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TMI Blog2011 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... being revenue in nature, is fully allowable as deduction. - ITAT remitted the matter with direction - Held that: - After stating the principle on which commission paid by the assessee to DSAs would be treated as expenditure relating to particular areas, for want of sufficient evidence to arrive at a definite finding in this behalf, the Tribunal, in its discretion, remitted the case back to the AO giving clear guidelines how to examine the issue on the basis of records to be produced and what course of action, the AO was supposed to take. - Decided against the assessee. - ITA No.213 of 2010 - - - Dated:- 3-6-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. For Appellant : Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. 2. The only dispute in this appeal is in respect of disallowance of Rs. 48,38,636/- out of the commission paid by the appellant company to its DSAs for their services in sourcing hirers. 3. The CIT (A) upheld the addition of Rs. 48,38,636/- made by the AO on account of disallowance out of the commission paid to the DSAs during the year. He held that the expenditure incurred in a deferred revenue expenditure and sought to draw his conclusion on the basis of the judgment of Apex Court in the case of Madras Industrial Investment Corporation Vs. Commissioner of Income Tax [225 ITR 802 (SC)]. According to the CIT (A), the aforesaid judgment was applicable to the facts of this case, as the commission is determined and paid with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee"s liability to pay the commission partly arises at the time when the DSA sources the hirer and partly on the volume of business generated. The assessee disburses the amount only after receiving the upfront processing fee from the prospective borrowers. It is also accepted fact that upfront processing fee is taxed in the year of receipt itself and not spread over the period of hire-purchase finance. Therefore, according to the Tribunal, payment of commission is not based on the hire-purchase charges receivable by the assessee but on the basis of hirer sourced by the DSA and in respect of such hirer the processing fee is received, which is allowable in the year of payment. This shows that the Tribunal accepted the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to be decided in accordance with our above observations. 6. The submission of Mr. C.S. Aggarwal, Sr. Advocate who appeared for the assessee was that there was no need to remit the case back to the AO when the Tribunal had the entire material before it and could form an opinion itself on the basis of said material. Attention was drawn to the provisions of Section 251 of the Act which lays down the scope of powers with the Commissioner (Appeals) and it was argued that the powers of the Commissioner (Appeals) are co-terminus of that of the AO. Proceeding on this basis, it was argued that since the Tribunal was given power to pass such orders in the appeal as thinks fit, it could pass the orders of its own on the merits of the case, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it must be quashed. 8. He also referred to the judgment of the Apex Court in the case of The Indian Molasses Co. Pvt. Ltd. Vs. Commissioner of Income Tax [37 ITR 66] which deals with the issue as to what constitutes expenditure within the meaning of that word under Section 10(2)(xv) of the Income Tax Act, 1929, which is pari materia to Section 32 of the present Income Tax Act. Following observations therefrom were specifically were relied upon: Side by side with these principles, there are others which are also fundamental. The income-tax law does not allow as expenses all the deductions a prudent trader would make in computing his profits. The money may be expend on grounds of commercial expediency but not of necessity. The te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no sufficient material placed before it to demonstrate as to what were the services rendered by the DSAs from which it could be ascertained as to how allowability to pay such brokerage had arisen and could be worked out. According to the Tribunal, mere Agreement was not sufficient for this purpose, as it does not reveal on what basis the brokerage is payable and is looked into what and how the assessee would be liable to pay such brokerage. Section 254(1) of the Act which confers power upon the Tribunal to decide the appeal clearly states that after giving opportunity of being heard to both the parties, it may pass such an order thereon as thinks fit . 10. After stating the principle on which commission paid by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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