RAJASTHAN TRANSMATE PVT. LTD., Jaipur V. ITO, Sikar

ITA 823/JPR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2190 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 30-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA CIT DHK
• Assessee Lawyers: B P MOONDRA
• Keywords: Business income; Corroborative evidences
• Section: 131

Judgement Text

+VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 823/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 RAJASTHAN TRANSMATE PVT. LTD. G-100, RIICO INDUSTRIAL AREA, BAGRU EXT., JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD-1, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 0662 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.P. MOONDRA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/04/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/04/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES FR OM THE ORDER DATED 24/09/2015 PASSED BY THE LD CIT(A)-III,JAIPUR FOR THE A.Y.2008-09. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F MANUFACTURING OF TRANSMISSION LINE HARDWARE AND THEI R ACCESSORIES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD DECLARED GROSS PROFIT AT RS. 47,50,516/- ON TOTAL SALES OF RS. 5,2 0,07,224/-. THE ASSESSING OFFICER MADE ADDITION OF RS. 7,61,752/- O F ENTIRE COMMISSION ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 2 DEBITED IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY SPECIFIC DOCUMENT , RECORD OR CORRESPONDENCE TO ESTABLISH THAT THE COMMISSIONS AG ENTS HAVE ACTUALLY RENDERED ANY SERVICE TO THE ASSESSEE, WHAT WAS THE EX PERTISE OF THE COMMISSION AGENT IN THE FIELD, WHAT WAS THE BASIS FOR COMMISSION AMOUNTS ON WHICH THESE WERE SETTLED, HOW IT WAS WORKWISE ALLOCATED AND FINALLY OBSERVED THAT THIS COMMISSION HAS BEEN PAID ONLY ON 25% OF THE TOTAL SALES, THEREFORE, THERE APPEARS TO BE NO REQU IREMENT OF PAYMENT OF COMMISSION. 3. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASS ESSING OFFICER AND NOW THE ASSESSEE IS IN APPEAL BEFORE THIS BENCH BY TAKING FOLLOWING GROUND OF APPEAL: THE LD. CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF C OMMISSION EXPENSES OF RS. 7,23,197/- OUT OF DISALLOWED BY THE LD. A.O. OF RS. 7,61,752/- AS DISALLOWANCES IS BAD IN LAW AND FAC TS. 4. THE SOLITARY ISSUE INVOLVED IN THIS APPEAL IS AGA INST CONFIRMING THE DISALLOWANCE OF COMMISSION EXPENSES OF RS. 7,23,197/ - OUT OF RS. 7,61,752/- DISALLOWED BY THE ASSESSING OFFICER. IN THIS REGARD, THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER: A. ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF TRANSMISSION LINE AND HARDWARE. SO LITARY ISSUE IN THIS APPEAL IS WITH REGARDS TO DISALLOWANCE OF COMM ISSION PAYMENT OF RS. 7,23,197/- PAID BY ASSESSEE TO FOLLOWING PAR TIES: ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 3 1 PREMIER ASSOCIATES TENDER COMMISSION 12538 2 ELEGANT ENTERPRISES COMMISSION ON SALE 209198 3 DEV ENTERPRISES COMMISSION ON SALE 121399 4 LINE EQUIPMENTS COMMISSION ON SALE 228259 5 BIKANER POLYMERS COMMISSION ON SALE 151803 TOTAL 723197 B. AS FAR AS PAYMENT OF COMMISSION AMOUNTING TO RS. 7,23,197/- IS