9911796707
TMI Blog2014 (3) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... members of the assessee against which the assessee has made said payment - AO is justified to state that the payment of commission by the assessee to his wife, two daughters-in-law, grandson, granddaughters and son of the assessee Sunil Kakkad (HUF) is for business purposes – the contention of the revenue is accepted that without stating any reason CIT(A) has stated that disallowance be restricted to 20% being excessive payment of commission by the assessee - There is no details as to the rate on which the assessee had made payment of commission to his family members - the payment of commission to his family members has been made merely to reduce the taxable income and the said payment is not for the purpose of business of the assessee – th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said payment is pending for three years and nothing moved on this account. Since Perfect Engineering Works has refused to work again on the body of trailer and the assessee is not willing to pay unless the work is done to his satisfaction, the AO stated that the liability of the assessee has ceased. The ld. CIT(A) deleted the said addition after considering the fact that the assessee filed a copy of ledger account of M/s Perfect Engineering Works for the period from 1.4.2006 to 7.7.2010 and it is seen that the amount had not been written off by the assessee in its books of account. Therefore, the liability is not ceased. Moreover, the assessee also filed a fresh confirmation from M/s Perfect Engineering Works and the amount was due fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion amount Rajkumari Makad Wife of the assessee Rs.1,00,000/- Sunil Makad Son of the assessee Rs.1,00,000/- Sunil Makad (HUF) Son of the assessee Rs.1,00,000/- Bharti Makad Daughter-in-law Rs.1,35,000/- Gopal Makad Grand son Rs.1,00,000/- Hema Makad (minor) Grand daughter Rs.1,00,000/- Naresh Makkad Son of the assessee Rs.1,00,000/- Sudh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the First Appellate Authority. 7. On behalf of the assessee it was contended that the assessee's wife , two daughters-in-law, grandson and grand-daughter are assessed to tax and they assisted the assessee in its business of transportation and warehousing by attending the assessee's business every day. The payment of lump sum commission of Rs.1 lakh to each member of the assessee's family as a taken of appreciation of the assistance given by them to the assessee in the business of the assessee is business expenses for rendering services to the assessee. The ld. CIT(A) after considering the above submissions of the assessee has restricted the disallowance to 20% of Rs.6,35,000/- on account of provisions of section 40A(2)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee . There is no details as to the rate on which the assessee had made payment of commission to his family members. We agree with ld. DR that the said payment of commission to his family members has been made merely to reduce the taxable income and the said payment is not for the purpose of business of the assessee. Hence, we reverse the order of ld. CIT(A) by confirming the total disallowance of Rs.6,35,000/- made by AO by allowing ground no.2 of the appeal taken by department. 11. In ground No.3, the department has disputed the order of ld. CIT(A) in deleting the disallowance of Rs.3,08,102/- made by the AO out of daily wages and contract charges of Rs.61,62,042/- claimed by assessee. 12. AO has stated that the assessee could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one month salary. He submitted that the entire payments aggregating to Rs.61,62,042/- is made in cash and hence the same was not subject to verification. He submitted that the AO has taken very conservative view to restrict the disallowance to 5% of the claim of the assessee for want of verification. However, ld. AR supported the order of ld. CIT(A). 15. We have carefully considered the orders of authorities below and the submission of the ld. Representatives of the parties. On considering the facts, in entirety, during the course of hearing, which we have mentioned hereinabove, we are of the considered view that the AO is justified to make an adhoc disallowance of 5% out of the claim of assessee of Rs.61,62,042/- as entire expenditure w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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