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TMI Blog2014 (2) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... n 9.10.2007 declaring total income of Rs 13,13,508/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 14.12.2009 and the total income was assessed at Rs 17,96,660/-. Aggrieved by the order of AO Assessee carried the matter before CIT(A). CIT(A) vide order dated 1.9.2010 dismissed the appeal of the Assessee. Aggrieved by the order of CIT(A), Assessee is in now in appeal before us. The grounds raised by the Assessee reads as under:- 1.1 The order passed u/s. 250 on 1.9.2010 for A.Y. 07-08 by CIT(A)-XVI, Abad confirming the disallowance of commission payment of Rs. 4,83,256/- is illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(A) has grievously erred in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee interalia submitted that the commission was made for following the sale of goods to the 8 customers and collection of amount, the rate of commission was 2% of the sales amount, TDS was deducted by the assessee before making the payment and Shri Keval Patel was also assessed to tax. The submission of the assessee was not found acceptable to AO. He was of the view that the assessee has failed to prove that Shri Keval Patel was having capacity to render the services, the expenditure was on account of business expediency and his services were indespensible for the sales. He accordingly held the expense to be non genuine and disallowed the commission of Rs 4,83,256/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant for purchases. Similarly, another party Shree Vishnu Saw Mills has also clearly stated that they were corresponding with the appellant directly by telephone and they have not used any mediator in the name of Mr. Patel. Three parties namely Ambika Traders, Ashok wood works and Royal timbers have replied on identical worded paper, which costs doubt on their submission. They have stated that they were corresponding through a mediator, but they do not know the name of the mediator. The other parties did not respond to the summons of the AO. From the above, it can be stated that at least three of the parties have clearly stated that they have done business directly with the appellant and not through the commission agent, namely Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the payment might have been made and although there might be an agreement in existence, it would still be open to the ITO to take into consideration all the relevant factors which will go to show whether the amount was paid as required by section 10(2)(xv) of 1922 Act. The question as to whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of such business, profession or vocation has to be decided on the facts and in the light of the circumstances of each case." 2.4.3 In view of the above, it is clear that in the present case, the commission payment is not genuine as the recipient of commission could not have performed the services required for doing the commission business. Three of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Gujarat High Court in the case of Gujarat Insecticides Ltd Vs ACIT (2012) 19 taxmann.com 70 (Guj). 9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that Assessee has paid commission on sales (for effecting sales to 8 parties listed on page 2 and 3 of the assessment order) to Shri Keval Patel, who is the son of one of the partners. It is also a fact that commission was paid to him in the earlier year and subsequent year. During the course of appeal proceedings before CIT(A), CIT(A) had called for remand report from AO. AO in the remand report has stated that notice u/s 133(6) was issued to all the 8 parties. In the remand report it was further submitted that out of the eight parties, 2 p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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