DCIT, New Delhi V. The Printer House Pvt. Ltd, New Delhi

ITA 3228/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4116 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 10-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: SWEETY KOTHARI CAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NOS. 2931 & 2932/DEL/09 ASSTT. YRS: 2005-06 & 2006-07 THE PRINTER HOUSE PVT. LTD. VS. ADDL. CIT, RANGE -16, 10, SCINDIA HOUSE, NEW DELHI. NEW DELHI. PAN NO. AAACT0004A AND ITA NOS. 3227 & 3228/DEL/09 ASSTT. YRS: 2005-06 & 2006-07 ADDL. CIT, RANGE-16, VS. THE PRINTER HOUSE PVT. L TD. NEW DELHI. 10, SCINDIA HOUSE, NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI V.K. BINDAL & SMT. SWEETY KOT HARI CAS REVENUE BY : SHRI H.K. LAL SR. DR O R D E R PER R.P. TOLANI, J.M: : THESE ARE CROSS APPEALS, FILED BY THE ASSESSEE AS W ELL AS THE REVENUE, AGAINST SEPARATE ORDERS OF CIT(A) RELATING TO A.Y. 2005-06 & 2006-07. 2. COMMON GROUND RAISED IN ASSESSEES APPEALS FOR B OTH THE YEARS IS AS UNDER: THE CIT(A) ERRED IN LAW AND ON FACTS IN: (A) CONFIRMING DISALLOWANCE OF RS. 9,21,305/-(5%) (FOR A.Y. 2005-06) & RS. 7,71,056/- (FOR A.Y. 2006-07) WHILE ALLOWING RS. 1,75,04,863/- (95%) (FOR A.Y. 2005-06) & RS. 1,46,50,063/- (FOR A.Y. 2006-07) OF THE TOTAL COMMI SSION OF RS. 1,84,26,168/- (FOR A.Y. 2005-06 & RS. 1,54,2 1,119/- (FOR A.Y. 2006-07) PAID BY ACCEPTING NOT ONLY THE S ERVICES 2 RECEIVED BY THE APPELLANT FROM THE AGENTS BUT ALSO THE BONAFIDE OF THE PAYMENTS AND THE AGENTS. (B) IN CONFIRMING THE SAID ADDITION ON ADHOC ESTIMATED BASIS WITHOUT POINTING OUT ANY DEFICIENCY IN THE INFORMAT ION AND EVIDENCE SUBMITTED OR IN RESPECT OF ANY PARTICULAR AGENT. (C) IN IGNORING THAT ONCE THE SERVICES ARE PROVED THEN THE QUANTUM OF PAYMENT FOR THE SAID SERVICES IS THE SOL E DISCRETION OF THE BUSINESSMAN. THUS THE ADHOC DISALLOWANCE OF COMMISSION SO CONFIR MED ON ESTIMATED BASIS IGNORING THE EVIDENCES PLACED ON RE CORD SHOULD BE DISALLOWED. 2.1. THE ONLY OTHER GROUND RAISED IN ASSESSEES APP EAL FOR A.Y. 2005-06 IS AS UNDER: THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 15,68,627/- TO THE EXTENT OF DI VIDEND RECEIVED OUT OF SHORT TERM CAPITAL LOSS INCURRED IN REDEMPTION OF LIC MUTUAL FUND BY APPLYING THE PROVISIONS OF SECTI ON 94(7) THOUGH THE SAID UNITS WERE HELD FOR MORE THAN THREE MONTHS AS PER THE LAW APPLICABLE ON THE DATE OF SALE AND BECA USE THE AMENDED PROVISION W.E.F. 1/4/2005 WAS NOT ONLY PASS ED BUT WAS ALSO PROPOSED BY THE FINANCE BILL 2005 ON A LATER D ATE. THUS THE DISALLOWANCE SHOULD BE DELETED. 