The Two member bench of Income Tax Appellate Tribunal ( ITAT ) of Kolkata directed to allow expenditure towards the commission payment made to agents who relate to business expenses.
The Assessee Jai Trading Company after filing the return of income assessee case was selected for scrutiny. During the assessment proceeding, the AO noticed that the assessee had claimed huge expenses on commission and brokerage to the tune of Rs. 84,52,802/-.
The AO in order to verify the claims of the assessee to furnish a comparative chart showing as to why the purported service of agents/brokers in connection to the business of the assessee. However, during the assessment proceeding, assessee had failed to provide necessary details before the AO. After verifying the claims the AO disallows the claim of expenses of Rs. 84,52,802/- in the hands of assessee.
Aggrieved by the order assesee filed appeal before the CIT(A). The CIT(A) has dismissed the appeal of the assessee.Accordingly the Assessee filed another appeal before the tribunal.
Miraj D. Shah, the counsel for assessee stated that all the payments were made to such broker commission agent through proper banking channel and against such payment TDS also taken as per section 194H of the Act and the commission agent/brokers were extensively involved in the increase of the business of the assessee.
P.P. Barman, Department representatives argued that authorities below have rightly passed the order against the assessee since the assessee could not justify its claim before the authorities below.
It is observed that assessee in order to justify its claim produce various documents in order to prove the genuineness of the expenses and incurred during the year but the CIT(A) did not look into the documents submitted by the assessee by simply dismiss the appeal of the assessee. Also assessee has duly deducted TDS on the payment made to the various parties against the commission and necessary agreement also furnished in order to prove the genuineness of the transactions.
Thus services of agents are termed to be for business purposes and, therefore, the commission paid to the agents are in relation to business expenses.
Accordingly the bench comprising Sonjoy Sarma, ( Judicial Member ) and Dr. Manish Borad,( Accountant Member ) directed the AO to allow the claim of assessee such expenditure towards commission payment made to the various parties.
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