Asstt. C.I.T.-3, Mathura V. M/s Brijbasi Hi-tech Udyog Ltd., Mathura

ITA 189/AGR/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0264 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: E PASS MATHURA PAN AAACB H
• Keywords: Business expenditure; Capital expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.189/AGR/2010 ASSESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF INCOME TAX-3, VS. M/S. BRIJBASI HI-TECH UDYOG LTD., MATHURA. AGRA DELHI BYE PASS, MATHURA. (PAN: AAACB 6512 H) (APPELLANT) (RESPONDENT) APPELLANT BY : KM. ANURADHA, JR. D.R. RESPONDENT BY : SHRI N.C. AGARWAL, C.A. DATE OF HEARING : 21.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 18.01.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 18.02.2010 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER :- 1. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.6,01,977/- MADE ON ACCOUNT OF COMMISSION PAID WHEN THE PERSON CONCERNED HIMSELF PROVE THAT HE WAS ACTUALLY PROVIDING ANY SORT OF SERVICE TO THE A SSESSEE COMPANY RELATED TO ITS BUSINESS ACTIVITIES. 2. BY DOING SO, THE LD. CIT(A)-I, AGRA HAS ERRED IN HOLDING THAT THE CLAIM OF THE COMMISSION IF GENUINE WHEN THE PAYMENT IS NOT DISPUTED ITA NO.189/AGR/2010 A.Y. 2007-08 2 AND TDS WAS MADE ON THE SAID PAYMENT, INSPITE OF TH E FACT THAT THE RENDERING OF SERVICES, RELATED TO THE BUSINESS OF T HE ASSESSEE WAS NOT PROVED CONCLUSIVELY. 3. THAT THE ORDER OF THE CIT(A)-I, AGRA IS ERRONEOU S IN LAW AND ON THE FACTS OF THE CASE AND THAT THE ORDER OF THE A.O . BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR DELETE OR ALTER OR MODIFY ANY GROUND DURING APPEAL PROCEEDINGS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE A.O. M ADE ADDITION BY DISALLOWING ASSESSEES COMMISSION CLAIM OF RS.6,01,977/- FOLLOW ING THE DETAILED DISCUSSIONS MADE BY THE A.O. IN A.Y. 2005-06. 4. THE CIT(A) DELETED THE ADDITION FOLLOWING HER DI SCUSSIONS MADE IN A.Y. 2005-06. 5. THE LD. REPRESENTATIVES OF THE PARTIES SUBMITTED THAT THEIR CONTENTIONS ARE SIMILAR TO THE CONTENTIONS MADE IN A.Y. 2005-06 IN ITA NO.188/AGR/2010 AS THE FACTS OF THE CASE UNDER CONSIDERATION ARE SIMILAR T O A.Y. 2005-06. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE SUBMISSION OF THE LD. REPRESENTATIVES OF THE PA RTIES ARE THAT THE FACTS OF THE CASE FOR A.Y. 2005-06 IN ITA NO.188/AGR/2010 ORDER EVEN DATED AND THE FACTS OF THE CASE UNDER CONSIDERATION ARE SIMILAR. THE FACT S OF THE CASE UNDER CONSIDERATION ITA NO.189/AGR/2010 A.Y. 2007-08 3 ARE SIMILAR TO THE FACTS OF THE CASE FOR A.Y. 2005- 06 IN ITA NO.188/AGR/2010 IN WHICH THE ISSUE HAS BEEN DECIDED BY US IN PARAGRAPH NOS.16 TO 22, WE ARE REPRODUCING THE RELEVANT FINDING FROM ITA NO.188/AG R/2010 AS UNDER :- 16. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE P ARTIES AND RECORDS PERUSED. THE ISSUE TO BE EXAMINED IN THE CASE UNDE R CONSIDERATION IS WHETHER COMMISSION OF RS.33,69,903/- WAS PAID AGAIN ST SERVICES RENDERED. WHETHER UNDER THE FACTS AND CIRCUMSTANCES THE ASSES SEE HAS DISCHARGED ITS BURDEN IN THIS REGARD. TO EXAMINE THESE ISSUES, WE WOULD LIKE TO REFER HE RELEVANT PROVISION AND SCHEME OF THE ACT. 17. BUSINESS EXPENDITURES INCURRED FOR THE PURPOSE OF BUSINESS ARE ALLOWABLE UNDER SECTION 37 OF THE ACT. THE SAID SE CTION 37 READS AS UNDER:- 37. (1)-ANY EXPENDITURE1 (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 [***] AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE15 OR PERSONAL EXPENSES OF THE A SSESSEE), LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY15 FOR THE PURPOS ES OF THE BUSINESS15 OR PROFESSION SHALL BE ALLOWED IN COMPUT ING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION'. [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PUR POSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR PROFES SION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE.] (2) 17[* * *] (2B) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (1), NO ALLOWANCE SHALL BE MADE IN RESPECT OF EXPENDITURE I NCURRED BY AN ASSESSEE ON ADVERTISEMENT IN ANY SOUVENIR, BROCHURE , TRACT, PAMPHLET OR THE LIKE PUBLISHED BY A POLITICAL PARTY.] 18. IN ORDER TO CLAIM DEDUCTION OF EXPENDITURE UNDE R SECTION 37(1) OF THE ACT, FOLLOWING CONDITIONS SHOULD BE SATISFIED:- ITA NO.189/AGR/2010 A.Y. 2007-08 4 I) THE EXPENDITURE IN QUESTION SHOULD NOT BE OF THE NATURE DESCRIBED UNDER THE SPECIFIC PROVISIONS OF SECTIONS 30 TO 36 AND 80VV (SECTION 80VV WAS OMITTED WITH EFFECT FROM APR IL 1, 1986); (II) THE EXPENDITURE SHOULD NOT BE OF THE NATURE OF CAPITAL EXPENDITURE; (III) IT SHOULD NOT BE A PERSONAL EXPENDITURE; AND (IV) THE EXPENDITURE SHOULD HAVE BEEN LAID OUT OR E XPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. (V) THAT ANY EXPENDITURE SHOULD NOT BE INCURRED FO R ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW. 19. IT IS THUS CLEAR THAT CONDITIONS AT (I), (II) A ND (III) ABOVE ARE NEGATIVE CONDITIONS WHEREAS THE CONDITION AT (IV) ABOVE IS A POSITIVE CONDITION. IF THE EXPENDITURE SATISFIES THE NEGATIVE CONDITIONS, IT H AS TO SATISFY THE POSITIVE CONDITION IN ORDER TO BE ELIGIBLE FOR DEDUCTION UND ER SECTION 37(1) OF THE ACT. THE CONDITION NO.