2.2. COMMON GROUND RAISED BY REVENUE IN BOTH THE AP PEALS, WHICH IS SIMILAR TO GROUND NO. 1 OF ASSESSEES CROSS APPEALS IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 1,75, 04,863/- OUT OF THE TOTAL DISALLOWANCE OF RS. 1,84,26,168/- MADE BY THE AO ON ACCOUNT OF COMMISSION CLAIMED TO HAVE PAID TO VA RIOUS AGENTS ESPECIALLY WHEN THE ASSESSEE COMPANY FAILED TO BRING ON RECORD ANY COGENT EVIDENCE OF SERVICES RENDERED BY THESE AGENTS TO JUSTIFY THE CLAIM OF EXPENSES BEING FOR BUSINESS PURPOSES. 3 2.3. THE ASSESSEE BEING THE SAME AND ISSUE INVOLVED BEING COMMON, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PRINTING PRESS AND MACHINES USED BY NEWSPAPER INDUSTRY. THE MACHINES ARE SOLD ON TURNKEY BASIS IN INDIA AND ABROAD. FOR PROMOTING THE SALES OF MACHINES, ASSESSEE HAS TO EMPLOY THE S ERVICES OF AGENTS/ DISTRIBUTORS IN VARIOUS PARTS OF THE COUNTRY AND AB ROAD FOR PROCURING ORDERS AND IN FINALIZING THE TERMS AND CONDITIONS OF SALE AND SUPPLY. THIS IS A REGULAR FEATURE OF ASSESSEES BUSINESS. COMMISSION HAS BEEN PAID TO SUCH AGENTS/ DISTRIBUTORS IN EARLIER YEARS ALSO. IN A.Y. 2004-05, AO DISALLOWED PART OF THE COMMISSION PAYABLE TO SOME OF THE AGENT S/ DISTRIBUTORS WHICH WAS CONFIRMED BY CIT(A). AGGRIEVED, ASSESSEE PREFER RED APPEAL BEFORE THE ITAT. THE ITAT DELHI BENCH F VIDE ORDER DATED 6-6 -2008 RENDERED IN ITA NO. 3988/DEL/07 REVERSED THE ORDERS OF LOWER AU THORITIES AND UPHELD THE PAYMENT OF COMMISSION BY FOLLOWING OBSERVATIONS: 7.11. SO FAR AS THE BUSINESS NECESSITY OF THE ASS ESSEE IS CONCERNED, IN THE CASE OF S.K. ENGINEERING VS. JCI T (2006) 286 ITR (AT) 210 (BANG.), THE ITAT BANGALORE BENCH RELYING UPON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF SHAHZADA NAND & SONS VS. CIT (1977) 108 ITR 358(SC) ; CIT VS. ASIATIC TEXTILES LTD. (1971) 82 ITR 816 (SC), H ELD THAT THE AO HAS TO CONSIDER THE EXPENSES FROM THE VIEW POINT OF PRUDENT BUSINESSMAN AND NOT FROM THE VIEW POINT OF THE REVE NUE COLLECTION OBJECTIVE. 7.12. IN THE INSTANT CASE ALSO, CONSIDERING FROM TH E BUSINESS EXIGENCY OF THE ASSESSEE THE PAYMENT OF COMMISSION IS FULLY JUSTIFIED. 7.13. SO FAR AS THE PROOF OF RENDERING OF SERVICES IS CONCERNED, IN THE CASE OF ASGAR JAN VS. CIT (2008) 298 ITR 60 (KAR.) THE HONBLE KARNATAKA HIGH COURT HAS HELD THAT WHERE TH E COMMISSION HAS BEEN PAID THROUGH CHEQUE AND THE REC IPIENT HAS 4 DECLARED THE SAME AS COMMISSION FOR SERVICES IN HIS RETURN OF INCOME AND THE SAME HAS BEEN ACCEPTED, THEN THE SA ME IS DEDUCTIBLE EXPENSES. IN THE PRESENT CASE ALSO, THE COMMISSION AMOUNT IS PAID TO THE AGENTS BY A/C PAYEE CHEQUES AND MOST OF THEM CONFIRMED THE SAME BY SUBMITTING THEIR PAN NU MBERS. