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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 ..... at the highest level is irrelevant to the question whether the appellant was entitled to deduct the amounts paid to them as commission. - Decided in favour of the Revenue. Disallowance on account of rent paid - appellant claimed a deduction of a sum of ₹ 10,50,806/- as rent paid to three persons who also fall within the ambit of Section 40A(2)(b) of the Act - Held that:- 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 on the said amount is irrelevant is correct. he Tribunal observed that the appellant had paid ₹ 14,40,000/-towards rent which was approximately 370% more than the rent paid in the preceding year namely ₹ 3,89,194/-. This is purely a question of appreciation of facts which in the facts of this case cannot be held to be perverse. No question of law arises in respect thereof. - Decided against assessee. - Income Tax Appeal No.66 of 2014 (O&M) - - - Dated:- 18-3-2015 - S. J. Vazifdar, Acting Chief Justice And G. S. Sandhawalia,JJ. For the Appellant : Mr. Sandeep Goyal, Advocate For the Respondent : Ms. Urv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 16 lacs to his son, daughter and daughters-in-law. The recipients are persons referred to in Section 40A(2)(a) and (b). Section 40A in so far as it is relevant reads as under:- Expenses or payments not deductible 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 being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm s length price as defined in clause(ii) of section 92F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order and the order of the CIT (Appeals) also for the following further reasons. The appellant had paid ₹ 4,80,000/- as salary to each of the persons who are his close relatives. The payment of commission was merely a device adopted to reduce the appellant s taxable income. The appellant had failed to discharge the burden cast on him to prove the genuineness of the expenditure claimed towards payment of commission. The appellant had failed to adduce cogent and credible evidence establishing the genuineness of the commission paid. The appellant had failed to adduce evidence regarding the technical qualification of such recipients to justify the payments made to them towards commission. The appellant had failed to file any explanation or submission justifying the payment of commission as genuine business expenses. 9. The finding of Tribunal that the mere payment of TDS by the appellant in respect of the said payments is irrelevant is correct. The payment itself is not denied. The question is whether the appellant was entitled to deduct the same from his income. 10. The findings of fact and the appreciation of evidence by the Assessing Officer, C.I.T. (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 payment is made. The recipient may not accept the assessment order and the challenge thereto may remain pending. Even if the assessment order in respect of the recipient has attained finality, the recipient in a given case may fail to or even be unable to meet the tax demand. Entitlement of deduction of Section 36(ii) cannot possibly depend upon whether the recipients meet or are capable of meeting the demand for tax or not. A view to the contrary would render the assessment orders pending for any length of time. Indeed it would then not be possible for an Assessing Officer to complete the assessment and pass an assessment order within the requisite time. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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