BOMI RUSTOMJI KARANJIA,,PUNE vs. DEPUTY COMMISSIONER OF INCOME TAX,, PUNE

Ground No. 1 raised by the assessee challenging the action of CIT(A) in confirming the disallowance of sales commission expenses paid to non- resident and employees in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. We note that the assessee claimed allowance of sales commission expenses to a foreign party and to its employees at Rs.2,72,350/- and Rs.12,91,116/-, respectively. Regarding the payment to foreign party the AO observed that no TDS was deducted and no reasons furnished for non deduction of TDS. Accordingly, the AO disallowed entire amount of Rs.2,72,350/-. Before the CIT(A), it was contended that non-resident did not carry on any business operations in the taxable territories and only acted as selling agents outside India. The ld. AR, Shri Dilip Kumar Kaur submits that the relevant evidences were filed before the CIT(A) i.e. copy of bill from non-resident agent along with ledger extract of customer. The CIT(A) did not discuss about such evidences and confirmed the addition made by the AO unilaterally. We note that, for want of evidences, the AO disallowed the amount paid to foreign party and the CIT(A) did not discuss about the evidences filed in this regard. The ld. DR, Shri Sudhendhu Das reported no objection in remitting the file to the AO. Therefore, taking into consideration the submissions of ld. AR and ld. DR in the facts and circumstances of the case, we deem it proper to remand the matter to the file of AO for its fresh adjudication. The assessee is liberty to file evidences, if any, in support of its clam.

Regarding commission paid to employees, we note that the AO for want of evidences disallowed an amount of Rs.12,91,116/-. The CIT(A)

Ground No. 2 raised by the assessee challenging the action of CIT(A) in confirming the addition made by the AO on account of gifts given to employees on the occasion of deewali in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. We note that in response to the above disallowance the AO sought details from the assessee against which the assessee filed ledger extract and copy of bill form the Ranka Jewellers. According to AO, the assessee did not give any justification for such gifts on the occasion of festival and in the absence of which he disallowed an amount of Rs.10,83,603/-. Before the

Ground No. 3 raised by the assessee against the disallowance of Rs.2,12,070/- on account of travelling expenses in the facts and circumstances of the case.

Heard both the parties and perused the material available on record. In the assessment proceedings, we note that the assessee produced copies of bills, challans and vouchers in support of travelling expenses and the AO for want of further evidences disallowed 10% of total travelling expenses of Rs. 2,12,070/- (Rs.21,20,676/- of 10%) was disallowed. The CIT(A) also held the said expenses were not supported by evidences. The ld. AR drew our attention to the page Nos. 55 to 78 and argued that all the evidences were filed before the CIT(A) but no discussion whatsoever accorded for justifying the said expenditure but readily agreed for remand the matter to the file of AO for its fresh adjudication. The ld. DR reported no objection. Therefore, taking into consideration the submissions of ld. AR and ld. DR in the facts and circumstances of the case, we deem it

In the result, the appeal of assessee is allowed for statistical purpose.