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE DEP ARTMENT HAS NOT ACCEPTED THE AMOUNT IN HANDS OF THESE AGENTS AS COMMISSION. HENCE, FROM THIS ANGLE ALSO THE PAYMENT OF COMMISSION BY THE ASSESSEE, WHICH IS DULY CLAIMED I N THE BOOKS OF ACCOUNT, CANNOT BE DISALLOWED. THE LEARNED AR HA S CITED PLETHORA OF CASE LAWS, REFERENCE TO WHICH HAS BEEN MADE IN THE WRITTEN SUBMISSIONS ALSO. WE DO NOT CONSIDER IT PRO PER TO REFER TO EACH CASE, AS IN OUR OPINION, THE SAME IS NOT NE CESSARY AND UNNECESSARILY ADD TO THE BULK OF THIS ORDER. IN VIE W OF THE ABOVE, WE ARE UNABLE TO CONCUR WITH THE LEARNED CI T(APPEALS) IN SUSTAINING THE ADDITION. IN OUR CONSIDERED OPINI ON, THE ASSESSEE HAS SUCCESSFULLY DISCHARGED THE BURDEN TO JUSTIFY AND SUBSTANTIATE ITS CLAIM BY FILING SUPPORTING DOCUMEN TARY MATERIAL, WHICH HAS BEEN REFERRED TO ABOVE. WE, THE REFORE, HOLD THAT THE CLAIM OF THE ASSESSEE WAS FULLY ALLOWABLE. CONSEQUENTLY, WE SET ASIDE THE FINDING OF THE LEARN ED CIT(APPEALS) ON THE ISSUE IN QUESTION AND ALLOW THI S GROUND IN FAVOUR OF THE ASSESSEE. 3.1. AGGRIEVED, REVENUE PREFERRED APPEAL BEFORE HON BLE DELHI HIGH COURT. THE HONBLE HIGH COURT VIDE ORDER DATED 16-4 -2009, REPORTED IN 188 TAXMAN 70 (DEL), CONFIRMED THE ORDER OF THE ITAT, B Y FOLLOWING OBSERVATIONS: THE QUESTION THAT HAS BEEN AGITATED BEFORE US PERT AINS TO A SUM OF RS. 32 LAKHS APPROXIMATELY PAID AS COMMISSION BY THE ASSESSEE TO SEVERAL PARTIES. THE IMPUGNED ORDER DET AILS 18 SUCH PERSONS AND ALSO EXPENSES SATISFACTION THAT THE PAY MENTS WERE GENUINE. MS. BANSAL, LEARNED COUNSEL APPEARING FOR THE REVENUE, CONTENDS THAT THE PAYMENTS OF COMMISSION I S NOT IN ISSUE. THE ARGUMENT IS THAT THERE WAS NO CONSIDERAT ION OR CAUSE FOR PAYMENT OF COMMISSION TO THOSE PARTIES, SINCE, NO SERVICES HAD BEEN RENDERED BY THE RECIPIENTS OF COMMISSION. THIS IS 5 COMPLETELY BELIED BY THE DETAILED FINDINGS RECORDED BY THE TRIBUNAL IN PARAS 7 TO 7.13 OF THE IMPUGNED JUDGMEN T. WE NOTE THAT THE TRIBUNAL HAS ALSO RECORDED THAT THERE IS N O EVIDENCE THAT COMMISSION FLOWED BACK TO THE ASSESSEE OR THAT THE ENTRIES WITH RESPECT TO COMMISSION PAYMENTS WERE JUST PAPER TRAN SACTION. THE FOLLOWING OBSERVATIONS BEING RELEVANT ARE EXTRA CTED HEREINAFTER: THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE COMMISSION WAS PAID TO ANY NEAR RELATIVE, FAMILY MEMBER OR SISTER CONCERN. THERE IS NO IOTA OF EVIDENCE TO SHOW THAT THE PAYMENT OF COMMISSION REPRESENTED ONLY ACCOMMODATION ENTRY OR WAS ONLY A PAPER TRANSACTION. THERE