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TMI Blog2021 (6) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... of the staff welfare expenses made by the A.O/DRP cannot be sustained and is liable to be vacated. Disallowance of Commission expenses - confirmations of the parties to whom commission was claimed to have been paid by the assessee were not filed in the course of the assessment proceedings - HELD THAT:- As material placed on record by the assessee to substantiate the authenticity of the commission expenses; that confirmations from all the dealers could not be obtained after lapse of a substantial period of 5 years (aprox); the PAN Nos. of majority of the parties were furnished by the asssessee; commission expense of ₹ 1.099 crores incurred by the assessee against its sales of ₹ 3,176.56 crores worked out at a miniscule figure of 0.03% of its sales; the assessee had duly demonstrated before the DRP the reason and justification for incurring the commission expenditure; and allowability of a similar claim of commission expenses in the past; and respectfully following the aforesaid order of the Tribunal in the assessee s own case, we find no justification in disallowance of a similarly placed assessee s claim for deduction of commission expenses - We, thus, in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total staff welfare expenses, aggregating to ₹ 2,45,259/-, incurred by the Appellant. Having regard to the facts and circumstances of the case, the Appellant submits that the disallowance is unwarranted and requires to be deleted. 3) The Assessing Officer and the learned DRP erred in disallowing commission payments, aggregating to ₹ 1,09,93,307/- on the ground that confirmations had not been filed by the Appellant before the Assessing Officer and that the confirmations filed before the DRP were not relevant or material. Having regard to the facts and circumstances of the case, the Appellant submits that the commission paid be allowed as a deduction as claimed by the Appellant in its Return of Income. 4) The Assessing Officer erred in observing that the process of amalgamation of the Appellant Company with Ingram Micro India Private Ltd. was not completed and in holding that the Appellant Company had not filed its returns of income for Assessment Year 2006-07 onwards. 5) The Assessing Officer erred in not granting credit for tax deducted at source aggregating to ₹ 24,66,754/-, without assigning any reasons for the non-grant of such credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) r.w.s 144C(1), dated 30.12.2010 for A.Y 2005-06 was passed and the income of the assessee was proposed by the A.O to be assessed at an amount of ₹ 69,45,05,530/- after inter alia making the following additions/disallowances: Sr. No. Particulars Amount 1. Depreciation on goodwill ₹ 14,93,072/- 2. Disallowance of staff/other welfare expenses ₹ 4,90,518/- 3. Disallowance of commission payment ₹ 1,09,93,307/- 4. Aggrieved, the assessee objected to the draft assessment order passed by the A.O under Sec. 153A/143(3) r.w.s 144C(1), dated 30.12.2010 before the Dispute Resolution Panel II, Mumbai (hereinafter referred to as DRP). The DRP Vide its order passed under Sec. 144C(5), dated 23.09.2011 disposed off the objections filed by the assessee. Insofar the disallowance of the assessee s claim for depreciation on goodwill and disallowance of commission payments of ₹ 1,09,93,307/- were concerned, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that despite its aforesaid efforts only a few confirmations could be obtained by December 31, 2010 i.e the latest by which the draft assessment order was to be passed. It was thus submitted by the assessee that for the aforesaid reason the remaining confirmations could not be filed with the A.O. It is stated by the assessee that as after culmination of the assessment proceedings it was able to obtain some more confirmations from its dealers, the same, thus, were filed with the DRP. However, the DRP declined to take cognizance of the aforesaid confirmations for the reason that as those were not filed in the course of the assessment proceedings, the A.O, thus was precluded from verifying the same. Also, the DRP was of the view that the confirmations furnished by the assessee company were not relevant as they did not have any contemporaneous evidentiary value. It is stated by the assessee that after culmination of the proceedings before the DRP it was able to obtain certain more confirmations from the dealers to whom commission was paid during the year under consideration. Accordingly, the assessee explaining the reasons as to why the confirmations which have been filed before us as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in the case of CIT, Kolkata Vs. Smifs Securities Limited (2012) 348 ITR 302(S.C) goodwill is an asset under Explanation 3(b) to Sec. 32(1) of the Act. It was observed by the Hon ble Apex Court, that a reading of the words any other business or commercial rights of similar nature in clause (b) of Explanation 3 indicates that goodwill would fall under the expression any other