CONCERNED, ASSESSING OFFICER ASKED THE ASSESSEE COM PANY TO EXPLAIN THE BASIS FOR MAKING SUCH COMMISSION PAYMEN T, ALONGWITH EVIDENCES REGARDING NATURE OF SERVICES RENDERED, CO PIES OF INVOICES ETC. ACCORDING TO ASSESSING OFFICER, ASSESSEE FAILE D TO PROVIDE JUSTIFICATION/BASIS FOR MAKING THE IMPUGNED PAYMENT AND SUPPORTING EVIDENCES DURING ASSESSMENT PROCEEDINGS. SO, SAME W AS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSE E. C. YOUR HONOUR, THE MATTER WAS CARRIED BEFORE THE L D.CIT APPEAL, WHEREIN ASSESSEE SUBMITTED COMPLETE DETAILS. KINDLY SEE AT PAGE NO. 5 TO 7 OF THE ORDER OF THE LD. CIT APPEAL. YOUR HONOUR THE LD. CIT APPEAL CONFIRM THAT TO JUSTIFY THE COMMISSION PAID THE ASSESSEE SUBMIT FOLLOWING DOCUMENTS. S.NO. NAME, ADDRESS & PAN OF PARTIES COMMISSION PAID DETAILS OF COMMISSION PAID JUSTIFICATION FOR COMMISSION PAYMENT 1 LINE EQUIPMENTS H-719 ROAD NO. 9, F3 VKIA, JAIPUR AAAFL5933H 228259/- BROKERAGE @ 4% ON TOTAL SALES OF RS. 5706497/- TO BAJAJ ELECTRICALS LTD. CONFIRMATION OF ACCOUNT IS ENCLOSED AT PB 19. DETAILS OF BILL WISE SALES IS AT PB 20. COPY OF DEBIT NOTE IS AT PB 21. COPY OF AGREEMENT IS AT PB 22. THE PARTY HAS SHOWN THIS AS INCOME IN ITS RETURN, P&L A/C AND BALANCE SHEET IS AT PB 23-27. FROM THESE DOCUMENTS, THE COMMISSION PAYMENT TO THIS FIRM IS FULLY VERIFIABLE. 2 BIKANER POLYMERS O-12, PARIZAD, ASHOK MARG, C-SCHEME, JAIPUR ACLPM1335R 151803/- BROKERAGE ON SALES OF RS. 37,95,073 TO ANGELIQUE INTERNATIONAL LTD. THIS PARTY IS COMMISSION AGENT OF ASSESSEE SINCE LAST 2 YEARS. IT HAS BEEN PAID COMMISSION ON SALES MADE TO ANGELIQUE INTERNATIONAL LTD. CONFIRMATION OF ACCOUNTS IS AT PB 29. COPY OF AGREEMENT IS AT PB 30. THE PARTY HAS SHOWN THIS BROKERAGE IN ITS RETURN OF INCOME. COPY OF AUDITED BALANCE SHEET, P&L A/C AND ITR-V IS AT PB 31-55. FROM THESE DOCUMENTS, THE COMMISSION PAYMENT TO THIS FIRM IS FULLY VERIFIABLE. ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 4 3 ELEGANT ENTERPRISES STATION ROAD, JAIPUR AAAFE4780D 209198/- BROKERAGE @ 4% ON TOTAL SALES OF RS. 5229945/- CONFIRMATION OF ACCOUNTS HAS BEEN RECEIVED FROM THE PARTY (PB 3). DETAILS OF BILL WISE SALES IS AT (PB 4-8). COPY OF AGREEMENT IS AT(PB 9). THE PARTY HAS SHOWN THIS AMOUNT AS INCOME IN ITS RETURN OF INCOME. COPY OF BALANCE SHEET, P&L A/C AND ITR-V IS ENCLOSED AT PB 10-14. TAX IS DEDUCTED AT SOURCE ON COMMISSION PAYMENT TO THIS FIRM IS FULLY VERIFIABLE. 4 DEV ENTERPRISES 14A, PANCHSHEEL VIHAR, AHIDKI MALVIYA NAGAR, NEW DELHI AADFD2157L 121399/- BROKERAGE @ 4% ON TOTAL SALES OF RS. 3034969/- CONFIRMATION OF ACCOUNTS IS AT (PB 15). DETAILS OF BILL WISE SALES TO KUMAR CONSTRUCTION, K.S. TRANSFORMERS (P) LTD. AND KALPTARU POWERS TRANSMISSION LTD. ARE AT (PB 16-18). FROM THESE DOCUMENTS, THE COMMISSION PAYMENT TO THIS FIRM IS FULLY VERIFIABLE. 5 PREMIER ASSOCIATES EASWARILA SOM ROAD, JAGATHY, THIRUVANTAPURAM, KERALA AHOPR6251P 12538/- COMMISSION @ 2.5% ON RS. 501500/- COPY OF DEBIT NOTE AGAINST KSEB ORDER # TCM/106/07-08/3153 IS ENCLOSED AT PB 58. FROM THE SAME IT CAN BE NOTED THAT IT HAS CLAIMED REIMBURSEMENT TOWARDS COST OF STAMP PAPER REQUIRED FOR EXECUTION OF AGREEMENT WITH KSEB WHICH ITSELF PROVE THE SERVICES RENDERED BY THIS PARTY. D. YOUR HONOUR THE ABOVE TABLE APPEARING IN THE ORD ER OF THE LD. CIT APPEAL THAT THE COMMISSION AGREEMENT IN ALL THE CAS ES IS AVAILABLE AND THE COMMISSION HAS BEEN PAID ON SALES. 