| The Tax Publishers2020 TaxPub(DT) 3433 (Ctk-Trib) INCOME TAX ACT, 1961
Section 37(1)
Since no material was found that person to whom commission was paid were accommodation/entry provider and money which was paid through banking channel to them came back to assessee in cash or through any other mode, thus, disallowance of commission expenses on allegation that assessee did not make any commission expenses to arrange buyers for sale of iron ores was invalid.
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Business expenditure - Allowability - Commission expenses -
Assessee claimed commission expenses. AO required assessee to furnish details of persons to whom commission was paid. Doubting genuineness of expenditure claimed, AO alleged that assessee did not make any commission expenses to arrange buyers for sale of iron ores. Held: CIT(A) rightly observed that at times when commission agent approaches purchasers, he does not identify himself as an agent of the seller and merely identifying himself as representative of seller, buyer cannot be aware that the person who has approached him is employee of the seller or agent of the seller. CIT(A) further held that commission may be paid to an agent for facilitating the trade even when orders are directly given to seller (assessee) by purchaser. Non-service of letters to the buyers or non-compliance of letters by buyers did not show that payment of commission was not genuine when relative sale was considered genuine and accepted by revenue department. Further, non furnishing of name of the buyers by agent in compliance to the notice does not necessarily mean that the agent is not aware of the buyers. No material was found that person to whom commission was paid were accommodation/entry provider and money which was paid through banking channel to them came back to assessee in cash or through any other mode. Thus, addition was invalid.
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FAVOUR : In assessee's favour.
A.Y. : 2012-13 & 2013-14
INCOME TAX ACT, 1961
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