IS ALS O NO EVIDENCE TO SHOW THAT THE AMOUNT OF COMMISSION CAME BACK TO THE ASSESSEE IN ANY FORM. SINCE THE ASSESSEE HAS GIVEN FULL DETAILS INCLUDING THE ADDRESSES OF BUYERS AND ADDRESSES OF THE AGENTS, AS WELL AS DETAILS OF PAYMENT ETC., THE TRANSACTIONS OF PAYMENT OF COMMISSION AS WELL AS THE ASPECT OF RENDERING SERVICES BY THE COMMISSION AGENTS WERE FULLY VERIFIABLE. HOWEVER, NEITHER THE AO NOR THE LEARNED CIT(APPEALS) MADE ANY ATTEMPT AT THEIR END TO MAKE PROBE INTO THE MATTER FOR COMING TO THE CONCLUSION THAT THE TRANSACTIONS WERE BOGUS, UNFAIR OR FRAUDULENT. IN OUR OPINION, IN ABSENCE OF ANY SUCH MATERIAL ON RECORD AND IN ABSENCE OF ANY SUCH MATERIAL ON RECORD AND IN ABSENCE OF ANY INQUIRY CONDUCTED TO PROVE THE NON-GENUINENESS OF THE TRANSACTIONS, THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE WHICH WAS FULLY SUPPORTED BY THE DOCUMENTARY EVIDENCE ON RECORD. APART FROM EXPRESSING ITS SATISFACTION AS TO THE GE NUINENESS OF THE TRANSACTION THE TRIBUNAL HAS TAKEN INTO CONSIDE RATION THE FACT THAT COMMISSION HAS BEEN PAID AND ALLOWED IN THE PA ST AND THAT THE COMMISSION PERCENTAGE IS NEGLIGIBLE. MS. BANSAL CONTESTS THIS POSITION. THE TOTAL TURNOVER OF THE ASSESSEE W AS RS. 68 6 CRORES BEFORE TAX, INTER ALIA OF WHICH INCLUDED RS. 25.68 CRORES OF EXPORT TURNOVER. THE TURNOVER WE ARE CONCERNED W ITH IS STATED TO BE RS. 3.74 CRORES ON WHICH THE COMMISSIO N HAS BEEN PAID. IT HAS BEEN POINTED OUT BY MS. BANSAL THAT RA THER THAN THE STATED 0.05 PER CENT THE COMMISSION, THE COMMISSION WORKS OUT TO 1.5 PER CENT IN RELATION TO LOCAL SALES AND 7 PE R CENT AS FAR AS EXPORT TURNOVER IS CONCERNED. EVEN THEN ACCORDING T O US THERE REMAINS NO REASON TO DOUBT THESE PAYMENTS. IT HAS B EEN LAID DOWN IN SEVERAL DECISIONS OF THE SUPREME COURT THAT THE TRIBUNAL IS A FINAL FORUM FOR FINDINGS OF FACT. THE HIGH COURT WOULD INTERVENE ONLY IF A FINDING APPEARS TO BE PER VERSE, WHICH WE ARE UNABLE TO CONCLUDE IN THE CASE IN HAND. 3.2. STILL AGGRIEVED, DEPARTMENT FILED SLP BEFORE H ONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE ORDER DATED 29-1 -2010 DISMISSED THE SAME. 3.3. LEARNED COUNSEL THEN CONTENDS THAT THE ISSUES, FACTS AND CIRCUMSTANCES ARE COMMON IN BOTH THESE YEARS. THE ISSUE BY NOW IS SETTLED IN ASSESSEES FAVOUR FOR THESE TWO YEARS, THEREFORE, THE COMMISSI ON SHOULD BE ALLOWED. 4. LEARNED DR, ON THE OTHER HAND, CONTENDS THAT IN THE IMPUGNED JUDGMENT OF THE TRIBUNAL, THE EXTENT OF SERVICES RE NDERED BY THE AGENTS/ DISTRIBUTORS AND THE JUSTIFICATION OF COMMISSION HA S NOT BEEN CONSIDERED BY THE ITAT, THEREFORE, THE ASPECT NEEDS TO BE EXAMINE D. LEARNED DR FURTHER CONTENDS THAT THOUGH THE AGENTS/ DISTRIBUTORS HAVE BEEN IDENTIFIED, THE FACT WHETHER THEY RENDERED ANY SERVICES OR NOT HAD NOT B EEN BROUGHT ON RECORD. 