business or commercial right of a similar nature . It was observed by the Hon ble Court that the principle of ejusdem generis would strictly apply while interpreting the aforesaid expression which finds place in Explanation 3(b) to Sec. 32(1) of the Act. In the case before the Hon ble Apex Court, pursuant to the scheme of amalgamation of M/s YSN Shares and Securities (P) Ltd. with M/s Smifs Securities Ltd. which was duly sanctioned by the Hon ble High Courts of Bombay and Calcutta with retrospective affect from 01.04.1998, the assets and liabilities of M/s YSN Shares Securities Pvt. Ltd. were transferred to and stood vested with M/s Smifs Securities Ltd. In the process goodwill had arisen in the books of M/s Smifs Securities Ltd. It was the claim of the assessee that the excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of our aforesaid observations. 13. Disallowance of Staff welfare expenses : We shall now advert to the grievance of the assessee that the A.O/DRP had erred in disallowing 5% of the staff welfare expenses. Observing that the assessee had neither furnished the full details of the expenses booked under the head staff welfare expenses nor supported the same on the basis of supporting documentary evidence, the A.O, thus, holding a conviction that the aforesaid claim for deduction was not fully verifiable disallowed on an ad hoc basis 10% of the said expenses amounting to ₹ 21,90,518/-. On objection filed by the assessee, the DRP observed that a similar disallowance that was made in the case of the assessee for A.Ys. 2002-03, 2003-04 and 2004-05 i.e @ 10% of the staff welfare expenses was on appeal restricted to 5% by the CIT(A), vide his orders dated 05.01.2011 and 26.08.2011. Accordingly, the DRP following the view taken by the CIT(A) in the assessee s own case for the preceding years directed the A.O to reduce the disallowance to 5%. Resultantly, the disallowance of staff welfare expenses was restricted by the A.O to an amount of ₹ 2,45,259/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... straightway transposed the view taken by the CIT(A) in the assesses own case for the preceding years and, restricted the disallowance to 5% of the total staff welfare expenses. Be that as it may, as the aforesaid disallowance made by the A.O/DRP falls short of a reasoned order, therefore, we are unable to persuade ourselves to accept the same. Accordingly, as the disallowance of 5% of the staff welfare expenses made by the A.O/DRP is devoid and bereft of any basis, therefore, the same cannot be sustained an dis vacated. The Ground of appeal No. 1 is allowed. We have given a thoughtful consideration to the aforesaid issue, and find, that the facts and the issue pertaining to the disallowance of the assessee s claim for deduction of staff welfare expenses remains the same as were there before us in the aforementioned appeal of the assessee in ITA No. 8793/Mum /2011. Admittedly, in the present case also, the A.O while resorting to an ad hoc disallowance out of the staff welfare expenses had not called upon the assessee to furnish the details in respect of the staff welfare expenses which as per him were not verifiable. As such, the assessee had suffered the aforesaid part disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been paid as well the nature of services which were rendered by them, thus, vide his draft assessment order proposed to disallow its claim for deduction of commission expenditure of ₹ 1,09,92,307/-. On objections filed by the assessee, the DRP did not find any infirmity in the view taken by the A.O and rejected the objection filed by the assessee. The DRP while concluding as hereinabove observed that in the earlier years too the disallowance of commission expenses was upheld by the CIT(A), on the ground, that the assessee had failed to furnish the confirmations of the parties to whom commission was claimed to have been paid. The assessee in the course of the proceedings before the DRP had filed by way of additional evidence confirmations of some of the parties which it was able to procure after the culmination of the assessment proceedings. Observing, that the aforesaid confirmations were filed by the assesee for the first time in the course of the proceedings before the panel in the month of September, 2011, thereby precluding the A.O from verifying the genuineness of its claim of expenditure, the DRP declined to take cognizance of the same. Accordingly, the DRP was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further submitted by the ld. A.R that confirmations of two main parties i.e M/s Omega Systems and M/s Micro Care Computer Pvt. Ltd. to whom commission aggregating to ₹ 49,87,539/- was paid were filed in the course of the assessment proceedings, Page 8-10 of APB. Ld. A.R drew our attention to the written submissions that were filed with the DRP, wherein it was brought to the notice of the panel that the assessee in compliance to the directions of the A.O had furnished the requisite details to support its claim of commission expense, viz. names and addresses of the parties to whom commission was paid; the amount of commission paid; the amount of tax deducted at source; and nature of the services rendered by the parties. It was further submitted by the assessee that the nature of services rendered by the parties were similar to those rendered by them in the previous years. It was submitted by the ld. A.R that the assessee had submitted before the A.O that it was virtually impossible to obtain confirmations from all the dealers who were spread all over India after gap of so many years specifically when with some of such dealers the assessee had severed its relations. