Sandip K. Patel, , Ahmedabad vs Assessee

DCIT, Vs Shri Sandip K Patel, Circle-7, Prop. Of Meet Marketing Ahmedabad F-102, Baleshwar Square Opp. Iscon Temple, SG Highway, Ahmedabad PAN : ABNPP 1812 F (Appellant) (Respondent/cross-objector)

Revenue by : Shri P.L. Kureel Sr.D.R., Assessee(s) by : Shri S.N. Divatia, AR

सुनवाई क तार ख/ Date of Hea ring : 23/04/2015 घोषणा क तार ख /Date of P ronouncement: 30/04/2015

आदेश /O R D E R

PER SHRI S.S. GODARA, JUDICIAL MEMBER

This Revenue's appeal and assessee's cross-objections for A.Ys.2011-12, arise from order of the CIT(A)-XIV, Ahmedabad dated 21.05.2014 restricting impugned commission expenses disallowance of Rs.69,40,154/- to Rs.8,33,000/- u/s 40A(2)(b), in proceeding u/s 143(3) of the Income-tax Act, 1961 (in short the Act).

2. The Revenue's grounds plead for restoration of entire disallowance amounting to Rs.69,40,154/- arising from commission payments made by the assessee to his brother Shri Amit K Patel by calling it excessive and unreasonable u/s 40A(2)(b) of the Act. The ITA No.2284/Ahd/2014 & CO 274/Ahd/2014 DCIT vs. Sandip K PATEL For A.Y. 2011-12 -2-

assessee's cross-objections seek to delete the remaining sum of Rs.8,33,000/- also to be deleted.

3. Facts of the case are in a narrow compass. The assessee paid a sum of Rs.81,40,154/- to his brother Shri Amit K Patel (Proprietor of Meet Enterprise) towards sales commission. The Assessing Officer invoked section 40A(2)(b) of the Act keeping in mind the assessee's turnover. The assessee appears to have strongly justified the same by highlighting his brother's experience and qualification in the field. The Assessing Officer in assessment order dated 25.03.2013 observed that the assessee had paid the said sum at the rate of 250% of the salary and other benefits given to employees and also more than 25% of the gross profits. He held that only a sum of Rs. 12 lacs was a reasonable commission payment and disallowed the balance amount of Rs.69,40,154/- as unjustifiable and excessive. The said sum stood added in the assessee's taxable income accordingly.

4. The CIT(A) has partly accepted the assessee's contention in the lower appellate order by restricting the impugned disallowance to that @ 12% of Rs.69,40,154/- coming to Rs.8,33,000/- by following his order of the preceding assessment year affirmed by the tribunal. The assessee has succeeded in getting relief of Rs.61,07,154/- in the lower appellate proceedings. Both parties are aggrieved in this backdrop of facts. The Revenue argues in favour of the entire disallowance. The assessee's cross-objections justify the whole payment to be reasonable as paid to his brother.

ITA No.2284/Ahd/2014 & CO 274/Ahd/2014 DCIT vs. Sandip K PATEL For A.Y. 2011-12 -3-

5. We have heard both the sides and perused the case file. Relevant facts of the case stand narrated in the preceding paragraphs. The sole question that arises for our consideration is as to whether the assessee's commission payment (supra) paid to his brother are to be disallowed u/s 40A(2)(b) or not being excessive or unreasonable. The case file reveals that the Co-ordinate Bench of the tribunal in assessee's own cases pertaining to Assessment Years 2008-09 and 2009-10 decided on 23.08.2013 holds that his payee brother is qualified enough to perform the marketing duties assigned. At the same time, it has partly accepted the Revenue's contention disallowing the similar commission to the tune of Rs.5 lacs out of the sum disallowed of Rs.40 lacs and Rs.4.5 lacs out of Rs.37.67 lacs @ approximately 12% thereof. Both parties are unable to rebut this factual position. The CIT(A) in the instant case has also proceeded on the same formula. In these circumstances, we adopt consistency and reject both parties grounds raised in the appeal and cross-objections; respectively. The CIT(A)'s findings stand affirmed.

6. The Revenue's appeal and assessee's cross-objections are dismissed.

Order pronounced in the Court on this day, the 30th April, 2015 at Ahmedabad.

Sd/- Sd/- (PRAMOD KUMAR) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated /04/2015 ITA No.2284/Ahd/2014 & CO 274/Ahd/2014 DCIT vs. Sandip K PATEL For A.Y. 2011-12 -4-

आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आयु त / Concerned CIT

4. आयकर आयु त(अपील) / The CIT(A), Ahmedabad

5. वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदेशानुस ार / BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad