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TMI Blog2017 (10) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and paid ₹ 9900/- by crossed account-payee cheque. In view of the above find no justification for the disallowance of commission paid by assessee in the normal course of business for the purpose of business. - Decided in favour of assessee For Assessment Year 2012-13 assessee had produced the evidence in the form of name, address, PAN and details of payment of commission by crossed account-payee cheques after deducting TDS to each of the six commission agents. The assessee had also furnished confirmation of accounts of each of these commission agents before the Commissioner (Appeals). The assessee also adduced evidence in the form of e-mails and other details to show that these commission agents rendered services for which the assessee had paid commission to them. I found that out of six agents, three agents namely. Mr. Sandeep More, Mr. R.B. Rahate and Mr. Narayan Hegde, were the commission agents to whom similar commission was paid for the A.Y. 2009-10 and the said commission was allowed by the AO while making scrutiny assessments. To these three commission agents, the assessee paid aggregate commission of ₹ 4,36,757/- out of total commission paid of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or delete any of the foregoing grounds of appeal. 3. Common grounds have been taken in the A.Y.2012-13. 4. Rival contentions have been heard and record perused. 5. Facts in brief are that the assessee, the proprietor of M/s. A. A. Traders, is carrying on the business of trading in chemical gases used for the purpose of Pharma and Industrial sectors. The assessee is dealing in gases like helium, nitrogen, oxygen, carbon dioxide, liquid nitrogen, liquid helium, gas mixtures, empty gas cylinders, accessories, etc., buys cylinders filled with these gases from the companies who are buying the gases in bulk and fill them in small cylinders. The assessee also buys gas filled cylinders from manufacturers of gas. The assessee sells the gas filled cylinders to the end consumers. The cylinders with gas are delivered and the cylinders are returnable and therefore, the assessee charges only for the gases supplied by it. The assessee is carrying on this business for more than 15 years. In order to induce customers, sometimes the assessee delivers cylinders at the premises of the customers and thus accommodates them for their urgent requirements. In order to approach more and more cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities. 8. I have considered rival contentions and carefully gone through the orders of the authorities below. From the record, I found that the assessee had paid commission of ₹ 2,16,719/- to one Mr. Sandeep More and ₹ 24,613/- to one Mr. Gautam Kamble for purchase of different gases in cylinders from the manufacturers with whom both these parties were working. 9. Mr. Sandeep More was working in the Accounts Department of M/s. Linde India Limited (formerly known as M/s. BOC India Limited) which was manufacturing high quality gases like Helium, Argon, Nitrogen, etc. used by pharmaceutical industries. During the year ended 31st March. 2010, the assessee had purchased different gases from M/s. Linde India Limited for the aggregate amount of ₹ 35,66,838/-. Mr. Sandeep More used to facilitate the procurement of different gases required by the assessee for supply of the same to its customers in the timeframe given by the customers including preparing of documents for supply of the said gases. To show that Mr. Sandeep More used to assist the assessee in procurement of gas cylinders for its customers, copies of e-mail correspondence with Mr. Sandeep More as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in sharing tenders, product requirements and ensuring the steady sales from the assessee to M/s. Development Corporation of Konkan Ltd. through his involvement. The assessee had sold Liquid Nitrogen amounting to ₹ 5,1 1,155/- during the year under consideration through the involvement of Mr. R.B. Rahate. The assessee paid commission of ₹ 27,056/- to Mr. R.B. Rahate by account-payee cheques. 13. From the record I also found that in the previous year relevant to A.Y.2009-10, the assessee had paid commission of ₹ 32,413/- to Mr. R.B.Rahate for the aforesaid services in procuring the various gas cylinders to M/s. Development Corporation of Konkan Limited of ₹ 5,34,758/-. The assessment for A.Y.2009-10 was scrutinized and the AO had allowed commission paid to Mr. R.B. Rahate vide the assessment order u/s. 143(3) of the Act dated 15th December, 201 1. Subsequently, the assessment for A.Y. 2009-10 was reopened and the assessment was completed u/s.143(3) r.w.s. 147 of the Act on 13th November, 2014. In both these scrutiny assessments, commission paid by the assessee to various agents, both for procuring gas cylinders and for selling the gas cylinders to vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative for procuring orders for sale of gas cylinders from the existing customers as well as from the new customers. In this endeavour, he brought business of selling gas cylinders to one M/s. Exe! Gas Equipments Pvt. Ltd. for supply of gas cylinders of ₹ 1,25,000/- and accordingly, the assessee paid commission of ₹ 11,000/- to him from which the assessee deducted TDS of ₹ 1100/- and paid ₹ 9900/- by crossed account-payee cheque. 