1. LINE EQUIPMENTS H-719 ROAD NO. 9, F3 VKIA, JAIPUR AAAFL5933H HAS BEEN PAID RS. 228259/- AS BROKERAGE @ 4% ON TOTAL SALES OF RS. 5706497/- /- TO BAJAJ ELECTRICAL S LTD. CONFIRMATION OF ACCOUNTS HAS BEEN RECEIVED FROM THE PARTY. DETAILS OF BILL WISE SALES, COPY OF AGREEMENT, COPY OF BALANCE SHEET, P&L A/C AND ITR-V WAS ALSO FURNISHED. TAX WA S ALSO DEDUCTED AT SOURCE ON COMMISSION PAYMENT TO THIS FI RM. YOUR HONOUR THE LD. CIT APPEAL CONFIRMED THE DISALLOWANC E WITH THE FINDING THAT SUSHIL KUMAR SABOO PARTNER OF FIRM WAS RECORDED WHEREIN IN REPLY TO QUESTION NO. 4,5 & 6 HE ACCEPTE D THE FACT THAT HE HAS DONE THE WORK FOR THE ASSESSEE. HE HAS ALSO EXPLAINED THAT HIS BUSINESS WAS CLOSED IN THE SUBSEQUENT YEAR S. HOWEVER AO IN REMAND REPORT MENTIONED THAT HE COULD NOT ADD UCE EVIDENCE IN SUPPORT OF THE SERVICES RENDERED. IN TH ESE FACTS, THE DISALLOWANCE OF COMMISSION OF RS. 228259/- PAID TO THIS PARTY WAS CONFIRMED. YOUR HONOUR MR. SUSHILKUAMR SAHU IN HIS STATEMENT CLEARLY STATED THAT HE HAS DONE THE WORK FOR THE AS SESSEE ALSO THE ASSESSEE FILED THE COPY OF ITR-V AS WELL AS PAN NO. AS THE ASSESSEE DEDUCTED TDS. YOUR HONOUR THE COMMISSION H AS BEEN PAID ON THE BASIS OF AGREEMENT AND BY ON ACHIEVING THE SALES OF RS. 5229945/-. SINCE THE PARTY HAS CHANGED THE ADDR ESS AND NOW ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 5 WAS NOT TRACEABLE TO THE ASSESSEE DOES NOT MEAN THA T THE ASSESSEE HAS NOT PAID JUSTIFIED COMMISSION TO ACHIE VE THE BUSINESS. AND SINCE THE AGREEMENT AVAILABLE ON RECO RD AS WELL AS THERE IS NO ADVERSE INFERENCE HAS BEEN GIVEN BY LD. AO ON SALES ACHIEVED THROUGH LINE EQUIPMENTS. HENCE THE CONFIRM ATION BY THE LD. CIT APPEAL OF DISALLOWANCE OF COMMISSION PAID I S BAD IN LAW AND FACTS. 2. BIKANER POLYMERS O-12, PARIZAD, ASHOK MARG, C-SCHE ME, JAIPUR ACLPM1335R EQUIPMENTS H-719 ROAD NO. 9, F3 VKIA, JA IPUR AAAFL5933H HAS BEEN PAID RS. 151803/- AS BROKERAGE @ 4% ON TOTAL SALES OF 37,95,073 TO ANGELIQUE INTERNATIONAL LTD. THIS PARTY IS COMMISSION AGENT OF ASSESSEE SINCE LAST 2 YEARS. IT HAS BEEN PAID COMMISSION ON SALES MADE TO ANGELIQUE INTERNAT IONAL LTD. CONFIRMATION OF ACCOUNTS. COPY OF AGREEMENT. THE PA RTY HAS SHOWN THIS BROKERAGE IN ITS RETURN OF INCOME. COPY OF AUDITED BALANCE SHEET, P&L A/C AND ITR-V. TAX WAS ALSO DEDU CTED AT SOURCE ON COMMISSION PAYMENT TO THIS FIRM. YOUR HON OUR THE LD. CIT APPEAL CONFIRMED THE DISALLOWANCE BY GIVING FIN DING THAT IT IS SEEN THAT THE LD. AR HAS FILED CONFIRMATION. BILL W ISE DETAILS OF SALES MADE THROUGH HIM, COPY OF THE AGREEMENT, RETU RN AND BALANCE SHEET. TAX HAS BEEN DEDUCTED AT SOURCE. IN REMAND PROCEEDING, STATEMENT OF KESHAV MUNDRA PROPRIETOR O F THE FIRM WAS RECORDED WHEREIN HE HAS ACCEPTED THE FACT THAT HE HAS DONE THE WORK FOR THE ASSESSEE. HOWEVER AO IN REMAND REP ORT MENTIONED THAT HE COULD NOT ADDUCE EVIDENCE IN SUPP ORT OF THE SERVICES