(V) IS OVERRIDING TO ALL OTHER CON DITIONS NUMBER (I) TO (IV) STATED ABOVE. THUS, SECTION 37(1) ALLOWS DEDUCTION OF ANY EXPENDITURE SUBJECT TO CONDITIONS NOTICED ABOVE. THE BURDEN OF PROVING THAT A PARTICULAR EXPENDITURE HAS BEEN LAID OUT OR EXPENDED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSES OF BUSINESS IS ON THE ASSESSEE. THIS POSIT ION IS WELL SETTLED BY THE JUDGMENTS OF THE APEX COURT IN CIT VD. CALCUTTA AGE NCY LTD. [1951] 19 ITR 191 AND CIT VS. IMPERIAL CHEMICAL INDUSTRIES (INDIA ) (P.) LTD. [1969] 74 ITR 17. THE MERE OBJECT OF INCURRING EXPENDITURE I S NOT DECISIVE WHETHER IT IS OF A CAPITAL NATURE OR REVENUE NATURE. THEREFOR E, THE ONUS IS ON THE ASSESSEE TO PROVE, INTER ALIA, THAT THE ITEM OF EXP ENDITURE IN QUESTION FOR ADMISSIBILITY TO DEDUCTION IS NOT DISQUALIFIED UNDE R SECTION 37(1) OF THE ACT. FURTHER, MERE PAYMENT BY ITSELF WOULD NOT ENTITLE T HE ASSESSEE TO DEDUCTION OF THE SAID EXPENDITURE UNLESS THE SAME WAS PROVED TO BE INCURRED IN ACCORDANCE WITH SECTION 37(1) OF THE ACT. THE ONUS OF PROOF IS UPON THE ASSESSEE. IT IS FOR THE TAXPAYER TO ESTABLISH BY E VIDENCE THAT A PARTICULAR ALLOWANCE IS JUSTIFIED. THEREFORE, IF THE ASSESSEE FAILS TO PLACE SUFFICIENT MATERIAL, HE IS NOT ENTITLED TO CLAIM THIS ALLOWANC E UNDER SECTION 37(1) OF THE ACT. IN CIT VS. CHANDRAVILAS HOTEL [1987] 164 ITR 102 (GUJ), IT IS HELD THAT IF THE EXPENDITURE IS DOUBTED BY THE ASSESSING AUTH ORITY, IT IS THE DUTY OF THE ASSESSEE TO PROVE BY LEADING EVIDENCE THAT THE EXPE NDITURE WAS IN FACT, INCURRED. 20. IN THE LIGHT OF ABOVE DISCUSSION, IF WE CONSIDE R THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF ITA NO.189/AGR/2010 A.Y. 2007-08 5 MANUFACTURING OF FIRE FIGHTING VEHICLES AND EQUIPME NTS. MAIN CUSTOMERS ARE OF DEFENCE, INDIAN AIR FORCE, ORDNANCE FACTORY, INDIAN OIL CORPORATION, GAS AUTHORITY OF INDIA LIMITED, OIL AN D NATURAL GAS CORPORATION, STEEL AUTHORITY OF INDIA, UNITE STATE GOVERNMENT AND OTHER GOVERNMENT AND SEMI- GOVERNMENT ORGANIZATIONS AND O THER PRIVATE COMPANIES. THE ASSESSEE CLAIMED 10% COMMISSION ON SALE OF FIRE FIGHTING VEHICLES TO DIRECTOR OF FIRE & EMERGENCY SERVICES, J&K WHICH IS AN UNDERTAKING OF GOVERNMENT OF JAMMU & KASHMIR (J&K), SRINAGAR. THE COMMISSION WAS PAID TO SHRI SHAIKH SHAFAT AHMAD, PR OP OF M/S. S&S. TRADERS, NEW COLONY BATAMLLOO, SRINAGAR (J&K). THE A.O. DISALLOWED THE CLAIM OF ASSESSEE ON THE GROUND THAT COMMISSION WAS NOT PAID FOR THE PURPOSE OF BUSINESS. THE COMMISSION WAS NOT PAID A GAINST ACTUAL SERVICES RENDERED. THE RECIPIENT OF COMMISSION IS NAME LEND ER OF ASSESSEE COMPANY. