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TMI Blog2016 (1) TMI 1490X X X X Extracts X X X X X X X X Extracts X X X X ..... large geographical area. Therefore, requirement of Representatives for doing such jobs cannot be denied. Further, M.P. State Agro State Marketing Development Corporation Limited vide their letter dated 21.02.2014 placed at paper book page no. 53, prescribes the various formalities and services required to be handled by the assessee or representatives of the agents. Therefore, we are of the considered opinion that the ld. CIT(A) was justified in deleting the addition on account of commission payments debited to the profit and loss account. Appeal of the Revenue is dismissed. - I.T.A. No. 620/Ind/2016 - - - Dated:- 16-1-2016 - SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For the Appellant by:-Shri Pankaj Shah and Shri G.J.Shah, C.A. For the Respondent by Shri Lalchand, CIT DR and Shri Mohd. Javed, Sr. DR ORDER PER O.P. MEENA, ACCOUTANT MEMEBR. This appeal is filed by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)-II, Indore [hereinafter referred to as the CIT(A)] dated 31.03.2016 and pertains to assessment year 2011-12 as against appeal decided in assessment order passed u/s 143(3) of the Act da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of India. The AO further observed that most of the agents were based at Indore, therefore, they could not have catered to 32 districts of the State. The assessee has also claimed before the AO that such payment of commission was allowed by the AO in the assessment for financial year 2010-11. However, the AO was not satisfied with the assessee and observed that the assessee has inflated debit side of the profit by booking fictitious expenses under the head commission . Therefore, the commission expenses of Rs. 1,64,08,950/- was disallowed. 4. Being aggrieved, the assessee has filed the appeal before the CIT(A). 5. Before the ld. CIT(A), it was contended that the detailed nature of services rendered by such commission agents, which included entering into rate contract, marketing in the villages, educating the usage, demonstration, completing paper formalities, documentation, follow up for payment after sales services were submitted. Therefore, it was contended that such funds/jobs could not have been executed without man-powers ear-marked for the villages and various works. Further, all the expenses included travelling, lodging etc. in providing services were supposed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilitating of sales and after sales services is of the assessee company and not of the Government nodal agencies. Therefore, the basis adopted by the AO for making disallowances of commission has not been considered as well founded as the same has emanated from the wrong question framed by the AO. There are number of formalities related to tender, sales, issues related to payments, awareness of farmers, installation of equipments, proper handling, after sale services etc. which are generally handled by the assessee or the representatives/agents. The ld. CIT(A) after going through the letters of M.P. State Agro Industries Development Corporation Limited dated 21.02.2014 submitted to AO on 25.02.2014, wherein they have detailed the various formalities and services required to be handled by the assessee or representatives/agents. Considering all these facts and relying on the decision of Hon'ble M.P. High Court in the case of CIT vs. Pure Pharma (P) Limited, 270 ITR 382 (MP) and on totality of facts, the ld. CIT(A) concluded that the commission expenses have been genuinely and reasonably claimed as such. Therefore, the AO was directed to delete the addition of Rs. 1,64,08,950/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as identity has been established. Hence, the ld. CIT(A) was correct in deleting the disallowances made by the AO. 10. We have considered the facts, rival submissions and perused the material available on record. On going through the assessment record as well as findings of the ld. CIT(A), we find that the assessee has submitted detailed evidences like names of the agents, PAN numbers, describing services rendered by the Agents, confirming the transaction, details of the TDS made, Bank account details with returns of income of agents. However, the AO has failed to examine or crossexamine these evidences by calling the concerned Agents. We also note that the question framed by the AO to various Government Agents like Madhya Pradesh Agro Industries Development Corporation Limited and Madhya Pradesh State Co-operative Marketing Federation etc. was whether such purchases were made through any commission agents ? If yes, the names and addresses of such commission agents. Therefore, the reply to this question had to be in negative as the commission agents were appointed by the assessee and not by the Government nodal agencies. We also note that the assessee is dealing in supplies of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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