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TMI Blog2015 (4) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the CIT (Appeals) dated 17.06.2010. By the second order dated 21.06.2013, impugned in this appeal, the Tribunal dismissed a miscellaneous application taken out by the appellant on the ground that the revised grounds of appeal had not been considered. 2. The appellant has raised the following questions of law:- "(i) Whether on the facts and circumstances of the case, the Ld. ITAT was justified in upholding the disallowance of Rs. 16.00 lacs paid as commission to the persons covered under Section 40A(2)(b) ignoring the fact that the persons to whom commission had been paid are income tax assessee paying tax in the highest tax bracket? (ii) Whether on the facts and circumstances of the case, the Ld. ITAT was justified in upholding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductible in certain circumstances. ......... ....... ....... ....... (2)(a) Where the assessee incurs any expenditure in respect of which payment has been or is to be made to any person referred to in clause (b) of this subsection, and the Assessing officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction: Provided that no disallowance, on account of any expenditure bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and exclusively for the purposes of the business as per the provisions of Section 37 of the Act cannot be faulted. It is an inference which can reasonably and legitimately be drawn. The Assessing Officer accordingly justifiably disallowed the expenditure of Rs. 16 lacs and added the same to the assessed income. He also initiated penalty proceedings under Section 271(1)(c) of the Act. 6. The CIT (Appeals) observed that the appellant had failed to establish the nature of the services provided by the said persons to whom the commission had been paid. He also held that the nature of the business of the appellant is not commensurate with such payments as in this line of business namely sale of jewellery, customers normally purchase the materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact and the appreciation of evidence by the Assessing Officer, C.I.T. (Appeals) and the Tribunal cannot be faulted on any ground. They are by no means perverse or unreasonable. The relevant facts were taken into consideration and analysed. In the appreciation of facts no question of law arises. 11. It was, however, contended that the finding of the Tribunal that the payments were a device adopted to reduce the appellant's taxable income is perverse as each of the persons to whom the commission was paid was taxable in the highest bracket. The revenue, therefore, suffered no loss. In view thereof, the appellant in the facts of this case ought to have been allowed the deduction in respect of the amounts paid as commission. 12. The submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is entitled to the deduction provided therein. If not he is not entitled to the same. The interpretation of Section 36(1)(ii) does not depend upon whether in the ultimate analysis the revenue suffered a loss or not. Such an approach or interpretation would render the entire tax machinery unworkable. When a person's income is assessed, the Assessing Officer is not concerned with or even aware of the possible financial consequences to the revenue. Indeed while making the payment, he cannot possibly be aware, except possibly in a rare case, of the financial implications on the revenue. The assessment in respect of the recipients of the alleged commission may not have attained finality when the assessment of the person making the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant claimed a deduction of a sum of Rs. 10,50,806/- as rent paid to three persons who also fall within the ambit of Section 40A(2)(b) of the Act. The Assessing Officer disallowed the same. The Assessing Officer observed that no explanation was furnished by the assessee to justify the payment. No rent agreement was furnished. Indeed the appellant stated that there was no rent agreement at all. The Assessing Officer's inference that there was no plausible explanation regarding the high rent during the relevant year cannot be said to be perverse. 19. The C.I.T. (Appeals) upheld the disallowance of deduction for the same reasons, namely, that there was no evidence to support/justify the deduction. The view that the payment of TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X
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