DEEPAK RAMESH KARNIK,THANE vs. ACIT CIR 1, THANE

आदेश / O R D E R

2.1. I have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is an individual, prop. Of Karnik Properties, engaged in the business of development and sale of plots, banglows in the project called Green Park in Raigad district. The assessee entered into an MOU dated 04/01/2008 with M/s Sidhant Concept Solutions (pages 35 to 41 of the paper book) to carry out certain activities as mentioned at page 37 of the paper book like marketing research work, marketing planning, pricing structure, communication design, advertisement, etc. For these activities, the assessee paid through cheque, a commission at 15% (Clause No.B/page 39 of the paper book). The ld. Assessing Officer examined Shri Santosh, partner of M/s Sidhant Concept Solutions, as per Revenue, who could not explain the receipt of marketing charges due to confusion between Financial Year and Assessment year and resultant into addition. Before the Ld. Commissioner of Income Tax (Appeal), an affidavit dated 18/08/2012 was filed (paper book pages 42 to 44) and affirmed on oath that he received the amount of Rs.13,20,035/- and contradicted the statement tendered before the Assessing Officer. The Ld. Commissioner of Income Tax (Appeal) sought a remand report from the Assessing Officer. The ld. Assessing Officer examined Shri Santosh as well as the assessee, examined various documents, confirmation of payment and thereafter, he informed the Ld. Commissioner of Income Tax (Appeal) that payments made to M/s Sidhant Concept Solutions were correct (copy of the remand report is available at page 33 & 34 of the paper book). The Ld. Commissioner of Income Tax (Appeal) allowed the commission payment to the extent of 2% and disallowed the remaining 13% by holding the same to be excessive, which resulted into confirmation of Rs.11,44,030/- . The assessee is in appeal before this Tribunal for the remaining disallowance of marketing commission.

2.2. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that commission at the rate of 15% was paid to M/s Sidhant Concept Solutions by cheque. This factual matrix even was not disputed by the Revenue. The only reason of disallowance by the Ld. Commissioner of Income Tax (Appeal) is that excessive commission was paid by the assessee. I am of the view that firstly the assessee is the best judge with respect to payment of percentage and secondly it is not the case that any under hand dealing was entered into between the parties or any cash payment was made in contravention of the provision. The recipient of the commission has also filed an affidavit dated 18/08/2012 confirming receipt of the impugned commission (page 42 to 44 of the paper book), a certificate dated 07/12/2011 was also issued by Thane Janta Sahkari Bank Ltd. confirming that payments were made to M/s Sidhant Concept Solution by cheques (page 45 of the paper book). At pages 46 & 47, the working of marketing charges bill raised by M/s Sidhant Concept Solution is also available along with its ledge account in the books of the assessee (page 48 of the paper book). The copies of bills raised by M/s Sidhant Concept Solutions along with annexures and vouchers confirming receipt of payment is also available on record (pages 49 to 72 of the paper book). Financial statement of the assessee, computation of income and acknowledgment of income for the year under appeal is also available at pages 73 to 97 of the paper book. The assessee has also filed a certificate that all these documents were duly available before the Assessing Officer during assessment/remand proceedings and before the Ld. Commissioner of Income Tax (Appeal) at the appropriate stage. The totality of facts clearly indicates that the payment of commission was duly made to M/s Sidhant Concept Solutions. It seems that the ld. Assessing Officer/CIT(A) took the commission as highly excessive on presumptive basis and it is not like a property broking commission rather various activities were involved as detailed in the MOU. Thus, considering the totality of facts, the ld. Assessing Officer is directed to delete the addition. Appeal of the assessee is therefore allowed.

Finally, the appeal of the assessee is allowed.

This order was pronounced in the open in the presence of ld. representative from both sides at the conclusion of the hearing on 06/09/2016.