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier year and that there was no change in facts in the year under consideration. ii. No new material or evidence was found during the search/survey proceedings, showing that such payments are not genuine. ii. The impugned commission payments were made by way of overriding commission to the dealers of the assessee. iv. It was virtually impossible to obtain the confirmations after a gap of so many years from dealers spread all over India, some of whom may no longer be dealers for the assessee. v. There were no written agreements by and between the assessee company and those dealers as the commission was payable on case-to-case basis depending upon the product(s) sold and the year of operation. vi. The assessee did not want to create a situation whereby it would be legally liable to pay commission at a fixed rate irrespective of the prevailing market conditions at the time of entering into transactions. The Assessing Officer accepted the details and did not call for any further information from the assessee. vii. The tax was deducted at source while making the payments of commission. viii. The PAN details were not called for by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties as well as before us. There is substantial force in the claim of the ld. A.R that due to substantial lapse of time it was not possible for the assessee to have procured confirmations from all the parties, specifically when with some of the parties its relations were severed. On a perusal of the records, we find that the assessee had in the course of the proceedings before the DRP elaborated at length upon the reasons and justification for payment of commission, as well as rebutted the judicial pronouncements that were relied upon by the A.O, as under: 2. Reasons For Payment of Commission The main reasons for the payment of such commission are briefly enumerated hereunder: i. Appellant has paid commission to its dealers, as an overriding commission, on account of sales made directly by the Appellant, in respect of orders procured by the dealer. Since the direct sale is made by the Appellant, the dealer is compensated for the margin loss through the payment of commission. ii. Such commission is paid mainly to build and maintain dealer goodwill and to ensure that the dealers are compensated for all sales generated though their efforts and is subject to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort span of time. ii. The Appellant is dependent on its dealers all over India to increase and sustain the sales of the Company. The services rendered by such dealers are to procure new orders for the Appellant from existing as well as new customers. Hence, the primary service for which the commission or incentive is paid to such dealers is for facilitating the business of the Appellant. iii. Such commission is paid to basically ensure that the dealers are compensated for their sales efforts and are actively involved in the selling and distribution of the Appellant Company's products. There is severe competition in this business and various competitors are ready to offer various inducements to the dealers to stock and sell competing products. Such incentives and commission payments are therefore a business necessity and custom to ensure the growth of the business. iv. The dealers are also independent third parties having no connection whatsoever with the Appellant Company or with any of the directors of the Company. Hence, the payment was made out of a pure business necessity and was not made to a group company or a related concern. v. The Appellant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, in the case of Ess Ess Kay Engineering Co. P. Ltd., the payments were made by a company to a selling agency where the shareholders of the company and the partners of the selling agency were closely related. Similarly, in the third case, there was no evidence of my sales being procured by the agent and hence, the commission paid was disallowed. The Appellant submits that in case of the Appellant Company, all the dealers are independent unrelated, third parties and have no connection with the Appellant Company and are in no way related with the Appellant Company or the Directors. The services rendered by the dealers have been enumerated above. Thus, the basic facts on which the various courts have confirmed the disallowance of commission payments are itself absent in the case of the Appellant Company and have the ratio of such judgments cannot be applied to the facts