The Income Tax Appellate Tribunal (ITAT), Indore bench has held that the stamp vendors are eligible for a deduction of commission expenses at 75% from their business income under the provisions of the Income Tax Act, 1961.
The assessee, a licensed stamp vendor, filed the return of income on 23.9.2012 declaring business income of Rs.8,04,664/-. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed deduction of commission/discount payment to the tune of Rs.15,40,500/- and did not submit any supporting documents.
The assessee, in his defense, claimed that the purchaser generally approaches the stamp vendor through advocates or consultant to get discount and for this process, the assessee allowed discount about 50% to the clients to generate high turnover.
The Tribunal bench comprising Accountant Member Manish Borad and Judicial Member Chandra Mohan Garg relied on the decision of the co-ordinate bench in assessee’s own case for a different assessment year held that “the total disallowance of Rs.10,10,287/-, disallowance of commission to the extent of 25% i.e. at Rs.2,52,572/- shall be justified to cover the deficiency of not maintaining necessary vouchers and acknowledgement receipts at the end of the assessee for paying commission to the persons purchasing the stamp from him. We accordingly order so and set aside the finding of both the lower authorities and partly allow assessee’s appeal by sustaining disallowance of commission expenditure at Rs.2,52,572/-.”
“Ld A.R. could not controvert the findings of the Tribunal by submitting that the decision is varied by any higher forum. In view of above, we find that the ld CIT(A) has restricted the disallowance after considering the decision of the Tribunal. Hence, we find no reason to interfere with the order of the ld CIT(A), which is hereby upheld,” the Tribunal said.
While concluding, the Tribunal added that “in the case of Abnamta Khan, the AO has disallowed commission of Rs.12,24,600/- and the ld CIT(A) has restricted the disallowance to Rs.3,06,150/-. In line with our decision in the case of MusthanKhap, we uphold the findings of the ld CIT(A) and dismiss the ground of the assessee.”
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