RENDERED. CONSIDERING ALL THESE FACTS, I F IND THAT THE DISALLOWANCE MADE BY THE AO IS CORRECT. ACCORDINGLY THE DISALLOWANCE MADE BY THE AO IS CONFIRMED. YOUR HONO UR THE ASSESSEE FILED THE COPY OF ITR-V AS WELL AS PAN NO. AS THE ASSESSEE DEDUCTED TDS. YOUR HONOUR THE COMMISSION H AS BEEN PAID ON THE BASIS OF AGREEMENT AND BY ON ACHIEVING THE SALES OF RS. 5229945/-. SINCE THE PARTY HAS CHANGED THE ADDR ESS AND NOW WAS NOT TRACEABLE TO THE ASSESSEE DOES NOT MEAN THA T THE ASSESSEE HAS NOT PAID JUSTIFIED COMMISSION TO ACHIE VE THE BUSINESS. AND SINCE THE AGREEMENT AVAILABLE ON RECO RD AS WELL AS THERE IS NO ADVERSE INFERENCE HAS BEEN GIVEN BY LD. AO ON SALES ACHIEVED THROUGH LINE EQUIPMENTS. HENCE THE CONFIRM ATION BY THE LD. CIT APPEAL OF DISALLOWANCE OF COMMISSION PAID I S BAD IN LAW AND FACTS. 3. ELEGANT ENTERPRISES STATION ROAD, JAIPUR AAAFE4780 D HAS BEEN PAID RS. 209198/- AS BROKERAGE @ 4% ON TOTAL SALES OF RS. 5229945/ CONFIRMATION OF ACCOUNTS HAS BEEN RECEIVED FROM THE PARTY. DETAILS OF BILL WISE SALES, COPY OF AGREEMEN T, COPY OF BALANCE SHEET, P&L A/C AND ITR-V WAS ALSO FURNISHED . TAX WAS ALSO DEDUCTED AT SOURCE ON COMMISSION PAYMENT TO TH IS FIRM. YOUR ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 6 HONOUR THE LD. CIT APPEAL CONFIRMED THE DISALLOWANC E WITH THE FINDING THAT THE SUMMONS ISSUED TO THIS PARTY HAS R ETURNED BACK WITH THE REMARKS LEFT THIS PALACE. THE APPELLANT SH OULD HAVE GIVEN THE CORRECT ADDRESS. FURTHER THE OTHER ARGUMENT OF LD. AR THAT PARTNER OF THIS FIRM IS SUSHIL KUMAR SABOO WHO IS S AME AS OF LINE EQUIPMENT MAKES NO DIFFERENCE AS SUSHIL KUMAR SABOO IN THE STATEMENT NOWHERE STATED ABOUT THE COMMISSION RECEI VED IN THIS FIRM. IN THESE FACTS, THE DISALLOWANCE OF COMMISSIO N OF RS. 2,09,198/- PAID TO THIS PARTY WAS CONFIRMED. YOUR H ONOUR THE ASSESSEE FILED THE COPY OF ITR-V AS WELL AS PAN NO. AS THE ASSESSEE DEDUCTED TDS. YOUR HONOUR THE COMMISSION H AS BEEN PAID ON THE BASIS OF AGREEMENT AND BY ON ACHIEVING THE SALES OF RS. 5229945/-. YOUR HONOUR MR. SUSHIL KUMAR SAHU AP PEARED BEFORE THE LD.AO ON BEHALF OF LINE EQUIPMENTS. BUT THE LD. AO HAD NOT ASKED ANY QUESTION REGARDING COMMISSION PAI D IN ELEGENT ENTERPRISE. THE ASSESSEE HAD ALREADY GIVEN THE PAN NO. OF ELEGANT ENTERPRISES AS WELL AS MR. SUSHIL KUAMR SAH U APPEARED BEFORE THE LD. AO THEREFORE THE ONUS SHIFTED TO THE LD. AO TO JUSTIFY THE DISALLOWANCE. AND SINCE THE AGREEMENT A VAILABLE ON RECORD AS WELL AS THERE IS NO ADVERSE INFERENCE HAS BEEN GIVEN BY LD. AO ON SALES ACHIEVED THROUGH ELEGENT ENTERPRISE S. HENCE THE CONFIRMATION BY THE LD. CIT APPEAL OF DISALLOWANCE OF COMMISSION PAID IS BAD IN LAW AND FACTS. 