of the Appellant Company's case. The Appellant respectfully submits that the issue of commission payments had come up before the learned CIT(A) - 40 in the case of Ingram Micro India Private Limited for the Assessment fears 2002-03 to 2004-05 and the learned CIT(A) has upheld the disallowance made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish the confirmations from the concerned parties; (ii) that, the PAN Numbers of the parties were not furnished by the assessee; (iii) that, the assessee had failed to satisfy the nature of services rendered by the parties to the assessee ; (iv) that, no details regarding quantum of business procured by the said parties was furnished by the assessee; and (v) that, no details as to whether there was any written agreement between the assessee and the aforesaid parties on the basis of which commission was paid to them was provided by the assessee. Accordingly, the A.O not being satisfied with the aforesaid claim of commission expenditure raised by the assessee proposed to disallow the same in his draft assessment order passed under Sec. 153A/143(3) r.w.s 144C(1), dated 30.12.2010. On objections filed by the assessee, the DRP observed that there was no scope to make an adhoc disallowance of the commission expenditure, as was so done by the A.O. However, at the same time, the DRP directed the assessee to furnish with the A.O the confirmations from all the parties to whom commission of ₹ 1 lac and above was paid during the year. In fact, the DRP on the basis of his aforesaid ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for the purpose of its business, therefore, the same was not liable to be disallowed. However, the DRP after so concluding, had directed the assessee to file with the A.O the confirmations from the parties to whom commission of ₹ 1 lac and above was paid during the year, failing which the same was to be disallowed by the A.O. We may herein observe, that the aforesaid observations of the DRP regarding the genuineness and allowability of the commission expenditure and, conclusion therein arrived at by him are not found to be befitting. In our considered view, the satisfaction recorded by the DRP that the commission expenditure was incurred by the assessee wholly and exclusively for the purpose of its business, was sufficient for allowing the assesses claim of the said expenditure. Be that as it may, we shall advert to the sustainability of the aforesaid disallowance made by the A.O/DRP on merits. As is discernible from the order of the DRP, the assessee in order to dispel any doubt as regards the authenticity of its claim of expenditure as regards commission exceeding ₹ 1 lac that was paid by it during the year, had thus, in the course of the proceedings before him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Egmore, Chennai, 600 008. 131,876 6,803 Frontier Business Systems Pvt. ltd. 18/10, Cunnigham Road, Banglore-560 052 ₹ 1,185,539 60,897 Global Systems SCO-3021-22, Sector 22-D, Chandigarh, 160024 129,587 7,127 Infonet Solutions 8E, Dhandapani Street, 2 Floor, T. Nagar, Chennai- 600 017 168,432 8,715 Interface Connectronics Pvt. ltd. 54/1, Sarder Patrappa Road, Bangalore 560 002 329,798 17,242 Lalani Computer Systems 59, Janmaboomi Marg, 2 Floor, Fort, Mumbai-400 001 110, 773 6,093 Mega Trends Ltd. 102, Mahalingapuram Main Road, Chennai- 600034 162,648 8,458 Micro World E-2/171, Arera Colony, Bhopal-462016 910,689 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wysetek Systems Technologists P. Ltd. 6-7, Udyog Mandir, Off Pitambar, Lane Mahim, Mumbai- 400 016 142, 334 7,295 As can be gathered from the aforesaid information that was furnished by the assessee, we find, that the complete details of the parties to whom commission of ₹ 1 lac and above was paid during the year, along with their respective addresses, amount of commission paid and, the TDS on the said respective payments was furnished by the assessee with the A.O. At this stage, we may herein observe, that the payments made by the assessee to the abovementioned parties for the period ended 31.12.2004, pertained to a period of about 7 years ago in context of the date of passing of the assessment order by the A.O under Sec. 153A/143(3) r.w.s. 144C(13), dated 31.10.2011. Accordingly, we find force in the contention advanced by the ld. A.R, that keeping in view the aforesaid substantial time gap of 7 years, it was practically not possible on its part to have obtained the confirmations of the said parties. In our considered view, now when the assessee had furnished complete details along with incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground which had weighed in the minds of the A.O while disallowing the assesses claim of commission expenditure, was that the summons issued under Sec.131 to the agents after expiry of a period of 4 years from the date when the transactions were entered by the assessee with them, were returned back by the postal authorities with the remarks not known . On the basis of the aforesaid facts, it was observed by the revenue authorities that the assessee had failed to discharge the