Assessing Officer without examining the said aspect in its proper perspective, mechanically applied holding that since the presentation items were of value of more than Rs. 50 therefore, the same are not admissible as business expenditure." In the instant case also, the Assessing Officer has disallowed expenses, in question, merely on the ground that presentation articles were of the value of more than Rs. 50 each. In fact, the Assessing Officer has not brought any other material on record. Even the learned CIT(A) has not given any cogent reasons while confirming the addition. In view of the decision of the Hon ble Karnataka High Court also, no addition is called for and accordingly the same is hereby deleted. 14. In the result, the appeal of the Revenue is dismissed while the C.O. filed by the assessee is partly allowed. - - TaxTMI - TMITax - In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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