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TMI Blog2023 (6) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Authority - CIT-A allowed the claim of assessee - HELD THAT:- This issue is been settled in the case of Valsad District Central Co-Op. Bank Ltd.[ 2019 (5) TMI 1979 - ITAT SURAT] as held petitioner produced what it had been producing all along namely, the contribution made towards the fund and the agreement of the LIC to manage the fund. If the Assessing Officer had any doubt about such a claim, it was always open for him to examine it, ask the petitioner to fulfill further requirements. Merely because the petitioner did not provide an additional declaration in the return that the scheme though approved, the pentioner is unable to produce a copy of the order approved by the Commissioner after long gap of time, cannot be categorized as failure on the part of the petitioner to disclose truly and fully all material facts. Also in M/S. TAMILNADU MARITIME BOARD [ 2020 (10) TMI 798 - MADRAS HIGH COURT] held that contribution made towards fund was to be treated as business expenditure and the same was allowable u/s. 37(1) of the Act, even though the said fund was unapproved by Income Tax Department - no hesitation in confirming the deletion made by the Ld. CIT(A) - Decided agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e if a dealer gets order at the rate higher than standard selling price then excess is also passed on to dealers on a mutually agreed basis. Moreover, in case the dealers who manage godowns, are given additional commission on the total value of sales carried out from the godowns to meet additional cost of maintaining godown. Sometimes in case of strategically important customers a higher percentage is offered to compensate the dealer for the extra efforts. The commission is paid by cheque and TDS is deducted paid. All the persons to whom commission payment is made are also assessed to the income tax. The appellant is maintaining its books of accounts in ERP system; Commission is calculated at the end of relevant quarter and after due verification of sales target achieved, payment received against sales etc. and on the basis of debit note received from dealers, the commission expenses is accounted in the books of company. The debit note for commission for April to June quarter is generally received and accounted in the month of July August. Similarly, debit note for commission for second quarter i.e. July to September in the month of October- November, for third quarter i.e. Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales, it is held that the disallowances cannot be sustained on based on such comparisons Further, the appellant's argument that in the past also commission on the same basis had been paid and has been allowed by the department is also .considered. In view of these facts, the addition made by the AD is deleted. Appeal on ground No. 1 (1) is allowed. 6.2 The appellant has submitted that the appellant has paid Rs.5,27,881/- being gratuity premium in compliance of provision of Section 36(v) r.w.s. 40A(9) and Section 43B of the Act. The appellant further submits that the application of approval of gratuity before competent authority was made in 1995 and neither any letter requiring further details has been received by your appellant nor the application is rejected. Kindly note that and as per the application approval is sought wef 01/08/1995. The appellant further has submitted that the said premium is paid to Life Insurance Corporation , an alterative authority prescribed for the payment of gratuity to worker in compliance of the rules and regulation prescribed as per Gratuity Act and Income Tax Act. The reliance is placed on the following decision including th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds argued that the Ld. NFAC erred in deleting the commission expenses. When the assessee could not establish with the documentary evidences of the commission expenses differ from case to case basis and customer to customer basis and product to product basis. The Ld. CIT(A) is not justified in deleting the addition of Rs. 5,27,881/- on account of disallowance of Gratuity paid towards LIC fund which was not approved by Income Tax Authority. Thus the Ld. CIT-DR pleaded to sustain the addition made by the Assessing Officer and thereby allow the appeal filed by the Revenue. 6. Per contra, the Ld. Sr. Counsel Shri S.N. Soparkar appearing for the assessee filed before us a Paper Book containing 140 pages of various details and documents submitted before the lower authorities. Our kind attention was invited to Page No. 51 of the Paper Book wherein a Chart depicting net sales commission paid to various parties by the assessee, the same is reproduced here below: Sr. No. Name of Party PAN Amount of Corresponding Sole (Rs.) Gross Commission (Rs.) Service Tax on Commission Net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No 4.14 12 RDEVIS ENGINEERS PVT LTD AABCR3000K 15,15,42,040 1,02,97,870 9,07,117 93,90,753 No 6.20 13 S HARI AALPHJ191G 83,84,239 5,37,590 5,37,590 No 6.41 14 SAI ENTERPRISES AFQPB4346D 3,94,30,973 23,15,192 2,95,379 20,19,813 No 5.12 15 SIGMA COATS AATFS939SA 8,94,38,793 56,54,266 6,25,067 50,29,199 No 5.62 16 SSY ENTERPRISES AFXPG6022L 1,36,99,281 9,06,516 9,06,516 No 6.62 17 SUPTHA MARKETING ACPPC.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t like godown rent, electricity charges, salary and perks of staff, office expenses, conveyance and welfare expenses of staff, etc., Branch office expenses are saved by bargaining commission to the parties that too after realization of sales proceeds from customers. Further in case the sales proceeds are not realized, the entire bad debts are recovered from the above parties. When the above dealers are not related party and appropriate TDS is deducted and commission is paid by cheques. Thus the Ld. CIT(A) deleted the addition made by the A.O. 7. Regarding the disallowance of Gratuity premium of Rs. 5,27,881/-. The Ld. Senior Counsel relied upon Jurisdictional High Court Judgment in the case of Valsad District Central Co-Op. Bank Ltd. vs. ACIT reported in [2018] 92 taxmann.com 280. Thus the Ld. Senior Counsel submitted that the Gratuity premium is paid to LIC, an alternative authority prescribed for the payment of gratuity to employees, in compliance of the rules and regulation prescribed as per Gratuity Act and Income Tax Act. Thus the deletion made by the ld. CIT(A) does not require any interference and the appeal filed by the Revenue is liable to be dismissed. 8. We have gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch claim not being approved, if such was the fact, may amount to not disclosing true and full facts. However, this issue must be examined in peculiar facts of the present case. According to the petitioner, factually, the scheme was approved by the Commissioner way back in A the year 1976. It was only after it, the LIC would undertake the responsibility to manage the same. It was on this basis that the petitioner had been raising the claim year after year right since its inception every year. In none of the past years, any such issue was raised by the Assessing Officers in this respect. Therefore, the petitioner produced what it had been producing all along namely, the contribution made towards the fund and the agreement of the LIC to manage the fund. If the Assessing Officer had any doubt about such a claim, it was always open for him to examine it, ask the petitioner to fulfill further requirements. Merely because the petitioner did not provide an additional declaration in the return that the scheme though approved, the pentioner is unable to produce a copy of the order approved by the Commissioner after long gap of time, cannot be categorized as failure on the part of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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