onus as regards establishing the identity of the agents to whom the commission was paid. On appeal, it was observed by the Hon ble High Court, that in the backdrop of the evidence placed on record by the assessee, it would be unreasonable to hold that the assessee had failed to establish the identity of the commission agents, for the reason, that the said persons were not found available at their respective addresses after an expiry of a period of 4 years from the date of the transactions under consideration. Now, in the case before us, it is an admitted factual position, as is discernible from the order of the DRP and, had not been assailed by the revenue before us viz. (i) that, the commission expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAN Nos. of majority of the parties were furnished by the asssessee; commission expense of ₹ 1.099 crores incurred by the assessee against its sales of ₹ 3,176.56 crores worked out at a miniscule figure of 0.03% of its sales; the assessee had duly demonstrated before the DRP the reason and justification for incurring the commission expenditure; and allowability of a similar claim of commission expenses in the past; and respectfully following the aforesaid order of the Tribunal in the assessee s own case, we find no justification in disallowance of a similarly placed assessee s claim for deduction of commission expenses of ₹ 1,09,93,307/-. We, thus, in terms of our aforesaid observations direct the A.O to vacate the disallowance of commission expenses of ₹ 1,09,93,307/-. The Ground of appeal No. 3 is allowed in terms of our aforesaid observations. 19. The ld. A.R submitted that the Ground of appeal No. 4 is not being pressed. As per the concession of the ld. A.R the Ground of appeal No. 4 is dismissed as not pressed. 20. The assessee has assailed before us the order of the A.O on the ground that he has erred in not granting credit of tax deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed as claimed by the Appellant in its Return of Income. (2) The Assessing Officer and the learned DRP erred in making an adhoc disallowance of 5% of the total staff welfare expenses, aggregating to ₹ 7,47,318/- incurred by the Appellant. Having regard to the facts and circumstances of the case, the Appellant submits that the disallowance is unwarranted and requires to be deleted. (3) The Assessing Officer and the learned DRP erred in disallowing commission payments, aggregating to ₹ 11,98,82,819/- on the ground that confirmations had not been filed by the Appellant before the Assessing Officer and that the confirmations filed before the DRP were not relevant or material. Having regard to the facts and circumstances of the case, the Appellant submits that the commission paid be allowed as a deduction as claimed by the Appellant in its Return of Income. (4) The Assessing Officer and the learned DRP erred in making an adhoc disallowance of ₹ 5,00,000/- out of the aggregate miscellaneous expenses incurred by the Appellant Company for the year under consideration. Having regard to the facts and circumstances of the case, the Appellant submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Disallowance of staff/other welfare expenses ₹ 14,94,635/- 3. Disallowance of commission payment ₹ 11,98,82,819/- 4. Miscellaneous expenses ₹ 12,47,700/- 27. Aggrieved, the assessee objected to the draft assessment order passed by the A.O under Sec. 153A/143(3) r.w.s 144C(1), dated 30.12.2010 before the Dispute Resolution Panel II, Mumbai (hereinafter referred to as DRP). The DRP Vide its order passed under Sec. 144C(5), dated 23.09.2011 disposed off the objections filed by the assessee. Insofar the disallowance of the assessee s claim for depreciation on goodwill of ₹ 11,19,804/- and disallowance of commission payments of ₹ 11,98,82,819/- were concerned, the panel rejected the objections of the assessee and upheld the view of the A.O. As regards the ad hoc disallowance of 10% of the staff welfare expenses of ₹ 14,94,635/- proposed by the A.O, the DRP restricted the same to 5% i.e to the extent of ₹ 7,47,318/-. As regards the disallowance out of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the assessee for A.Y 2006-07 in ITA No. 8794/Mum/2011. Accordingly, on the same terms the disallowances made by the A.O, viz. (i). disallowance of assessee s claim for depreciation on goodwill :₹ 11,19,804/- ; (ii). disallowance out of staff welfare expenses :₹ 7,47,318/- ; and (iii). disallowance of commission expenses: ₹ 11,98,82,819/- are vacated. The Grounds of appeal Nos. 1 to 3 are allowed in terms of our aforesaid observations. 