SHRI MADANLAL SARIA,KOLKATA vs. A.C.I.T, CIRCLE-38, KOLKATA., KOLKATA

Ground No.1 raised by the assessee is general and calls for no specific adjudication.

Ground No.2 and 3 raised by the assessee can be conveniently decided together and these grounds of appeal

The assessee while computing its income from business had claimed expenses on account of commission payment of Rs.10,06,312/-. Out of the above commission paid to Savita Industrial Agencies Bandaur West amounting to Rs.2,58,632/-, Shri Shyam Marketing Service, Jaipur amounting to Rs.850/- and Yaswant Mourya amounting to Rs.19,543/- was disallowed by AO and confirmed by CIT(A) and this addition is the subject matter of ground nos. 2 and 3 before the Tribunal.

The AO disallowed the aforesaid commission for the reason that (i) complete address of the parties was not submitted (ii) from the details of sales debtors and creditors, the AO found no party was stationed at the place where from the recipients of the commission operated and therefore it could not be ascertained as to what services were rendered by the recipients of the commission. (iii) no details of TDS whether deducted and deposited were furnished by the assessee (iv) there was no compliance at the time of hearing before the AO and therefore the genuineness of the transactions could not be verified.

Before CIT(A) the assessee filed general ledger of Savita Industrial Agencies as per the books of the assessee which is placed at pages 4 and 5 of the assessee’s paper book. The assessee also filed letter of Savita Industrial Agencies addressed to the assessee wherein they have given the details of order number, item that were supplied utilizing 2

Similarly in respect of Shri Shyam Marketing service the general ledger account and the particulars of transaction for which commission was due and payable was given by the assessee and the same is placed at pages 21 and 22 of the assessee’s paper book. In respect of Yashwant Mourya the general ledger and correspondence giving complete details of the transaction for which commission was payable was also given and the same is placed at pages 23 to 25 of the assessee’s paper book.

Since these details were filed before CIT(A), the CIT(A) called for a remand report from the AO. In his remand report dated 23.11.2012, the AO after examining all the details submitted that there was no response from Savita Industrial Agencies to the notice issued by him u/s.133(6) of the Act in the remand proceedings.

The assessee submitted before CIT(A) that all the documents to satisfy that the grounds on which the commission was disallowed by the AO were produced before the and there is no reason that the disallowance should be sustained. The assessee also pointed out that the rendering of services by the parties has been proved and similarly commission paid to the very same parties in the past was allowed as deduction in the assessment completed u/s 143(3) of the Act. Copy of the assessment order for A.Y.2008-09 in which the assessee had claimed commission payment to the very same parties was allowed by AO by order dated 31.12.2010. The same is at pages 33 and 34 of the assessee’s paper book. The details of the commission paid to the very same parties in A.Y.2008-09 is available at page 31 of the assessee’s paper book.

Aggrieved by the order of CIT(A) the assessee has raised ground nos. 2 and 3 before the Tribunal.

I have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assessee took us through the evidence filed by the assessee to substantiate his claim for deduction on account of commission. It was highlighted by him that if the AO wanted to ascertain certain other details from the aforesaid three parties nothing prevented him from enforcing their attendance by issuing summons u/s 131 of the Act. Having failed to do so, the AO could not be heard to say that services rendered by the recipients of the commission could not be verified. The ld. DR relied on the decision of ITAT, Kolkata ‘C ‘ Bench in the case of United Traders Co. vs TRO (2012) 27 taxmann.com 293 (Kol.) wherein it was held that the evidence of services having been rendered should be available to allow commission payment as an expenditure. According to him the assessee failed to prove the nature of services in the present case. Hence the disallowance should be sustained.

After careful consideration of the rival submissions and the material on record, I am of the view that the disallowance of commission cannot be sustained. As already seen, the payment of commission and the transactions for which Savita Industrial Agencies acted as an intermediary have been given from pages 6 to 20 of the assessee’s paper book. This contains the entire details of the transactions for which the recipient received commission and the contract for which he has acted as an intermediary, the value of the contract, percentage of the commission, details of TDS etc. In the light of 4

Ground no.4 raised by the assessee reads as follows :- “4. For that the Ld. C.I.T(A) erred in confirming the addition of Rs. 14,629/- from telephone expenses, Rs. 55,856/- from conveyance expenses and Rs. 37,720/- from travelling expenses fully incurred for business purposes.”

As can be seen from grounds of appeal, the disallowance of telephone expenses, conveyance expenses and travelling expenses at 20% of the expenses claimed by the Assessee was made by the AO on an adhoc basic for the reason that personal use of these facilities by the assessee cannot be ruled out. The CIT(A) restricted the disallowance to 10%. As we have already seen the Assessee was handicapped by the fact that several of documents to support his claim were destroyed in a fire at his business premises. In my view such disallowance on an adhoc basis without any satisfactory material cannot be sustained. I, therefore direct that the aforesaid disallowances should also be deleted. Ground no.4 raised by the assessee is allowed.