The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that the secret commission paid to the middlemen in cheque discounting business shall be eligible for income tax deduction under the Income Tax Act, 1961.
The assessee, Chintan Niketan Bhandari claimed deduction in respect of “secret commission” paid to other middlemen. The assessee submitted that he paid certain “secret commission” to certain middlemen and agents who bring in cheque/cash of multiple beneficiaries in order to obtain cheque/cash. However, the assessee has submitted on several occasions before the Department (that he has not maintained any records of such hidden expenses in the form of discount charges to other persons/ parties.
A bench of Shri Waseem Ahmed, Accountant Member and Shri Siddhartha Nautiyal, Judicial Memberheld that where assessee’s claim for deduction of secret commission paid by it had neither been proved nor disproved, and assessee’s claim was found to be on higher side, only 50 per cent of secret commission was to be allowed.
“In view of the facts of the case, where the assessee has clearly submitted that he has no records of parties to whom such “secret commission”, but also considering the fact that the assessee submitted that payment of such commission helped in generating the“cheque discounting” business, we are directing that 50% of such “secret commission” may be allowed, in the interests of justice,” the ITAT said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
