Assessee could not be taxed more than what it had received-High Court upholds Tribunal order allowing commission paid by the assessee
ABCAUS Case Law Citation:
ABCAUS 2449 (2018) 08 HC
Instant Income Tax appeals were filed by the Revenue aggrieved by the order passed by the Income Tax Appellate Tribunal (Tribunal) allowing claim of commission paid by the assessee.
The assessee had paid substantial amounts towards sales commission for consignment sales. The Assessing Officer disallowed the claim, on the ground that the existence of such agent itself was in doubt.
The first Appellate Authority conducted further enquiries into the matter. But, however confirmed the order of assessment.
Before the Tribunal, the assessee produced further documents. The Tribunal referred to the documents and found that the evidence indicated that the assessee had received only 95% of the invoice price and that the assessee could not have been taxed for an income which they have not received. The Tribunal placed reliance of the judgment of the Apex Court and on that basis, allowed the appeals of the assessee.
The Hon’ble High Court opined that it agreed with the Revenue that there were circumstances which created a reasonable suspicion about the existence of the Agency, but the fact remained that such a concern had CST Registration. There were transactions between the assessee and the said concern and the invoices which were raised by the assessee in the name of the Agent also contained the gross sale price and the net amount payable, after recovery of 5% towards commission and other expenses due. Based on such transactions, the amounts were realised by the assessee through banking channels and F forms under the CST Act were also obtained by them from the Agent.
Therefore the Hon’ble High Court opined that the above admitted facts showed that the assessee had received only 95% of the gross price and the Revenue had nor placed any material that the assessee had received anything in excess thereof either directly or otherwise.
The Hon’ble High Court observed that the principles laid down by the Apex Court clearly indicate that the assessee could be taxed only for the income that it has derived.
In view of the above, the Hon’ble High Court opined that despite the contentions raised regarding the doubtful existence of the agent, the assessee having received only 95% of the gross value, could have been taxed, only for what it had actually received.
The Hon’ble High Court held that the Tribunal was justified in coming to the factual conclusion that the assessee could not have been taxed anything more than what it had received. The Appeals were accordingly dismissed.
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