×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
This appeal filed by the Assessee is directed against the Order dated 15.11.2017 of the Ld. CIT(A)-12, New Delhi pertaining to assessment year 2014-15 on the following grounds:-
1. That the Ld. CIT(A) has erred in confirming the addition of Rs. 25,72,092/- made by the Assessing Officer by disallowing the commission paid by the assessee to M/s Idem Health Care Pvt. Ltd.
2. That the Ld. CIT(A) has erred in confirming the disallowance observing that the assessee had failed to establish the payment of Commission by way of necessary evidences.
3. That the Ld. CIT(A) has erred in ignoring the material fact that the Assessing Officer had not doubted rendering of services for which commission had been paid. Infact CIT(A) had invoked provisions of Section 40A(2) for disallowing the payment of commission and not the provisions of Section 37(1) of the Act.
4. That the Ld. CIT(A) has misdirected himself in not considering th'e law and facts that mere suspicion or doubt is not sufficient to disallow the expenditure when the services were performed for which the payment was made.
5. That infact the Ld. AO and Ld. CIT(A) has not considered the nature and character of the business portal of the assessee which is prevalent in this type of business while disa lowing payment of commission and guided by the fact that assessee had made purchases from and sales to the related persons and the commission was paid to the related concern.
6. That while confirming the addition, Ld. CIT(A) has not considered the material fact that by disallowing the commission of Rs. 25,72,092/-, Net Profit came to RS. 28,66,412/- i.e. 34.60% of the turnover, which could never be the case particularly when the assessee had launched the new products in the competitive markets.
7. That the addition made by the Assessing Officer was arbitrary and capricious in nature, which deserves to be set aside.
8. That the appellant seeks leave to add, amend, alter, abandon or substitute the above grounds during the hearing of the appeal.
2. The brief facts of the case are that assessee filed his return of income declaring income at Rs. 3,97,240/- on 29.3.2015. The case of the assessee was selected for scrutiny through CASS. Accordingly, notice u/s. 143(2) of the Income Tax Act, 1961 (in short “Act”) was issued on 28.8.2015 and served upon the assessee. In response to the same and subsequent notices, the AR of the assessee attended the proceedings and filed details from time to ime During the year under consideration, the assessee was engaged in the business of trading of Medicines and had shown income from house property, income from business and profession and income from other sources. During the year under consideration, the sales from the proprietorship concern M/s Medi were declared at Rs.82,85,280/- against the purchases of Rs.73,38,607/-. The gross profit was declared at Rs.32,49,063/- and net profit at Rs.2,94,320/-. The AO found on comparison that though gross profit during the year under consideration as better, net profit fell down to 3.55% against the net profit of 10.64% and 11.17% in the relevant Financial Years for Assessment Years 2013-14 & 2012-13 respectively. On further examination the Assessing Officer found that 77.78% of the gross profit has been incurred on commission. The AO further noted that the Assessee did not pay any commission for the previous Financial Year relevant for AY 2013-14. The Assessee submitted that commission amounting to Rs.25,27,092/- was paid to M/s Idem Healthcare Pvt Ltd. during the relevant Financial Year. It was also