4.1. LEARNED DR THEN RELIED ON THE RATIO OF DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF LACHMINARAYAN MADAN LAL VS. CI T (1972) 86 ITR 439 TO THE EFFECT THAT MERE EXISTENCE OF AN AGREEMENT B ETWEEN ASSESSEE AND ITS SELLING AGENT, CANNOT BIND THE ASSESSEE TO ALLOW T HE EXPENDITURE. 5. IN REPLY, THE LEARNED COUNSEL FOR THE ASSESSEE C ONTENDS THAT IN CHART COMPANY FURNISHED ON PAPER NOS. 1 & 1A OF THE PAPER BOOK, THE ASSESSEE 7 COMPANY HAS FILED ALL RELEVANT DETAILS I.E. NAME O F THE AGENT AND THE PERSON TO WHOM THE MACHINES WERE SUPPLIED WITH THEIR NAMES AND ADDRESSES, MODE OF PAYMENT, AMOUNT OF COMMISSION, DATE OF PAYMENT A ND INVOICE NO. QUA WHICH A COMMISSION WAS PAID. THE INVOICES ARE ALSO PLACED ON RECORD WHICH ARE MENTIONED IN LAST COLUMN OF THE ABOVE PAPER BOO K. FROM PAGES 2 TO 448 THE ASSESSEE HAS SUBMITTED CONFIRMATIONS FROM ALL T HE AGENTS AND DISTRIBUTORS. THE ASSESSEE CANNOT DICTATE THE TERMS ON HIS AGENTS / DISTRIBUTORS TO CONFIRM EVERY MINOR DETAIL OF THE COMMISSION. VARIOUS DETAI LS PERTAINING TO REFUNDS HAVE BEEN FURNISHED WITH THE AO WHICH ARE PLACED ON PAPER BOOK PAGE NOS. 449 TO 458, THEREFORE, IT CANNOT BE INFERRED THAT T HE ASSESSEE HAS NOT FILED DETAILS OF PAYMENT OF COMMISSION. 5.1. APROPOS SUPREME COURT JUDGMENT CITED BY LEARNE D DR, THE COUNSEL OF THE ASSESSEE CONTENDS THAT IN THE CASE IN CASE OF L ACHMINARAYAN MADAN LAL (SUPRA), THE TRIBUNAL DISALLOWED THE COMMISSION BY FINDING: I) THAT ON THE DAY THE SELLING AGENCY AGREEMENT WA S EXECUTED, VIZ., MARCH 26,1962, THE SELLING AGENCY FIRM HAD NO T EVEN COME INTO EXISTENCE; IT HAD COME INTO EXISTENCE LATER, O N APRIL 13,1962; (II) THAT THE LADIES HAD NO PRIOR BUSINESS EXPERIENCE; (III) THAT THE ONLY MALE ADULT PARTNER IN THAT FIRM WAS A PARTNER IN ANOTHER MANUFACTURING CONCERN SITUATE AT A PLACE QU ITE DISTANT FROM THE PLACE WHERE THE SELLING AGENCY BUSINESS WA S SAID TO HAVE BEEN CARRIED ON; (IV) THAT THE BUSINESS ADDRES S OF THE SELLING AGENCY FIRM WAS THE SAME AS THAT OF THE ASS ESSEE; (V) THAT THE SELLING AGENCY FIRM HAD NO GODOWN OF ITS OWN NO R ANY TRANSPORT VEHICLES. ON THESE FINDINGS THE TRIBUNAL REACHED THE CONCLUSION THAT THE SELLING AGENCY FIRM WAS NOT GEN UINE AND THE AGREEMENT WAS ONLY A MAKE-BELIEVE ARRANGEMENT AND T HAT IT WAS MERELY A DEVICE TO MINIMIZE THE ASSESSEES TAX LIAB ILITY. 