| Question And Answer | |
|---|---|
| Subject: | Allowability of expenditure |
| Category: | Income-Tax |
| Querist: | Manali |
| Answered by: | Research Team |
| Tags: | Business expenditure, Commission, Summons |
| Date: | November 19, 2022 |
Assesee is LLp and engaged in the business of call center. For procuring business, assessee has paid Re. 5 lakh as commission after deduction TDs and claimed it as deduction as business expenditure. Assessee has given confirmation from the party along with PAN n paid the amount by account payee cheques.
Ao issued summons U/sec 131 to the Act, to the party, mail ID is block.
Ao has issued show cause to the assessee asking as to why this expenditure should not be disallow as party has not filed copy of IT return of the recipient .
Whether action of AO is correct .
The burden is on the assessee to establish that the payment was made for services rendered. Mere deduction of TDS and giving PAN is not sufficient . Mere confirmation is not sufficient , the recipient of the commission has to respond to the summons .