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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI SHAMIM YAHYA, HONBLE & SHRI C.N. PRASAD, HONBLE
PER C.N. PRASAD (JM) 1. These two appeals are filed by the assessee and Revenue against the order of the Learned Commissioner of Income Tax (Appeals)–25, Mumbai dated 07.11.2014 for the Assessment Year 2008-09.
The only issue in the appeal of the assessee as well as the Revenue is in respect of partly deleting/allowing the commission expenses by the Assessing Officer.
Briefly stated facts are that, the Assessing Officer while completing the assessment u/s. 143(3) r.w.s. 263 pursuant to the order passed u/s.263 of the Act by the Ld. Commissioner of Income-tax required the assessee to justify the commission paid to M/s. Natural Petrochemicals Private Limited amounting to ₹.85,96,203/-. Assessing Officer required the assessee to provide various details, evidences of commission expenses with TDS applicability, copy of contract, nature of services rendered along with evidences etc. In the course of Assessment Proceedings assessee appears to have furnished ledger account of M/s. Natural Petrochemicals Private Limited. Assessing Officer also issued notice u/s. 133(6) to M/s. Natural Petrochemicals Private Limited asking them to explain in detail the nature of services provided by them to the 3 ITA.No.43 & 537/MUM/2015 (A.Y: 2008-09) Gopal Lalchand Talreja assessee, copy of contract if any, ledger account of the assessee in their Books of Accounts. However, no reply was received by the Assessing Officer. The assessee furnished TDS details on the commission expenses debited to Profit and Loss Account. The Assessing Officer disallowed the commission expenses as the assessee could not produce any evidence regarding nature of services rendered by the party and he also observed that the genuineness of the commission remains unexplained.
The matter was carried before the Ld.CIT(A) and the Ld.CIT(A) partly allowed the claim of the assessee holding that Assessing Officer cannot disallow the whole amount of commission as the appellant had made payment of ₹.58,38,011/-. Ld.CIT(A) was of the view that if the payment has to be considered as not genuine then the Assessing Officer has to reject the Books of Accounts which was not done in this case. Therefore, he restricted the disallowance to the amount of outstanding i.e. ₹.27,58,192/-.
Learned Counsel for the assessee before us submits that, assessee has provided party wise details of sales made through M/s. Natural Petrochemicals Private Limited. Further, referring to Page No.19 of the Paper Book which is the debit note issued by M/s. Natural Petrochemicals
4 ITA.No.43 & 537/MUM/2015 (A.Y: 2008-09) Gopal Lalchand Talreja Private Limited submits that it has been specifically mentioned that the amount was debited towards selling commission for the financial year ended on 31.03.2008 for various products and quantity, the rate of commission on such quantity was also mentioned in the debit note. Therefore, Learned Counsel for the assessee submits that M/s. Natural Petrochemicals Private Limited has rendered services to the assessee by procuring orders for the assessee and sales have been made to various parties by the assessee through M/s. Natural Petrochemicals Private Limited for which commission was paid.
Ld.DR submits that details have not been furnished before the Assessing Officer or before the Ld.CIT(A). Ld.DR submits that as there is no finding by the lower authorities as to the rendering of services by M/s.Natural Petrochemicals Private Limited to the assessee. Therefore, the genuineness of the rendering of services by the party have not been established. Ld.DR submits that though notice was issued u/s. 133(6) party did not respond to the notice. Therefore, there is no confirmation from the party that they have rendered any services to the assessee. Ld.DR strongly supported the orders of the Assessing Officer in disallowing the entire commission paid by the assessee.
5 ITA.No.43 & 537/MUM/2015 (A.Y: 2008-09) Gopal Lalchand Talreja 7. We have heard the rival submissions, perused the orders of the authorities below. on a perusal of the orders of the lower authorities, we observe that there is no finding by the lower authorities as to the rendering of services by the M/s. Natural Petrochemicals Private Limited to the assessee. It is the submission of the assessee before us that M/s. Natural Petrochemicals Private Limited has rendered services by procuring orders for which the assessee has made commission. No such finding is given in the orders of the lower authorities. In the absence of any finding by the lower authorities regarding rendering of services by the M/s. Natural Petrochemicals Private Limited to the assessee the expenditure cannot be said to have been incurred for the purpose of the business by the assessee. Before us, Learned Counsel for the assessee furnished Customer’s wise sales summary of various products and the quantity sold and the value of such products to establish that M/s. Natural Petrochemicals Private Limited has rendered services, as it is the submission that these sales were made through M/s. Natural Petrochemicals Private Limited, therefore, M/s. Natural Petrochemicals Private Limited has acted as an agent for procurement of sales and rendered services for which commission has been paid.
On hearing both the sides, we are of the considered view that the issue has to be examined afresh in the light of the submissions and the 6 ITA.No.43 & 537/MUM/2015 (A.Y: 2008-09) Gopal Lalchand Talreja evidences furnished before us by the assessee, as there is no finding that M/s. Natural Petrochemicals Private Limited has rendered any services to the assessee. These evidences were not examined by the lower authorities. In the circumstances, we restore this matter to the file of the Assessing Officer who shall examine this afresh in accordance with law after providing adequate opportunity of being heard to the assessee.
In the result the appeal of the assessee and appeal of the Revenue are allowed for statistical purposes.
Order pronounced in the open court on the 25th October, 2017.