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TMI Blog2018 (10) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid commission payment. AO has also failed to substantiate with relevant material that commission payment made by the assessee is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment has been made. AO to disallow the entire commission expenses u/s. 40A(2)(b) of the act without substantiating and restricting the disallowance to the unreasonable and excess payment of expenses is not correct. - Decided in favour of assessee. - ITA No. 2516/Ahd/2016 - - - Dated:- 30-8-2018 - Shri Amarjit Singh , Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri Sumit Kr. Verma, Sr. D.R. For the Assessee : Shri S.N. Divetia, A.R. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case is that return of income declaring income of ₹ 17,19,830/- was filed on 19th Sep, 2012. Subsequently, the case was selected under scrutiny u/s. 143(2) of the act on 6th August, 2013. The assessee firm is engaged in the business of manufacturing of bulk drugs. During the course of assessment proceedings, the assessing officer noticed that assessee has debited commission expenses amounting to ₹ 20,73,417/- for the year under consideration. The assessing officer observed that during the year under consideration the gross turnover of the assessee has been reduced to ₹ 629.82 lacs compared to gross turnover of 863.12 lacs to preceding year. He has further observed that commission expenses has been increased from ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng department. He has also carried out marketing work and developed new customers. The assessing officer has not accepted the explanation of the assessee. He was of the view that both of them were squarely covered u/s.40A(2)(b) of the act and the assessee has failed to prove why these persons paid commission over and above the salary. Consequently, the assessing officer has disallowed the entire amount of commission ₹ 15,50,035/- . 5. Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee by observing as under:- 3.2 I have considered the assessment order and the submissions made by the appellant. The AO after a detailed discussion in the assessment order held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion expenses of ₹ 15,50,035/- made by the Assessing Officer is confirmed. Grounds of appeal Nos. 5.1 5.2 are dismissed. 6. During the course of appellate proceedings before us, the ld. counsel has furnished copies of ledger account of commission expenses and details of commission paid during the year under consideration. He has also submitted copy of assessment order u/s. 143(3) passed in the case of assesseee itself for the assessment year 2011-12 stating that no such disallowance of commission expenses were made by the assessing officer. He has also furnished paper book containing details of submission made before assessing officer and ld. CIT(A) during the course of assessment proceedings and appellate proceedings. On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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