[aaykarbhavan] Commission disallowed on assessee's failure to prove actual rendition of services by recipient of sum

IT: Where assessee in support of commission expenses, failed to prove that it had infact availed of certain services from recipients of commission, authorities below were justified in rejecting assessee's claim in respect of said expenses

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[2013] 40 taxmann.com 166 (Gujarat)

HIGH COURT OF GUJARAT

Gujarat Insecticides Ltd.

v.

Deputy Commissioner of Income-tax*

AKIL KURESHI AND MS. HARSHA DEVANI, JJ.

Tax Appeal No. 1409 of 2011

OCTOBER  1, 2012 

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Commission] - In course of assessment, Assessing Officer rejected assessee's claim in respect of commission paid for availing of certain services -Tribunal upheld order of Assessing Officer finding that there was no evidence to suggest that any services were rendered by recipient of such commission - Tribunal also noted that onus was on assessee, claiming such deduction, to establish that such payments were made for services rendered - Whether finding recorded by Tribunal being a finding of fact, no substantial question of law arose therefrom - Held, yes [Para 3] [In favour of revenue]

Manish J. Shah for the Appellant.

ORDER

 

Akil Kureshi, J. - Counsel for the appellant-assessee pointed out that questions. (A) and (C) in the present tax appeal are being considered by this Court in case of this very assessee in Tax Appeal No.1883 of 2010.

2. Counsel for the assessee also pointed out that question (B) is similar to one, which this Court declined to entertain in Tax Appeal No.1883 of 2010. He further submitted that in the present case, the assessee had produced additional material. The Tribunal, without examining such additional evidence, proceeded to reject the assessee's claim for deduction of commission payment relying on the decision in case of earlier years.

3. Having perused the decision of the Tribunal on this issue, we notice that in the previous year as well as in the present year, while rejecting the assessee's claim for deduction of commission payment, the Tribunal heavily relied on the factor that there was nothing to suggest that the recipient of such commission payment had rendered any services to the assessee. The Tribunal noted that the onus was on the assessee, claiming such deduction, to establish that such payments were made for services rendered.

4. In view of the above conclusion, we do not see any scope of entertaining such question.

5. In the result, tax appeal is admitted for consideration of following questions only:—

"(a)		Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing Rs.1,33,99,935/- paid to M/s. Gharda Chemicals Ltd. under section 40A(2)(b) of the I.T. Act, 1961?
(b)		Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the interest of Rs.38,81,250/- had really accrued on the inter corporate deposit with Nipun Investment Pvt. Ltd?

 

Regards

Prarthana Jalan

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