Payment of canvassing to the agents as per Chit Fund Act

IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH, CHENNAI

BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND
SHRI G. MANJUNATHA, ACCOUNTANT MEMBER

ITA No.:3164/CHNY/2019

Assessment Year: 2016-17

M/s. Shri Ayngaran Business
Chits Pvt.Ltd.,
No.51, Kotrampalayam Street,
First Floor,
Kanchipuram – 631 501.
PAN: AAPCS 1446Q

vs

The Income Tax Officer,
Corporate Ward - 6(2),
Chennai – 34.

Appellant by : Ms. Nithya Sankaran, CA

Respondent by : Shri G. Johnson, Addl.CIT

Date of Hearing : 12.08.2021

Date of Pronouncement : 30.08.2021

O R D E R

This appeal filed by the assessee is directed against order of learned Commissioner of Income Tax (Appeals) – 15, Chennai, dated 30.08.2019 and pertains to assessment year 2016-17.

2. The case was taken up for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has incurred a sum of Rs.90,16,875/- under the head commission expenses.

3. In response, the assessee filed a letter dated 22.11.2018 and furnished all details. The AO, on the basis of details furnished by the assessee noticed that out of 23 agents to whom commission was paid, 14 agents were relatives of the Directors of the company. Therefore, he opined that commission paid to agents for procuring business is not expanded wholly and exclusively for the purpose of business and accordingly made addition of Rs.65,83,750/-.

4. The ld.AR further submitted that there is no dispute with regard to the fact that the assessee has paid commission through proper banking channel after deducting applicable TDS as per law.

5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the court on 30th August, 2021 at Chennai.

Please find attached the enclosed file for the full judgement