SC: Consumers Cannot Bear Power Plant Depreciation Costs When No Electricity Was Supplied  ||  Supreme Court: Para-Teachers’ Regularisation Depends On Educational Standards Set By States  ||  Bombay High Court: State Cannot Withhold Aid to Child Homes While Supporting Ladki Bahin Yojana  ||  Delhi High Court: Husband Cannot Seek to Strike off Wife’s Defence over Unpaid Litigation Costs  ||  Calcutta HC: Bank Accounts Cannot Be Frozen Solely on Complaints Filed Via MHA Cybercrime Portal  ||  J&K&L HC: Unregistered Agreement to Sell Can be Considered For Assessing Possession at Interim Stage  ||  Raj HC: Cybercrime Cases Can't be Quashed Only on Compromise as They Impact Society at Large  ||  Gujarat High Court: Separate Compensation is Payable For Stillborn Child in Railway Accident Case  ||  Delhi HC: Hymen Rupture is Not Required to Prove Penetrative Sexual Assault under the POCSO Act  ||  Delhi HC: Organised Crime Groups Exploit Juveniles, Misuse Juvenile Justice Laws for Serious Crimes    

Akik Tiles (P) Ltd., Mehsana vs. The Joint Commissioner of Income Tax, Mehsana Range - (Income Tax Appellate Tribunal) (13 Apr 2022)

Primary onus lies upon the assessee to justify that the business decisions were taken in the course of the business only

MANU/IB/0179/2022

Direct Taxation

The assessee is a private limited company and engaged in the business of manufacturing Glazed Ceramics Tiles. The assessee in the year under consideration has claimed commission expenses amounting to Rs. 6,61,569 only. The assessee in support of such commission expenses has filed copy of accounts of the parties along with the copies of the income-tax return. However, the AO found that the assessee failed to furnish the details of the services rendered by such commission agents. Therefore, the AO disallowed the same and added to the total income of the assessee.

Aggrieved assessee preferred an appeal to the Learned CIT(A). The assessee before the Learned CIT(A) submitted that it's a common prevailing practice to increase the business by way of getting references from the parties. By way of reference, the assessee gets vital business information which has been used to increase the turnover and therefore, the commission expenses were incurred. It was also submitted by the assessee that, the commission expenses were paid to unrelated parties after deducting the TDS. Therefore, there cannot be any doubt on the genuineness of the expenses.

However, the Learned CIT(A), disregarded the contention of the assessee by observing that the assessee failed to furnish the details about the services rendered by the commission agents. The assessee has not furnished the names of the parties to whom the sales have been made after getting reference from the commission agents. Thus, the Learned CIT(A) confirmed the order of the AO.

There is no ambiguity to the fact that the AO is not expected to interfere in the decision making process of the assessee. In the business environment, there are certain decision which are taken by the assessee depending upon the market forces. However, the primary onus lies upon the assessee to justify based on the documentary evidence that the business decision were taken in the course of the business as mandated under the provision of Section 37 of the Income Tax Act, 1961.

But in the given case, it is to be noted that the Learned AR has just tried to justify the genuineness of the expenses which has been not doubted by the authorities below. What has been doubted, were the services which were rendered by the consultants. To this effect, no satisfactory explanation was furnished by the assessee. Therefore, there is no ambiguity in the order of the authorities below. Appeal filed by the assessee is dismissed.

Tags : ASSESSMENT   ADDITIONS   LEGALITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved