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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 ..... % - he would be entitled to commission at 2% of sales and will be paid at the year end on the basis of yearly statement and further in case of credit sales, only after the realization of the sales, commission would be paid - nothing has been placed on record about the sales made to various parties, whether the sales were on credit and in case the same were on credit, whether the commission was paid only after realisation of sales –thus, the disallowance is restricted to Rs. 2 lacs as against Rs 4,83,256/- made by the AO – Decided partly in favour of Assessee. - I.T. A. No. 3009/AHD/2010 - - - Dated:- 7-2-2014 - Shri G. C. Gupta And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri S.N. Divetia A.R. For the Respondent : Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case as well as in law, the ld. CIT(A) ought not to have confirmed the disallowance of commission expenses. 2.3 The disallowance of commissijon payment to Shri Keval Patel is upheld by CIT(A) on presumption, surmise and conjunctures such as Shri Patel being a student, he could not find even a few hours to move in the market. 3.1 The ld. CIT(A) has grievously erred in calling for remand report from A.O. and thereby allowing a fresh opportunity to suggest disallowance on altogether different grounds. The action on the part of CIT(A) to call for remand report from A.O. was beyond the scope of his powers under the Act so that the conclusion reached on the basis of such report was illegal, unlawful and bad in law. 4. Though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring and is in his third year. This means that during the year relevxnt to the current assessment year, Mr. Patel was studying either in his 12th or in the first year of engineering. Mr. Patel cannot find so much time to do the commission business by contacting a large number of parties. It cannot be the claim of Mr. Patel that he contacted only the relevant eight parties and none else. If it is so then his services are no more required. If the commission has to be genuine, then the commission agent has to contact a large number of parties who would require the goods, as well as he has to contact a large number of parties who have the goods available of required quantity and quality as well as sizes. This will take his full-time in moving i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupation with 12th standard science subject or first year engineering course. Hence, the payment of commission is not genuine. The Hon. Supreme Court in the case of Swadeshi Cotton Mills ltd 63 ITR 27 has clearly stated that existence of an agreement and payment of commission by itself does not prove that the same is for the purpose of business and is allowable. The Hon. Supreme Court has stated that this depends on facts and circumstances of each case. In the scales, the Hon. Supreme Court has stated as under:- "it was true that as between the directors and the company the resolution had a binding effect and the payment had to be legally made. But it was for the ITO to decide whether the amount so paid to the directors was wholly and exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is now in appeal before us. 7. Before us, the ld A.R. submitted that Assessee had paid commission at 2% on the sales effected by Mr Keval Patel. He was paid commission in the year under consideration and also in preceding and subsequent years at the same rate. He pointed to the table of commission paid to various parties including to Mr Keval Patel at page 2 of the paper book. He further submitted that in the statement of Shri Keval Patel which was recorded u/s 131 of the Act, Mr Keval Patel has admitted to the receipt of commission and also answered the questions with the nature of work handled by him. He further submitted that Shri Keval Patel has been paid commission in earlier year and subsequent years and the same has been offered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbers) had replied on identical worded paper and have stated to have been corresponding through a mediator but they did not know the name of the mediator, which according to CIT(A), casts doubt on their submission . From the details of commission paid and placed on record at page 2 of the paper book, it is seen that during the year under consideration, commission was only paid to Mr Keval Patel and no other party was paid commission but in AY 2006-07, 2008-09 and 2009-10, apart from commission to Mr Keval Patel, Assessee had also paid commission to other parties. The details of commission further reveals that commission @ 2% has been paid to Mr. Keval Patel in all the years but on the other hand, the commission to other parties has been pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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