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TMI Blog2018 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 - - - Dated:- 2-7-2018 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For The Assessee : Shri R. K. Baral For The Revenue : Shri Kimesh Demble ORDER PER SHAMIM YAHYA, A.M. This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) I, Nagpur dated 22.09.2015 and pertain to assessment year 2012-13. 2. The grounds of appeal read as under: 1. On the facts and circumstances of the case and in law, the Ld.CIT(Appeals) has erred in deleting the addition of ₹ 40,03,210/- made by the Assessing Officer being disallowance of commission paid to related party. 3. Brief facts of the case are as under : The assessee is wholesale dealer in country liquor and running the property concern in the style of Adwani Wine Agency, Amravati. The Assessing Officer in the course of assessment proceedings found that the assessee has claimed sales commission expense of ₹ 40,03,210/- in the P L a/c. The commission is claimed to have been paid to Shri Shankarlal K. Advani Prop. of M/s Shiv Products, Amravati. The Assessing Officer found that the commission is paid to a sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals). 5. The ld. Commissioner of Income Tax (Appeals) noted that there is a valid agreement for the payment of commission between the assessee and the commission agent. He further noted that the amount paid has not been disputed. The TDS was duly deducted. The payee had appeared before the assessing officer and confirmed the payment. In the return of income the payee had also shown the commission received as income. In these circumstances, by an elaborate order, the ld. Commissioner of Income Tax (Appeals) deleted the addition. The order of the ld. Commissioner of Income Tax (Appeals) reads as under: 5.2 On careful examination of the material facts, it is seen that the payment in question amounting to ₹ 40,03,210/- to Shri Shankarlal Advani by the appellant is not disputed by the Id. AO . The Id. AO has also not brought out a case that actual services have not been rendered by the said party to the appellant in looking after the day to day affairs of its business including the efforts made towards sales promotion. The payment has been made by account payee cheque, TDS has duly been made and paid to the Government account. On perusal of the deposition made by Shri Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing increase of GP and NP by 48% and 55% in comparison to the immediately preceding FY 2010-11. The ld. AO in his order has recorded a finding that there is no competition with the business of the assessee in the area. However, the same does not appear to be correct and several other brands such as tango punch, bhingri, ploycam, badi saunf, mango, sakhu santra, blue santra, brands are in competition in the area with the brand called boby dealt with by the appellant. Thus, saying that there exists no competition in appellant's business would not be correct, as otherwi se also in an economy wi th free market conditions, the competition is inevitable. The appellant has been paid the commission as per the terms of the agreement dtd. 01.04 .2011. The Id. AO has also stated that the agreement is not registered, but registration of agreement is not a pre-requisite for payment of commission or salary which right accrues purely with reference to the services rendered and an oral agreement between the parties would also hold good for that limited purpose. The net taxable income declared by the recipient in his return of income after claim of deductible expenditure is immaterial, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. A.O. within a span of 15 days and he himself has accepted the commission income of ₹ 40,03,2107- received from assessee. This Act of Ld A.O. would amount to assessing same income twice. G. Agreement dated 01/04/2011 between assessee Shri Shankarlal Adwani for commission, is on record. H. Statement of Shankarlal Adwani u/s. 131 of the IT. Act, 1961 has been recorded and he has categorically stated that he is receiving commission from assessee in his answers to question no. 13. I. Comparative Chart showing increase in sales, gross profit and net profit during the concerned assessment year vis-a-vis A.Y. 2011-12 is as under: Particulars FY 201 0-11 FY 2011-12 Increase % Inc. Sales 35,27,60,069 53,13,73,695 17,86,13,626 50.63% Gross Profit 1,73,72,256 2,57,40,321 83,68,065 48.17% Net Profit 1,23,74,523 1,91,94,975 68,20,452 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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