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TMI Blog2013 (7) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... ntravention of Rule- 46A of the IT Rules, 1962. 2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in deleting the disallowance of ₹ 1,13,24,831/- out of commission by holding that when the genuineness of the payment cannot be impeached, then the expenditure has to be allowed u/s 37 as necessity of making the payment cannot e examined by the AO without appreciating the fact that even where the payment is not doubted, the AO can disallow the expenditure u/s 37 if the assessee fails to prove business expediency of incurring the same. 3. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the disallowance of ₹ 1,13,24,831/- out of commission by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 1,13,24,831/-. Assessee claims that the said amount was paid by the assessee as commission on sales to a foreign party ie Mr. John Victor Smith, and in this regard, he relied on the agreement between the assessee company and Mr. John Victor Smith. On demand from the Assessing Officer about the genuineness of the expenditure and the services rendered by Mr. John Victor Smith, assessee filed written submissions which are narrated in para 3.2 of the assessment order. Not satisfied with the assessee s explanation and in the absence of the evidence in support of the services rendered by Mr. John Victor Smith and on considering certain discrepancies noticed in the correspondence filed by the assessee, AO held as under: 3.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee filed an appeal before the first appellate authority. 5. During the proceedings before the first appellate authority, assessee raised both the issues. Assessee also furnished additional evidences for establishing the genuineness of the claim. As per the principle of natural justice, CIT (A) remanded the matter to the AO. AO submitted the remand report on 24.10.2011 and requested the CIT (A) to not to entertain the same as it amounts to additional evidences. In respect of the remand report, a copy of which was made available to the assessee for reply. In response, the assessee filed written submissions the contents of which are explained in para 1.4 of the impugned order. In the reply, assessee submitted that there is no viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the proceedings before us, Ld DR mentioned that the CIT (A) erroneously admitted the additional evidences furnished by the assessee despite the objection of the AO. He, however, could not demonstrate specifically as which of the provisions are violated in respect of any documents furnished by the assessee before the CIT (A). AO also could not specify the details in contravention. Considering the same we find that the ground relating to the violation of Rule-46A of IT Rules, 1962 is dismissed. 7. Regarding allowability of the said commission u/s 37 of the Act, Ld DR heavily relied on the Assessing Officer s conclusions. 7.1. On the other hand, Ld Counsel brought our attention to the replies given by the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sales made by the appellant and the commission paid by the appellant to Mr. John Victor Smith / Jonathan Smith. Thus, the objections of the AO are unwarranted on the given facts of the case since, both the payment and the receipt of this amount in Canada stands clearly established. Thus, when the genuineness of the payment cannot be impeached then it has to be allowed u/s 37 because the necessity of making of this payment cannot be examined by the AO. Once, its genuineness is established as above. Hence, I direct the AO to allow this payment of commission of ₹ 1,13,24,831/- u/s 37 of the IT Act. The objection of the AO as to admission of the details relating to identity of Mr. John Victor Smith / Jonathan Smith and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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