Ch. Rama Rao vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, a partnership firm doing business of petrol bunk, filed its return of income for the Assessment Year 2017-18 on 22/10/2017, reporting a total turnover of Rs. 35,70,43,007/-. The assessee's turnover exceeded the prescribed limit of Rs. 1 Crore during the FY 2016-17, leading to an audit of its books of account. The case was selected for 'complete scrutiny' under CASS to examine large value cash deposits during the demonetization period. The Assessing Officer (AO) disallowed Rs. 25 lakhs on account of sales commission paid to a partner and added Rs. 14,38,274/- due to a debit balance in the partner's account. The assessee appealed against the order passed under section 143(3) of the Income Tax Act, 1961.…

Legal Issues

• 1. Disallowance of commission payment to the partner
• 2. Disallowance of interest paid to the bank on the overdraft account

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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