5.2. LEARNED COUNSEL SUBMITTED THAT IN ASSESSEES C ASE NO SUCH FACTORS ARE PRESENT. ITAT IN EARLIER YEAR ITSELF HAS HELD PAYME NT OF COMMISSION TO BE 8 GENUINE AND JUSTIFIED. THE ASSESSEE HAS DISCHARGED ITS BURDEN; THE ASSESSEE AND AGENTS WERE IN EXISTENCE; THERE IS NO ISSUE OF ANY LADY ENGAGED IN THE ASSESSEES BUSINESS. IT IS A PROFESSIONALLY MANAGED COMPANY. THE BUSINESS ADDRESS OF EACH OF THE AGENTS/ DISTRIBUTORS ARE DIF FERENT WHEREAS IN ABOVE CASE IT WAS THE ASSESSEES SAME ADDRESS ONLY; THERE IS NO QUESTION ABOUT THE AGENT OR DISTRIBUTOR HAVING ANY GODOWN INASMUCH AS THE ASSESSEE WAS SUPPLYING MACHINES ON TURN-KEY BASIS. SINCE THE FAC TS IN THE CASE OF LACHMINARAYAN MADAN LAL (SUPRA) ARE TOTALLY DIFFERE NT THAN ASSESSEES CASE, THERE IS NO PARITY BETWEEN THE FACTS OF ASSESSEE AN D LACHMINARAYAN MADAN LALS CASE AND THE RATIO IS INAPPLICABLE TO ASSESSE ES CASE. 6. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE FACTS ABOUT ASSESSEES BUSINESS, ITS DI STRIBUTION NET WORK AND SELLING PATTERN REMAINS THE SAME. LEARNED DR, HOWEV ER, CONTENDS THAT THE JUSTIFICATION AND EXTENT OF SERVICES RENDERED BY EA CH AND EVERY AGENT/ DISTRIBUTOR HAS NOT BEEN CONSIDERED BY THE ITAT WHI LE RENDERING THE ABOVE ORDER FOR A.Y. 2004-05. 6.1. APROPOS TO ABOVE, THE ASSESSEE CONTENDS THAT I T HAS FILED EACH AND EVERY CONFIRMATION AND POSSIBLE DETAIL IN RESPECT O F THE IDENTITY OF AGENTS AND THE PURCHASERS; INVOICE NO.; PAYMENT OF COMMISS ION; MODE OF PAYMENT; DATE OF PAYMENT AND ALL DETAILS IN THIS RESPECT HAV E BEEN FILED IN THE PAPER BOOK. THE ASSESSEES METHODOLOGY OF BUSINESS AND PA TTER OF AGENTS AND DISTRIBUTORS FOR SELLING IS SAME. THE COMMISSION PA YMENTS HAVE BEEN MADE OVER A PERIOD OF TIME WHICH ARE DULY SUPPORTED BY C ONFIRMATIONS, INVOICES AND VARIOUS OTHER DETAILS SUBMITTED BY THE ASSESSE E. IN THESE CIRCUMSTANCES, WE ARE UNABLE TO HOLD THAT THE FACTS OF THE ASSESSE ES BUSINESS IN A.Y. 2004- 05 AND THESE YEARS HAVE ANY DIFFERENCE. 9 6.2. THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2004- 05 AFTER CONSIDERING ALL THE ASPECTS HAS HELD THAT THE ASSESSEE INCURRED THE EXPENDITURE FROM THE PRUDENCE OF A BUSINESSMAN, THE COMMISSION HAS BEEN PAID THROUGH CHEQUES, THE RECIPIENTS THEREOF HAVE CONFIRMED THE PAYMENT. IN CASE OF INDIAN AGENTS, PAN NOS. ARE SUBMITTED. IN CASE OF AGENTS ABROAD, T HEY HAVE DULY CONFIRMED THE SAME. IN VIEW OF ALL THESE FACTS, THE ASSESSEE HAS DISCHARGED THE BURDEN TO JUSTIFY AND SUBSTANTIATED ITS CLAIM THAT THE PAYM ENT OF COMMISSION FULLY JUSTIFIED. THE HONBLE HIGH COURT ALSO HAS UPHELD T HE ITAT ORDER AND THE HONBLE SUPREME COURT HAS DISMISSED THE REVENUES S LP. IN OUR CONSIDERED VIEW IN THE GIVEN FACTS AND CIRCUMSTANCES, THE VIE W ADOPTED BY THE ITAT AND THE HONBLE DELHI HIGH COURT IN ASSESSEES OWN CASE FOR A.Y. 2004-05, HAS TO BE APPLIED, AS THE SAME HAS ATTAINED FINALIT Y BY DISMISSAL OF SLP FILED BY THE DEPARTMENT. 