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TMI Blog2015 (10) TMI 2817X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the brokers. 3. On the facts and in the circumstances of the case the ld CIT(A) has erred in deleting the addition made by the A.O. on account of commission expenses on sales, ignoring that the business use of the expenditure claimed was not proved, and therefore, the expenditure was not allowable U/s 37(1) of the IT Act, 1961. 4. On the facts and in the circumstances of the case the ld CIT(A) has erred in deleting the addition made by the A.O. on account of commission expenses on sales, ignoring that the Hon'ble ITAT order has been accepted by the department as has been challenged before the Hon'ble High Court." 2. The assessee filed return on 27/09/2010 declaring total income of Rs. 2,43,32,535/-. The assessee company is engaged in manufacturing and trading of TMT bars and MS ingots. All the grounds of revenue's appeal are interlinked and against deleting the addition made by the Assessing Officer on account of commission expenses of Rs. 95,44,810/- the ld Assessing Officer observed that the assessee had claimed expenses under the head brokerage and commission at Rs. 95,44,810/-. The ld Assessing Officer asked to file copy of ledger account of all the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding brokerage on sale bill, reveals that assessee had made a make believe arrangement to claim commission expenses. It was also noticed that commission had been paid to some ladies, who happens to be the relatives or wives of brokers, therefore, these ladies appeared to be just name lenders. Whole gaumt of raising bill for commission at the fag end of the year and receiving cheques from the assessee company for commission in the next year was a made believe arrangement between the assessee company and these so claimed brokers to siphon off the profit to evade tax. The bills were raised at the fag end of the year after calculating the adjustment to be made in the P&L account to reduce the profit. The ld Assessing Officer relied on the following decisions: (i) Niemla Textiles Finishing Mills Pvt. Ltd. Vs. CIT 100 ITR 611 (P&H) for agreement made and make believe arrangement. (ii) Precision Instrument Manufacturing Co. Vs. CIT 137 ITR 5 (Del) for agreement made, correspondence made between broker and the company. (iii) Vishnu Cotton Mills Vs. CIT 117 ITR 754 (Cal) for nature of service rendered by the broker. 2.1 The ld Assessing Officer further observed that there were agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2007-08 to 2009-10 when the ld CIT(A) disallowed the claim of brokerage/commission on sales in respect of those brokers who have not executed agreements for such work in the beginning for the F.Y., the Hon'ble ITAT even allowed payment of brokerage/commission irrespective of fact that no agreements on stamp paper were executed with the brokers. In the A.Y. under consideration the appellant has also executed agreements on stamp paper with the brokers. The facts of the claim of brokerage/commission in respect of A.Y. under consideration is similar to the facts of earlier assessment years, particularly A.Y. 2007-08 to 2009-10 and the Hon'ble ITAT has allowed such claim to the appellant in earlier years. The findings of the jurisdictional ITAT in the appellant own cases is of binding nature. Reliance is placed on the following case laws:- i) Agarwal Ware House and Leasing Ltd. Vs. CIT 257 ITR 235 (MP) ii) Bank of Baroda Vs. Hon'ble High Court Srivastava & Another 256 ITR 385 (Bombay) iii) Voest Alpine Ind. GBBH vs. ITO 246 ITR 745 (Cal.) iv) Avon Apparels vs. ITO 22, Taxworld 399 (ITAT Jaipur) v) Eagle Flask Industries Vs. DCIT 72 ITD 458 (ITAT Pune). Respectf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws referred before him, which is summarized as under:- (1) Aluminium Corporation of India Ltd. Vs. CIT West Bengal (Supreme Court) wherein it has been held that brokers have duly confirmed the commission and service provided via the confirmations as well as the Declarations. These details are sufficient that brokers have provided the service. The ld Assessing Officer should collect some concrete evidence to prove the show called nexus to prove his suspicion. The ld Assessing Officer merely held suspicion but commission was paid wholly and exclusively for the purpose of business. The case law cited by the Assessing Officer are not applicable in the case of assessee. The ld AR has drawn our attention on case laws, which was referred by the Assessing Officer in the assessment order. He further relied on the decision in the case of UMACHARAN SHAW & BROS Vs. COMMISSIONER OF INCOME-TAX, WEST BENGAL [1959] 37 ITR 271 (SC), A. S. SIVAN PILLAI Vs COMMISSIONER OF INCOME-TAX, MADRAS [1958] 34 ITR 328 (Mad), COMMISSIONER OF AGRICULTURAL INCOMETAX, KERALA Vs. M. J. CHERIAN [1979] 117 ITR 371 (Ker). He further argued that the Hon'ble ITAT Jaipur Bench, jaipur in assessee's own case has conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were figured in commission payment list, which has been accepted by the learned CIT(A) as genuine and allowed the appeal of M/s Kamdhenu Ispat Ltd. where no second appeal has been filed by the Assessing Officer. Names of brokers as per assessment years wise, M/s Kamdhenu Ispat Ltd. had paid commission are as under:- A.Y. 2003-04 A.Y. 2004-05 Party's name Party's name 1. Ajay Traders 1. Sh. Maman Chand Goyal 2. Sh. Vikrant Mahajan 2. Sh. Naresh Garg 3. Sh. Gulshan Gupta. 3. Sh. Vikrant Mahajan 4. Sh. Dharmpal Khera 4. Ajay Traders 5. Sh. Maman Chand Goyal 6. Sh. Sanjay Gupta 7. Sh. Naresh Garg 8. Sh. Anil Kumar 9. Rajiv Garg (HUF) A.Y. 2005-06 A.Y. 2006-07 Party's name Party's name 1. Ajay Traders 1. Ajay Traders 2. Sh. Naresh Garg 2. Sh. Anil Kumar 3. Aman Steel. 3. Sh. Jagdish Manchanda 4. Sh. Chandrashekhar Steel 4. Sh. Naresh Kumar Garg 5. Sh. Jagdish Manchand 5. Sh. Rajiv Garg (HUF) 6. Sh. Kanta Modi 6. Smt.Sharda Manchanda 7. Sh. Maman Chand Goyal 7. Smt. Shashi Bala Garg. 8. Project Consultant 8. Sh. Vikrant Mahajan. 9. Smt. Sharda Manchanda 10. Sh. Vikrant Mahajan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticle as well as ancillary object have not been allowed to deal in such items. The appellant's arguments that for commission business no specific object is to be provided in the memorandum of articles but all the companies are allowed under the companies' law to do miscellaneous business either in form of commission or any other income. Further commission paid to Ruchiraraj is given for supply of goods, which has been arranged by the brokers, is no bar under the law that a contractor or consultant cannot supply the goods on commission basis. It has been claimed by the appellant that Shri Ruchiraraj has information about supply and demand of the material. The appellant had made agreement with him. The assessee has filed copy of bill and ledger and payments have been made through account payee cheques to him (page No. 58 of paper book of A.Y. 2008-09), in which, the recipient charged service tax, which proves that he has rendered service for the appellant. It is further found that in the assessee's group, search seizure operation had carried out by the department but no incriminating documents found on account of commission payment. The assessee had shown turnover in A.Y. 2003-04 at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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