Olivine International Vs DCIT (ITAT Kolkata)
The appeal concerned the disallowance of Rs. 23,88,636 towards brokerage and commission for AY 2013-14. The assessee challenged the order of the Commissioner of Income-tax (Appeals), who had upheld the Assessing Officer’s disallowance despite the assessee’s claim that the expenditure was incurred wholly and exclusively for business purposes and was allowable under Section 37(1) of the Income-tax Act.
The assessee, engaged in the business of trading in medicines, surgical goods, chemicals and medical equipment, had claimed brokerage and commission expenditure of Rs. 57,95,566 in its Profit and Loss Account. During scrutiny assessment under Section 143(3), the Assessing Officer sought details of the commission payments, including names and addresses of the recipients. The assessee furnished details of the brokerage and commission paid along with TDS certificates.
The Assessing Officer issued notices under Section 133(6) to three recipients. The notices were initially returned unserved. The assessee subsequently furnished updated addresses of the parties. However, notice issued to one recipient still remained unserved even after the updated address was provided. On this basis, the Assessing Officer treated the commission payments as not proved and disallowed the expenditure.
The Commissioner (Appeals) affirmed the disallowance, holding that the assessee had failed to discharge the statutory burden and that the Assessing Officer had pointed out specific defects during assessment proceedings.
