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TMI Blog2011 (4) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ence submitted or in respect of any particular agent. (c) In ignoring that once the services are proved then the quantum of payment for the said services is the sole discretion of the businessman. Thus the adhoc disallowance of commission so confirmed on estimated basis ignoring the evidences placed on record should be disallowed. 2.1. The only other ground raised in assessee s appeal for A.Y. 2005-06 is as under: The CIT(A) erred in law and on facts in confirming the disallowance of ₹ 15,68,627/- to the extent of dividend received out of short term capital loss incurred in redemption of LIC Mutual fund by applying the provisions of section 94(7) though the said units were held for more than three months as per the law applicable on the date of sale and because the amended provision w.e.f. 1/4/2005 was not only passed but was also proposed by the Finance Bill 2005 on a later date. Thus the disallowance should be deleted. 2.2. Common ground raised by revenue in both the appeals, which is similar to ground no. 1 of assessee s cross appeals is as under: On the facts and in the circumstances of the case, ld. CIT(A) has erred in deleting the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income and the same has been accepted, then the same is deductible expenses. In the present case also, the commission amount is paid to the agents by a/c payee cheques and most of them confirmed the same by submitting their PAN numbers. There is no evidence on record to show that the department has not accepted the amount in hands of these agents as commission. Hence, from this angle also the payment of commission by the assessee, which is duly claimed in the books of account, cannot be disallowed. The learned AR has cited plethora of case laws, reference to which has been made in the written submissions also. We do not consider it proper to refer to each case, as in our opinion, the same is not necessary and unnecessarily add to the bulk of this order. In view of the above, we are unable to concur with the learned CIT(Appeals) in sustaining the addition. In our considered opinion, the assessee has successfully discharged the burden to justify and substantiate its claim by filing supporting documentary material, which has been referred to above. We, therefore, hold that the claim of the assessee was fully allowable. Consequently, we set aside the finding of the learned CIT(Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumentary evidence on record. Apart from expressing its satisfaction as to the genuineness of the transaction the Tribunal has taken into consideration the fact that commission has been paid and allowed in the past and that the commission percentage is negligible. Ms. Bansal contests this position. The total turnover of the assessee was ₹ 68 crores before tax, inter alia of which included ₹ 25.68 crores of export turnover. The turnover we are concerned with is stated to be ₹ 3.74 crores on which the commission has been paid. It has been pointed out by Ms. Bansal that rather than the stated 0.05 per cent the commission, the commission works out to 1.5 per cent in relation to local sales and 7 per cent as far as export turnover is concerned. Even then according to us there remains no reason to doubt these payments. It has been laid down in several decisions of the Supreme Court that the Tribunal is a final forum for findings of fact. The High Court would intervene only if a finding appears to be per verse, which we are unable to conclude in the case in hand. 3.2. Still aggrieved, department filed SLP before Hon ble Supreme Court and the Hon ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) that the only male adult partner in that firm was a partner in another manufacturing concern situate at a place quite distant from the place where the selling agency business was said to have been carried on; (iv) that the business address of the selling agency firm was the same as that of the assessee; (v) that the selling agency firm had no godown of its own nor any transport vehicles. On these findings the Tribunal reached the conclusion that the selling agency firm was not genuine and the agreement was only a make-believe arrangement and that it was merely a device to minimize the assessee s tax liability. 5.2. Learned counsel submitted that in assessee s case no such factors are present. ITAT in earlier year itself has held payment of commission to be genuine and justified. The assessee has discharged its burden; the assessee and agents were in existence; there is no issue of any lady engaged in the assessee s business. It is a professionally managed company. The business address of each of the agents/ distributors are different whereas in above case it was the assessee s same address only; there is no question about the agent or distributor having a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment in the case of Lachminarayan Madan Lal (supra) is concerned, we are unable to agree with learned DR s contention that commission should not be allowed on that basis of ratio of decision in the case of Lachminarayan Madan Lal (supra), which in our view is not applicable to the facts of assessee s case. 6.4. In view of above facts, submissions and observations we hold that the entire commission paid by the assessee to its agents/ distributors is to be allowed to the assessee. This ground of assessee in both the years is allowed. 7. Coming to the other ground no. 2 in respect of short term capital loss incurred on redemption of LIC mutual fund, CIT(A) upheld the order of AO by holding that amendment to sec. 94(7)(b)(ii), the transaction of the assessee was effected on 7-7-2004 i.e. one day prior to the finance bill becoming the Act on 8-7-2004. 7.1. CIT(A) held that Finance Act is applicable to whole of the year and when the assessee effected the transaction, finance bill was already under the consideration of the Parliament, therefore, it cannot be held that provision of section 94(7) will be applicable from 8-7-2004 i.e. when the Finance Act becomes a law. The Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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