4. DEV ENTERPRISES 14A, PANCHSHEEL VIHAR, AHIDKI MALV IYA NAGAR, NEW DELHI AADFD2157L HAS BEEN PAID RS. 121399/-/- A S BROKERAGE @ 4% ON TOTAL SALES OF RS. 3034969/ CONFI RMATION OF ACCOUNTS HAS BEEN RECEIVED FROM THE PARTY. DETAILS OF BILL WISE SALES TO KUMAR CONSTRUCTION, K.S. TRANSFORMERS (P) LTD. AND KALPTARU POWERS TRANSMISSION LTD., COPY OF AGREEMEN T ALSO FURNISHED. TAX WAS ALSO DEDUCTED AT SOURCE ON COMMI SSION PAYMENT TO THIS FIRM. YOUR HONOUR THE LD. CIT APPEA L CONFIRMED THE DISALLOWANCE ONLY ON THE BASIS THAT THE SUMMONS ISS UED TO THIS PARTY HAS RETURNED BACK WITH THE REMARKS LEFT THIS PALACE. THE APPELLANT SHOULD HAVE GIVEN THE CORRECT ADDRESS, TH E DISALLOWANCE OF COMMISSION OF RS. 121399/- PAID TO THIS PARTY WA S CONFIRMED. YOUR HONOUR THE ASSESSEE FILED PAN NO. AS THE ASSES SEE DEDUCTED TDS. YOUR HONOUR THE COMMISSION HAS BEEN P AID ON THE BASIS OF AGREEMENT AND BY ON ACHIEVING THE SALES OF RS. 3034969/-. SINCE THE PARTY HAS CHANGED THE ADDRESS AND NOW WAS NOT TRACEABLE TO THE ASSESSEE DOES NOT MEAN THA T THE ASSESSEE HAS NOT PAID JUSTIFIED COMMISSION TO ACHIE VE THE BUSINESS. THE ASSESSEE HAD ALREADY GIVEN THE PAN NO . BEFORE THE LD. AO THEREFORE THE ONUS SHIFTED TO THE LD. AO TO JUSTIFY THE DISALLOWANCE. AND SINCE THE AGREEMENT AVAILABLE ON RECORD AS WELL AS THERE IS NO ADVERSE INFERENCE HAS BEEN GIVE N BY LD. AO ON SALES ACHIEVED THROUGH DEV ENTERPRISES. HENCE TH E ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 7 CONFIRMATION BY THE LD. CIT APPEAL OF DISALLOWANCE OF COMMISSION PAID IS BAD IN LAW AND FACTS. 5. PREMIER ASSOCIATES EASWARILA SOM ROAD, JAGATHY, THIRUVANTAPURAM, KERALA AHOPR6251P HAS BEEN PAID RS . 12538/- AS BROKERAGE @ 4% COMMISSION @ 2.5% ON RS. 501500/- COPY OF DEBIT NOTE AGAINST KSEB ORDER # TC M/106/07- 08/3153 IS ENCLOSED AT PB 58. FROM THE SAME IT CAN BE NOTED THAT IT HAS CLAIMED REIMBURSEMENT TOWARDS COST OF STAMP PAPER REQUIRED FOR EXECUTION OF AGREEMENT WITH KSEB WHICH ITSELF PROVE THE SERVICES RENDERED BY THIS PARTY. YOUR HONOUR TH E LD. CIT APPEAL CONFIRMED THE DISALLOWANCE ONLY ON THE BASIS THAT COMMISSION PAID TO PREMIER ASSOCIATE RS. 12,538/-:- THE LD. AR HAS FILED COPY OF DEBIT NOTE AGAINST KSEB ORDER # T CM/ 106/07- 08/3153 SHOWING REFERENCE OF ORDER AND DETAILS OF C OMMISSION, HOWEVER NO CONFIRMATION FROM THIS PARTY WAS FILED T O PROVE PAYMENT OF COMMISSION. THE EXPLANATION OF THE APPEL LANT IS, THEREFORE, NOT ACCEPTABLE. ACCORDINGLY THE DISALLOW ANCE MADE BY THE AO IS CONFIRMED. YOUR HONOUR THE ASSESSEE FILED PAN NO. AS THE ASSESSEE DEDUCTED TDS. YOUR HONOUR THE COMMISSI ON HAS BEEN PAID ON THE BASIS OF AGREEMENT AND BY ON ACHIE VING THE SALES OF RS. 501500/-. MERELY BY NOT FILLING CONFIR MATION DOES NOT MEAN THAT THE ASSESSEE HAS NOT PAID JUSTIFIED COMMI SSION TO ACHIEVE THE BUSINESS. THE ASSESSEE HAD ALREADY GIVE N THE PAN NO. BEFORE THE LD. AO THEREFORE THE ONUS SHIFTED TO THE LD. AO TO JUSTIFY THE DISALLOWANCE. AND SINCE THE AGREEMENT A VAILABLE ON RECORD AND ALSO THE CLAIM OF REIMBURSEMENT TOWARDS COST OF STAMP PAPER REQUIRED FOR EXECUTION OF AGREEMENT WITH KSEB AS WELL AS THERE IS NO ADVERSE INFERENCE HAS BEEN GIVEN BY LD. AO ON SALES ACHIEVED THROUGH PREMIER ASSOCIATES. HENCE THE CONF IRMATION BY THE LD. CIT APPEAL OF DISALLOWANCE OF COMMISSION PA ID IS BAD IN LAW AND FACTS. E. YOUR HONOUR BOTH ASSESSEE AND COMMISSION AGENT A RE PAYING TAX. SIMILAR EXPENSES WERE CLAIMED IN EARLIER YEAR, NO DISALLOWANCE WAS MADE. THE ASSESSEE IS SUPPOSED TO MAINTAIN ITS AFFAIR IN ITS OWN WAY AND REVENUE AUTHORITIES H AD BROUGHT NOTHING ON RECORD TO SUGGEST THAT SUCH PAYMENTS WER E NOT FOR BUSINESS PURPOSE. F. THERE IS ALSO NOTHING ON RECORD THAT SUCH PAYMEN TS HAVE ROUTED BACK TO ASSESSEE IN ANY MANNER. G. THE ASSESSEE HAS PAID THE AMOUNT IN QUESTION AFT ER DEDUCTING TDS AND RECIPIENT HAS PAID TAXES ON SAME. ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 8 HE RELIED ON THE FOLLOWING CASE LAWS:- 1. LAXMI ENGINEERING INDUSTRIES VS. INCOME TAX OFFIC ER, HIGH COURT OF RAJASTHAN (2007) 75CCH 1257 RAJ HC, (2008) 1 DTR 039 1, (2008) 215 0319, (2008) 298 ITR 0203 2. ITAT JODHPUR BENCH, M/S DHAN RAJ KHEMRAJ VS ITO, (ITA NO. 423/JU/2007), XL TW PAGE NO. 114 3. ANKIT PIPES PVT. LTD VS. JCIT XXXIV 116 ITAT JAIPU R BENCH (ITA NO. 560/JP/2002) 4. G. S. ENTERPRISES VS. DCIT XXXII 180 ITAT JAIPUR B ENCH (SMC) (ITA NO. 610/JP/1999) 5. ON THE OTHER HAND, THE LD SR.DR HAS RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIALS AVAILABLE ON THE RECORD ON THIS ISSUE . THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE ASSESSEE WAS ALSO PAID COMMISSION IN THE PRECEDING YEAR ALSO I.E. FOR THE FINANCIAL YEAR 200 6-07 RELEVANT TO ASSESSMENT YEAR 2007-08 OF RS. 7,66,192/-, WHICH HAS BEEN ALLOWED BY THE ASSESSING OFFICER. I HAVE NOTED THAT IN THE CAS E OF LINE EQUIPMENT, COMMISSION WAS PAID OF 228259/-, WHICH WAS 4% OF TOTA L SALES OF RS. 57,06,497/- TO BAJAJ ELECTRICALS LTD.. IN THIS REGA RD, CONFIRMATION OF ACCOUNT WAS SUBMITTED. DETAILS OF BILL WISE SALES WERE ALSO GIVEN AND COPY OF DEBIT NOTE WAS ALSO PLACED ON THE RECORD. TH E COPY OF AGREEMENT WAS ALSO SUBMITTED. INCOME FROM THIS COMMISSION WAS S HOWN IN THE P&L ACCOUNT BY THE PAYEE. RELEVANT DOCUMENTS IN THIS ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 9 REGARD WERE ALSO SUBMITTED. THUS, THE ASSESSEE SUBMIT TED SUFFICIENT MATERIAL FROM WHERE THE VERIFICATION OF THE PAYMENT WAS POSSIBLE. THE RELEVANT SALES WERE ALSO SHOWN BY THE ASSESSEE. THE B ASIS WAS ALSO STATED. SIMILARLY IN THE CASE OF BIKANER POLYMERS, THE AMOUNT OF RS. 1,51,803/- WAS PAID @ 4% ON THE SALES OF RS. 37,95,07 3/- ON THE SALES AFFECTED OF ANGELIQUE INTERNATIONAL LTD.. THIS PARTY WAS COMMISSION AGENT OF ASSESSEE SINCE LAST TWO YEARS. THE RELEVANT AGREEMENT BETWEEN THE ASSESSEE AND ANGELIQUE INTERNATIONAL LTD. WERE A LSO SUBMITTED. COPY OF THE AUDITED ACCOUNTS WHERE INCOME FROM SUCH BROK ERAGE WERE DECLARED BY THE PAYEE ANGELIQUE INTERNATIONAL LTD. WAS ALSO SUBMITTED. THUS, THE PAYMENTS WERE MADE ON THE SALES AFFECTED TO ANGELIQUE INTERNATIONAL LTD. AND TDS WAS ALSO DEDUCTED. THE COMM ISSION OF RS. 2,09,198/- PAID TO ELEGANT ENTERPRISES WAS ON THE SA LES OF RS. 52,29,945/- @ 4%, IN THIS REGARD ALSO, NECESSARY DOC UMENTS WERE SUBMITTED. COPY OF BALANCE SHEET, P&L ACCOUNT AND I TR OF THE PAYEE WERE ALSO SUBMITTED. THE TAX WAS DEDUCTED ON THE PAYME NTS MADE ON COMMISSION. SIMILARLY THE PAYMENT TO DEV ENTERPRISE S OF RS. 1,21,399/- WAS MADE ON THE SALES OF RS. 30,34,969/- @ 4%. BILL WI SE DETAILS WERE SUBMITTED. THE SALES WERE AFFECTED TO KUMAR CONSTRUC TION, K.S. TRANSFORMERS (P) LTD. AND KALPTARU POWER TRANSMISSION LTD. NECESSARY DOCUMENTS WERE SUBMITTED IN THIS REGARD. SIMILARLY T HE PAYMENT OF RS. ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 10 12,538/- TO PREMIER ASSOCIATES WAS ALSO MADE ON THE SALES OF RS. 5,01,500/- @ 2.5%. IN THIS REGARD ALSO, NECESSARY DO CUMENTS WERE SUBMITTED. FURTHER SHRI SUSHIL KUMAR SABOO PARTNER OF LINE EQUIPMENTS HAS ALSO STATED IN HIS STATEMENT RECORDED THAT HE H AS DONE THE WORK FOR THE ASSESSEE AND HE HAS SUBSEQUENTLY CLOSED HIS BUS INESS. THE PARTNER OF THE FIRM HAS CONFIRMED THAT HE HAS WORKED FOR AS SESSEE AND FOR THE SAME HE HAS RECEIVED COMMISSION AND ALSO SUBMITTED COPY OF INCOME TAX RETURN, PAN. TDS WAS ALSO DEDUCTED ON THE COMMISSION PAID. IN SUCH A SITUATION WHEN THE PARTY HAS CHANGED THE ADDRESS AND AT PRESENT IT HAS BEEN UNTRACEABLE THEN THERE IS NO JUSTIFICATION TO DISALLOW THE CLAIM OF THE ASSESSEE FOR THE PAYMENT OF THE COMMISSION IN EARLI ER YEARS WHEN THE SAME IS BASED ON AN AGREEMENT ON IDENTIFIED SALES WI TH CERTAIN PERCENTAGE. SIMILARLY IN THE CASE OF BIKANER POLYME RS, THE CONFIRMATION OF ACCOUNTS WAS SUBMITTED, COPY OF AGREEMENT WAS MADE AV AILABLE, THE BROKERAGE INCOME DECLARED BY THE BIKANER POLYMERS I N THEIR RETURN OF INCOME WAS ALSO SUBMITTED, TDS WAS ALSO DEDUCTED, BILL WISE DETAILS OF SALES AFFECTED THROUGH BIKANER POLYMERS WERE ALSO SU BMITTED AND COPY OF AGREEMENT WAS SUBMITTED. IN THE REMAND PROCEEDINGS, SHRI KESHAV MOONDRA, PROPRIETOR OF THE FIRM ACCEPTED THAT HE HA S WORKED FOR THE ASSESSEE. IN SUCH A SITUATION, DISALLOWANCE OF COMMI SSION PAID TO BIKANER POLYMERS WAS COMPLETELY UNJUSTIFIED. IN THE CASE OF ELEGANT ENTERPRISES ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 11 ALSO THE SALES WERE IDENTIFIED AND COMMISSION PAID WA S A CERTAIN PERCENTAGE OF THE SALES. BILL WISE DETAILS WERE SUBMI TTED, COPY OF AGREEMENT WAS SUBMITTED. COMMISSION RECIPIENT ELEGAN T ENTERPRISES HAS SUBMITTED ITS INCOME TAX RETURN AND THE TDS WAS DEDUC TED ON THE PAYMENT OF THE COMMISSION. IN THE CASE OF DEV ENTER PRISES ALSO, THE SALES WERE IDENTIFIED AND COMMISSION WAS PAID @ 4%. TD S WAS ALSO DEDUCTED. THE PARTIES TO WHOM THE SALES AFFECTED WERE ALSO IDENTIFIED. THE ONLY BASIS THAT SUMMONS RETURNED BACK WITH THE RE MARKS THAT THE PARTY HAS LEFT THE PLACE, CANNOT BE MADE THE SOLE B ASIS FOR DISALLOWANCE OF THE COMMISSION PAID. THIS COMMISSION WAS PAID ON T HE BASIS OF AN AGREEMENT. SIMILARLY IN THE CASE OF PREMIER ASSOCIA TES ALSO, THE COMMISSION WAS PAID @ 2.5% ON THE SALE OF RS. 5,01,50 0/- AND THE DEBIT NOTE ISSUED AGAINST KSEB WAS ALSO PRODUCED. THE NECES SARY TDS WAS DEDUCTED ON THE PAYMENT OF COMMISSION. PAN OF THE P ERSON TO WHOM THE COMMISSION WAS PAID WERE ALSO SUBMITTED AND NECESSARY AGREEMENT WAS MADE AVAILABLE ON THE RECORD. THEREFORE, CONSIDERING ALL THESE ASPECTS IN RESPECT OF THE VARIOUS PERSONS TO WHOM THE COMMISSIO NS WERE PAID AFTER DEDUCTING NECESSARY TDS, I HOLD THAT THERE WAS NO MER IT IN SUSTAINING SUCH DISALLOWANCES WHEN THERE IS NOTHING ON THE RECOR D THAT THE ASSESSEE HAS RECEIVED BACK ANYTHING FROM THESE PAYM ENTS. I ALSO GET SUPPORT FROM THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 12 LAXMI ENGINEERING INDUSTRIES VS. ITO (SUPRA) WHEREI N THE HON'BLE HIGH COURT HAS