9911796707
TMI Blog2017 (2) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the assessee, who is selling agent. It is on the basis of above material that the tribunal has come to conclusion that the learned CIT had made an error in revising the order under Section 263 of the Income Tax Act, as the material on record did not reflect in any manner that any activity of the assessee had resulted in causing prejudice to the revenue, nor were there any circumstances to contemplate the taking of any action under Section 263 of the Income Tax Act by the department. The tribunal, therefore, came to conclusion that the commission paid to the selling agent was based on sound and genuine business consideration and therefore, the allowances have rightly been allowed by the A.O. The disallowance made by the CIT was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not examined earlier by the Assessing Officer? The facts of the case are that the assessment of the company was completed under Section 143 (3) vide order dated 29.12.2000. The returned income of ₹ 2,47,23,220/- was accepted. As per Profit and Loss A/c the assessee has claimed various expenses including deduction on account of payment of commission of ₹ 72,92,319/- to its sister concern M/s. Micro Matic Machines and Tools (P) Ltd. besides expenditure of ₹ 19.14 lacs was claimed as exhibition expenses Rs, 26,14,832/- as travelling and conveyance and ₹ 10,27,446/- as advertisement and publicity expenses. The A.O. called for the details of such expenses and has allowed the same without making proper verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich specific queries were raised. After issue of notice u/s 142 records of the assessee were examined which took place on many dates running for several hours at a stretch. We are, therefore, of the opinion that the basic premises of CIT, Ghaziabad, that owing to the fact that returned income was accepted and, therefore, no enquiries were made is factually incorrect. (7) The second premises of the notice was that the sales during the year had gone down and the expense had gone up. This again is factually incorrect. The AR of the assessee took us through details of turn over since 1981 upto the year 2001, it is apparent from the same that in the year under consideration, the sales of the assessee were the highest ever achieved by it. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent had filed appeals. These are separate proceedings and no adverse inference should have been drawn in respect thereof, especially when the selling agent is a large tax payer for the last twenty years and had paid tax every year before and every year after the year under consideration. Therefore, the third assumption of fact by CIT, Ghaziabad is also wrong. We find that all the three assumption on the basis of which CIT, Ghaziabad initiated proceedings u/s 263 are factually incorrect and we are of the opinion that the order u/s 263 dated 18.12.2001 needs to be cancelled. While examining the matter the tribunal also took a note of the fact that there was an agency agreement between the two parties, which showed the various responsib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission which was granted by the assessee, who is selling agent. It is on the basis of above material that the tribunal has come to conclusion that the learned CIT had made an error in revising the order under Section 263 of the Income Tax Act, as the material on record did not reflect in any manner that any activity of the assessee had resulted in causing prejudice to the revenue, nor were there any circumstances to contemplate the taking of any action under Section 263 of the Income Tax Act by the department. The tribunal, therefore, came to conclusion that the commission paid to the selling agent was based on sound and genuine business consideration and therefore, the allowances have rightly been allowed by the A.O. The disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
