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TMI Blog2018 (9) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the principle of res judicata does not apply to proceedings under Income-tax Act, and secondly the cited assessment order of A.Y.2012-13 does not carry any discussion on the issue of commission paid to HUF, hence there is no finding or opinion formed on the issue. The commission paid to the said HUF is at the rate of 5% of sales made to NEC during the year and similar payment of commission has been made to the Karta in his individual capacity also, which has been allowed. Considering the entire gamut of facts and the decisions cited, it is held that the payment of commission of Sanjay Palaria HUF is not allowable as the exertion, if any, for earning any commission has been made by Sh. Sanjay Palaria only, for which he has been paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consideration the written submissions and other material on record and hearing the ld. DR. 3. The facts of the case are that during the course of assessment proceedings, the Assessing Officer observed that the assessee has claimed commission expenses amounting to ₹ 6,89,891/- paid to Shri Sanjay Palaria HUF and ₹ 3,39,253/- paid to Smt. Ginnidevi Palaria. The assessee was asked to justify the payment of the commission expenses. However, the assessee failed to provide any justification whatsoever with regard to the payments and no details or evidence of any sort could be produced before the AO regarding nature of services rendered by two persons. Accordingly, the AO held that the said commission payment are bogus expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion paid were produced before her and income tax returns of Smt. Ginni Devi Palaria and Sanjay. Palaria HUF were also submitted in which commission income paid by assessee were included and TDS also deducted by assessee firm. Sales of firm for assessment year 2008-09 was ₹ 318.88 crore and during assessment year 2009-10 was ₹ 328.89 crore while firm has paid ₹ 24,00,000/- salary to marketing managers but sales not increased, therefore, firm has changed policy and dropped salary to marketing managers and decided to pay commission on sales linked with sales and due to such change in policy sales of firm has increased significantly to ₹ 501.36 crores in the assesseement year 2010-11. In view of above facts commission pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on commission payments made to them and due taxes payable by them were paid. It was further contended that the assessee had saved payment of salary of ₹ 24,00,000 which was being made to Sh. Sanjay Palaria in earlier years and lesser amount of commission was now being paid, which has resulted in increase in sales by 52.44% this year. It is further stated that such commission paid to Sanjay Palaria HUF was allowed in the order u/s 143(3) for A.Y.2012-13. It is also contended that Smt. Ginnidevi was earning commission income from another party viz. Giriraj Industries, which shows that she is engaged in providing genuine services as commission agent. 4.4 I have carefully considered the contentions of the appellant. During appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of ₹ 3,39,253/- paid to her, is hereby upheld. 4.5 Further, on examining the return filed by Sanjay Palaria HUF, I find that the HUF, has shown only the commission income of ₹ 6,89,891/- received from the assessee and interest income of ₹ 788/- and has deducted salary payment of ₹ 24,000/-, telephone charges of ₹ 2,420/- and bank charge of ₹ 316, showing Total Income of ₹ 2,420/- and bank charge of ₹ 316, showing Total Income of ₹ 6,63,943/- entailing a payment of tax of ₹ 1,06,277/-. The HUF does not have any other person deployed for earning such commission income as no evidence regarding salary payment made and purpose thereof was submitted. More importantly, the HUF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t towards earning commission income. It has further been noted that the resultant tax paid by HUF is nominal and on the other hand substantial tax has been saved by the appellant, who falls in the highest tax bracket. The tax saved on this transaction with HUF is around ₹ 2,00,000. The further plea that the payment of commission had been accepted in a later assessment also does not carry weight, firstly, as the principle of res judicata does not apply to proceedings under Income-tax Act, and secondly the cited assessment order of A.Y.2012-13 does not carry any discussion on the issue of commission paid to HUF, hence there is no finding or opinion formed on the issue. Further, the commission paid to the said HUF is at the rate of 5% of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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