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TMI Blog2016 (8) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... they had provided services, the assessee must be given the advantage, even though there is no written agreement. Accordingly, we allow the commission to the extent of those agents who had confirmed before the Assessing Officer to have provided the service to the assessee and at the same time, we cannot overlook the point of view of the Department that the agents have declined to have any business connection with the assessee. Accordingly, we direct the Assessing Officer to allow the commission to the extent of 12 agents and uphold the disallowance of commission to the extent of 3 agents, who denied to have done any services to the assessee. - Decided partly in favour of assessee. - I. T. A. No. 793/Hyd/2015 And 143/Hyd/2016 - - - Dated:- 10-6-2016 - P. Madhavi Devi (Judicial Member) And S. Rifaur Rahman (Accountant Member) For the Appellant : A. V. Raghuram For the Respondent : M. Sitaram ORDER S. Rifaur Rahman (Accountant Member) 1. Both these appeals are preferred by the assessee against the orders of the Commissioner of Income-tax (Appeals)-4, Hyderabad, for the assessment years 2010-11 and 2011-12. Since an identical issue is involved in both these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer has given his findings at paragraphs 21 to 27 of his order wherein the logical conclusions flowing from the statements recorded by the Assessing Officer are analysed. It is seen from the above that the claim of the assessee regarding services rendered by the parties who received commission, stands disproved. The assessee has failed to discharge onus of proving that the expenditure claimed is wholly and exclusively for the purpose of business. The claim of the assessee is that the payment is made by way of cheques and TDS has been made wherever required. I am afraid payment by cheque and making TDS itself is not enough for allowing the claim of expenditure under section 37(1). In view of the above, the action of the Assessing Officer in disallowing the commission payment is confirmed and the ground of appeal of the assessee on this issue is dismissed. 4. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee is in appeal before us raising the following grounds of appeal : 1. The order of the learned Commissioner of Income-tax (Appeals) is erroneous both on facts and in law to the extent it is prejudicial to the assessee. 2. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments and declared the same as their income, accordingly, claimed the TDS. Due to some personal differences, they have become hostile. The Assessing Officer cannot rely only on these statements and deny the deduction. 5.1 The learned authorised representative submitted that the Assessing Officer had not brought any finding on record to claim that these expenditures were recorded to accommodate to increase the expenditures of the assessee. The Assessing Officer should have brought on record whether the recipient of commission has adjusted or claimed any benefit or made any withdrawals of funds immediately or subsequent to the credit of payments to substantiate the claim that the transaction was done to accommodate the assessee. 5.2 The learned authorised representative submitted that the commissions are paid to those who pass on the information that there is demand in such company, it is not necessary that they should actually procure the order, this is the reason, the employees of the company who bought the chemicals, has no information about the agents. He submitted that in the case of CIT v. Transport Corporation of India [2014] 368 ITR 728 (T AP) ; [2014] 110 DTR (AP) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cannot be claimed as a matter of course, and it can only be on complying with the two requirements, namely, (a) the particulars of the amounts paid as commission are furnished transaction-wise and ultimately they are correlated to the turnover, and (b) the names of the recipients are (i) furnished in the returns, or (ii) a plea is raised to the satisfaction of the assessing authority that the disclosure of the names of the recipients is detrimental to the interest of the assessee. Those two important factors have not been addressed by the appellate authority. We are of the view that the matter needs to be remanded for fresh consideration and disposal. Hence, in the given case all the details were submitted before the Assessing Officer. Moreover, the genuineness of the transaction was investigated by the Assessing Officer himself without consulting the assessee. 6. The learned Departmental representative submitted that the payment of commission is factual and the genuineness of the same has to be proved by the assessee by demonstrating that there is a link to the order procurement. He submitted that there are agents who are not connected to the chemical business, in fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st only oral agreements, the agents are from different field of activities and the customers are denying the presence of agents in the transaction. At the same time, the Revenue had investigated this issue independently without involving the assessee but it has carried out the investigation partially. There are some holes in this investigation. The first being the statements recorded from the 3 lady agents are stereo typed and the languages of all three are exactly similar. The Revenue has not brought out whether the agents who denied, has done any service to the assessee had filed their return of income, if filed, whether they have declared the commission as their income and taken the tax credit. In the absence of such details and for the sake of fair justice, in our considered view, the case is peculiar and the assessee had submitted the details of the agents, who had agreed that they had provided services, the assessee must be given the advantage, even though there is no written agreement. Accordingly, we allow the commission to the extent of those agents who had confirmed before the Assessing Officer to have provided the service to the assessee and at the same time, we cannot o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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