The Income Tax Appellate Tribunal (ITAT), Delhi Bench directed the AO to decide the issue of disallowance of commission expenses based on documentary evidence.
The assessee, Kunwar Tuli was engaged in the business of electrical home appliances under the proprietorship firm, namely, M/s. Golden Sparrow Industries through online trading from a platform, namely, Home Shop 18.
The assessee filed a return of income declaring income of Rs.3,16,350/-. In the assessment completed under Section 143(3) of the Income-tax Act, 1961 out of the commission expenses of Rs.61,93,667 paid by the assessee during the year under consideration, 30% of the commission expenses which were worked out to Rs.18,58,100, was disallowed by the Assessing Officer in view of the non-production of documentary evidence to support high commission paid. The learned CIT(A) also upheld the disallowances.
The assessee submitted that the commission was paid to the digital platform company i.e. Homeshop 18, who sold goods of the assessee through their digital platform.
The assessee urged that the commission has been paid as per the agreement entered into with the digital platform company which included charges such as taxes, refunds, shipping & freight charges etc. According to him, in view of the services rendered by the digital platform company, the commission paid was justified.
It was prayed that the assessee is willing to produce all documentary evidence, if one more opportunity is provided.
The coram of Bhavnesh Saini and O.P. Kant noted that the commission deducted by the digital platform company, namely, Homeshop 18 also included taxes, refunds, shipping and freight charges etc. as per the agreement with the said company. The learned counsel for the assessee has undertaken that the relevant document shall be filed before the Assessing Officer and, therefore, one more opportunity may be provided to the assessee.
Therefore, the ITAT restored the issue back to the file of the Assessing Officer for deciding afresh in the light of the documentary evidence including agreement with the digital platform company to whom the commission has been paid.
“Accordingly, the order of the learned CIT(A) is set aside and the issue in dispute is restored back to the file of the Assessing Officer for deciding afresh in the light of the above direction, after affording an adequate opportunity of being heard to the assessee,” the coram said.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
