9911796707
TMI Blog2023 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... are available - thus find that the assessing officer has given contrary finding. There is no finding of AO that the commissions paid to both the parties are excess or unreasonable. No comparable stances are given by the assessing officer. Commission payment is ranging from 3 % to 5% is not unreasonable keeping in view the alleged assistance rendered by the persons to whom such commission is paid as they were having sufficient experience in the business of assessee. Similar commission payment was allowed in subsequent assessment year. Thus, no justification in making disallowance of entire commission expenses - we direct AO to delete the entire commission payment disallowances - Grounds of appeal raised by the assessee is allowed. - ITA No. 776/Srt/2018 - - - Dated:- 27-2-2023 - Shri Pawan Singh, Judicial Member For the Assessee : Shri Parin Shah, CA For the Department : Shri Vinod Kumar, Sr. DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Valsad (in short, the ld. CIT(A)) dated 26/09/2018 for the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner: Commission paid to Shri Chintan K Shah (brother of assessee) Sl. No. Party Name Sales Rs. Commission @ 5% 1. Kalpena Industries 9747080 Rs. 487354 Commission paid to Shri Kishor Kumar K Shah (father of the assessee 70 years old) Sl. No. Party Name Sales Rs. Commission @ 3% 1. Deccan Canes Printers P ltd. 2136089 Rs. 64082 2. Rotam India Ltd. 1912298 Rs. 57369 3. Sumintono chemicals 4757172 Rs. 142715 4. Trimurti Polymers 3696089 Rs. 110883 12501648 Rs. 375049 3. To ascertain the genuineness of commission expenses, the assessee was asked to furnish the details of parties to whom sales were made on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed and added back to the total income of assessee. The Assessing Officer recorded that the assessee was provided copy of statement of Sh. Chintan K Shah and Sh. Kishore Kumar K Shah recorded under Section 131 of the Act. 4. The assessee filed his reply dated 26/12/2016, the contents of reply of assessee is recorded in para 5.5 of the assessment order. The assessee in his reply, submitted that he has paid commission of Rs. 4,87,354/- to Sh. Chintan K Shah for various services availed from him in respect of sales to Kalpena Industries. Sh. Chintan K shah was also dealing in trading of fire safety equipment as he himself is in the similar nature of business for rendering services, a person is not required to have sound educational background, though such educational background may help in providing better services. Experience in the field of business is counted. He was having 10 years experience in the same business and the assessee paid commission to Sh. Chintan K Shah as he possessed required skill to procure and executed the orders. The assessee prayed to treat the commission expenses as genuine business expenses and allowance thereof. Similarly, the commission was paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsome activity and it involves alteration in RCC structures fitting of fire extinguisher in multi storied building etc. The assessee received various contracts and for timely completion of such contract required various services. The assessee paid commission to his brother and father who are doing the similar business and doing their help and assistance in completing contract in an efficient and time manner. The commission to both the persons were paid for not facilitating the deals between the vendors and the assessee but paid for facilitating execution of contract received by assessee. The contention of assessee is also supplemented by the percentage of sales to various vendors in calculating the commission paid during the year. The Assessing officer has not treated the expenses as bogus or non-genuine but merely disallowed by observing that the vendors to whom such commission were paid, replied that they do not know Sh. Chintan K Shah and Kishore K Shah to whom the commission was paid. The assessee never stated that the commission was paid to bring the vendor. There was no case of such disallowance. The payee to whom the commission was paid included the commission received in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AR of the assessee submits that in response to notice under Section 133(6) of the Act, Sumitomo chemicals India Pvt. Ltd. filed reply and in response to question No. 2 they specifically stated that we know Mr. Kishore Shah and he was instrumental in sourcing purchases made from Shah Industrial Products during the F.Y. 2013-14. Similar Khalpana Industries(India) Limited also in response to notice under Section 133(6) replied that they know Mr. Chintan Shah, who was instrumental in sourcing purchase from Shah Industrial products. Copy of such reply is filed on page No. 61 62. However, the Assessing Officer observed/recorded otherwise. The ld. AR of the assessee submits that it was not the case of assessee that he paid commission for procuring order from various parties. However, the case of assessee throughout the proceedings was that he paid commission to his brother and father for timely completion of contract and providing various services and guidance to the assessee, who was in the same business in which the assessee is engaged. The assessee has paid 5% commission to his brother on the total sales to Kalpana Industries and 3% commission on sale consideration to four p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with Shah Industrial Products directly. None appeared from Trimurti Polymers. Thus, the Assessing Officer after making full-fledged investigation and giving full opportunity to the assessee, disallowed the commission expenses as the assessee failed to prove the services rendered by the commission agent. The ld. Sr.DR submits that facts of the case laws relied by the ld. AR of the assessee are based on different set of facts and the ratio of the decisions is not applicable on the facts of the present case. In the short rejoinder submission, the ld. AR of the assessee reiterated that it is not case of assessee that he paid commission to bring the vendors rather paid the commission for facilitating the execution of contract being experienced in business carried out by assessee. 10. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. I find that the Assessing Officer made disallowance of commissions payment by taking view that the parties have not rendered any services and no evidence is filed by the assessee. The ld CIT(A) also upheld the disallowance by similar observation. Before me the ld AR for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
