9911796707
TMI Blog2013 (11) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... ld)/1994 for Assessment Years 1990-91, connected with Income Tax Appeal No. 1069 (Alld)/1994 for assessment year 1991-92, by which the appeal of the revenue was allowed. 3. The appeal was admitted on the following substantial question of law:- "Whether the Tribunal is legally justified in confirming the part disallowance of commission without making out any case that during the year under consideration, appellant has not rendered the same services as have been rendered in previous years? 4. The brief facts giving rise to this appeal are that the assessee-appellant was engaged in the business of manufacturing and selling of loud speakers and electronic components. The Company entered into an agreement with M/s. Laxmi & Co., to act as sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a partner in M/s. Laxmi and Co., Sri G.C. Gupta another partner holding 27 % share in assessee firm is brother of Sri L.C. Gupta and Smt. Meera Gupta holding 19 % share in assessee firm is wife of Smt. L.C. Gupta. In other words relatives within the meaning of Section 241 of the I.T. Act, hold 100 % in the firm M/s. Laxmi & Co., and, therefore, the provision of Section 40-A (2) of the I.T. Act are clearly applicable. The assessee was therefore, asked to furnish the details to explain that any service was actually rendered by M/s. Laxmi & Co. and justifying that the payment was reasonable having regard to the fair market value of the services for which the payment is made. In the reply, the assessee furnished photo copy of some corresponden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable having regard to the fair market value of the services rendered. As discussed above, since only nominal services have been rendered, by applying the provision of Section 40 A (2) (a) I am holding commission @ Rs.1.5 % only is reasonable. Thus out of commission paid of Rs.5,29,058/-, Rs.3,96,793/- is disallowed. Addition Rs.3,96.793" 6. Learned counsel for the appellant submits that there was an agreement between the assessee and M/s. Laxmi & Co., to give commission on the sales, and that commission was increaed to 6 % in case total sales exceed Rs.35 lacs. In case the sale exceed Rs.75 lacs, the selling agents was also payable incentive commission. It is submitted that in the previous year also the CIT (Appeals) set aside the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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