KOHINOOR TAJCENTRAL LLP,HYDERABAD vs. ACIT., CIRCLE-6(1), HYDERABAD

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee has filed details of commission expenditure paid through M/s. Building Blocks Properties LLP, and also commission expenditure directly paid by the assessee on sales and argued that, since the erstwhile firm has paid commission partially to the agents and deducted against their sale consideration, the same has been debited to profit and loss account. The assessee further claimed that, it has also directly incurred sales commission of Rs. 9,03,411/- for selling the plots. The Ld. CIT(A), after considering relevant submissions of the assessee and also taking note of the reasons given by the A.O., observed that, the assessee has failed to discharge the primary onus lies on the assessee to provide complete details of commission paid to persons with the nature and quantum of services rendered by such persons related to sale of plot of land. Further, it is also required on the part of the assessee to give the percentage of commission, and in the case of variation, explanation should have been provided for such 5 variation, etc. Since the assessee failed to provide any authentic documentary evidence like copy of invoices, bills/vouchers or agreement with the persons to whom commission is paid, the A.O. has rightly disallowed commission expenditure of Rs. 41,01,691/-. Therefore, the Ld. CIT(A) rejected explanation of the assessee and sustained additions made by the A.O.

Aggrieved by the Ld. CIT(A) order, the assessee is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri G.V.N. Hari, Advocate, submitted that the learned Ld. CIT(A) erred in sustaining additions made by the A.O. towards commission expenditure even though the assessee has filed relevant details including, name and address of the persons to whom commission was paid, payment by bank details and also TDS deducted on applicable commission payments. The learned counsel further submitted that, the assessee firm entered into an agreement with M/s. Building Blocks Properties LLP for sale of plots and subsequently said agreement was cancelled due to non- performance. Further, the above firm has paid partial commission to selling agents and the same has been adjusted against their

The learned Senior A.R. for the Revenue, Shri Ashish Kumar Shukla, on the other hand, supporting order of the Ld. CIT(A), submitted that, the assessee has failed to prove the onus by filing relevant supporting evidences to justify payment of commission. The assessee has not furnished TDS details and also failed to prove the details of services rendered by the sales agents. Since the assessee has not discharged the onus, the A.O. has rightly disallowed commission expenditure and the Ld. CIT(A), after considering relevant facts, has rightly sustained additions made

We have heard both the parties, perused the materials on record and had gone through orders of the authorities below. The A.O. disallowed commission and sales promotion expenses of Rs. 41,01,691/- on the ground that, the assessee has failed to discharge the onus by filing relevant evidences in support of commission expenditure, including the details of services rendered by the agents, the reasonableness of commission paid by the assessee when compared to the revenue generated for the year under consideration. It was the arguments of the assessee that additions made by the A.O. under Section 69C of the Act, cannot be sustained, because provisions of Section 69C is applicable only when some expenditure is incurred which was not recorded in the books of accounts of the assessee and source for the said expenditure has not been explained to the satisfaction of the A.O. Further, the assessee had also filed relevant supporting evidences, including the agreement between the assessee firm and M/s. Building Blocks Properties LLP, corresponding details of commission paid by the above firm along with name and address

We find that, the assessee claims to have entered into agreement with M/s. Building Blocks Properties LLP for sale of project and also cancelled said agreement for non-performance. Further, the above firm has sold certain plots to customers for which the firm has paid partial commission to agents. We further find that, the assessee has furnished relevant agreement along with details of commissions paid to various parties which is available in page nos. 92 to 107 of Paper Book filed by the assessee. From the details submitted by the assessee, we find that, the assessee has furnished party-wise amount of commission paid along with TDS deducted on said commission wherever applicable. The assessee had also filed copy of agreement between M/s. Building Blocks Properties LLP and the assessee and subsequent cancellation agreement. From the details filed by the assessee, it appears that the claim of the assessee towards payment of commission is genuine. However, fact remains that whether the assessee has furnished these evidences before the 9 A.O. and the Ld. CIT(A) or not is not forthcoming from the orders of the lower authorities. Since the assessee has filed various evidences, including party-wise details of commission paid along with details of plot numbers sold, corresponding payment details and TDS details, in our considered view, the issue needs to be re- examined by the A.O. in light of the various evidences filed by the assessee. Thus, we set aside the order of the Ld. CIT(A) and restore the issue back to the file of the A.O. The A.O. is directed to re-examine the issue in light of various evidences filed by the assessee to justify its claim. The A.O. is also directed to re- examine the contentions of the assessee on the applicability of provisions of Section 69C and decide the issue as per law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

The Principal Commissioner of Income Tax, Hyderabad. 4. विभागीयप्रतिनिधि, आयकर अपीलीय अधिकरण, हैदराबाद / DR, ITAT, Hyderabad 5. गार्डफ़ाईल / Guard file