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TMI Blog2014 (4) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the concern of the assessee. It is prerogative of the businessman to conduct the business in the manner it suits its business expediency and necessity - the business expediency cannot be doubted looking to the overall transaction undertaken by the assessee through ACL - the genuineness of the payment is also corroborated by the fact that the assessee has deducted TDS on such a commission and has also deposited in the Government treasury - This leads to some credence about the genuineness of the commission of payment and its claim for deduction u/s 37(1) - the payment of commission to ACL is genuine business expenditure which has been paid on account of business and commercial expediency – thus, the claim is duly allowable u/s 37(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the various decisions of the High Court which have been listed from Page-4 to 6 of the assessment order, he held that the payment of commission cannot be allowed. He further observed that M/s. Accent Industries Ltd. (for short ACL )is one of the related parties and the commission has been paid on some selected sales only. Thus, without any evidence, such payments are only book entries. Accordingly, he added the sum of Rs. 3,88,623 to the income of the assessee. 3. Before the learned Commissioner (Appeals), it was submitted that the assessee is mainly exporting goods outside India and only part of its sale is made to domestic market. Since the company did not had enough manpower and infrastructure to market its product in domestic mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or proof to suggest that what kind of services were rendered by the ACL. He also observed that the commission has been paid in three different ratios and the basis of such difference has also not been explained. The working given by the assessee is only a self serving document which does not have much sanctity. Thus, in view of the failure on the part of the assessee to substantiate the exigency or necessity of incurring such expenditure for the purpose of business, he confirmed the disallowance. 4. Before us, the learned Counsel for the assessee explained that the assessee is 100% Export Oriented Unit (EOU) at MIDC area, near Kolhapur. Having 100% EOU, it is allowed to sell its products in domestic market up to the certain percentage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the payment of such commission to the said party. Similarly, in the assessment year 2007-08, such commission payment has also been accepted under the scrutiny proceedings under section 143(3). He also furnished a comparative chart of the sales and commission paid in the three assessment years which are as under:- 5. The learned Departmental Representative, on the other hand, strongly relying upon the orders of the learned Commissioner (Appeals) and the Assessing Officer, submitted that the onus is upon the assessee to show not only the genuineness of the expenditure but also that it was incurred solely for the purpose of business. The assessee has failed to provide any evidence like agreement and what was the percentage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n introduced through ACL. It is in this transaction the difference amount has been treated as commission paid to ACL. Before the learned Commissioner (Appeals), the assessee has given the working of commission in the case of ASB International and Bajaj Auto Industries Ltd. Insofar as the ASB International is concerned, there has been two transaction on which the total commission paid is Rs. 7,176 @ 2.99% of the sale amount, whereas in the case of Bajaj Auto Industries Ltd., the commission payment is around 1.36%. The said working of commission has not been refuted by the learned Commissioner (Appeals). The only ground for confirming the disallowance is that the assessee could not produce any agreement and the nature of service provided. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he scrutiny proceedings under section 143(3). The nature of transaction on the domestic sales by the assessee through ACL is on account of ordinary course of business and it was a business expediency that the assessee had decided to make the sales in the domestic market through ACL. In the cases where sale has been made to ACL, then it has been made on pre-determined price and whatever further sales has been made by the ACL is not the concern of the assessee. However, only when the bill has been raised directly to the buyers on their insistence, then the assessee had paid the difference amount to the ACL as commission. Such a transaction is is nothing but only a commercial expediency and business exigency. It is prerogative of the businessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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