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TMI Blog2013 (4) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... papers only. Assessee-company can have access to such tenders through local agents only. In these circumstances, if agents have been paid commission, it has to be held an allowable expenditure. Thus payments made by the assessee to agents were not against public policy rather same were pure business transactions. Assessee did not make any payment in contravention of law of the land and hence cannot be treated as expenditure incurred against public Policy & the expenditure is allowable as business expenditure - in favour of the assessee. - ITA No. 7250/Mum/2010 - - - Dated:- 15-2-2013 - D. Manmohan And Rajendra,JJ. For the Appellant : Shri Dhirendra M. Shah For the Respondent: Shri Manoj Kumar ORDER Following Grounds of Appeal have been filed by the appellant against the Order dt. 13-08-2010 of the CIT(A)-16, Mumbai : 1.(a)On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the disallowance made ofRs.42,09,552/- being the commission payment made which be deleted. (b)The learned CIT(A) erred in stating that, the payment is made against public policy and erred in stating that, explanation to section 37(1) is applicable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Maddi Venkataraman Co. P.Ltd., (229 ITR 534) delivered by the Hon'ble High Court of Karnataka and Hon'ble Supreme Court. He further held that in view of the explanations inserted to Section 37(1) with retrospective effect from 01-04-1962, expenditure incurred by the assessee was not allowable. He further held that so-called commission was not actually legal expenditure but was the bribe/illegal gratification which was routed through the Books of Accounts of the appellant company in the form of commission paid to the certain persons. He further referred to the matter of Indraprastha Agencies delivered by the Hon'ble High Court of Jharkhand (266 ITR 320). Finally, he confirmed the order of the AO and dismissed the appeal filed by the assessee. 5. Before us, Authorised Representative (AR) submitted that assessee was engaged in the business of manufacturing electrical items, that the assessee company was supplying material to Railways and Bharat Heavy Electricals Ltd (BHEL), that it maintained office only at Mumbai, that for procuring orders it had engaged services of certain agents in other cities, that the agents were informing the assessee-company about the orders placed, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has to prove that expenditure incurred was not for any ulterior/non-business consideration. How to run his business is the exclusive domain of the assessee. So, while carrying out its business, assessee-company had availed services of certain persons and made payment to them it cannot be held that expenditure incurred was not for business. Documents referred to by the AR clearly indicate that assessee was getting orders/payments/ pieces of information from the persons payments have been made. Getting information about the material required by Indian Railways/BHEL was one of the activities of the agents and they were paid for it. Assessee is situated at Mumbai and for procuring orders, if he avails services of agents instead of opening branch offices at different places, it can easily be termed a prudent decision. One cannot forget that advertisement for procuring the orders are not always published in national news papers. When goods are required in smaller quantities, tenders are floated in local news papers only. Assessee-company can have access to such tenders through local agents only. In these circumstances, if agents have been paid commission, it has to be held an allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the State which in turn is utilised for the public welfare. It may also be a case where the State engages itself in such a business or trade to minimise the public harm, which otherwise would result to the public, if the trade or business is carried on by the citizens at large. It is now quite firmly established that none has a fundamental right to carry on trade in vending liquor. The right given to trade in this regard is actually a privilege conferred by the State and normally these privileges are conferred by auctioning the right to vend. It is of the utmost importance that there should be as many bidders as possible in such an auction, so that maximum revenue could be obtained by the State. Purchasing of rival bidders, therefore, on the face of it, will be harmful to public interest and the very object of conducting the auction gets defeated or diluted when intending bidders are sought to be kept away by one of the bidders. ....on the admitted facts in the instant case, the assessee had purchased a rival bidder so that he would not come forward to participate in the public auction to vend arrack. This was contrary to the public interest as well as public welfare and, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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