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TMI Blog2022 (4) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order on the following solitary ground of appeal: "1. Ld. CIT(A) erred in confirming disallowance of Rs. 8,29,120/- made by the AO on account of commission to agents, without appreciating the facts of the case properly. The disallowance was made by the AO on extraneous reasons. The disallowance made by the AO and confirmed by the CIT(A) is arbitrary, illegal and not justified." 2. Succinctly stated, the assesee firm which is engaged in the business of wholesale trading of crude coal tar and other tar products, had e-filed its return of income for the assessment year 2013-14 on 27.09.2013, declaring an income of Rs. 7,93,570/-. The return of income filed by the assessee was processed as such u/s. 143(1) of the Act. Subsequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricted the increase in the commission expenditure in the same ratio i.e, in which the sales for the year under consideration had increased as in comparison to those of the immediately preceding year i.e., A.Y 2012-13. Accordingly, the Assessing Officer restricted the assessee's claim for deduction of commission expenditure to Rs. 2,10,880/- and disallowed its claim for deduction of the balance amount of Rs. 8,29,120/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT (Appeals), but without any success. 5. The assessee being aggrieved with the order of the CIT (Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, and perused the orders of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to persuade ourselves to subscribe to incongruous basis adopted by the lower authorities for disallowing the assessee's claim for deduction of commission expenses. As is discernible from the record, the assessee in the course of the proceedings before the CIT(Appeals) had placed on record confirmations of the commission agents as 'additional evidence', which were admitted by him. On a perusal of the orders of the lower authorities, we find that the genesis of the disallowance by the lower authorities of the assessee's claim for deduction of commission expenses is that the increase in the said expenditure did not satisfy the "benefit test" i.e, is not accompanied with a corresponding increase in the sales. At this stage, we may herein ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim for deduction of the same by the assessee, but then, as observed by us hereinabove, the allowability or not of the same has to be tested as per the mandate of Section 37 of the Act; and not on the touchstone of satisfaction of the "benefit test" as had been done by the A.O in the present case. Backed by our aforesaid observations, we are of the considered view that as the disallowance of the assessee's claim for deduction of commission expenses is not based on any material or observations which would lead to an irrefutable conclusion that the said expenditure was either not genuine or; was not incurred wholly and exclusively for the purpose of assessee's business within the meaning of section 37(1) of the Act, therefore, we set-aside t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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