TMI Blog1976 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ate limited company doing business in chemicals and textile auxiliaries. It appears that one Shri A. M. Khopkar, who was previously in the employ of M/s. Amritlal Co. Pvt. Ltd., joined the service of the assessee-company and in the year of account he was working as the manager of the assessee-company drawing a salary of Rs. 400 per month. In the middle of the year, i.e., June 12, 1958, he addressed a letter to the chairman of the assessee-company requesting him to sanction commission on sales at the rate of 2 1/2%, which, according to him, was what he was required to disburse in one form or another in the interest of the company's business. The board of directors at their meeting held on 15th September, 1958, passed a resolution sanctioni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was duly spent for procuring business but he did not have any proof of expenditure. According to him, the payments were mostly made to third parties as secret commission to canvas sales on the company's behalf and by its very nature no receipt could be obtained from the recipients and that although he was in a position to give away their names, it was not advisable or discreet to do so. The Income-tax Officer on an appreciation of material that was placed before him recorded a finding that the assessee had parted with the so-called commission of Rs. 26,288 with the oblique purpose of reducing the profit and thereby it had avoided the tax liability to that extent. He, accordingly, disallowed the claim for deduction. The Appellate Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that details of the expenditure, or the purpose for which such expenditure had been incurred had not been furnished by the assessee in the assessment. He pointed out that the assessee was not really concerned and would not be in a position to prove as to who were the parties to whom either entertainment was granted or presents were given or commission was paid by Shri Khopkar and all that the assessee could prove was that it had made payment to Shri Khopkar for the purpose of entertaining persons and payment of secret commission. He, therefore, urged that the expenditure should be regarded as an allowable one either under section 10(1) or section 10(2)(xv) of the Act. It is not possible for us to accept any of these submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disburse in one form or another." It is rather surprising that Shri Khopkar, who was a science graduate and appointed to a managerial post for the assessee-company, could think of writing to the chairman to the effect that: "It is thus clear that this expenditure is laid out wholly and necessarily in the interest of the company's business..." From the language employed it leaves no room for any doubt in our mind that the request was an inspired one made for the purpose of achieving the desired result. Even the resolution dated September 15, 1958, recites that in view of the fact that Shri Khopkar had to expend various sums on account of entertaining, presents and commission to the diverse customers of the company in the interest of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be proved by the assessee and it is in this regard that the taxing authorities as well as the Tribunal have recorded a finding that the assessee-company has failed to discharge this burden. In fact, before the Appellate Assistant Commissioner a specific contention was made by counsel, who appeared for the assessee-company, that the Income-tax Officer had not disputed the fact of payment to Shri Khopkar and that the expenditure could not be disallowed merely on the ground that detailed information as to how it was expended could not be produced. It was with reference to such an argument that was made before the Appellate Assistant Commissioner that the Appellate Assistant Commissioner has observed as follows: "When such a large expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed to have been made by Shri Khopkar had been furnished or not furnished, the Tribunal has recorded a finding of fact that there is not even indirect evidence of any expenditure incurred by Shri Khopkar on behalf of the company. In other words, the finding is clear that the assessee-company has failed to discharge the burden that Rs. 26,288 which was purported to have been paid to Shri Khopkar had been expended by the assessee-company for entertainment, presents and commission to push up sales as suggested by the assessee-company. It would not be possible for us to go behind this finding of fact recorded against the assessee-company. It is, therefore, clear that the claim for deduction that was made by the assessee-company was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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