Brief of the case:
In the case of ACIT Vs. Rukamani Iyer Mumbai Bench of ITAT held that the claim has to be judged in the light of commercial expediency. Relying upon the judgment of CIT v Associated Electrical Agencies {2004} 266 ITR 63 (Mad.) it was held that as such if the payment is made out of commercial expediency, despite there was no legal compulsion, the same is allowable.
Facts of the case:
- Assessee is the proprietor of M/s. P. P. International, which is a merchant exporter of pharmaceutical products.
- AO noticed that the assessee had debited an amount of Rs.94,05,029/- towards commission on sales, and that the entire amount had been paid to person residing outside India.
- AO again noticed that there was difference between the balance of sundry creditors (two parties) as per the amount shown in the books of accounts and as per the confirmation received from the said three parties.
- During the course of assessment proceedings the AO issued notice to two parties and In absence of response from these two creditors, it was presumed that this is a case of ceased liability and accordingly the closing balance of these two parties was added as income.
Contention of the assessee:
Paid content
Become a Premium Member, or log in if you are already a Premium member.