31. We shall now take up the grievance of the assessee that the A.O/DRP had erred in making an ad hoc disallowance of ₹ 5 lac w.r.t miscellaneous expenditure. As observed by us hereinabove, the A.O had initially disallowed an amount of miscellaneous expenses of ₹ 12,47,700/- out of the total miscellaneous expenses of ₹ 3,24,50,622/- that were booked in the profit loss account. On objections filed by the assesse, the DRP taking cognizance of the fact that the aforesaid miscellaneous expenditure inter alia comprised of an amount of income-tax penalty of ₹ 2,47,700/- that was already disallowed by the assessee in its computation of income, thus, it vacated the disallowance of the said amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch circumstances could justifiably have been made. In our considered view a disallowance of an expense made by an A.O in the thin air can by no means be sustained. We, thus, in terms of our aforesaid observations vacate the disallowance of ₹ 5 lac made by the A.O/DRP w.r.t the miscellaneous expenses. The Ground of appeal No. 4 is allowed in terms of our aforesaid observations. 35. The Ground of appeal No. 5 as per the concession of the ld. A.R is dismissed as not pressed. 36. The assessee has assailed before us the order of the A.O on the ground that he has erred in not granting credit of tax deducted at source of ₹ 72,98,738/-. As the adjudication of the aforesaid issue would require verification of facts, therefore, we restore the issue to the file of the A.O. The A.O is directed to verify the aforesaid claim of the assessee and give consequential effect thereof. The Ground of appeal No. 6 is allowed for statistical purposes. 37. The assessee has assailed before us the order of the A.O on the ground that he has erred in not granting credit of Self-assessment tax of ₹ 6,74,44,387/-. As the adjudication of the aforesaid issue would require ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer and the learned DRP erred in making an adhoc disallowance of 5% of the aggregate miscellaneous expenses, aggregating to ₹ 11,78,786/-, incurred by the Appellant Company for the year under consideration. Having regard to the facts and circumstances of the case, the Appellant submits that such expenditure requires to be allowed as claimed by the Appellant in its Return of Income. 5. The Assessing Officer erred in observing that the process of amalgamation of the Appellant Company with Ingram Micro India Private Ltd. was not completed and in holding that the Appellant Company had not filed its returns of income for Assessment Year 2006-07 onwards. 6. The Assessing Officer erred in not granting credit for tax deducted at source aggregating to ₹ 9,68,210/-, without assigning any reasons for the non-grant of such credit. 7. The Appellant submits that the Assessing Officer erred in levying interest under Section 234A(3) of the Act when no such interest was leviable. Having regard to the facts and circumstances of the case, and the provisions of law, the Appellant submits that the Assessing Officer be directed to delete the said interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t while computing its income. As such, the DRP directed that the disallowance of income-tax penalty be vacated. As regards the balance amount of misc. expenditure the DRP considering the nature of expenses restricted the disallowance on an ad hoc basis to 5%. Accordingly, the disallowance pursuant to the directions of the DRP was restricted by the A.O to an amount of 11,78,786/-, i.e 5% of total misc. expenses. 44. After receiving the order passed by the DRP under Sec. 144C(5), dated 23.09.2011, the A.O vide his order passed under Sec. 153A/143(3) r.w.s 144C(13), dated 31.10.2011 assessed the income at ₹ 184,09,76,230/- 45. The assessee being aggrieved with the assessment order passed by the A.O under Sec. 153A/143(3) r.w.s 144C(13), dated 31.10.2011 has carried the matter in appeal before us. Before proceeding with the merits of the appeal, we may herein observe that the assessee company had vide its letter dated 05.03.2018 and 04.04.2018 sought liberty to place on record as additional evidence the confirmations of 23 parties and 15 parties, respectively, to whom commission during A.Y 2005-06, A.Y. 2006-07 and A.Y. 2007-08 is claimed to have been paid, which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance amount of misc. expenditure, the DRP considering the nature of expenses restricted the disallowance on an ad hoc basis to 5% of total miscellaneous expenditure. A.O vide his order passed u/s 153A/143(3) r.w.s 144C(13), dated 31.10.2011 giving effect to the direction of the DRP worked out the disallowance out of miscellaneous expenditure at ₹ 11,78,786/- i.e @5% of total miscellaneous expenditure of ₹ 2,35,75,724/-. 48. Before us, it was submitted by the ld. A.R that no part out of the ad hoc disallowance out of the misc. expenses could be sustained. It was submitted by the ld. A.R that the lower authorities without pointing out the specific expenses which as per them was not allowable as a deduction could not have on an ad hoc basis justifiably dislodged the assessee s claim for deduction. In support, reliance was placed by the ld. A.R on the order of the Tribunal in the assessee s own case, viz. Ingram Micro India Private Limited Vs. Dy. CIT, Mumbai, ITA No. 8793/Mum/2011; dated 19.06.2019. It was, thus, submitted by the ld. A.R that in the absence of any reasoning the ad hoc disallowance of the miscellaneous expenses could not be sustained. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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