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN THAT COMMISSION EXPENDITURE HAS BEEN LAID OUT OR EXPENDITURE WAS WHOLLY OR EXCLUSIVELY F OR THE PURPOSE OF BUSINESS, SO THAT THE ASSESSEE MAY BE ENTITLED FOR CLAIMING DEDUCTION OF BUSINESS EXPENDITURE OF THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, IN ORDER TO EXAMINE SERVICES RENDERED AGAINST PAYMENT OF COMMISSION, THE A.O. ASKED ASSESSEE TO FURNISH CORRESPONDENCE WITH M/S. S&S TRADERS, RECIPIENT OF COMMISSION BUT THE ASSESSEE FAILED TO FURNISH TH E SAME ON THE GROUND THAT CORRESPONDENCE WITH M/S. S&S TRADERS IS NOT AVAILAB LE. THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY ADMITTED ON OATH, STATEMENT RECORDED ON 21.08.2007 THAT THERE IS NOTHING ON RECORD TO SUPPO RT THE FACTS THAT COMMISSION WAS PAID AGAINST SERVICES TO THE ASSESSE E COMPANY. THE DIRECTOR OF THE ASSESSEE COMPANY ALSO STATED IN HIS STATEMENT THAT SAME THING WHICH WAS STATED BY THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY. MANAGER SALES & SERVICES OF ASSESSEE COMPANY ALSO D ID NOT HAVE KNOWLEDGE OF SUCH COMMISSION AGENT. ON DIRECT ENQUIRY FROM P URCHASERS, DIRECTORATE GENERAL FIRE & EMERGENCY SERVICE VIDE LETTER DATED 29.09.2007 WHEREIN IT IS CLEARLY REPLIED THAT SHRI SHAIKH SHAFAT AHMAD OR ANY OTHER PERSON OF M/S. S&S TRADERS DID NOT ATTEND THEIR OFFICE ON BEHALF O F THE ASSESSEE COMPANY. THE RELEVANT ABSTRACT OF THE LETTER IS REPRODUCED I N ABOVE PARAGRAPH NO.7OF THIS ORDER. IN THE REMAND REPORT DATED 12.05.2009 THE A.O. SUBMITTED BEFORE THE CIT(A) THAT EVEN AT THE SECOND TIME WHEN OPPORT UNITY WAS GIVEN TO THE ASSESSEE DURING EXAMINATION FOR REMAND REPORT THE R ECIPIENT ALLEGED TO PROVIDE CONSULTANT OF FIRE FIGHTING EQUIPMENTS BUT THE RECIPIENT AND ASSESSEE BOTH FAILED TO FURNISH ANY DOCUMENTS REGARDING TECH NICAL QUALIFICATIONS OR EXPERIENCE ETC. THE RECIPIENT WAS NOT AWARE ABOUT HIS BOOKS OF ACCOUNT AND BASIS ON WHICH RETURN WAS FILED BY HIM. THE RECIPI ENT ALSO DID NOT FURNISH ANY CORRESPONDENCE OR MATERIAL TO JUSTIFY THE COMMI SSION RECEIVED. THE ITA NO.189/AGR/2010 A.Y. 2007-08 6 A.O. FOUND THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF THE CLAIM THAT COMMISSION WAS PAID AGAINST THE SERVICES RENDERED. 21. THE CIT(A) DELETED THE ADDITION ON THE BASIS OF CERTAIN IRRELEVANT FACTS BROUGHT TO THE NOTICE BY THE ASSESSEE THAT AMOUNT I S PAID BY CHEQUES, THE ASSESSEE CLAIMED TRAVELING EXPENSES CLAIMED TO BE I NCURRED FOR TRAVELING OF COMMISSION AGENT SHRI AHMAD CAME TO DELHI AND MATHU RA. SUCH MATERIAL IN THE SHAPE OF EVIDENCE CAN BE CREATED BY THE ASSE SSEE AFTER TAKING IN TO CONFIDENCE OF OTHER PERSON. SUCH EVIDENCE CANNOT S AID TO BE IN SUPPORT OF THE FACT THAT SERVICES WERE RENDERED AGAINST COMMIS SION PAYMENTS. CONTRARY TO THAT, WE NOTICED CERTAIN