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TMI Blog2021 (4) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived under the MAP Agreements in the preceding year vis- vis the year under consideration, we are satisfied that the ld. CIT(A) rightly appreciated the facts and was justified in deciding this issue in favour of the assessee Disallowance of commission expenditure paid to two ladies - HELD THAT:- We find that the assessee has paid commission to the same two ladies namely Ms. Inderjeet Kaur and Ms. Paramjit Kaur and assessee failed to lead any evidence about the genuineness of the transaction of payment of commission and any services rendered by them. In that order also the ld AR explaining the nature of payment with same distributors necessitated of making payment to these ladies as part of their incentive under MAP agreement. The coordinate bench also considered the same in para 7. As the co-ordinate bench after examining the facts held that the assessee failed to adduce any evidence of rendering of services by these persons, which necessitated to make such payments and therefore the disallowance was confirmed. We do not find any reason to deviate from the judgment, facts quoted by the ld AR are also duly considered therein. However, in view of any evidence of rendering of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any evidence is cannot be upheld, therefore, we reverse the orders of the lower authorities and direct the ld AO to delete the disallowances of 1/10th of such expenditure of ₹ 1,75,679/-. Thus, ground No. 3 of the appeal is allowed. - ITA No. 2359/Del/2017, ITA No. 3218/Del/2017 - - - Dated:- 16-4-2021 - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri KVSR Krishanan, CA For the Revenue : Shri S. S. Negi, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. These are the cross appeals filed by the assessee as well as Ld ACIT circle 54 (1) New Delhi for assessment year 2012-13 against order of the CIT appeals 18 New Delhi dated 15 2 2017. 2. The assessee has raised the following grounds of appeal in ITA No. 2359/Del/2017 for Assessment Year 2012-13:- 1. The Ld. CIT(A) has erred in law and on facts in disallowing a sum of ₹ 7,00,000/- paid as commission to Mrs. Inderjeet Kaur and Smt. Parvinder Kaur. The appellant contends that it has provided sufficient evidences justifying the claim for allowability as allowable business expenditure. 2. The Ld. CIT(A) has erred in law and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of ₹ 7,00,000/- paid as commission to Ms Parminder Kaur and Ms Inderjeet Kaur whom commission is paid by assessee but AO has stated that those parties have not done any work for the assessee and the alleged commission was paid only to reduce the taxable income of the assessee. No written agreement was entered into and both the parties were ignorant of the business and mode of commission payment. Furthermore, the assessee could not produce one of the parties before the AO. b. The addition of ₹ 2,19,48,840/- wherein, as per Form Nos. 26AS the assessee was shown to have been received a sum of ₹ 2,90,80,000/- from M/s. Exxonmobil Lubricants Pvt. Ltd on which TDS of ₹ 5,81,600/- was deducted but the above receipt was not found included in the profit and loss account of the assessee. The ld AO after considering MAP agreement (distributor MAP agreement) noted that the payment received is not the liability of assessee to be taken straight way to the balanced sheet and the assessee was not legally obliged to pass on the entire amount received under the agreement to its customers. Therefore the ld AO included the sum of ₹ 2,19,48,840/- to the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. The co-ordinate bench has dealt with this issue in para Nos. 4 to 5 of that order dealing with this as under:- 4. Having heard both the sides and gone through the relevant material on record, we find from running account of the assessee with M/s Exxonmobil Lubricants Pvt. Ltd. that it received a sum of ₹ 1,91,65,000/- vide four cheques dated 17.05.2010, 23.07,2010, 16.09.2010 and 30.12.2010. These four amounts were awarded to the assessee under four different distribution MAP Agreements. Copy of the first agreement for a sum of ₹ 10.60 lac is available in the paper book, which provides that Exxonmobil Lubricants Pvt. Ltd. wanted to provide the assessee with funds to assist it in marketing of MOBIL and/or ESSO products. Clause 4 of the Agreement provides that: Distributor (the assessee) shall amortize or repay MAP payment in accordance with the Second Schedule. Clause 6 of the Agreement, which is relevant for our purpose, reads as under:- 6. Right to demand immediate paymentEMLPL may at its option demand immediate payment of an amount equal to the Unamortized Balance multiplied by the Amortization Rate, upon the happening of one or more of the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly following this practice of accounting the amounts under MAP Agreement and the same has been accepted in the assessments completed u/s 143(3) for the two immediately preceding assessment years, namely, 2009-10 and 2010-11. The ld. CIT(A) has recorded a categorical finding to this effect in para 1.6 of the impugned order, which has not been controverted by the ld. DR. In the absence of any factual difference in the manner of receipt, disbursement or accounting of the marketing assistance payment received under the MAP Agreements in the preceding year vis- -vis the year under consideration, we are satisfied that the ld. CIT(A) rightly appreciated the facts and was justified in deciding this issue in favour of the assessee. We, therefore, uphold the same. 8. The coordinate bench has upheld the order of the CIT (A) for assessment year 2011-12 deleting the above additions. Both the parties confirmed that there is no change in the facts and circumstances of the case and the issue is identical. In view of this, respectfully following the decision in assessee s own case for assessment year 2011-12, we uphold the order of the ld CIT(A) deleting the addition of ₹ 2,19,48,840/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a part of their incentive under the MAP Agreement. It, therefore, becomes manifest that such commission is simply a part of the payment made to the distributors which was received by the assessee under the MAP Agreements from Exxonmobil Lubricants Pvt. Ltd. for onward payment to customers. Since the assessee is neither offering the receipt of incentive ITA Nos.3986 2421/Del/2015 from Exxonmobil Lubricants Pvt. Ltd., as income, nor payments made to sub-distributors as expense, a part of such payment, termed as commission, to these two ladies cannot, therefore, cannot have a different shade from the angle of deductibility. It is further observed that the assessee failed to adduce any evidence of rendering of services by these two ladies, which necessitated it to make such payments. We, therefore, uphold the impugned order on this score. 15. We find that the assessee has paid commission to the same two ladies namely Ms. Inderjeet Kaur and Ms. Paramjit Kaur and assessee failed to lead any evidence about the genuineness of the transaction of payment of commission and any services rendered by them. In that order also the ld AR explaining the nature of payment with same distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his year. There is no evidence that the transaction resulting into credit in the name of the above party pertains to this year, in fact, it pertains to earlier year. Merely because the assessee could not furnish the confirmation of one of the several creditors naturally the liability to pay such party does not ceases to exist. In view of this, we reverse the order of the lower authorities directing the ld AO to delete the addition of ₹ 2,27,250/- outstanding in the name of Ms Grace Enterprises. In view of this, ground No. 2 of the appeal is allowed. 18. Ground No. 3 is on account of confirmation of disallowances out of telephone tours, and other expenses including depreciation on the car stating that involvement of the personal element of the partners of the firm cannot be ruled out. Both the lower authorities have confirmed the disallowances on that account. 19. On careful consideration and after hearing both the parties we find that the ld AO has made an ad hoc disallowances on this expenditure without pointing out any element of such personal expenditure. During the course of assessment, proceedings, the assessee has given complete details to the various queries rais ..... X X X X Extracts X X X X X X X X Extracts X X X X
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