HELD AS UNDER:- ASSESSEE FIRM HAVING ADDUCED EVIDENCE OF PAYMENT O F COMMISSION TO A COMPANY BY DEPOSING TO THE EFFECT T HAT THERE WAS AN UNDERSTANDING BETWEEN THE ASSESSEE AND THE COM PANY THAT THE LATTER WOULD PROMOTE THE SALES OF THE ASSES SEE, AND THE ASSESSEE WOULD PAY COMMISSION AND ALSO LED EVIDE NCE COMPRISING OF AFFIDAVITS OF THE PURCHASERS OF MACHI NES MANUFACTURED BY THE ASSESSEE, PAYMENT OF COMMISSION COULD NOT BE DISALLOWED ON THE GROUND THAT THE COMPANY IS A SISTER CONCERN OF THE ASSESSEE FIRM AND THAT THE PAYMENT I S BOGUS, MORE SO WHEN THE COMPANY HAS ALREADY BEEN ASSESSED O N THAT AMOUNT. THE ITAT, JAIPUR BENCH IN THE CASE OF M/S ANKIT PIPES PVT. LTD. VS. JCIT IN ITA NO. 560/JP/2002 FOR THE ASSESSMENT YEAR 1997 -98 HAS HELD AS UNDER:- ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURE AND SALE OF ASBESTOS CEMENT PRESSURE PIPES. ASSESSEE APPOINTED M/S UNIVERSAL SUPPLY CORPORATION AS ITS AGENT FOR OBTAI NING ORDERS AS WELL AS FOR OBTAINING PAYMENTS AS PER AGREEMENT F OR DOING LIAISON WORK. ORDERS FOR SUPPLY OF THESE PIPES WORTH RS. 55,40,694/- WERE OBTAINED THROUGH THE AGENT FROM RIC CO AND SUPPLY WAS MADE TO VARIOUS BRANCHES AT JAIPUR, BHIWAD I, JHALAWAR, ABU ROAD, BHILWARA, CHURU AND OTHER PLACES. FOR THIS ASSESSEE PAID COMMISSION TOTALING RS. 2,09,400/- TH ROUGH ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 13 ACCOUNT PAYEE CHEQUES. A.O. DISALLOWED THE COMMISSIO N PAYMENT AFTER HOLDING THAT AGENT DID NOT RENDER ANY SERVICE SINCE SUPPLIES WERE MADE TO GOVERNMENT DEPARTMENT. C IT(A) UPHELD THE DISALLOWANCE. NOW TRIBUNAL HAVE RESTRICTED THE DISALLOWANCE TO RS. 1,00,000/- AFTER OBSERVING THAT IT IS ON HIGHER SIDE. WHETHER COMMISSION PAID FOR RENDERING SERVICE FOR THE PURPOSE OF BUSINESS IS ALLOWABLE AS DEDUCTED? HE LD YES. FURTHER HELD THAT IN THE FACTS OF THIS CASE, AGENT RENDERED SERVICES FOR THE PURPOSES OF ASSESSEES BUSINESS FO R WHICH PAYMENT OF COMMISSION IF ALLOWABLE. ALSO HELD THAT EVEN IN THE GOVERNMENT DEPARTMENT LI ASIONING WORK IS REQUIRED DUE TO HEAVY COMPETITION. THE ITAT, JAIPUR BENCH IN THE CASE OF M/S G.S. ENTERP RISES PVT. LTD. VS. DCIT IN ITA NO. 610/JP/1999 FOR THE ASSESSMENT YEAR 1996-97 HAS HELD AS UNDER:- WHETHER COMMISSION PAYMENT CAN BE DISALLOWED SIMPLY BECAUSE ASSESSEE DID NOT PRODUCE THE RECIPIENTS BEF ORE A.O. FOR EXAMINATION? HELD NO, IN THE COMPLETE DETAILS O F SUCH PERSONS AND PAYMENTS WERE DULY FILED BEFORE THE A.O. FURTHER HELD THAT A.O. HIMSELF COULD HAVE SUMMONED THESE PERSONS U/S 131 SINCE THESE WERE IDENTIFIABLE. ALSO HELD THAT PAYMENTS IN THESE CASE WERE MADE BY ACCOUNT PAYEE CHEQUES. ITA 823/JP/2015_ RAJASTHAN TRANSMATE P. LTD. VS ITO 14 CONSIDERING ALL THESE FACTUAL ASPECTS AND THE CASE LAWS RELIED UPON BY THE LD. AR, I ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/04/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06 TH APRIL, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- RAJASTHAN TRANSMATE PVT. LTD. JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-1, SIKAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 823/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR