ITO, JIND vs. SMT. URMILA DEVI, JIND

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ITA 597/CHANDI/2017Status: DisposedITAT Chandigarh13 December 20183 pages
AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) deleted the addition after verifying that the agents had indeed received the commission and considering the nature of the assessee's multi-level marketing business. The Tribunal upheld the CIT(A)'s order.

What were the facts?

The assessee, working as a Marketing Agent, claimed to have paid commission to nine agents for introducing new business. The Assessing Officer disallowed this commission, stating there was no nexus with the assessee's business activity.

What were the issues?

Whether the commission paid by the assessee to agents for introducing new business in a multi-level marketing scheme was a genuine business expenditure.

Which sections of the Income-tax Act were involved?

Section 131

AI-generated summary — verify with the full judgment below

आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the Revenue against the order dated 24.01.2017 of the Commissioner of Income Tax(Appeals), Hisar [hereinafter referred to as ‘CIT(A)’].

2.

The Revenue is aggrieved by the action of the CIT(A) in deleting the addition made by the Assessing officer into the income of the assessee of Rs. 87,32,000/- on account of disallowance of commission.

3.

The brief facts relating to the issue are that the assessee during the year has been working as a Marketing Agent with M/s Daulphin Tower

ITA No. 597-Chd-2017- Smt. Urmila Devi, Jind 2

Network (P) Ltd. Out of the commission received of Rs. 1,11,00,000/- the

assessee claimed that she had paid the commission amounting of Rs.

87,32,000/-to nine agents / persons for introducing new business for

joining multi-level marketing system of sales. The Assessing officer

disallowed the said commission paid to the persons on the plea that the

above said persons were not having any nexus with the business activity

that was carried on by the assessee.

4.

In appeal before the CIT(A, the assessee pleaded that the aforesaid

persons introduced to the assessee new persons who become members in

the multi-level marketing chain business. To verify the facts, the Assessing

officer summoned four persons / agents to whom the assessee had paid

commission and recorded their statements u/s 131 of the Income-tax Act,

1961 (in short 'the Act'), wherein, they confirmed that they have received

the aforesaid commission from the assessee.

5.

The Ld. CIT(A) after considering the above facts and the admission

of the persons that they had actually received the commission from the

assessee and also further considering the nature of the activity carried on

by the assessee, held that the commission payments were made by the

assessee in the course of obtaining order for the assessee’s line of

business. He, according deleted the additions so made by the Assessing

officer.

ITA No. 597-Chd-2017- Smt. Urmila Devi, Jind 3

6.

After considering the rival contentions of the Ld. representatives of the parties, we do not find any reason to interfere in the order of the CIT(A) and the same is accordingly upheld. In the result, the appeal of the Revenue is hereby dismissed.

Order pronounced in the Open Court on 13.12.2018

Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 13.12. 2018 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

1.

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