6.3. APROPOS LEARNED DRS RELIANCE ON SUPREME COURT S JUDGMENT IN THE CASE OF LACHMINARAYAN MADAN LAL (SUPRA) IS CONCERNE D, WE ARE UNABLE TO AGREE WITH LEARNED DRS CONTENTION THAT COMMISSION SHOULD NOT BE ALLOWED ON THAT BASIS OF RATIO OF DECISION IN THE CASE OF LACHMINARAYAN MADAN LAL (SUPRA), WHICH IN OUR VIEW IS NOT APPLICABLE TO THE FACTS OF ASSESSEES CASE. 6.4. IN VIEW OF ABOVE FACTS, SUBMISSIONS AND OBSERV ATIONS WE HOLD THAT THE ENTIRE COMMISSION PAID BY THE ASSESSEE TO ITS AGENT S/ DISTRIBUTORS IS TO BE ALLOWED TO THE ASSESSEE. THIS GROUND OF ASSESSEE IN BOTH THE YEARS IS ALLOWED. 7. COMING TO THE OTHER GROUND NO. 2 IN RESPECT OF S HORT TERM CAPITAL LOSS INCURRED ON REDEMPTION OF LIC MUTUAL FUND, CIT(A) U PHELD THE ORDER OF AO BY HOLDING THAT AMENDMENT TO SEC. 94(7)(B)(II), THE TRANSACTION OF THE ASSESSEE WAS EFFECTED ON 7-7-2004 I.E. ONE DAY PRIO R TO THE FINANCE BILL BECOMING THE ACT ON 8-7-2004. 10 7.1. CIT(A) HELD THAT FINANCE ACT IS APPLICABLE TO WHOLE OF THE YEAR AND WHEN THE ASSESSEE EFFECTED THE TRANSACTION, FINANCE BILL WAS ALREADY UNDER THE CONSIDERATION OF THE PARLIAMENT, THEREFORE, IT CANN OT BE HELD THAT PROVISION OF SECTION 94(7) WILL BE APPLICABLE FROM 8-7-2004 I.E. WHEN THE FINANCE ACT BECOMES A LAW. THE FINANCE ACT ITSELF MAKES SUCH TR ANSACTIONS TAXABLE W.E.F. 1-4-2004. WE UPHOLD THE ORDER OF CIT(A) ON THIS ISS UE. IN THE RESULT, ASSESSEES APPEAL FOR A.Y. 2005-06 IS PARTLY ALLOWE D AND THAT FOR A.Y. 2006- 07 IS ALLOWED. 8. COMING TO REVENUES GROUNDS IN RESPECT OF PART A LLOWANCE OF COMMISSION HAS BEEN CHALLENGED BY THE REVENUE. WHIL E EXAMINING THE CLAIM OF PAYMENT OF COMMISSION BY ASSESSEE, CIT(A) ALLOWED THE SAME IN PART. BOTH THE PARTIES FILED APPEALS. IN ASSESSEES APPEALS, WE HAVE HELD THAT THE PAYMENT OF COMMISSION MADE BY THE ASSESSEE TO A GENTS/ DISTRIBUTORS HAS TO BE ALLOWED. IN VIEW THEREOF THE COMMISSION ALLOW ED BY CIT(A) WHICH IS AGITATED BY REVENUE HAS TO BE CONFIRMED. 9. IN THE RESULT, ASSESSEES APPEAL FOR A.Y. 2005-0 6 IS PARTLY ALLOWED, FOR A.Y. 2006-07 IS ALLOWED AND REVENUES APPEALS ARE D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29-04-2011. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29-04-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 11