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TMI Blog2017 (2) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... ssly erred on facts and in the circumstances of the case in sustaining adhoc addition of Rs. 10,00,000/- out of commission expenses without appreciating the benefit obtained by the appellant company. 4) That the Commissioner of Income tax (Appeals) - XXVII, New Delhi has grossly erred on facts and in the circumstances of the case in sustaining an addition of Rs. 150000 for alleged low household withdrawals. 5) That the appellant reserves the right to add, alter or amend any other ground at the time of hearing. 2. The facts in brief of the case are that in the year under consideration, the assessee was engaged in import of items of handicrafts, carpets etc. and sale of those products in Indian Market under proprietary concern, namely, M/s Fame Impex and Job Work in the name of another person proprietary concern, namely, M/s R.A. Plasto Chem. The assessee also earned share of profit from a partnership firm, namely, M/s Finsa Impex. The assessee filed return of income on 29/09/2010 declaring income of Rs. 10,17,900/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short 'the Act') was issued and complied with. In the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of board of directors and to decide how much is reasonable expenditure having regard to the circumstances of the case. In this connection the learned Authorised Representative relied on the decision of Hon'ble Supreme Court of India in the case of M/s. Hero Cycles Private Limited Vs. Commissioner of Income Tax (Central), Ludhiana, (2015) 63 taxmann.com 308 (SC) wherein the Hon'ble Court agreed with the view taken by the Hon'ble Delhi High Court in the case of CIT Vs. M/s. Dalmia Cements (P) Ltd (2002) 121 taxmann 706 (Delhi). 3.3 The learned Senior Departmental Representative, on the other hand, relied on the findings of the lower authorities and submitted that no evidence in support of services rendered by Sh. Rajkumar Jain was submitted by the assessee and, therefore, the expenses incurred by the assessee were not wholly and exclusively for the purpose of the business, and disallowance of Rs. 4 lakhs has been correctly sustained by the learned Commissioner of Income-tax (Appeals). 3.4 We have heard the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. It further held that no businessman can be compelled to maximize his profit and that the income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman." 3.6 We find that facts of the above case are different from the case in hand. In the case of Hero Cycles Private Limited (supra), the assessee advanced money to its subsidiary company without charging any interest and simultaneously the assessee borrowed money from banks and paid interest thereon. The issue involved in that case was whether the money borrowed on which interest was paid was not for business purpose and no deduction could be allowed. In view of the facts, the Hon'ble Apex Court held that advance given to subsidiary company was for busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . on foreign travel expenses is sustained against 2/34d disallowance made by the A.O. in the assessment order. Therefore, the disallowance of Rs. 1,56,301/- on travelling expenses is sustained and the appellant gets a relief of Rs. 1,56,301/-. As a result, ground no. 2 is partly allowed." 4.2 Before us, the learned Authorized Representative of the assessee referring to pages 23 to 54 of the paper book submitted that expenses were incurred wholly and exclusively for the purpose of business, and therefore the disallowance sustained by the learned Commissioner of Income-tax (Appeals) should be deleted. 4.3 The learned Senior Departmental Representative, on the other hand, submitted that the learned Commissioner of Income-tax (Appeals) has already allowed relief of 1/3rd disallowance made by the Assessing Officer and, therefore, no further relief on this account, might be allowed to the assessee. 4.4 We have heard the rival submissions of the parties and perused the relevant material on record including the pages of the paper book referred by the learned Authorized Representative of the assessee. We find that in the paper book, the assessee submitted details of expenses incurred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... percent of the profit, which is highly excessive. In respect of commission paid to other parties, the Assessing Officer mentioned that the confirmations were stereotyped saying commission towards coordination and support services in respect of custom duty refunds during the financial year 2009- 10. The Assessing Officer further relied in the case of Jayshree Tea and Industries Ltd. Vs. Commissioner of Income Tax (Cal.) reported in 272 ITR 193 and CIT Vs. Premier Breweries Ltd.(Kar.) 279 ITR 51, wherein it is held that the mere fact that payment has been made under a contract agreement is not conclusive that the expenditure is incurred wholly and exclusively for the purpose of business and burden of proof of the same was on the assessee. The Assessing Officer observed that grant of custom or income tax refund is automatic and as per rules and in accordance with law and any such payment made was not allowable being illegal relying on the decision of Madras High Court in the case of CIT Vs. India Cement Ltd. reported in 241 ITR 62. In view of above, the Assessing Officer disallowed the entire commission of Rs. 12,82,840/-. The learned Commissioner of Income-tax (Appeals) allowed par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the circumstances of the case, the learned Authorized Representative relied on the decision of the Hon'ble Supreme Court in the case of Hero Cycles (Pvt.) Ltd. (supra). 5.5 On the other hand, the learned Senior Departmental Representative relied on the finding of the lower authorities. 5.6 We have heard the rival submissions and perused the relevant material on record including the pages of the paper book referred by the learned Authorized Representative. We find that the assessee has submitted evidence in support of deduction of tax at source on the commission payment. But in our opinion, mere deduction of tax at source is not sufficient for establishing that the expenses incurred were wholly and exclusively for the purpose of the business. The assessee has neither furnished any evidence in support of services rendered by the persons to whom commission is paid, nor any evidence in support of professional competence of those persons. It was the onus of the assessee to submit the evidences which could justify that any such services were rendered by those persons and justify such high percentage of commission paid to those persons. The assessee has failed to discharge th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Authorized Representative referred to the drawing account available on pages 86 to 87 of the paper book and copy of return and computation of income of wife of the assessee, Mrs. Shveta Aggarwal for assessment year 2010-11, which is available on pages 88 to 89 of the paper book and submitted that the assessee was having sufficient source to meet the household expenses. 6.3 On the other hand, the learned Sr. Departmental Representative relied on the finding of the lower authorities. 6.4 We have heard the rival submissions and perused the relevant material on record. We find that the learned Commissioner of Income-tax (Appeals) has already analyzed the drawing Ledger account of the assessee and found that withdrawal from M/s. Fame Impax have been incurred through cheque which was utilized towards school fees, electricity, water charges, medical claim, telephone bills etc. and only cash withdrawal of Rs. 15,000/-has been made from this account. In respect of income of wife of the assessee, no evidence had been produced either before us or the lower authorities to substantiate that income was earned and utilized towards household withdrawals of the family. In view of above ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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