THINGS WHICH W ERE CREATED BY THE ASSESSEE SUBSEQUENTLY IN SUPPORT OF THE CLAIM. TH E RECIPIENT HAS FILED RETURN SUBSEQUENT TO ENQUIRY STARTED BY THE A.O. AN EARLI ER CONTENTION OF THE ASSESSEE THAT SHRI SHAIKH SHAFAT AHMAD IS ASSESSED TO TAX WAS FOUND FALSE. LET US SEE HOW CIT(A) SATISFIED REGARDING SERVICES RENDERED AND HOW THIS OBJECTION OF THE A.O. HAS MET OUT BY THE CIT(A). T O BETTER APPRECIATE THIS ASPECT, WE WOULD LIKE TO REFER THE RELEVANT ABSTRAC T OF THE ORDER OF CIT(A) FROM PAGE NOS.37 & 38 OF HER ORDER WHICH HAS BEEN R EPRODUCED IN PARAGRAPH NO.15 OF THIS ORDER. THE CIT(A) ON THE B ASIS OF HIS OWN ASSUMPTION AND PRESUMPTION TRIED TO JUSTIFY THAT SE RVICES WERE RENDERED AGAINST COMMISSION PAID. ON CAREFULLY GOING THROUG H THE ENTIRE ORDER OF CIT(A) PARTICULARLY ABOVE ABSTRACT OF ORDER OF CIT( A), WE FIND THAT THE ASSESSEE AS WELL AS RECIPIENT BOTH FAILED TO FURNIS H ANY EVIDENCE TO SUPPORT THAT THE COMMISSION WAS PAID AGAINST SERVICES RENDE RED. AS DISCUSSED ABOVE THAT IN THIS REGARD BURDEN OF PROVING IS ON THE ASS ESSEE AS THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF CIT VS. CALCUTTA A GENCY LIMITED, 19 ITR 191 (SC) WHEREAS THE CIT(A) IN PARAGRAPH NO.3.16 PA GE NO.38 HELD I FIND THAT THERE IS NO EVIDENCE TO PROVE THAT PAYEE SHRI SHAIKH SHAFAT AHMAD HAD NOT RENDERED ANY SERVICE TO APPELLANT. THE FINDIN G OF CIT(A) IS CONTRARY TO THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF CIT VS. CALCUTTA AGENCY LIMITED, 19 ITR 191 (SC) THAT THE BURDEN IN THIS RE GARD IS ON THE ASSESSEE. WHEREAS THE CIT(A) SHIFTED THIS ONUS ON THE A.O. T HERE IS NO FINDING OF CIT(A) THAT THE ASSESSEE HAS FURNISHED SUFFICIENT E VIDENCE TO PROVE THAT THE PAYEE RENDERED SERVICE TO THE ASSESSEE AGAINST COMM ISSION PAYMENT. SINCE THERE IS NO SUCH MATERIAL ON RECORD NOR THE ASSESSE E FURNISHED ANY MATERIAL BASIS ON WHICH IT CAN BE HELD THAT THE PAYEE RENDER ED SERVICES TO THE ASSESSEE AGAINST COMMISSION PAYMENT. THE CIT(A) CA ST NEGATIVE BURDEN ON THE A.O. WHICH IS NOT IN ACCORDANCE WITH LAW. THER EFORE, THE ORDER OF CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW. FURT HER IT IS ALSO SETTLED LAW THAT MERE PAYMENT ITSELF WOULD NOT ENTITLE THE ASSE SSEE TO DEDUCTION OF SUCH COMMISSION UNLESS THE SAME IS PROVED TO BE PAID FOR COMMERCIAL ITA NO.189/AGR/2010 A.Y. 2007-08 7 CONSIDERATION AND EXPENDED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF BUSINESS. THE ONUS OF PROOF IS ALWAYS ON THE ASSES SEE. IT CANNOT BE SAID THAT EVEN IF THE ASSESSEE DOES NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM FOR DEDUCTION, THE A.O. HIMSELF INDEPENDENTLY IS TO