18. In view of the above discussion, I do not find any justification for the disallowance of commission paid by assessee in the normal course of business for the purpose of business. Accordingly, I direct the AO to delete the disallowance of commission payment. Assessment Year 2012-13:- 19. During the year ended 31st March, 2012. the assessee had sales of ₹ 4,48,66,306/- for which the assessee had paid commission to various agents aggregating to ₹ 19,57,700/-. While competing the assessment u/s. 143(3) of the Act, the AO called for the explanation regarding commission paid by the assessee to six different agents. In the course of the hearing, the assessee had filed the explanation in respect of each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of payment receipt were also filed which are at pages 15 16 of the Paper Book. 20. Following the reasoning given in the A.Y.2010-11 in respect of payment of similar commission to Shri Sandeep More, I do not find any justification for the disallowance so made by the AO in so far as in the previous year relevant to A.Y. 2009-10, the assessee had paid commission of ₹ 77.932/- to Mr. Sandeep More for the aforesaid services in procuring the various gas cylinders of ₹ 14,44,270/-. The assessment for A.Y. 2009-10 was scrutinized and the AO had allowed commission paid to Mr. Sandeep More vide the assessment order u s. 143(3) of the Act dated 15th December 2011. Subsequently, the assessment for A.Y. 2009-10 was reopened and the assessment was completed u/s. 143(3) r.w.s. 147 of the Act on 13th November, 2014. In both these scrutiny assessments, commission paid to Mr. Sandeep More was allowed. 21. Mr. Gautam Kamble was working as a Sales Manager of M/s. Chemtron Science Laboratories Pvt. Ltd. which was engaged in the business of manufacturing various special mixture gases used for Pharma and Industrial use. Mr. Gautam Kamble had facilitated the assessee in procuri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both these scrutiny assessments, commission paid by the assessee to various agents, both for procuring gas cylinders and for selling the gas cylinders to various customers, was allowed. 23. As per material placed on record Mr. Narayan Hegde was representative of the assessee managing the business relationship between the assessee and its customer namely. M/s. Revti Industries Pvt. Ltd. He was rendering services to the assessee in respect of procuring orders for various gas requirements from M/s. Revti Industries Pvt. Ltd. for the assessee and ensuring the timely delivery and follow up for outstanding payment clearance, etc. The assessee had sold Oxygen, Nitrogen, Helium, Argon and various mixture gases, etc. amounting to ₹ 14.95,086/- during the year under consideration through the representative, Mr. Narayan Hegde. The confirmation letter dated 20th March, 2012 of Mr. Anil Kumbhar of M/s. Revti Industries Pvt. Ltd. confirming that Mr. Narayan Hegde was representative of the assessee, M/s. A.A. Traders, through whom M/s. Revti Industries Pvt. Ltd. had purchased various gases such as Argon, Nitrogen. Helium, Oxygen, etc. was filed and also placed at (page 32) of paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ylinders from the existing customers as well as from the new customers. In this endeavour, he brought business of selling gas cylinders to M/s. Panacea Biotech Ltd. and M/s. Wipro GE Healthcare Pvt. Ltd. for supply of gas cylinders of ₹ 6.60.744/- and accordingly, the assessee paid commission of ₹ 53,333/- to him from which the assessee deducted TDS of ₹ 5,333/- and paid ₹ 48,000/- by crossed account payee cheque. 27. In view of above discussion, I deserve that assessee had produced the evidence in the form of name, address, PAN and details of payment of commission by crossed account-payee cheques after deducting TDS to each of the six commission agents. The assessee had also furnished confirmation of accounts of each of these commission agents before the Commissioner (Appeals). The assessee also adduced evidence in the form of e-mails and other details to show that these commission agents rendered services for which the assessee had paid commission to them. I found that out of six agents, three agents namely. Mr. Sandeep More, Mr. R.B. Rahate and Mr. Narayan Hegde, were the commission agents to whom similar commission was paid for the A.Y. 2009-10 and th ..... 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