Commission Expenses Can Be Allowed If Taxpayer Satisfies Rendering Of Services By Commission Agents And Income From Same Is Shown In Return: Mumbai ITAT

While deleting the addition made u/s 68 of the Income Tax Act, the Mumbai ITAT directed the assessee to file the details of the services rendered by the commission agents for availing the commission payment from the assessee. The ITAT clarified that if the assessee satisfies the AO about the services rendered by these commission agents and that they had shown their income as the commission paid by the assessee, then such commission expenses are to be allowed under law. The Bench of the ITAT comprising Aby T. Varkey and S Rifaur Rahman observed that “given an opportunity the assessee would be able to prove before AO that these commission agents had filed their respective ITR's and demonstrate that commission paid to these agents have been duly shown by them as income in their hands i.e, thirteen commission agents. However, the AO was of the view that the assessee couldn't prove what services these thirteen parties rendered to the assessee for earning the commission of Rs.44,36,581/- and therefore he disallowed the commission expenditure as well as the franking charges booked by the assessee to the tune of Rs.4,25,176/-. The CIT upheld the AO's action since the assessee could not file proof in support of the services rendered by thirteen commission agents and the incurrence of franking charges.