COLLECT EVIDENCE AND DECIDE THAT THE DEDUCTIONS CLAIMED IS BASELESS HAVI NG REGARD TO THE LEGITIMATE BUSINESS NEED OF THE ASSESSEE. THE FIND ING RECORDED BY THE CIT(A) IS SOLELY BASED ON SURMISES AND CONJECTURES. THE W HOLE APPROACH OF CIT(A) IS ERRONEOUS. IT IS THE ADMITTED FACT OF THE CASE THAT THE ASSESSEE FAILED TO FURNISH EVIDENCE TO SUPPORT THE CLAIM THAT COMMISSI ON WAS PAID AGAINST SERVICES RENDERED. WHATEVER DETAILS FILED BY THE A SSESSEE AND CONSIDERED BY THE CIT(A), SUCH ROUTINE DETAILS CAN BE SUBMITTED I N A NUMBER OF CASES TO DEMONSTRATE FALSE PAYMENT OF COMMISSION. WHEN AN A SSESSEE IS MANUFACTURING FIRE FIGHTING VEHICLE AND EQUIPMENT A ND SALE IS MADE TO A UNIT OF STATE GOVERNMENT, SERVICE OF AGENT, IF ANY, MUST BE ACCORDINGLY TO THAT LEVEL. THE COMMISSION AGENT MUST HAVE THE TECHNICA L KNOWLEDGE OF PRODUCT, HAVING CAPACITY OF SALESMANSHIP, HAVING CAPACITY OR TO PROVIDE SERVICES IN REALIZING SALE CONSIDERATION ETC. BUT IN THE CASE UNDER CONSIDERATION, THE SUPPLY WAS MADE TO GOVERNMENT DEPARTMENT. WE DO NO T THINK THAT RECOVERY OF SALE CONSIDERATION WAS IN DOUBTFUL CONDITION. SO , ANY SERVICE IS REQUIRED FOR REALIZATION OF SALE CONSIDERATION. FURTHER, SU PPLY TO GOVERNMENT DEPARTMENT IS ALSO NOT REQUIRED ANY MIDDLEMAN OR AG ENT AS THE GOVERNMENT DEPARTMENT ITSELF IS HAVING SUFFICIENT INFRA-STRUCT URE IN THIS REGARD. THUS, THE ASSESSEE HAS COMPLETELY FAILED TO FURNISH ANY E VIDENCE OR MATERIAL BASED ON WHICH IT CAN BE SAID THAT THE COMMISSION WAS PAI D AGAINST SERVICES RENDERED. 22. IT IS NOT THE CASE OF THE ASSESSEE THAT PAYMENT OF SUCH COMMISSION IS AS PER PREVAILING PRACTICE OF THE TRADE. WHEN SUPPLY OF GOODS IS MADE TO GOVERNMENT DEPARTMENTS, COMMISSION IS NOT ALLOWABLE UNLESS IT IS ESTABLISHED THAT COMMISSION WAS PAID FOR SERVICES O THER THAN SERVICES RELATED TO SUPPLY OF GOODS TO GOVERNMENT DEPARTMENT . AS REGARDS WORKING OF GOVERNMENT DEPARTMENT, WE ARE OF THE VIEW THAT P UBLIC OFFICIALS ARE EXPECTED TO DISCHARGE THEIR DUTIES DISPASSIONATELY, AND DECIDE ON THE MERITS OF EACH CASE. THEREFORE, THE SO-CALLED COMMISSION EXPENDITURE IN RESPECT OF GOODS SUPPLIED TO GOVERNMENT DEPARTMENT CAN NOT BE SAID TO BE AN EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND SECONDLY IT WOULD BE DISQUALIFIED UNDER EXPLANATION TO SECTION 37(1) AS BEING OPPOSED TO PUBLIC POLICY. ITA NO.189/AGR/2010 A.Y. 2007-08 8 7. IN THE LIGHT OF THE DETAILED DISCUSSIONS MADE AB OVE AND FOLLOWING THE SAME, ORDER OF THE CIT(A) IS SET ASIDE AND ORDER OF A.O. IS RESTORED. THE ADDITION OF RS.6,01,977/- MADE BY THE A.O. IS CONFIRMED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY