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TMI Blog2022 (6) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... inventorising etc. The assessee has admittedly paid these agents at 3.5% of the sales handled by them. As stated earlier, the amounts or fact of payments has not been disputed by the A.O. The CIT(A) has rendered a categorical factual finding, which has not been dispelled by the Revenue by placing any contra evidence. In the light of the a foresaid reasons, we reject grounds 2 and 3 raised by the Revenue. Disallowing the credit balance of various parties in the books of the assessee under the head creditors not verifiable - A.O. disallowed the sundry credits - HELD THAT:- The details of the parties, nature of transaction and the amounts of transaction are described in impugned order of the CIT(A). Each of the above parties transactions, it was found by the CIT(A) that the assessee has made the payment through bank accounts and had submitted copies of confirmation of transactions, the ledger extracts from all the parties evidencing payments made. The A.O. in the remand report has not raised any specific objections with regard to the submissions made by the assessee. It is in this context and after examining the evidences placed on record the CIT(A) has come to a factual findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment for those specific services have already been made under the subheads of transporting charges, handling charges magazine rent. Prima facie there does not appear to be any justification for making, such commission payment when the specified services are being accounted for under the subheads of handling charges, magazine rent and transportation charges. It is also noteworthy that no commission can be considered as payable as the sales are being made to the public Sector Undertakings. (c) The issue of commission payment has been examined in detail during the assessment proceedings for A.Y. 2010-11 by Additional Commissioner of Income-tax, range 3(2), Mumbai and the said commission payments were disallowed in its entirety during that assessment year i.e. 2010-11. The facts are exactly same during the current assessment year. Therefore, such commission payment cannot be considered as allowable for the purpose of business and an amount of Rs. 1,03,03,601/- claimed as commission expenses is therefore disallowed. The penalty proceedings u/s. 271(c) are being initiated separately. 4. Aggrieved, the assessee filed an appeal before the first appellate authority. The CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any commission for executing the sales. Further, he has conjectured that since the appellant was separately making payments under heads transportation, handling, magazine rent etc., there could be no justification for making additional payments to agents relating to these activities. 7.2.5 I find that the Assessing Officer has not understood the nature of business of the appellant company. It has nowhere been contended by the appellant that the amounts paid to the agents are for procurement of orders because such procurement by PSUs is done through public tenders for which no commission needs to be paid However, PSUs using explosives are mostly in mining sector which are spread across remote areas of the country. The appellant has appointed agents to properly execute sales orders in these different locations all over the country. It can be appreciated that executing of these orders require considerable efforts to be made by the agents in terms of statutory compliances, storage, last mile transportation, inventorising etc., obviously, no one would render these services without charging any fees. The appellant has been compensating its agents by offering 3.5% of the sales eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to low tax effect), the submissions made before the lower authorities, the audited financial statements and returns of income for the relevant assessment year. The learned AR relied on the findings of the CIT(A). 7. We have heard rival submissions and perused the material on record. The CIT(A) had deleted the disallowance following his predecessors order in assessee's own case for assessment years 2010-2011 and 2013-2014. The order of the CIT(A) for assessment years 2010-2011 and 2013-2014 was challenged before the Tribunal by the Revenue. However, the same was dismissed on account of low tax effect. 8. As regards the issue on merits, we find that the assessee is in the business of manufacture and sale of industrial explosives. The assessee sells goods to various public sector undertakings, which are located at different parts of the country. To execute the order, the assessee-company engaged various services of agents to assist and handle sales. The services rendered by these agents are explained in the order of the CIT(A) for assessment years 2010-2011 and 2013-2014 (extracted in the impugned order of CIT(A)). The services rendered by the agents are remunerated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the first appellate authority, the assessee had filed certain additional evidences and the same was forwarded to the A.O. for his report. The remand report was submitted by the A.O. vide letter dated 10.11.2016. Pursuant to the remand report, the assessee filed a rejoinder. The CIT(A) after examining each of the additions made for the sundry creditors outstanding, held that payments were made by the assessee through account payee cheques on future dates. Therefore, it was concluded by the CIT(A) that the addition is not warranted. 11. The Revenue being aggrieved, has raised this issue before the Tribunal. The learned DR relied on the grounds raised. The learned AR reiterated the submissions made before the Income Tax Authorities and relied on the findings of the CIT(A). 12. We have heard rival submissions and perused the material on record. The A.O. has made an addition of Rs. 1,36,65,795 by disallowing the credit balance of various parties in the books of the assessee under the head creditors not verifiable . The A.O. issued notices u/s. 133(6) of the I.T. Act to the sundry creditors to verify the genuineness of the same. However, some of them remained unserved. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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