This case involves an appeal by Kunwar Tuli against the order dated February 4, 2019, passed by the learned CIT(A)-15, New Delhi, for the assessment year 2015-16, addressing disallowed commission expenses.
The appeal addresses the rejection of commission expenses related to the digital marketing platform Homeshop 18, which collected payments directly from customers and remitted them to the assessee after deducting commissions and other agreed charges. The core of the dispute revolves around the justification of the commissions paid under the terms of an agreement with Homeshop 18.
The assessee’s representative argued that the commission included not only service charges but also taxes, refunds, shipping, and freight charges as per the agreement, which were necessary for conducting business. The CIT(A)’s decision upheld the assessing officer’s disallowance due to inadequate substantiation of these expenses.
The tribunal decided to remand the case back to the assessing officer for a fresh examination of the documentary evidence, including the contract agreement with Homeshop 18. This decision allows the assessee another opportunity to substantiate the commission expenses.
This case highlights the critical role of contractual agreements in determining the deductibility of business expenses under tax law. It underscores the necessity for taxpayers to maintain thorough documentation and proof of agreements dictating terms of business operations and expenses.
ITA 896/DEL/2020: Kunwar Tuli vs ITO – Tax Appeal on Commission Expenses
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