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| The Tax Publishers2020 TaxPub(DT) 1469 (P&H-HC) INCOME TAX ACT, 1961
Section 37(1)
Tribunal was not justified in disallowing commission paid to Indian resident for booking orders for export because as per agreement, no order could be processed by assessee without services from agent and thus, assessee was bound to pay commission on any sale which was taken place in territory of an agent.
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Business expenditure - Allowability - Commission paid to Indian resident for booking orders for export -
Issue was as regards allowability of commission paid to Indian resident for booking orders for export in terms of section 37(1). Tribunal held that to justify payment of commission, assessee had to prove in every case that the order had been obtained from the agent. Contention of assessee was that as per agreement, it was to pay commission on whatever sale was generated within territory of agent. Held: Interpretation of Tribunal was incorrect. Clauses in agreement nowhere stipulated that assessee was not bound to report to agent any enquiry which may have received directly or indirectly. From reading of agreement, it was clear that no order could be processed by assessee without services from agent and if that was so, the assessee was bound to pay commission on any sale which was taken place in the territory of an agent.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE PUNJAB & HARYANA HIGH COURT
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