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TMI Blog2012 (11) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... n who is or was the employee of the first mentioned person or is or was connected in any manner whatsoever with the business of first mentioned person - first mentioned person is the partnership firm while the policy has been taken on the life o! the partner who is the second mentioned person – addition deleted – In favor of assessee Disallowance on account of sales commission – alleged that the assessee was unable to provide the proof of services rendered – Held that:- Genuineness of the commission paid stands established and the AO has nowhere given a finding that the same was excessive or unreasonable - payment made to the parties is genuine, after verification from two persons to whom commission was paid. This finding of fact was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Hon ble Gujarat High Court in the case of Khodidas Motiral Panchal 161 ITR 99 and also relied on CBDT Circular No.762, dated 18-02- 1998. 3. Aggrieved by the order of the AO, the assessee filed an appeal before the learned CIT(A). The learned CIT(A) directed the AO to delete the addition by observing as under:- I have considered the submissions and find that the decision of Hon'ble Gujarat High Court relied upon by the AO pertains to A Y.I 971-72. Subsequent to that Section 2(24)(xi) was amended with effect from 1.10.1996 by the Finance Act,1996 as a result of which any sum received under a Keyman Insurance policy including the sum allocated by way of bonus on such policy would form part of the total income and the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the business of first mentioned person," In the instant case, the first mentioned person is the partnership firm while the policy has been taken on the life o! the partner who is the second mentioned person. Therefore, the AO's action in disallowing the insurance premium paid by the firm under Keyman Insurance policy is not in order and the addition is directed to be deleted. The CBDT circular read in its entirety is also in favour of the appellant. 4. Now, the Revenue is in appeal before us. At the time of hearing, both the parties agreed that the issue is covered against the Revenue by the decision of the ITAT Ahmedabad Bench-D in the case of M/s Parmeshwar Engineers [ITA no.4369/Ahd/2007, order dated 20-08-2010]. 5. After hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the commission was not an allowable expenditure and he made an addition on this account. 7. On appeal, the learned CIT(A) directed the AO to delete the disallowance in the following manner:- Before me the Id. AR submitted that the said commission was paid to increase the sales, In medicine market, the general practice was that every retailer would keep an open register in which lie would note down the names of the medicines which were about to finish. One person of the appellant who was assigned to the area would visit the shop everyday and take orders as per the registers and report the same to the appellant when delivery was made and bills were issued. For the said service those representatives were paid commission @ 1% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on this account is therefore directed to be deleted. 8. The Revenue is in appeal before us. The learned DR supported the order of the AO. The learned counsel of the assessee, on the other hand, supported the order of the learned CIT(A). 9. We have heard both the parties and perused the record and find that the learned CIT(A) has given clear finding that the payment made to the parties is genuine, after verification from two persons to whom commission was paid. This finding of fact was not disputed by the Revenue before us. Therefore, we are not inclined to interfere with the order passed by the learned CIT(A) and the same is hereby upheld. Ground no.2 raised by the Revenue is dismissed. 10. Ground no.3 in the Revenue s appeal relat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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