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TMI Blog2019 (4) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... be either a registry consultants or the customer actually using the stamp for himself. However one cannot deny the fact that the person who is coming to purchase the stamp from a stamp vendor is conscious of the fact that the stamp vendors are earning some commission/income from sale of stamp paper. There being multiple stamp vendors, the customer has a liberty/option to purchase stamp paper from the stamp vendor who gives maximum commission or parts with maximum profits embedded in the stamp value. One of the well known business principle is that for increasing the gross revenue the profit margin needs to be reduced and same seems to be the situation of the assessee. Thus out of the total disallowance disallowance of commission to the extent of 25% shall be justified to cover the deficiency of not maintaining necessary vouchers and acknowledgement receipts at the end of the assessee for paying commission to the persons purchasing the stamp from him. We accordingly order so and set aside the finding of both the lower authorities and partly allow assessee s appeal by sustaining disallowance of commission expenditure at ₹ 2,52,572/-. - Decided partly in favour of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation/admission of the Id AO who clearly admits at page no 03 of the Assessment order that according to his findings the fact of payment of portion of commission claimed as deduction by the appellant , appears to be correct but beneficiaries of the same are the said advocates or the registry consultants and not the customers. This vital finding of the AO is also not disbelieved by the Id CIT (A) and on this ground alone, the expense claimed deserves to be allowed u/s 37 (1) of the IT Act. 7. The findings of Id. CIT(A) in holding the stamp sales registers mandatorily to be maintained by the appellant in own hand writing and deposited with the Govt. At the close of every year under the stamp Act r/w licensing rules as a self generated evidence having no evidencery value is contrary to law and incorrect findings. 3. Briefly stated facts as culled out from the records are that the assessee earns income from working as a licensed stamp vendor. Ereturn of income filed on 02.03.2011 declaring income of ₹ 5,00,130/-. Case selected for scrutiny through CASS followed by serving of notices u/s 143(2) 142(1) of the Act. During the course of assessment proceedings while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y could be carried out. But the assessee himself shown his inability to identify the purchasers as the name address appearing on the stamp sale register was illegible. The assessee was provided numerous opportunities to attend personally and provide the name and address of the customers whose names are appearing in the stamp sale register. Since the writing appearing in the register was illegible the assessee was asked to provide the name and address, but the assessee failed to do so. It is pertinent to mention here that assessee has himself admitted that the entry appearing in the stamp sale register is made by him and it is highly surprising that he himself failed to read the names and address written by him only. The assessee was also asked to furnish the commission payment account, ledgers, etc so that the claim of the assessee could be verified with the purchasers but he also failed to so and gave evasive replies each time. Further the assessee had paid commission to his various customers and as per the provisions of section of 40(a)(ia) TDS was required to be deducted on payment of commission. Though the assessee has claimed to have made a payment of over ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the following written submission filed before Ld. CIT(A) during the course of appellate proceedings. That the appeal was fixed for hearing on 16.12.2014 and was partly heard by the then Ld appellate authority and on next day a paper book comprising 82 pages were filed by the assesse in appeal office. On that date itself the then CIT(A) issued a direction to then ITO probably Mr Jha sahib to call the subject remand report. That the assessee on 14.02.2015 submitted to the ITO office the sale register called from sub registrar office Indore for him to randomly select some of the customers and verify' on test check basis whether he customers were paid commission/ discount by the assessee? The assessee submitted his written submissions before the Id AO's office vide its paper book compilation of 76 pages comprising affidavits/confirmations from 14 advocates also copy of IT returns of some of the registry consultants for verification purposes. The AR also submitted customers confirmation/ documents gathered by him over a period of 2. 5 years from the customers totalling to roughly 26 details. The said paper book was received by the office of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, in the assessment proceedings also the assessee had specifically requested the Id AA to call the parties and examine them on oath with a right to cross examine them (in case of adverse statement) (kindly refer page no 02 of our reply dated 06.09.2012 being part and parcel of our compilation at page 29). Despite such a clear request the AO/respondent have not thought it fit to verify any of the sworn statements referred to above available with their file since last 04 years. It is equally pertinent to mention here that the AA rejecting the deduction of commission expenditure accepts in the same body of Assessment order at pg no 03 that from the above it transpires that the beneficiaries of the portion of commission claimed as deduction by you are the said advocates or the registry consultants. As such it is in your interest that you produce the advocates who issued you the confirmation letters along with following documents: i) Details of IT returns filed by them ii) A copy of their computation of Income. iii) Amount of such commission/ discount declared by them in their income tax return for taxation. Please note that if the above compliance is not mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of purchase, sales, stock, indirect income and other indirect expenses except the commission expenditure of ₹ 10,10,287/-. Books of accounts are duly audited by a Chartered Accountant. 10. Now as far as the expenditure for commission of ₹ 10,10,287/- is concerned assessee s claim is that the growth in this line of business solely depends on adopting commercial trade practice and to follow the system prevalent in this line of business of selling the stamp papers with requires that in order to retain and attract the customers, commission/discount to be passed on to customers and clients through registry consultants, since these professionals are the back bone limbs of this business. Ld. Counsel for the assessee also pleaded before us that the licencing rules does not prohibit the vendor to lower the stamps face value, however sale of stamps above the face is prohibited and complete records of stamp purchased and sold are maintained. 11. We also observe that the Ld. Counsel for the assessee while referring to the paper book mentioned about tax returns, computation of income of around 10 registry consultants showing such discount/ commission as their income in t ..... 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